<PAGE>
PIMCO Funds Annual Report
Multi-Manager Series
June 30, 1999
Share Classes
Institutional
Administrative
PIMCO EQUITY ADVISORS
Renaissance Fund Mid-Cap Equity Fund
Growth Fund Opportunity Fund
Core Equity Fund Innovation Fund
Target Fund International Growth Fund
CADENCE CAPITAL MANAGEMENT
Capital Appreciation Fund Small-Cap Growth Fund
Mid-Cap Growth Fund Micro-Cap Growth Fund
NFJ INVESTMENT GROUP
Equity Income Fund Value 25 Fund
Value Fund Small-Cap Value Fund
PARAMETRIC PORTFOLIO ASSOCIATES
Enhanced Equity Fund Tax-Efficient Structured
Tax-Efficient Equity Fund Emerging Markets Fund
Structured Emerging Markets Fund
BLAIRLOGIE CAPITAL MANAGEMENT
International Fund
MULTIPLE MANAGERS
Balanced Fund
PIMCO
FUNDS
<PAGE>
PIMCO Funds Annual Report
Dear Fellow Shareholder:
The past year has been an eventful time, both in the geopolitical sphere and in
the financial markets. After flaring up in March, the Kosovo Crisis is now on
the road to resolution. It proved, in the end, to have surprisingly little
impact on the U.S. stock and bond markets.
Large-cap growth stocks continued to dominate the stock market through most of
the 12 months, until April, when their leadership began to falter, the market
broadened, and value stocks emerged from the sidelines. Value investing appeared
to be back. Then towards the end of June, the stock market teetered back in the
direction of growth stocks. No one can guarantee what will happen next, but all
of these events serve to underscore the importance of portfolio diversification.
Of course, there was also the much hyped advent of the "Dow 10,000." After
topping 10,000 for the first time in mid-March, the Dow Jones Industrial Average
waited until April to close above that mark. It then thundered past 11,000, only
to fall back and waver between the two levels for the past few months. To think
it was a mere three and a half years ago that the Dow Jones broke 5,000!
The past 12 months have been eventful at PIMCO Funds as well. We are now one of
the country's fastest-growing fund families, with assets under management
recently surpassing $50 billion. In January, PIMCO announced the formation of a
new investment division, PIMCO Equity Advisors, to focus on our expanding slate
of stock mutual funds. Based in New York City, the division is headed by Ken
Corba, a 14-year investment veteran. PIMCO Equity Advisors currently manages
PIMCO Growth, Innovation, Target, Renaissance and Opportunity Funds, with more
than $6 billion in assets under management as of June 30, 1999.
As we move toward the new millennium, we will of course continue to work hard to
help you meet your financial objectives. As viable opportunities arise, we will
be expanding our fund family to offer you additional investment options managed
by PIMCO's investment professionals.
Inside this Annual Report, you will find detailed information on our
Multi-Manager Series of stock funds. As you will see, these Funds have continued
to report strong relative performance. I encourage you to review the information
and commentary carefully. Once again, I would like to thank you for the trust
you've placed in us through your investments. If you have any questions
regarding your investment, contact your financial adviser, or call us at
1-800-426-0107. Or visit our Web site at www.pimcofunds.com.
Sincerely,
/s/ William D. Cvengros
William D. Cvengros
Chairman of the Board
July 30, 1999
A Word About the Year 2000
We at PIMCO are dedicated to making our computer systems fully operational
before, during, and after 2000. Similarly, our analysts and portfolio managers
take Year 2000 risks into account along with other investment considerations
when making investment decisions, such as choosing counterparties and evaluating
risks associated with portfolio securities. This evaluation often differs for
different issuers and depends upon the investment objectives, policies, and
restrictions applicable to a portfolio. The information available for different
issuers and counterparties varies substantially in accuracy and completeness. In
particular, little information exists about companies that are not registered
with the United States Securities and Exchange Commission and about foreign
issuers, counterparties, markets, and other institutions.
While we are dedicated to making the transition to Year 2000 a smooth one, we
cannot guarantee investment performance or that Year 2000 will not result in
losses. Investments in companies with real or perceived Year 2000 problems may
decline in value or fail on scheduled dividend, interest, or principal payments.
Any such failures may affect the fund's performance./1/
/1/This is a Year 2000 Readiness Disclosure.
3
<PAGE>
Market Review
Stock Market
A Broadened Stock Market Continues Its Ascent
The market corrects and then rises to new heights.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
S&P 500
Index
-----
<S> <C>
07/03/1998 1146
07/10/1998 1164
07/17/1998 1187
07/24/1998 1141
07/31/1998 1121
08/07/1998 1089
08/14/1998 1063
08/21/1998 1081
08/28/1998 1027
09/04/1998 974
09/11/1998 1010
09/18/1998 1020
09/25/1998 1045
10/02/1998 1003
10/09/1998 984
10/16/1998 1056
10/23/1998 1071
10/30/1998 1099
11/06/1998 1141
11/13/1998 1126
11/20/1998 1164
11/27/1998 1192
12/04/1998 1177
12/11/1998 1166
12/18/1998 1188
12/25/1998 1226
01/01/1999 1229
01/08/1999 1275
01/15/1999 1243
01/22/1999 1225
01/29/1999 1280
02/05/1999 1239
02/12/1999 1230
02/19/1999 1239
02/26/1999 1238
03/05/1999 1275
03/12/1999 1295
03/19/1999 1299
03/26/1999 1283
04/02/1999 1294
04/09/1999 1348
04/16/1999 1319
04/23/1999 1357
04/30/1999 1335
05/07/1999 1345
05/14/1999 1338
05/21/1999 1330
05/28/1999 1302
06/04/1999 1328
06/11/1999 1294
06/18/1999 1343
06/25/1999 1315
06/30/1999 1373
</TABLE>
Source:Bloomberg
This fiscal year certainly was an eventful one for stock investors. The third
quarter of 1998 saw the market correct as a result of concerns over an economic
down-turn in Asia that appeared to be spreading. In the fourth quarter, the
market rose as these fears began to abate, and the first quarter of 1999
continued the upward trend as the market hit record highs. However, many
industry analysts expressed concern over the narrowness of the market, in which
the largest of the large-cap growth stocks were responsible for much of this
performance. Their concerns proved to be short-lived: in the second quarter of
1999, the market finally broadened, as smaller-capitalization issues as well as
lower valuation issues showed strength.
The technology sector, particularly the Internet, was an important driver of
performance in the last quarter of 1998 as well as the first quarter of 1999.
However, these issues hit a speed bump early in the second quarter of 1999 as
interest rates began to rise.
Higher valuation growth stocks also had the same inverse relationship with
interest rates. They turned in a strong performance in the last quarter of 1998
and the first quarter of 1999, benefiting from the Federal Reserve's interest
rate cuts. Like technology stocks, they suffered in the second quarter as a
result of rising interest rates.
In contrast, cyclical and industrial issues saw lackluster performance in the
last quarter of 1998 and the first quarter of 1999. However, in the second
quarter of this year, they benefited not only from a rise in interest rates but
legitimate evidence of a global economic recovery, which resulted in increased
demand for basic materials.
The broadening of the market was welcomed by most analysts. It was largely
viewed as a healthy event, after a long period of domination by one segment of
the market. Looking ahead, we are cautiously optimistic that this broadening
will enable the market to continue its rise, and that more stocks will
participate in this ascent.
Bond Market
Bond Yields Move Higher
After falling to 4.7% late last year, bond yields have moved higher.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
30 - Year
U.S.Treasury
Yields
------
<S> <C>
07/03/1998 5.6 %
07/10/1998 5.6 %
07/17/1998 5.7 %
07/24/1998 5.7 %
07/31/1998 5.7 %
08/07/1998 5.6 %
08/14/1998 5.5 %
08/21/1998 5.4 %
08/28/1998 5.3 %
09/04/1998 5.3 %
09/11/1998 5.2 %
09/18/1998 5.1 %
09/25/1998 5.1 %
10/02/1998 4.8 %
10/09/1998 5.1 %
10/16/1998 5.0 %
10/23/1998 5.2 %
10/30/1998 5.2 %
11/06/1998 5.4 %
11/13/1998 5.3 %
11/20/1998 5.2 %
11/27/1998 5.2 %
12/04/1998 5.0 %
12/11/1998 5.0 %
12/18/1998 5.0 %
12/25/1998 5.2 %
01/01/1999 5.1 %
01/08/1999 5.3 %
01/15/1999 5.1 %
01/22/1999 5.1 %
01/29/1999 5.1 %
02/05/1999 5.4 %
02/12/1999 5.4 %
02/19/1999 5.4 %
02/26/1999 5.6 %
03/05/1999 5.6 %
03/12/1999 5.5 %
03/19/1999 5.6 %
03/26/1999 5.6 %
04/02/1999 5.6 %
04/09/1999 5.5 %
04/16/1999 5.6 %
04/23/1999 5.6 %
04/30/1999 5.7 %
05/07/1999 5.8 %
05/14/1999 5.9 %
05/21/1999 5.8 %
05/28/1999 5.8 %
06/04/1999 6.0 %
06/11/1999 6.2 %
06/18/1999 6.0 %
06/25/1999 6.2 %
06/30/1999 6.0 %
</TABLE>
Source: Bloomberg
In our last report to shareholders we suggested that the historic 18-year bull
market for bonds had come to an end. The bond market seemed to agree as Treasury
prices fell throughout most of the first half of this year.
Inflation fears have dominated the fixed income marketplace in 1999. OPEC's cuts
in oil production sent gasoline prices climbing, which negatively affected
inflation reports for the month of April. The economy, fueled by stock market
gains, grew faster than expected, adding to speculation that higher inflation
was just around the corner. In addition, foreign economies, particularly in
Asia, began to recover, as synchronized global central-bank easings appeared to
be having a positive impact.
As a result, the Federal Reserve moved to a tightening bias in May and then
raised the fed funds rate by a quarter-point to 5.0% at the end of June. The
move capped a difficult period for the bond market as Treasury prices fell
steadily, with long-term yields rising over one percentage point, breaking above
6% for the first time since early 1998.
Looking ahead, it appears the economy has come to a crossroads. Deflationary
forces, including the glut of global capacity and strong productivity gains,
remain at work. However, reflationary forces, including central bank easings and
a tight U.S. labor market, are also in play. The Fed appears to share this view,
moving back to a neutral stance after its recent tightening, explaining that
productivity gains continued to offset the wage inflation pressures created by a
tight labor market.
We believe that these forces may well offset one another, creating an
environment where interest rates remain in a relatively narrow range of between
5% and 6 1/2%. The opposing forces will likely keep inflation subdued, between
2% and 3%. In periods where deflationary forces dominate, interest rates could
fall toward the lower end of the range and vice versa. In this environment of
lower interest rate volatility, securities that provide incremental yield will
become more attractive to bond investors.
4
<PAGE>
PIMCO Funds Financial Information
We are pleased to present an in-depth review of the PIMCO Multi-Manager Series
Funds as of June 30, 1999. In order to help analyze, compare and contrast the
Funds, the report is broken down into a number of sections. Listed below is a
table of contents and descriptions of the various sections.
Pages 6-27 Fund Summaries
A summary of a Fund's performance record and portfolio composition, and a review
from the Fund's investment manager.
Pages 48-83 Schedule of Investments
The Schedule of Investments includes a listing of securities in the Fund's
portfolio as of June 30, 1999, including the number of shares or principal
amount and value as of that date.
Schedule of
Fund Name Fund Summary Investments
Renaissance Fund Page 6 Page 48
Growth Fund Page 7 Page 49
Core Equity Fund Page 8 Page 50
Target Fund Page 9 Page 51
Mid-Cap Equity Fund Page 10 Page 52
Opportunity Fund Page 11 Page 53
Innovation Fund Page 12 Page 55
International Growth Fund Page 13 Page 56
Capital Appreciation Fund Page 14 Page 57
Mid-Cap Growth Fund Page 15 Page 58
Small-Cap Growth Fund Page 16 Page 59
Micro-Cap Growth Fund Page 17 Page 61
Equity Income Fund Page 18 Page 62
Value Fund Page 19 Page 63
Value 25 Fund Page 20 Page 64
Small-Cap Value Fund Page 21 Page 65
Enhanced Equity Fund Page 22 Page 66
Tax-Efficient Equity Fund Page 23 Page 68
Structured Emerging Markets Fund Page 24 Page 70
Tax-Efficient Structured Emerging Markets Fund Page 25 Page 74
International Fund Page 26 Page 78
Balanced Fund Page 27 Page 81
Pages 28-35 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
returns, the chart reports distributions, asset sizes, expense ratios and
portfolio turnover rates.
Pages 36-38 Statements 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 39-41 Statements 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 42-47 Statements 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 84-92 Notes to Financial Statements
A description of the significant accounting policies of the Funds, and more
detailed information about the schedules and tables that appear in the report.
5
<PAGE>
June 30, 1999
PIMCO Renaissance Fund
Objective
Long-term growth of capital and income
Portfolio
Primarily common stocks with below-average valuations that have improving
business fundamentals
Total Net Assets
$659.8 million
Number of Securities in the Portfolio
82 (not including short-term instruments)
PIMCO Advisors Institutional Manager
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
Inst'l Class Admin. Class Russell 1000 S&P 500 Lipper Equity Income
(Incep. 12/30/97) (Incep. 8/31/98) Value Index Fund Average
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year 10.24% -- 16.38% 22.76% 11.36%
Inception 16.46% 36.41% -- -- --
</TABLE>
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO
Renaissance S&P 500 Russell
MONTH Fund Index 1000 Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12/31/97 5,000,000 5,000,001 5,000,000
01/31/98 5,005,928 5,055,301 4,929,500
02/28/98 5,388,263 5,419,889 5,261,255
03/31/98 5,595,732 5,697,442 5,583,244
04/30/98 5,723,177 5,754,758 5,620,596
05/31/98 5,604,624 5,655,834 5,537,411
06/30/98 5,652,045 5,885,574 5,608,401
07/31/98 5,536,455 5,822,892 5,509,693
08/31/98 4,555,424 4,981,019 4,689,851
09/30/98 4,718,435 5,300,103 4,959,048
10/31/98 4,922,940 5,731,213 5,343,374
11/30/98 5,234,143 6,078,582 5,592,376
12/31/98 5,591,637 6,428,830 5,782,516
01/31/99 5,947,095 6,697,683 5,828,777
02/28/99 5,659,994 6,489,520 5,746,591
03/31/99 5,912,917 6,749,165 5,865,545
04/30/99 6,217,107 7,010,560 6,413,387
05/31/99 6,032,542 6,845,041 6,342,840
06/30/99 6,230,779 7,224,941 6,526,782
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 1/1/98, the first full month following the Fund's
Institutional Class inception on 12/30/97, compared to the S&P 500 Index, an
unmanaged market index. The performance of the Administrative Class (shown
above) reflects the payment of a service fee in an amount not to exceed 0.25% on
an annualized basis. The Administrative Class commenced operations on 8/31/98.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Aetna, Inc. 4.6%
Multi-line insurance business
- --------------------------------------------------------------------------------
Micron Technology, Inc. 3.5%
Microcomputer parts
- --------------------------------------------------------------------------------
Conseco, Inc. 3.0%
Life insurance co.
- --------------------------------------------------------------------------------
Arrow Electronics, Inc. 2.9%
Distributor of electronic components
- --------------------------------------------------------------------------------
Asia Pulp & Paper Co. 2.9%
Pulp & paper products
- --------------------------------------------------------------------------------
Valero Energy Corp. 2.8%
Oil and gas refining/marketing
- --------------------------------------------------------------------------------
Smurfit-Stone Container Corp. 2.6%
Paperboard & packaged products
- --------------------------------------------------------------------------------
Nabors Industries, Inc. 2.5%
Contract drilling & services
- --------------------------------------------------------------------------------
Fleet Financial Group, Inc. 2.4%
Commercial banking
- --------------------------------------------------------------------------------
MediaOne Group, Inc. 2.3%
Cable/telecommunications service
- --------------------------------------------------------------------------------
Top Ten Total 29.5%
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 17.8%
- --------------------------------------------------------------------------------
Technology 16.2%
- --------------------------------------------------------------------------------
Energy 14.7%
- --------------------------------------------------------------------------------
Materials & Processing 14.5%
- --------------------------------------------------------------------------------
Health Care 10.3%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 97.0%
- --------------------------------------------------------------------------------
Cash Equivalents 3.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Renaissance Fund
Institutional Class shares returned 10.2%.
The telecom sector contributed greatly to the Fund's performance this year.
For instance, Motorola saw its stock price improve after introducing a new
product line of advanced digital technology cellular phones. The company is
regaining the market share it lost in the past several years as it continues to
offer more competitive products. Another of the Fund's telecom holdings,
MediaOne, was driven higher based on news that AT&T would be purchasing the
cable service and telecommunications provider.
Technology also turned in solid performance for the Fund this year. An
improving global economy resulted in greater demand for semiconductors, PCs and
other `cyclical technology' products. For instance, Micron Technology, a maker
of semiconductors, performed well as orders began to increase, and investor
sentiment regarding semiconductors became positive because of the brightening
global economic outlook. Another tech stock that contributed to the Fund's
performance was IBM, driven by increased revenues from its service business. IBM
has effected a corporate turnaround by moving away from dependence on its PC and
mainframe businesses and focusing on other opportunities, including consulting
and the formation of strategic alliances with a number of other companies.
Another standout stock for the Fund this year was Anheuser-Busch. The beer
producer and distributor benefited from a surge in domestic beer sales volume,
as well as increased profit margins, as much of the pricing pressure on beer has
eased. The company continues to benefit from strong brand recognition.
One disappointment for the Fund this year was Mirage Resorts. Mirage
Resorts owns and operates casino-based entertainment resorts in Las Vegas and
Laughlin, Nevada. The company suffered from the increasingly competitive nature
of the casino industry, with new and more elaborate casinos being built every
quarter. It also reported earnings disappointments this year that resulted from
decreased traffic to its casinos.
Looking ahead, the manager believes the Fund is well-positioned to benefit
from the recent market broadening as well as the improving global economy, both
of which significantly helped its performance in the second quarter.
6 See page 48 for financial details.
<PAGE>
June 30, 1999
PIMCO Growth Fund
Objective
Long-term growth of capital; income is incidental
Portfolio
Primarily stocks
of large capitalization companies
Total Net Assets
$2.4 billion
Number of Securities in the Portfolio
41 (not including short-term instruments)
PIMCO Advisors Institutional Manager
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Inst'l Class Admin. Class S&P 500 Lipper Growth
(Incep. 3/31/99) (Incep. 3/31/99) Index Fund Average
- --------------------------------------------------------------------------------
Inception -0.10% -0.13% -- --
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Fund's Institutional and
Administrative Shares commenced operations on 3/31/99. Since the Fund is less
than 1-year old, the reported returns are cumulative. The S&P 500 Index is an
unmanaged index and it is not possible to invest in an unmanaged index. The
performance of the Administrative Class reflects the payment of a service fee in
an amount not to exceed 0.25% on an annualized basis.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 4.4%
Computer network products
- --------------------------------------------------------------------------------
Microsoft Corp. 3.7%
Computer software
- --------------------------------------------------------------------------------
Citigroup, Inc. 3.5%
Diversified financial services
- --------------------------------------------------------------------------------
Tyco International 3.5%
Fire protection systems/cable
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 3.4%
Telecommunications systems/software
- --------------------------------------------------------------------------------
EMC Corp. 3.4%
Computer storage products
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 3.4%
Discount Stores
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 3.4%
Financial services/products
- --------------------------------------------------------------------------------
Omnicom Group 3.3%
Major international advertising co.
- --------------------------------------------------------------------------------
Nokia Corp. 3.2%
Telecommunication systems & equipment
- --------------------------------------------------------------------------------
Top Ten Total 35.2%
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 29.4%
- --------------------------------------------------------------------------------
Financial & Business Services 22.9%
- --------------------------------------------------------------------------------
Capital Goods 14.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 14.1%
- --------------------------------------------------------------------------------
Communications 8.1%
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96.6%
- --------------------------------------------------------------------------------
Cash Equivalents 3.4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the period since inception through June 30, 1999, PIMCO Growth Fund returned
- -0.10% for Institutional Class shares.
The strong performance that large-cap growth stocks experienced in the second
half of 1998 and the first quarter of 1999 slowed during the second quarter due
to rising interest rates which resulted from concerns over inflation. Investors
showed preference in the second quarter for lower valuation issues, particularly
cyclical stocks, which had been out of favor but were benefiting from an
improving global economy. Growth stocks did, however, finish the quarter on a
strong note as the interest rate environment and earnings outlook improved.
In general, the technology sector performed well for the Fund during the
period. The demand for technology products and services continued to be robust,
as companies realized it is a necessary means in gaining a competitive advantage
in today's global marketplace. Large-cap technology stocks did exhibit interest
rate sensitivity in the second quarter of 1999, but for most of the year they
flourished in the low interest rate environment. America Online continued to
benefit from more new subscriptions than expected as well as an increase in
advertising revenues. However, its valuation proved to be highly sensitive to
interest rate changes and it did not perform well in the second quarter.
Another strong area for the Fund was the retail sector. The domestic
economy remained strong throughout the year, with low unemployment and low
inflation, which enabled consumer confidence and spending to remain at high
levels. Many large-cap retail companies, such as Wal-Mart and Home Depot,
benefited from strong brand recognition, earnings growth and an Internet
presence.
The health care sector proved to be disappointing for the Fund this period.
Concerns about President Clinton's proposed changes to Medicare hurt these
stocks' performance. Also, many pharmaceutical companies came to the end of
strong product cycles this year, which resulted in a pause in activity. In
addition, a number of the higher valuation health care companies, such as
pharmaceutical giant Pfizer, were punished by the market in the second quarter
because of interest rate fears and declining earnings growth.
Looking ahead, the manager is optimistic that the Fund will resume its
recent outperformance, given the recent drop in interest rates as well as a
strong earnings outlook for the second half of 1999.
See page 49 for financial details. 7
<PAGE>
June 30, 1999
PIMCO Core Equity Fund
Objective
Long-term growth of capital, with income as a secondary objective
Portfolio
Common stocks of companies with market capitalizations in excess of $3 billion
Total Net Assets
$1.2 million
Number of Securities in the Portfolio
51 (not including short-term instruments)
PIMCO Advisors Institutional Manager
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
Inst'l Class Admin. Class S&P 500 Lipper Growth
(Incep. 12/28/94) (Incep. 5/31/95) Index Fund Average
- --------------------------------------------------------------------------------
1 year 26.34% 25.84% 22.76% 18.87%
3 years 29.64% 29.24% 29.11% 22.76%
Inception 28.06% 26.65% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO S&P 500
Core Equity Index
Fund
- -------------------------------------------------------------
<S> <C> <C>
12/31/94 5,000,000 5,000,000
01/31/95 5,034,965 5,129,650
02/28/95 5,189,810 5,329,552
03/31/95 5,339,660 5,486,828
04/30/95 5,545,390 5,648,415
05/31/95 5,735,746 5,874,182
06/30/95 5,921,094 6,010,639
07/31/95 6,181,582 6,209,952
08/31/95 6,246,704 6,225,539
09/30/95 6,422,032 6,488,256
10/31/95 6,386,996 6,465,093
11/30/95 6,502,485 6,748,911
12/31/95 6,397,852 6,878,895
01/31/96 6,644,715 7,113,052
02/29/96 6,799,004 7,178,990
03/31/96 6,772,780 7,248,124
04/30/96 6,875,788 7,354,962
05/31/96 7,107,556 7,544,646
06/30/96 6,987,958 7,573,391
07/31/96 6,513,499 7,238,799
08/31/96 6,761,043 7,391,465
09/30/96 7,225,188 7,807,457
10/31/96 7,333,489 8,022,786
11/30/96 7,777,005 8,629,229
12/31/96 7,546,203 8,458,284
01/31/97 7,917,776 8,986,757
02/28/97 7,731,989 9,057,213
03/31/97 7,327,631 8,685,052
04/30/97 7,628,168 9,203,550
05/31/97 8,245,634 9,763,862
06/30/97 8,496,992 10,201,283
07/31/97 9,327,566 11,012,999
08/31/97 8,748,350 10,396,051
09/30/97 9,322,102 10,965,443
10/31/97 9,065,279 10,599,197
11/30/97 9,185,494 11,089,834
12/31/97 9,456,557 11,280,246
01/31/98 9,675,240 11,405,006
02/28/98 10,425,854 12,227,535
03/31/98 11,129,186 12,853,707
04/30/98 11,353,779 12,983,015
05/31/98 11,206,020 12,759,837
06/30/98 12,051,200 13,278,142
07/31/98 11,867,979 13,136,729
08/31/98 9,840,730 11,237,421
09/30/98 10,679,999 11,957,290
10/31/98 11,117,365 12,929,896
11/30/98 11,950,724 13,713,577
12/31/98 13,339,575 14,503,754
01/31/99 14,552,263 15,110,301
02/28/99 13,903,046 14,640,673
03/31/99 14,717,630 15,226,446
04/30/99 14,711,505 15,816,166
05/31/99 14,099,036 15,442,747
06/30/99 15,225,979 16,299,819
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 1/1/95, the first full month following the Fund's
Institutional Class inception on 12/28/94, compared to the S&P 500 Index, an
unmanaged market index. The performance of the Administrative Class (shown
above) reflects the payment of a service fee in an amount not to exceed 0.25% on
an annualized basis. The Administrative Class commenced operations on 5/31/95.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Cendant Corp. 3.8%
Member based consumer svcs.
- --------------------------------------------------------------------------------
Motorola, Inc. 3.6%
Semiconductors/comm. eqp.
- --------------------------------------------------------------------------------
Microsoft Corp. 3.5%
Computer software
- --------------------------------------------------------------------------------
Citigroup, Inc. 3.3%
Diversified financial svcs.
- --------------------------------------------------------------------------------
Anheuser Busch Cos., Inc. 3.3%
Brewer/baker
- --------------------------------------------------------------------------------
Enron Corp. 3.1%
Nat'l. gas/pipeline sys.
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 2.9%
Telecom. systems/software
- --------------------------------------------------------------------------------
Intel Corp. 2.8%
Semiconductor memory circuits
- --------------------------------------------------------------------------------
Chancellor Media Corp. 2.6%
Own/operates radio stations
- --------------------------------------------------------------------------------
Tyco International Limited 2.6%
Fire protection systems
- --------------------------------------------------------------------------------
Top Ten Total 31.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 29.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 20.9%
- --------------------------------------------------------------------------------
Financial & Business Services 13.0%
- --------------------------------------------------------------------------------
Health Care 11.7%
- --------------------------------------------------------------------------------
Consumer Staples 5.8%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 98.4%
- --------------------------------------------------------------------------------
Cash Equivalents 1.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Core Equity Fund Institutional Class shares posted a return of 26.3% for
the one-year period ended June 30, 1999, outperforming both the S&P 500 Index
return of 22.8% and the Lipper Growth Fund Average return of 18.9% for the same
period.
The technology sector was a strong performer for the Fund this year. For
instance, Intel, the semiconductor manufacturer, posted stellar returns. The
company benefited from a recovering global economy, which resulted in increased
demand for semiconductors. Another technology standout was Microsoft, which
benefited from growing sales as well as a strong product pipeline. Fund holding
Lucent was also a strong performer this year, benefiting from increased
corporate spending on data communications.
The consumer discretionary sector also made a positive contribution to the
Fund this year. A strong domestic economy, low unemployment and, for most of the
year, low interest rates resulted in strong consumer spending and an increase in
discretionary spending. For instance, Home Depot benefited from an increase in
home purchases and re-financings, which fueled sales of home improvement
materials.
Another standout for the Fund this year was Tyco. This international
manufacturing conglomerate, contributed heavily to the Fund's performance this
year, benefiting from a strengthening global economy as well as a highly
successful acquisition policy.
A disappointment for the Fund this year was the health care sector. These
stocks were hurt in the fourth quarter of 1998 by profit-taking associated with
the strong performance they experienced earlier that year. Then again in the
second quarter of 1999, this industry group performed poorly, although its
fundamental drivers had not changed. Rising interest rates caused a contraction
in the price/earnings ratios of healthcare companies, driving stock prices down.
In particular, Pfizer negatively affected the Fund's performance, as
disappointing sales of Viagra, Pfizer's drug for impotency in males, pushed the
stock lower. Staying true to its discipline, the manager sold the stock
immediately following the negative news release.
Looking forward, the manager remains cautiously optimistic about the Fund's
performance. While the broadening of the market is positive for the Fund in the
long term, rising interest rates may negatively affect the Fund in the short
term. However, the manager believes this market environment places a greater
emphasis on stock selection, which should continue to benefit PIMCO Core Equity
Fund.
8 See page 50 for financial details.
<PAGE>
June 30, 1999
PIMCO Target Fund
Objective
Capital appreciation; no consideration given to income
Portfolio
Primarily common stocks of companies with medium-sized capitalizations
Total Net Assets
$1.2 billion
Number of Securities in the Portfolio
59 (not including short-term instruments)
PIMCO Advisors Institutional Manager
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Inst'l Class Admin. Class S&P Mid-Cap Lipper Mid-Cap
(Incep. 3/31/99) (Incep. 3/31/99) 400 Index Fund Average
- --------------------------------------------------------------------------------
Inception 8.57% 8.51% -- --
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Fund's Institutional and
Administrative Shares commenced operations on 3/31/99. Since the Fund is less
than 1-year old, the reported returns are cumulative. The S&P Mid-Cap Index is
an unmanaged index and it is not possible to invest in an unmanaged index. The
performance of the Administrative Class reflects the payment of a service fee in
an amount not to exceed 0.25% on an annualized basis.
PORTFOLIO COMPOSITION
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
VISX, Inc. 3.1%
Vision correction systems
- --------------------------------------------------------------------------------
Comverse Technology, Inc. 3.0%
Developer & marketer of computer systems
- --------------------------------------------------------------------------------
Sanmina Corp. 2.6%
Electronic circuit boards
- --------------------------------------------------------------------------------
Abercrombie & Fitch Co. 'A' 2.5%
Retail casual apparel
- --------------------------------------------------------------------------------
Kansas City Southern Industries, Inc. 2.5%
Railroad financial services/mutual funds
- --------------------------------------------------------------------------------
Immunex Corp. 2.5%
Immunological bio products
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 2.5%
Multi-user application server systems
- --------------------------------------------------------------------------------
Allergan, Inc. 2.4%
Opthalmic/dermatological products
- --------------------------------------------------------------------------------
Gemstar International Group Limited 2.4%
TV/Video recording products
- --------------------------------------------------------------------------------
Tiffany & Co. 2.3%
Retail gift items
- --------------------------------------------------------------------------------
Top Ten Total 25.8%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 26.6%
- --------------------------------------------------------------------------------
Consumer Discretionary 22.8%
- --------------------------------------------------------------------------------
Health Care 19.4%
- --------------------------------------------------------------------------------
Financial & Business Services 9.3%
- --------------------------------------------------------------------------------
Communications 8.0%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 94.9%
- --------------------------------------------------------------------------------
Cash Equivalents 5.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Target Fund posted strong results for the period since inception through
June 30, 1999, returning 8.6% for Institutional Class shares.
The sector that most positively contributed to the Fund's performance was
technology. Technology stocks in general benefited from increased investor
interest as well as earnings growth that continues to outpace the growth of the
market. In particular, the broadening of the market in the second quarter
benefited mid-cap technology stocks, many of which offered investors lower
valuations and greater growth potential than their large-cap counterparts at a
time when rising interest rates caused concern about higher valuation issues.
Biotechnology also contributed to the Fund's performance this period. For
instance, Immunex, a company that develops, markets, and manufactures innovative
therapeutic products for the treatment of cancer and infectious diseases, was a
strong contributor to the Fund's performance. One of its new products, Enbrel,
widely considered the most effective drug on the market for the treatment of
rheumatoid arthritis, recently received FDA approval. Sales of the drug have
been remarkable, and this high demand is expected to continue, giving it the
potential to reach one billion dollars in sales. The company also benefited from
continued demand for another of its drugs, Leukine, a white blood cell
stimulant, as well as the prospects of a strong product pipeline.
Another sector that benefited the Fund's returns was health care. VISX, the
leading manufacturer and developer of laser eye surgery equipment, turned in a
robust performance this year. Its market share in the fast-growing laser eye
surgery industry is a phenomenal 80%. The company, which saw its stock price
rise after a judge threw out a lawsuit against it by the Federal Trade
Commission, experienced high sales growth and high profitability this year, and
appears on track to continue this growth.
One disappointment for the Fund this period was Providian Financial, a
credit card company. Like many other financial services stocks, it was hurt by
rising interest rates in the second quarter. Providian in particular was also
hurt by a pending consumer advocate group lawsuit alleging unfair practices.
Looking ahead, the manager is optimistic that the Fund will continue to
perform well, given that both the earnings growth outlook and the long-term
outlook for interest rates, two of the most important drivers of stock prices,
appear favorable.
See page 51 for financial details. 9
<PAGE>
June 30, 1999
PIMCO Mid-Cap Equity Fund
Objective
Long-term growth of capital
Portfolio
Common stocks of companies with market capitalizations between $800 million and
$3 billion
Total Net Assets
$7.4 million
Number of Securities in the Portfolio
58 (not including short-term instruments)
PIMCO Advisors Institutional Manager
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
Inst'l Class S&P Mid-Cap Lipper Mid-Cap
(Incep. 12/28/94) 400 Index Fund Average
- --------------------------------------------------------------------------------
1 year 23.18% 17.17% 13.36%
3 year 20.75% 22.48% 16.58%
Inception 24.22% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO S&P
Mid-Cap Mid-Cap 400
Equity Index
Fund
- -----------------------------------------------------------
<S> <C> <C>
12/31/94 5,000,000 5,000,000
01/31/95 4,910,000 5,052,050
02/28/95 5,190,000 5,317,126
03/31/95 5,370,000 5,409,394
04/30/95 5,445,000 5,517,999
05/31/95 5,435,000 5,651,109
06/30/95 5,850,000 5,881,160
07/31/95 6,205,000 6,187,969
08/31/95 6,205,000 6,302,409
09/30/95 6,375,000 6,455,173
10/31/95 6,467,605 6,289,081
11/30/95 6,542,693 6,563,757
12/31/95 6,585,784 6,547,426
01/31/96 6,539,441 6,642,416
02/29/96 6,750,557 6,868,179
03/31/96 7,002,866 6,950,487
04/30/96 7,389,054 7,162,762
05/31/96 7,734,048 7,259,631
06/30/96 7,548,678 7,150,700
07/31/96 6,704,215 6,666,927
08/31/96 7,100,701 7,051,429
09/30/96 7,574,424 7,358,871
10/31/96 7,574,424 7,380,285
11/30/96 7,945,164 7,796,017
12/31/96 7,725,848 7,804,670
01/31/97 7,914,427 8,097,657
02/28/97 7,578,521 8,031,095
03/31/97 7,266,187 7,688,729
04/30/97 7,454,766 7,887,944
05/31/97 8,073,541 8,577,666
06/30/97 8,273,906 8,818,698
07/31/97 8,957,505 9,691,838
08/31/97 9,122,512 9,680,208
09/30/97 9,700,035 10,236,819
10/31/97 9,051,795 9,791,518
11/30/97 9,063,581 9,936,432
12/31/97 8,978,700 10,321,966
01/31/98 8,811,246 10,125,849
02/28/98 9,568,774 10,964,269
03/31/98 10,055,187 11,458,757
04/30/98 10,414,016 11,668,453
05/31/98 10,015,317 11,143,372
06/30/98 10,788,793 11,213,575
07/31/98 10,485,782 10,778,489
08/31/98 8,731,506 8,772,612
09/30/98 9,544,852 9,591,097
10/31/98 9,616,618 10,448,541
11/30/98 10,190,744 10,969,923
12/31/98 11,662,454 12,295,090
01/31/99 12,056,796 11,816,811
02/28/99 11,268,112 11,197,610
03/31/99 12,115,528 11,511,143
04/30/99 12,753,187 12,418,221
05/31/99 12,434,358 12,472,861
06/30/99 13,290,164 13,138,912
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 1/1/95, the first full month following the Fund's
Institutional Class inception on 12/28/94, compared to the S&P Mid-Cap 400
Index, an unmanaged market index. The performance of the Administrative Class
(shown above) reflects the payment of a service fee in an amount not to exceed
0.25% on an annual basis. The Administrative Class commenced operations on
8/21/97.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Qualcomm, Inc. 3.7%
Mfr. digital wireless comm.
- --------------------------------------------------------------------------------
Intimate Brands, Inc. 3.1%
Intimate apparel/personal care prod.
- --------------------------------------------------------------------------------
Global Telesystems Group, Inc. 3.1%
Telecommunications svcs.
- --------------------------------------------------------------------------------
Catalina Marketing Corp. 2.8%
Electronic coupon mktg. sys.
- --------------------------------------------------------------------------------
Circuit City Stores 2.7%
Retailer: video equp./appliances
- --------------------------------------------------------------------------------
Bed, Bath & Beyond, Inc. 2.7%
Domestic home products
- --------------------------------------------------------------------------------
SPX Corp. 2.4%
Engine parts/piston rings
- --------------------------------------------------------------------------------
Comdisco, Inc. 2.4%
Remarket/lease IBM comp. eqp.
- --------------------------------------------------------------------------------
Bausch & Lomb, Inc. 2.4%
Vision care & instruments
- --------------------------------------------------------------------------------
Linear Technology Corp. 2.3%
Mfr. integrated circuits
- --------------------------------------------------------------------------------
Top Ten Total 27.6%
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 26.8%
- --------------------------------------------------------------------------------
Consumer Discretionary 24.3%
- --------------------------------------------------------------------------------
Health Care 14.9%
- --------------------------------------------------------------------------------
Communications 8.2%
- --------------------------------------------------------------------------------
Financial & Business Services 5.3%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 97.9%
- --------------------------------------------------------------------------------
Cash Equivalents 2.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Mid-Cap Equity Fund
Institutional Class shares returned 23.2%, far surpassing the S&P Mid-Cap 400
Index return of 17.2% and the Lipper Mid-Cap Fund Average return of 13.4% for
the same period.
Technology stocks were a strong contributor to the Fund's performance this
year. Corporations continued to realize that technology is a necessary means in
gaining a competitive advantage in today's global marketplace, which is causing
an increase in demand for technology products and services. For instance,
Qualcomm, a telecom firm, was a standout this year. The company, which designs,
develops, manufactures, markets, licenses, and operates digital wireless
communications, infrastructure and subscriber products, benefited from an
increase in telecom subscribers as well as increased demand for its
semiconductors. The company also benefited from the sale of its wireless
infrastructure business to Telefonaktiebdaget LM Ericsson, ridding itself of a
money-losing operation and securing its position in third generation cellular
technology.
The consumer discretionary sector was also a strong performer for the Fund
this year. Despite a difficult third quarter of 1998, in which consumer
confidence suffered as a result of the Asian economic crisis, this sector showed
strength in the fourth, first and second quarters. It benefited from a strong
domestic economy, a tight labor market and relatively low interest rates, all of
which fueled consumer confidence and spending.
Individual standouts for the Fund this year included Intimate Brands, the
intimate apparel retailer. The company benefited from a strong domestic economy,
solid customer response to new product offerings and investor enthusiasm for the
Victoria's Secret Web site. SPX Corp., a consolidator in the auto parts
industry, was another standout for the Fund. The company capitalized on its
ability to successfully integrate earlier acquisitions, producing savings from
economies of scale.
A disappointment for the Fund this year was Providian Financial, a credit
card issuer. Not only was it hurt by rising interest rates but it was also
negatively affected by a pending consumer advocate group lawsuit alleging unfair
practices.
In the second quarter of 1999, in order to benefit from a global economic
recovery, the Fund was repositioned with a bias towards global growth. Going
forward, the manager is cautiously optimistic about the Fund's performance, but
will continue to observe economic and monetary policy developments closely.
Although the Federal Reserve has moved back towards neutral after having raised
rates, there is concern that continued economic strength may lead to further
tightening. Should additional evidence of domestic strength emerge, the manager
would continue to reduce the Fund's consumer cyclical exposure.
10 See page 52 for financial details.
<PAGE>
June 30, 1999
PIMCO Opportunity Fund
Objective
Capital appreciation; no consideration given to income
Portfolio
Primarily stocks of small-capitalization companies
Total Net Assets
$433.1 million
Number of Securities in the Portfolio
104 (not including short-term instruments)
PIMCO Advisors Institutional Manager
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Inst'l Class Admin. Class Russell 2000 Lipper Cap. App.
(Incep. 3/31/99) (Incep. 3/31/99) Index Fund Average
- --------------------------------------------------------------------------------
Inception* 13.36% 13.36% -- --
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Fund's Institutional and
Administrative Shares commenced operations on 3/31/99. Since the fund is less
than 1-year old, the reported returns are cumulative. The Russell 2000 Index is
an unmanaged index and it is not possible to invest in an unmanaged index. The
performance of the Administrative Class reflects the payment of a service fee in
an amount not to exceed 0.25% on an annualized basis.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
WinStar Communications, Inc. 2.5%
Telecommunications/info. services
- --------------------------------------------------------------------------------
SFX Entertainment, Inc. 2.0%
Producer of live entertainment events
- --------------------------------------------------------------------------------
Premier Parks, Inc. 1.9%
Theme parks
- --------------------------------------------------------------------------------
B.J.'s Wholesale Club, Inc. 1.6%
Wholesale cash & carry merchandise
- --------------------------------------------------------------------------------
True North Communications 1.5%
International advertising agency
- --------------------------------------------------------------------------------
Sotheby's Holdings 1.5%
Auction house/art dealer
- --------------------------------------------------------------------------------
Advanced Energy Industries 1.4%
Semiconductors/film prod. equip.
- --------------------------------------------------------------------------------
Pinnacle Holdings, Inc. 1.4%
Real estate investment trust
- --------------------------------------------------------------------------------
Furniture Brands International, Inc. 1.4%
Residential furniture
- --------------------------------------------------------------------------------
Visual Networks, Inc. 1.3%
Networking products
- --------------------------------------------------------------------------------
Top Ten Total 16.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 30.5%
- --------------------------------------------------------------------------------
Consumer Discretionary 15.2%
- --------------------------------------------------------------------------------
Communications 11.1%
- --------------------------------------------------------------------------------
Health Care 10.2%
- --------------------------------------------------------------------------------
Consumer Services 8.7%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 95.5%
- --------------------------------------------------------------------------------
Cash Equivalents 4.5%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the period since inception through June 30, 1999, PIMCO Opportunity Fund
posted stellar results, returning 13.4% for Institutional Class shares.
Through much of this period, the market was dominated by large-cap growth
stocks, which did not bode well for the small-cap sector. However, in the second
quarter of 1999, the market rotated away from large-cap growth issues in favor
of smaller-capitalization and lower valuation issues, benefiting Opportunity
Fund's performance.
The telecom sector performed well for the Fund this period. Increased
demand by corporations for data communications capabilities, coupled with a
dramatic increase in the number of cellular phone users, boosted this sector.
One telecom standout was Winstar Communications, an emerging telecommunications
company with an important market niche. Winstar offers a creative, economical
solution to the `bandwidth bottleneck' facing small and mid-sized companies, by
providing cheap, high-speed wireless bandwidth. The company benefited from a
strong market position, a result of its purchase of many of the radio licenses
necessary to provide wireless bypass services to fiber optic hubs. Winstar also
saw strong sales growth this year, and appears on track to maintain this
momentum.
Another standout this period was Pinnacle Holdings, a major provider of
tower space for wireless communications. The company benefited from its rapid
tower consolidation strategy, which has resulted in significant gains in cash
flow.
One disappointment for the Fund this period was Alaska Airlines. It
suffered from pricing pressure and a decrease in traffic. It was also hurt by a
boost in the price of fuel, resulting from increased demand brought on by an
improving global economy. Its shrinking profit margin prompted the manager to
remove it from the Fund.
Looking ahead, the manager is optimistic that the Fund will continue its
outperformance, especially given the increased investor interest in
smaller-capitalization stocks, the tame inflationary environment and the strong
earnings outlook for many growth stocks.
See page 53 for financial details. 11
<PAGE>
June 30, 1999
PIMCO Innovation Fund
Objective
Capital appreciation; no consideration given to income
Portfolio
Primarily technology-related stocks of companies of all sizes
Total Net Assets
$1.3 billion
Number of Securities in the Portfolio
43 (not including short-term instruments)
PIMCO Advisors Institutional Manager
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Inst'l Class S&P 500 Lipper Science & Tech.
(Incep.3/05/99) Index Fund Average
- --------------------------------------------------------------------------------
Inception 14.57% -- --
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Fund's Institutional Class Shares
commenced operations on 3/5/99. Since the fund is less than 1-year old, the
reported returns are cumulative. The S&P 500 Index is an unmanaged index and it
is not possible to invest in an unmanaged index.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 5.1%
Computer network products
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 4.7%
Telecom. systems/software
- --------------------------------------------------------------------------------
Microsoft Corp. 4.1%
Computer software
- --------------------------------------------------------------------------------
America Online, Inc. 4.1%
Online computer services
- --------------------------------------------------------------------------------
Motorola, Inc. 3.8%
Semiconductors/comm. equip.
- --------------------------------------------------------------------------------
Siebel Systems, Inc. 3.4%
Marketing info. for software sys.
- --------------------------------------------------------------------------------
Nokia Corp. 3.4%
Telecommunication sys. & equip.
- --------------------------------------------------------------------------------
Tellabs, Inc. 3.4%
Voice data communications equip.
- --------------------------------------------------------------------------------
Sun Microsystems, Inc. 3.3%
Markter of networked workstations
- --------------------------------------------------------------------------------
Xilinx, Inc. 3.2%
Supplier of semiconductors
- --------------------------------------------------------------------------------
Top Ten Total 38.5%
Top 4 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 70.4%
- --------------------------------------------------------------------------------
Communications 10.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 6.3%
- --------------------------------------------------------------------------------
Health Care 5.9%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 92.8%
- --------------------------------------------------------------------------------
Cash Equivalents 7.2%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Innovation Fund posted strong results for the period since inception
through June 30, 1999, returning 14.57%.
Telecom equipment stocks contributed significantly to the Fund's
performance during the period. The sector benefited from the increased demand
from companies for data transmission capabilities, which resulted in increased
spending by phone companies. The sector also benefited from higher-than-expected
cellular phone subscriptions, driven by more competitive pricing plans and
improved cellular phone technology. For instance, Nokia, the Finnish cellular
phone manufacturer, saw its sales rise as a result of the increase in overall
cellular phone subscriptions. Motorola also benefited from this subscription
increase and the introduction of a more competitive digital phone product line.
Motorola significantly contributed to the Fund's performance during this
period. The cellular phone manufacturer benefited from an improved, more
competitive digital product line which helped it regain market share that it had
lost in the past three years. The company is also participating in the industry
recovery in semiconductors. The stock, which hit a new high in the second
quarter of 1999, continues to postively surprise Wall Street.
A disappointing sector for the Fund was PCs. The anticipated increase in
Y2K PC sales did not occur, and PC stocks saw lackluster results for much of the
period. In addition, pricing pressures in the industry have kept profit margins
down. As a result, the manager reduced the Fund's PC exposure, although
remaining confident that this seasonal business will see improvement in the
second half of the year due to back-to-school and holiday PC buying. In
particular, PC maker Compaq negatively affected the Fund's performance. The
company did not meet its March earnings estimate and continued to have problems
reducing its channel inventory as more lean competitors, such as Dell, have
mastered inventory management.
The Fund ably weathered the volatility of the market this year and, looking
ahead, the manager is optimistic that the Fund will continue its outperformance
in the coming year.
12 See page 55 for financial details.
<PAGE>
June 30, 1999
PIMCO International Growth Fund
Objective
Long-term growth of capital
Portfolio
Common stocks of companies domiciled outside the United States
Total Net Assets
$8.4 million
Number Of Securities In The Portfolio
63 (not including short-term instruments)
PIMCO Advisors Institutional Manager
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
Inst'l Class MSCI Lipper International
(Incep. 12/31/97) EAFE Index Fund Average
- --------------------------------------------------------------------------------
1 year 28.62% 7.92% 4.83%
Inception 44.97% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO MSCI
International EAFE
Growth Index
Fund
- ----------------------------------------------------------
<S> <C> <C>
12/31/97 5,000,000 5,000,000
01/31/98 5,190,000 5,230,000
02/28/98 5,595,000 5,566,812
03/31/98 6,090,000 5,739,383
04/30/98 6,385,000 5,785,872
05/31/98 6,635,000 5,759,257
06/30/98 6,775,000 5,804,179
07/31/98 7,040,000 5,864,543
08/31/98 5,940,000 5,139,099
09/30/98 5,570,000 4,982,870
10/31/98 5,895,000 5,503,580
11/30/98 6,490,000 5,787,015
12/31/98 6,970,063 6,016,759
01/31/99 7,529,624 6,000,514
02/28/99 7,317,751 5,858,902
03/31/99 7,801,255 6,104,976
04/30/99 8,393,412 6,353,448
05/31/99 8,051,156 6,027,516
06/30/99 8,713,937 6,263,795
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 1/1/98, the first full month following the Fund's
Institutional Class inception on 12/31/97, compared to the Morgan Stanley
Capital International (MSCI) EAFE Index (Europe, Australasia, Far East), an
unmanaged market index. The Fund may invest in foreign securities which involve
potentially higher risks including foreign currency fluctuations and political
or economic uncertainty.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
South Korea/Korea Telecom 3.2%
- --------------------------------------------------------------------------------
Japan/Takeda Chemical Industries 3.2%
- --------------------------------------------------------------------------------
Netherlands/Koninklijke Philips Electronics NV 2.9%
- --------------------------------------------------------------------------------
Finland/Nokia Corp. SP 2.7%
- --------------------------------------------------------------------------------
Netherlands/STMicroelectronics NV 2.7%
- --------------------------------------------------------------------------------
Netherlands/Equant 2.6%
- --------------------------------------------------------------------------------
Canada/TLC The Laser Center 2.6%
- --------------------------------------------------------------------------------
United Kingdom/Vodafone Group 2.2%
PLC SP
- --------------------------------------------------------------------------------
Netherlands/United Pan-Europe Communication NV 2.2%
- --------------------------------------------------------------------------------
Singapore/Natsteel Electronics Limited 2.1%
- --------------------------------------------------------------------------------
Top Ten Total 26.4%
- --------------------------------------------------------------------------------
Top 5 Countries % of Total Investments
- --------------------------------------------------------------------------------
Japan 16.6%
- --------------------------------------------------------------------------------
Netherlands 12.9%
- --------------------------------------------------------------------------------
United Kingdom 11.4%
- --------------------------------------------------------------------------------
Singapore 6.1%
- --------------------------------------------------------------------------------
Canada 5.8%
- --------------------------------------------------------------------------------
Regional Breakdown
- --------------------------------------------------------------------------------
Eastern Europe 34.3%
- --------------------------------------------------------------------------------
Asia 29.0%
- --------------------------------------------------------------------------------
Europe 14.0%
- --------------------------------------------------------------------------------
Canada 6.0%
- --------------------------------------------------------------------------------
Latin America 3.1%
- --------------------------------------------------------------------------------
Australia 3.0%
- --------------------------------------------------------------------------------
United States 1.0%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 90.4%
- --------------------------------------------------------------------------------
Cash Equivalents 9.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO International Growth Fund posted a steller return of 28.6% for the
one-year period ended June 30, 1999, far outperforming the MSCI EAFE Index
return of 7.9% as well as the Lipper International Growth Average return of 4.8%
for the same period.
The Fund's telecommunications holdings turned in a solid performance for
the Fund this year. For instance, Nokia, the Finnish cellular phone
manufacturer, made a strong contribution to the Fund's performance. The company
benefited from the success of one-rate plans as well as the conversion from
analog to digital cell phones, both of which caused an increased demand for
cellular phones. In addition, the company's performance was aided by an increase
in profit margins.
A recovering Asian economy in the first half of 1999 also contributed
positively to the Fund's performance. For instance, Korea Telecom was a standout
during this period. The company benefited from the infrastructure buildout in
telecommunications in Asia as well as an increase in cellular phone subscribers.
Cathay Pacific Airways, Hong Kong's largest airline, was up strongly, buoyed by
better than expected traffic statistics and the settlement of a labor dispute.
The new labor contract should result in large cost reductions and improved
efficiency over the coming years. Softbank, a Japanese company with large
Internet holdings, continued to show strength as the Internet remained a
dominant secular trend.
The European financial sector turned in a mixed performance this year. In
the second half of 1998 and the first quarter of 1999, the sector performed
well, as lower interest rates helped propel the market higher. However, in the
second quarter of 1999, the fear of higher interest rates due to stronger global
growth weighed on these stocks. National Bank of Greece, Royal Bank of Scotland
and UBS all declined in the second quarter.
With the global economy continuing to improve, the manager has further
increased exposure to Asian markets and to beneficiaries of a global economic
recovery while trimming positions in Europe. For instance, the Fund's energy
holdings and growth cyclical holdings have been increased. Within Asia, the Fund
is overweight in Hong Kong, Singapore and Korea while slightly underweight in a
still somewhat shaky Japan. The Fund continues to be overweight in
telecommunications and technology issues, as the manager believes these secular
trends will continue to be rewarded. The manager remains cautiously optimistic
about the Fund's performance, particularly in light of the improved global
economic situation.
See page 56 for financial details. 13
<PAGE>
June 30, 1999
PIMCO Capital Appreciation Fund
Objective
Growth of capital
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
$1.1 billion
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 6/30/99
Inst'l Class Admin. Class S&P 500 Lipper Capital
(Incep. 3/8/91) (Incep. 7/31/96) Index Apprec. Fund Average
- --------------------------------------------------------------------------------
1 year 10.57% 10.30% 22.76% 20.04%
3 years 24.58% -- 29.11% 16.67
5 years 24.49% -- 27.87% 19.28%
Inception 19.50% 27.31% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO S&P 500
Capital Index
Appreciation
Fund
<S> <C> <C>
- ----------------------------------------------------------------------------
03/31/91 5,000,000 5,000,000
04/30/91 4,854,350 5,012,000
05/31/91 5,094,373 5,228,518
06/30/91 4,820,061 4,989,052
07/31/91 5,164,862 5,221,542
08/31/91 5,327,032 5,345,293
09/30/91 5,253,318 5,256,026
10/31/91 5,433,351 5,326,457
11/30/91 5,275,577 5,111,801
12/31/91 6,008,526 5,696,591
01/31/92 5,951,282 5,590,634
02/29/92 6,015,540 5,663,312
03/31/92 5,817,823 5,552,878
04/30/92 5,805,268 5,716,132
05/31/92 5,830,077 5,744,142
06/30/92 5,646,491 5,658,669
07/31/92 5,811,083 5,889,825
08/31/92 5,666,801 5,769,261
09/30/92 5,816,058 5,837,050
10/31/92 6,018,924 5,857,187
11/30/92 6,371,407 6,056,624
12/31/92 6,459,843 6,130,939
01/31/93 6,679,451 6,182,194
02/28/93 6,599,169 6,266,457
03/31/93 6,904,241 6,398,680
04/30/93 6,735,135 6,244,023
05/31/93 7,040,790 6,411,051
06/30/93 7,153,400 6,429,835
07/31/93 7,052,175 6,403,987
08/31/93 7,310,181 6,646,954
09/30/93 7,525,186 6,595,972
10/31/93 7,543,860 6,732,443
11/30/93 7,393,094 6,668,283
12/31/93 7,603,513 6,748,903
01/31/94 7,871,521 6,978,365
02/28/94 7,764,846 6,788,973
03/31/94 7,377,445 6,492,973
04/30/94 7,405,400 6,576,213
05/31/94 7,399,773 6,684,129
06/30/94 7,191,566 6,520,301
07/31/94 7,367,360 6,734,427
08/31/94 7,587,534 7,010,539
09/30/94 7,384,297 6,839,131
10/31/94 7,554,006 6,992,806
11/30/94 7,208,583 6,738,128
12/31/94 7,279,887 6,838,055
01/31/95 7,275,418 7,015,365
02/28/95 7,638,905 7,288,754
03/31/95 7,973,994 7,503,845
04/30/95 8,248,506 7,724,833
05/31/95 8,550,420 8,033,595
06/30/95 8,920,691 8,220,215
07/31/95 9,416,251 8,492,798
08/31/95 9,507,671 8,514,115
09/30/95 9,884,778 8,873,410
10/31/95 9,700,127 8,841,732
11/30/95 9,998,064 9,229,884
12/31/95 9,983,895 9,407,652
01/31/96 10,319,950 9,727,888
02/29/96 10,710,996 9,818,066
03/31/96 10,731,348 9,912,614
04/30/96 10,866,103 10,058,726
05/31/96 11,141,737 10,318,140
06/30/96 11,121,089 10,357,452
07/31/96 10,561,962 9,899,860
08/31/96 11,016,637 10,108,648
09/30/96 11,692,504 10,677,563
10/31/96 11,987,428 10,972,050
11/30/96 12,859,911 11,801,427
12/31/96 12,658,812 11,567,641
01/31/97 13,397,357 12,290,387
02/28/97 13,259,311 12,386,744
03/31/97 12,776,151 11,877,772
04/30/97 13,183,386 12,586,875
05/31/97 14,025,466 13,353,165
06/30/97 14,625,966 13,951,386
07/31/97 16,206,592 15,061,498
08/31/97 15,599,190 14,217,753
09/30/97 16,544,805 14,996,459
10/31/97 16,248,006 14,495,577
11/30/97 16,662,144 15,166,577
12/31/97 16,991,599 15,426,988
01/31/98 16,723,663 15,597,610
02/28/98 17,951,702 16,722,510
03/31/98 18,949,019 17,578,870
04/30/98 18,963,905 17,755,713
05/31/98 18,651,313 17,450,492
06/30/98 19,447,678 18,159,332
07/31/98 18,889,478 17,965,934
08/31/98 15,808,216 15,368,420
09/30/98 16,693,892 16,352,921
10/31/98 17,460,487 17,683,067
11/30/98 18,599,214 18,754,838
12/31/98 19,980,246 19,835,492
01/31/99 20,637,174 20,665,012
02/28/99 19,812,008 20,022,744
03/31/99 20,292,687 20,823,854
04/30/99 20,989,673 21,630,362
05/31/99 20,268,654 21,119,669
06/30/99 21,502,398 22,291,811
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 4/1/91, the first full month following the Fund's
Institutional Class inception on 3/8/91, compared to the S&P 500 Index, an
unmanaged market index. The performance of the Administrative Class (shown
above) reflects the payment of a service fee in an amount not to exceed 0.25% on
an annualized basis. The Administrative Class commenced operations on 7/31/96.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 1.9%
Telecommunications systems/software
- --------------------------------------------------------------------------------
Microsoft Corp. 1.9%
Computer software
- --------------------------------------------------------------------------------
Tyco International Limited 1.8%
Fire protection systems
- --------------------------------------------------------------------------------
Tellabs, Inc. 1.8%
Voice data communications equipment
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1.6%
Discount stores
- --------------------------------------------------------------------------------
Johnson Controls, Inc. 1.5%
Building Controls/auto products
- --------------------------------------------------------------------------------
Texas Instruments, Inc. 1.5%
Semiconductors/electrical equipment
- --------------------------------------------------------------------------------
Honeywell, Inc. 1.5%
Computers/industrial control systems
- --------------------------------------------------------------------------------
International Business Machines Corp. 1.5%
Manufacturer of business machines
- --------------------------------------------------------------------------------
AlliedSignal, Inc. 1.5%
Aerospace/automotive fibers
- --------------------------------------------------------------------------------
Top Ten Total 16.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 21.2%
- --------------------------------------------------------------------------------
Technology 16.1%
- --------------------------------------------------------------------------------
Consumer Discretionary 15.9%
- --------------------------------------------------------------------------------
Capital Goods 10.0%
- --------------------------------------------------------------------------------
Health Care 7.4%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96.3%
- --------------------------------------------------------------------------------
Cash Equivalents 3.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Capital Appreciation Fund Institutional Class shares posted a positive
return of 10.6% for the one-year period ended June 30, 1999.
The telecom sector contributed significantly to the Fund's performance this
year, benefiting from an increased demand from corporations for data
communications capabilities. One standout in particular was Tellabs, which
designs, manufactures, markets, and services voice, data and video transport and
network access systems used worldwide by public telephone companies,
long-distance carriers, and wireless service products. The company has benefited
from the explosion in the telecommunications infrastructure business, as demand
for Internet access continues to grow. The company also benefited from its
strong acquisition strategy, which has enabled it to grow larger and more
efficient.
Consumer cyclicals also contributed positively to the Fund's performance. A
strong domestic economy and tight labor market this year resulted in a high
level of consumer confidence. Companies such as Wal-Mart, Circuit City, The Gap,
Home Depot, Lowe's and TJX all benefited from this trend. In particular, The Gap
saw its stock price rise significantly during the year. The company continued
its expansion, currently operating over 2,000 stores selling casual apparel,
personal care and other accessories for all age groups. Its brands, which
include Gap, GapKids, babyGap, Banana Republic and Old Navy, all benefited from
strong branding. Same-store sales continued to grow, with the company realizing
strong growth in particular from its lower-end Old Navy division.
Tyco International, an international manufacturing conglomerate, also did
well for the Fund. The company benefited from a stronger global economy, which
created an increased demand for its products. It also continued to benefit from
its successful acquisition policy, which included purchases of ADT, AMP, Raychem
and Central Sprinkler.
One disappointment for the Fund this year was HealthSouth, a health
maintenance organization. Its lackluster performance was directly attributable
to the lack of pricing power in the HMO industry. The industry was plagued by an
inability to raise its fees high enough to meet anticipated price increases by
the medical profession. General uncertainty about profitability led the manager
to sell this holding.
PIMCO Capital Appreciation Fund was rewarded for its growth-at-a-reasonable
price investment philosophy in the second quarter of 1999, as interest rates
rose and investors shied away from the highest valuation growth stocks. In this
market environment, the manager is optimistic that the Fund's strong performance
will continue.
14 See page 57 for financial details.
<PAGE>
June 30, 1999
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
$1.0 billion
Number of Securities in the Portfolio
99 (not including short-term instruments)
PIMCO Advisors Institutional Manager
Cadence Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
Inst'l Class Admin. Class Russell 2000 S&P Mid-Cap Lipper Mid-Cap
(Incep. 8/26/91) (Incep. 11/30/94) Mid-Cap Index 400 Index Fund Average
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year 0.33% 0.31% 11.29% 17.17% 13.36%
3 years 18.23% 17.99% 19.60% 22.48% 16.58%
5 years 20.56% -- 20.92% 22.27% 19.67%
Inception 16.90% 21.84% -- -- --
</TABLE>
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO Russell 2000 S&P
Mid-Cap Mid-Cap Mid-Cap 400
Growth Index Index
Fund
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
08/31/91 5,000,000 5,000,000 5,000,001
09/30/91 4,974,950 4,970,800 4,983,726
10/31/91 5,157,144 5,072,701 5,178,963
11/30/91 5,011,661 4,862,945 5,004,443
12/31/91 5,665,299 5,407,887 5,595,983
01/31/92 5,671,673 5,509,555 5,694,981
02/29/92 5,727,031 5,636,110 5,785,594
03/31/92 5,555,924 5,492,107 5,567,703
04/30/92 5,519,126 5,535,055 5,501,202
05/31/92 5,524,162 5,570,812 5,553,288
06/30/92 5,378,127 5,480,453 5,394,741
07/31/92 5,525,925 5,709,591 5,662,558
08/31/92 5,364,436 5,578,099 5,527,115
09/30/92 5,541,064 5,693,789 5,604,467
10/31/92 5,722,284 5,833,116 5,738,605
11/30/92 6,066,939 6,127,047 6,059,312
12/31/92 6,185,404 6,291,558 6,262,638
01/31/93 6,414,599 6,417,263 6,340,946
02/28/93 6,216,680 6,424,579 6,252,243
03/31/93 6,470,422 6,633,570 6,468,102
04/30/93 6,293,134 6,457,781 6,298,857
05/31/93 6,562,549 6,662,815 6,585,789
06/30/93 6,765,881 6,738,172 6,618,817
07/31/93 6,682,647 6,770,650 6,606,109
08/31/93 7,013,472 7,071,740 6,878,849
09/30/93 7,201,787 7,098,825 6,951,558
10/31/93 7,128,883 7,104,717 6,974,262
11/30/93 6,929,867 6,939,959 6,819,984
12/31/93 7,160,996 7,191,324 7,136,602
01/31/94 7,309,331 7,389,733 7,302,606
02/28/94 7,299,101 7,289,232 7,198,982
03/31/94 7,033,122 6,978,711 6,865,540
04/30/94 7,058,599 7,026,585 6,916,620
05/31/94 6,930,633 7,036,141 6,851,147
06/30/94 6,700,295 6,827,801 6,615,200
07/31/94 6,851,806 7,062,131 6,839,197
08/31/94 7,210,540 7,396,947 7,197,380
09/30/94 7,026,048 7,216,165 7,063,070
10/31/94 7,167,804 7,271,369 7,140,297
11/30/94 6,829,168 6,950,556 6,818,234
12/31/94 6,991,678 7,040,844 6,880,819
01/31/95 6,924,894 7,185,463 6,952,448
02/28/95 7,346,142 7,557,383 7,317,236
03/31/95 7,582,451 7,773,675 7,444,212
04/30/95 7,753,580 7,890,902 7,593,669
05/31/95 8,020,945 8,150,197 7,776,852
06/30/95 8,493,975 8,424,125 8,093,439
07/31/95 9,295,489 8,833,116 8,515,658
08/31/95 9,367,547 8,968,440 8,673,147
09/30/95 9,501,369 9,171,037 8,883,375
10/31/95 9,355,709 8,965,881 8,654,806
11/30/95 9,536,022 9,411,754 9,032,804
12/31/95 9,599,034 9,466,624 9,010,331
01/31/96 9,789,114 9,666,181 9,141,053
02/29/96 10,026,714 9,893,143 9,451,739
03/31/96 10,152,383 10,036,296 9,565,008
04/30/96 10,364,554 10,320,625 9,857,133
05/31/96 10,539,595 10,476,466 9,990,441
06/30/96 10,325,462 10,319,110 9,840,535
07/31/96 9,831,497 9,680,460 9,174,783
08/31/96 10,367,953 10,141,443 9,703,920
09/30/96 11,095,622 10,642,329 10,127,011
10/31/96 11,169,983 10,727,681 10,156,481
11/30/96 11,849,848 11,381,211 10,728,595
12/31/96 11,841,245 11,265,123 10,740,504
01/31/97 12,326,596 11,686,551 11,143,703
02/28/97 12,120,488 11,668,787 11,052,101
03/31/97 11,774,758 11,172,864 10,580,950
04/30/97 12,027,407 11,450,845 10,855,103
05/31/97 12,858,488 12,286,299 11,804,273
06/30/97 13,483,461 12,688,306 12,135,973
07/31/97 14,733,407 13,746,765 13,337,556
08/31/97 14,713,461 13,596,925 13,321,551
09/30/97 15,750,651 14,373,309 14,087,540
10/31/97 15,418,218 13,814,188 13,474,732
11/30/97 15,524,596 14,142,965 13,674,158
12/31/97 15,887,569 14,533,311 14,204,715
01/31/98 15,605,123 14,260,085 13,934,826
02/28/98 16,523,072 15,375,224 15,088,629
03/31/98 17,031,474 16,104,009 15,769,126
04/30/98 17,278,614 16,144,269 16,057,701
05/31/98 16,692,539 15,645,411 15,335,105
06/30/98 17,010,291 15,862,100 15,431,716
07/31/98 16,523,072 15,105,478 14,832,965
08/31/98 13,578,576 12,688,602 12,072,550
09/30/98 14,560,074 13,509,554 13,198,919
10/31/98 14,962,560 14,430,906 14,378,903
11/30/98 15,788,713 15,113,487 15,096,410
12/31/98 17,147,689 15,999,138 16,920,056
01/31/99 16,406,007 15,971,939 16,261,866
02/28/99 15,523,405 15,440,074 15,409,744
03/31/99 15,597,573 15,923,348 15,841,217
04/30/99 16,398,590 17,100,083 17,089,505
05/31/99 16,361,506 17,050,493 17,164,699
06/30/99 17,066,104 17,652,376 18,081,294
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 9/1/91, the first full month following the Fund's
Institutional Class inception on 8/26/91, compared to the Russell 2000 Mid-Cap
Index, an unmanaged market index. The performance of the Administrative Class
(shown above) reflects the payment of a service fee in an amount not to exceed
0.25% on an annualized basis. The Administrative Class commenced operations on
11/30/94.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Best Buy Co., Inc. 1.4%
Electronics supply store
- --------------------------------------------------------------------------------
Waters Corp. 1.4%
Liquid Chromatography
- --------------------------------------------------------------------------------
Premark International, Inc. 1.4%
Commercial food equipment products
- --------------------------------------------------------------------------------
Hertz Corp. 1.4%
Auto/construction equip. rental service
- --------------------------------------------------------------------------------
General Dynamics Corp. 1.4%
Aerospace/defense equip.
- --------------------------------------------------------------------------------
VERITAS Software Corp. 1.4%
Storage mgmt. software
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 1.4%
Multi-user application server systems
- --------------------------------------------------------------------------------
Food Lion, Inc. 1.4%
Food supermarket chain
- --------------------------------------------------------------------------------
Bed, Bath & Beyond, Inc. 1.3%
Domestic/home products superstores
- --------------------------------------------------------------------------------
Southdown, Inc. 1.3%
Cement/concrete/environmental services
- --------------------------------------------------------------------------------
Top Ten Total 13.8%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 21.9%
- --------------------------------------------------------------------------------
Financial & Business Services 20.9%
- --------------------------------------------------------------------------------
Technology 17.1%
- --------------------------------------------------------------------------------
Capital Goods 7.2%
- --------------------------------------------------------------------------------
Health Care 6.4%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96.4%
- --------------------------------------------------------------------------------
Cash Equivalents 3.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Mid-Cap Growth Fund Institutional Class shares returned 0.3% for the
one-year period ended June 30, 1999. It is important to note that, for the
three-month period ended June 30, 1999, the Fund's Institutional Class returned
9.4%.
The Fund's lackluster performance for this one-year period can be
attributed to the fact that, for much of the year, the market was extremely
narrow and dominated by the largest of the large-cap growth stocks. As a result,
mid-cap growth-at-a-reasonable-price stocks were overlooked by investors.
However, in the second quarter of 1999, the market rotated away from these
large-cap high valuation issues and towards smaller-capitalization and lower
valuation issues, which resulted in strong performance by the Fund in the second
quarter.
The technology sector positively impacted the Fund this year. This sector
benefited from investor enthusiasm for stocks with the greatest growth
potential. Fund holding Citrix Systems, a computer company, benefited from
corporations' increased demand for networking capabilities. The company saw a
rise in sales of its software, which links computers to networks and provides
systems solutions for different networks. In addition, Fund holding Comdisco saw
a large uptick in its stock price as a result of the sale of one of its units to
IBM.
Another strong sector for the Fund was consumer cyclicals. A growing
domestic economy, tight labor market and low inflation combined to fuel investor
confidence, which resulted in an increase in consumer spending. The Funds'
holding of Harley Davidson benefited from this increase as demand for its
high-end motorcycles skyrocketed.
Other beneficiaries of the strong economy included holdings Abercrombie &
Fitch and Tommy Hilfiger. The growing clout and spending power of the American
teenager contributed to these companies' sales growth. Demographics also helped,
as there are more young people to purchase their goods. Both companies also
benefited from strong branding and high earnings-per-share growth.
One disappointment for the Fund this year was Jones Apparel. The women's
apparel and shoe maker suffered from execution problems related to its line of
shoes. It also lost market share in the past year by missing fashion trends. The
manager removed this holding from the Fund.
Despite disappointing performance for the one-year period, the Fund showed
strong performance in the second quarter of 1999, as the market broadened and
medium-capitalization and lower valuation stocks became more attractive to
investors. The manager is optimistic that, as this market environment continues,
the Fund's strong performance will continue as well.
See page 58 for financial details. 15
<PAGE>
June 30, 1999
PIMCO Small-Cap Growth
Objective
Growth of capital
Portfolio
Common stocks of companies with market capitalizations between $50
million and $1 billion that have improving fundamentals and whose stock is
reasonably valued by the market
Total Net Assets
$68.6 million
Number of Securities in the Portfolio
105 (not including short-term instruments)
PIMCO Advisors Institutional Manager
Cadence Capital Management
- --------------------------------------------------------------------------------
Performance*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
Inst'l Class Admin. Class Russell 2000 Lipper Small-Cap
(Incep. 1/17/91) (Incep. 9/27/95) Index Fund Average
- --------------------------------------------------------------------------------
1 year -14.99% -15.26% 1.50% 1.93%
3 years 7.60% 7.45% 11.21% 10.45%
5 years 11.38% -- 15.39% 16.52%
Inception 16.98% 6.70% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO Russell 2000
Small-Cap Index
Growth
Fund
- -------------------------------------------------------
<S> <C> <C>
01/31/91 5,000,000 5,000,000
02/28/91 5,463,287 5,560,750
03/31/91 5,843,531 5,950,725
04/30/91 5,766,171 5,935,373
05/31/91 6,033,043 6,218,074
06/30/91 5,766,171 5,858,483
07/31/91 6,099,236 6,063,471
08/31/91 6,374,882 6,287,092
09/30/91 6,383,633 6,336,132
10/31/91 6,581,876 6,503,659
11/30/91 6,263,398 6,202,670
12/31/91 6,995,446 6,699,007
01/31/92 7,323,081 7,242,297
02/29/92 7,544,456 7,453,699
03/31/92 7,247,813 7,201,466
04/30/92 7,066,286 6,948,623
05/31/92 7,030,866 7,041,039
06/30/92 6,694,376 6,710,181
07/31/92 6,951,171 6,943,427
08/31/92 6,712,086 6,747,067
09/30/92 6,955,598 6,902,452
10/31/92 7,249,837 7,120,293
11/30/92 7,809,634 7,665,565
12/31/92 8,162,949 7,932,403
01/31/93 8,548,383 8,200,677
02/28/93 8,456,613 8,011,570
03/31/93 9,066,884 8,271,465
04/30/93 8,644,742 8,044,082
05/31/93 9,154,066 8,399,872
06/30/93 9,374,314 8,452,035
07/31/93 9,374,314 8,568,758
08/31/93 9,934,112 8,938,757
09/30/93 10,250,718 9,191,009
10/31/93 10,066,641 9,427,677
11/30/93 9,599,036 9,120,523
12/31/93 10,158,807 9,432,172
01/31/94 10,348,945 9,727,682
02/28/94 10,609,706 9,692,370
03/31/94 9,979,534 9,181,873
04/30/94 10,202,267 9,236,321
05/31/94 9,887,181 9,132,413
06/30/94 9,631,853 8,824,285
07/31/94 9,903,478 8,969,356
08/31/94 10,354,377 9,468,950
09/30/94 10,316,350 9,436,850
10/31/94 10,528,218 9,398,725
11/30/94 9,898,046 9,018,923
12/31/94 10,214,126 9,260,359
01/31/95 9,843,666 9,143,401
02/28/95 10,372,895 9,524,041
03/31/95 10,437,578 9,687,283
04/30/95 10,502,262 9,902,534
05/31/95 10,766,877 10,072,759
06/30/95 11,296,106 10,595,333
07/31/95 12,824,991 11,205,624
08/31/95 12,836,751 11,437,469
09/30/95 13,160,169 11,641,742
10/31/95 12,360,445 11,121,123
11/30/95 12,383,966 11,588,322
12/31/95 12,445,286 11,894,022
01/31/96 12,400,748 11,881,176
02/29/96 12,807,956 12,251,512
03/31/96 13,037,010 12,500,831
04/30/96 13,787,799 13,169,250
05/31/96 14,144,106 13,688,250
06/30/96 13,253,339 13,126,211
07/31/96 12,318,034 11,979,767
08/31/96 13,132,449 12,675,313
09/30/96 13,717,811 13,170,664
10/31/96 13,533,295 12,967,704
11/30/96 14,214,095 13,501,973
12/31/96 14,540,393 13,855,860
01/31/97 14,856,225 14,132,700
02/28/97 14,005,909 13,789,982
03/31/97 13,738,667 13,139,233
04/30/97 13,787,257 13,175,891
05/31/97 15,342,119 14,641,709
06/30/97 16,277,466 15,269,253
07/31/97 17,309,992 15,979,731
08/31/97 17,686,560 16,345,667
09/30/97 18,877,002 17,542,170
10/31/97 18,233,192 16,772,069
11/30/97 17,953,802 16,663,050
12/31/97 18,425,982 16,954,654
01/31/98 17,857,536 16,686,770
02/28/98 19,368,772 17,921,591
03/31/98 20,380,883 18,659,961
04/30/98 20,699,768 18,763,150
05/31/98 19,493,552 17,751,816
06/30/98 19,424,230 17,789,095
07/31/98 18,231,879 16,348,179
08/31/98 14,294,347 13,173,362
09/30/98 14,599,368 14,204,837
10/31/98 14,627,097 14,784,394
11/30/98 15,971,958 15,559,096
12/31/98 16,859,127 16,522,204
01/31/99 15,730,361 16,741,950
02/28/99 14,456,882 15,385,852
03/31/99 14,225,341 15,625,871
04/30/99 15,267,278 17,025,949
05/31/99 15,542,234 17,274,528
06/30/99 16,511,815 18,055,336
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 2/1/91, the first full month following the Fund's
Institutional Class inception on 1/17/91, compared to the Russell 2000 Index, an
unmanaged market index. The performance of the Administrative Class (shown
above) reflects the payment of a service fee in an amount not to exceed 0.25% on
an annualized basis. The Administrative Class commenced operations on 9/27/95.
The Fund may invest in stocks of small and intermediate sized companies which
may have less liquidity than those of larger companies and may be subject to
greater price volatility than the overall stock market.
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
Ames Department Stores, Inc. 2.0%
Discount department stores
- -------------------------------------------------------
American Eagle Outfitters 1.9%
Retail casual apparel/footwear
- -------------------------------------------------------
Hooper Holmes, Inc. 1.8%
Health care/info. services
- -------------------------------------------------------
Manitowoc Co., Inc. 1.8%
Mfr. heavy-lift cranes
- --------------------------------------------------------
Ethan Allen Interiors 1.7%
Mfr. retail home furniture
- --------------------------------------------------------
AVT Corp. 1.7%
Software computer-telephony solutions
- --------------------------------------------------------
Foodmaker, Inc. 1.6%
Operates food chain
- --------------------------------------------------------
CEC Entertainment, Inc. 1.6%
Family rest./entertainment ctrs.
- --------------------------------------------------------
Lone Star Industries, Inc. 1.5%
Cement, concrete, sand, gravel
- --------------------------------------------------------
Westamerica BanCorp 1.4%
Commercial banking
- --------------------------------------------------------
Top Ten Total 17.0%
- --------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------
Financial & Business Services 23.2%
- --------------------------------------------------------
Consumer Discretionary 19.3%
- --------------------------------------------------------
Capital Goods 13.2%
- --------------------------------------------------------
Technology 10.4%
- --------------------------------------------------------
Consumer Services 6.5%
- --------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------
Common Stock 97.8%
- --------------------------------------------------------
Cash Equivalents 2.2%
- --------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Small-Cap Growth Fund Institutional Class shares posted a return of -15.0%
for the one-year period ended June 30, 1999.
For much of the year, the Fund's performance suffered because the market was
dominated by the largest of the large-cap growth stocks. However, in the second
quarter of 1999, the market broadened and small-cap stocks were strongly bid up
as demand for these issues increased. The downward pressure on Internet stocks
combined with a re-emergence of deep cyclicals and more attention to
fundamentals contributed to profound recovery in small-cap psychology and
attendant price levels in the second quarter.
The consumer discretionary sector continued to add value to the Fund this
year. Fossil, which designs, develops, markets and distributes fashion watches
and accessories, boosted the Fund's performance. The company benefited from
increased revenues, which resulted from higher sales as well as higher profit
margins due to the increased production level.
Consumer cyclical stocks also positively contributed to the Fund's
performance during this period. This sector benefited from a strong domestic
economy. One of the sector's standouts was Ames Department Stores, the
nationwide off-price retailing chain. The company benefited from higher revenues
resulting from its acquisition of Hills Store Co. and Caldor sites as well as an
increase in the number of stores in operation. Another strong performer in this
sector was American Eagle Outfitters, a specialty retailer of men's and women's
casual apparel. The company benefited from demographic trends, as
fashion-conscious teenagers with greater purchasing power continued to boost the
company's sales.
The transportation sector also aided the Fund's performance. In particular,
Fund holding Monaco Coach, a recreational motor home manufacturer, posted strong
returns this year. The company benefited from a strong domestic economy, which
resulted in greater demand for its motor homes. The company was also helped by
an increased profit margin as a result of improved
efficiencies.
The financial services sector turned in mixed results for the Fund this year.
For instance, banks were hurt by rising interest rates in the second quarter of
1999. However, on the positive side, Fund holding Metris, a specialty credit
card issuer, performed well. The company benefited from a strong domestic
economy which resulted in growth in both average managed loans and total credit
card accounts.
Despite disappointing performance for the much of the year, the Fund
performed well in the second quarter as the market broadened. The manager is
optimistic that the Fund will continue this strong performance as the market
continues to broaden.
16 See page 59 for financial details.
<PAGE>
June 30, 1999
PIMCO Micro-Cap Growth Fund
Objective
Long-term growth of capital
Portfolio
Common stocks of companies with market capitaliza-tions less than $100 million
that have improving fundamentals and whose stock is reasonably valued by the
market
Total Net Assets
$237.4 million
Number of Securities in the Portfolio
72 (not including short-term instruments)
PIMCO Advisors Institutional Manager
Cadence Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
Inst'l Class Admin. Class Russell 2000 Lipper Micro-Cap
(Incep. 6/25/93) (Incep. 4/1/96) Index Fund Average
- --------------------------------------------------------------------------------
1 year -12.66% -12.91% 1.50% 18.32%
3 years 11.99% 11.71% 11.21% 12.80%
5 years 19.33% -- 15.39% 14.55%
Inception 17.60% 14.19% -- --
Change in Value
$5,000,000 invested at the Fund's inception
<TABLE>
<CAPTION>
MONTH PIMCO Russell 2000
Micro-Cap Index
Growth
Fund
- --------------------------------------------------------
<S> <C> <C>
06/30/93 5,000,000 5,000,000
07/31/93 5,021,687 5,069,050
08/31/93 5,277,282 5,287,932
09/30/93 5,442,666 5,437,157
10/31/93 5,547,911 5,577,164
11/30/93 5,517,841 5,395,460
12/31/93 5,893,716 5,579,823
01/31/94 6,099,194 5,754,639
02/28/94 6,084,159 5,733,749
03/31/94 5,763,413 5,431,753
04/30/94 5,903,739 5,463,963
05/31/94 5,723,320 5,402,493
06/30/94 5,487,771 5,220,213
07/31/94 5,482,760 5,306,033
08/31/94 5,808,518 5,601,580
09/30/94 5,958,868 5,582,590
10/31/94 5,953,856 5,560,037
11/30/94 5,838,588 5,335,355
12/31/94 5,953,856 5,478,183
01/31/95 5,803,506 5,408,993
02/28/95 6,003,973 5,634,170
03/31/95 6,124,253 5,730,740
04/30/95 6,389,871 5,858,077
05/31/95 6,455,022 5,958,777
06/30/95 6,941,154 6,267,918
07/31/95 7,472,390 6,628,950
08/31/95 7,602,693 6,766,103
09/30/95 7,813,183 6,886,946
10/31/95 7,707,938 6,578,962
11/30/95 7,923,440 6,855,344
12/31/95 8,111,989 7,036,188
01/31/96 7,666,725 7,028,589
02/29/96 8,040,337 7,247,670
03/31/96 8,444,657 7,395,160
04/30/96 9,355,656 7,790,579
05/31/96 9,729,268 8,097,606
06/30/96 9,452,898 7,765,118
07/31/96 8,736,381 7,086,913
08/31/96 9,268,651 7,498,379
09/30/96 9,601,319 7,791,416
10/31/96 9,350,538 7,671,350
11/30/96 9,780,448 7,987,410
12/31/96 10,044,807 8,196,760
01/31/97 10,387,828 8,360,531
02/28/97 10,073,392 8,157,788
03/31/97 9,581,728 7,772,822
04/30/97 9,324,462 7,794,508
05/31/97 10,444,998 8,661,647
06/30/97 11,348,288 9,032,885
07/31/97 11,977,160 9,453,185
08/31/97 12,520,277 9,669,663
09/30/97 13,800,890 10,377,483
10/31/97 13,292,075 9,921,911
11/30/97 13,349,245 9,857,419
12/31/97 13,730,013 10,029,924
01/31/98 13,453,742 9,871,451
02/28/98 14,488,151 10,601,938
03/31/98 15,561,110 11,038,738
04/30/98 15,708,883 11,099,782
05/31/98 15,137,066 10,501,504
06/30/98 15,201,315 10,523,557
07/31/98 14,237,580 9,671,149
08/31/98 11,635,495 7,793,012
09/30/98 12,053,114 8,403,205
10/31/98 12,001,715 8,746,055
11/30/98 12,522,132 9,204,349
12/31/98 13,197,781 9,774,098
01/31/99 13,304,000 9,904,093
02/28/99 12,374,579 9,101,862
03/31/99 11,405,325 9,243,851
04/30/99 12,500,715 10,072,100
05/31/99 13,025,174 10,219,153
06/30/99 13,277,445 10,681,058
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 7/1/93, the first full month following the Fund's
Institutional Class inception on 6/25/93, compared to the Russell 2000 Index, an
unmanaged market index. The performance of the Administrative Class (shown
above) reflects the payment of a service fee in an amount not to exceed 0.25% on
an annualized basis. The Administrative Class commenced operations on 4/1/96.
The Fund may invest in stocks of small and intermediate sized companies which
may have less liquidity than those of larger companies and may be subject to
greater price volatility than the overall stock market.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
K-Swiss, Inc. 2.8%
Athletic footwear
- -------------------------------------------------------
Dover Downs Entertainment, Inc. 2.4%
Gaming/motorsports
- -------------------------------------------------------
Crossmann Communities, Inc. 2.3%
dvlp/constr/marketing/sales new homes
- -------------------------------------------------------
Astec Industries, Inc. 2.3%
Asphalt mix/paving equip.
- -------------------------------------------------------
Premier National Bancorp, Inc. 2.3%
General banking
- -------------------------------------------------------
Shoe Carnival, Inc. 2.3%
Discount stores
- -------------------------------------------------------
Morton's Restaurant Group, Inc. 2.2%
Own/operate full svc. restaurants
- -------------------------------------------------------
Movado Group, Inc. 2.1%
Mfr/dstr. quality watches
- -------------------------------------------------------
Taco Cabana, Inc. 2.1%
Operate/franchise restaurants
- -------------------------------------------------------
Community First Bankshares, Inc. 2.0%
General banking
- -------------------------------------------------------
Top Ten Total 22.8%
- -------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------
Consumer Discretionary 26.6%
- --------------------------------------------------------
Financial & Business Services 14.8%
- --------------------------------------------------------
Capital Goods 11.2%
- --------------------------------------------------------
Technology 9.6%
- --------------------------------------------------------
Consumer Services 8.3%
- --------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------
Common Stock 94.7%
- --------------------------------------------------------
Cash Equivalents 5.3%
- --------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Micro-Cap Growth Fund
returned -12.7% for Institutional Class shares. For the three- and five-year
periods, the Fund outperformed its benchmark index, the Russell 2000.
For much of the year, the Fund's performance suffered because the market was
dominated by the largest of the large-cap growth stocks. It was not until the
broadening of the equity market in the second quarter of 1999, in which the Fund
returned 16.6%, approximately 1 percentage point ahead of the Russell 2000, that
the Fund turned in a strong performance.
The consumer discretionary sector contributed positively to the Fund's
performance this year. These stocks benefited from a healthy domestic economy,
which boosted consumer confidence. K-Swiss, the shoe retailer, saw its earnings
rise, driven by both volume and price increases. In addition, the company has
continued its successful strategy of carving out a niche in the very competi
tive shoe apparel market, which has improved sales. Shoe Carnival, a regional
footwear and apparel store, benefited from increased revenues, resulting from
the opening of new stores, increased comparable store sales and improved profit
margins.
The consumer staples sector was another strong performer for the Fund this
year. For instance, Pilgrims Pride, one of the largest chicken producers in the
U.S. and Mexico, benefited from heightened demand for prepared chicken products
as well as stable feed prices and a recent increase in chicken prices. Hain
Foods, which sells natural and organic foods, benefited from mergers and
acquisitions that have increased its growth, leveraging economies in production
and logistics and developing export opportunities.
Financial and business services also contributed to the Fund's performance
this year. Business services stocks benefited from a booming domestic economy
and a growing trend towards corporate outsourcing. However, the manager trimmed
the Fund's position in financial services in the second quarter, particularly
banks, because of the current interest rate climate.
One disappointment for the Fund this year was Zonagen, a company that
develops pharmaceutical products for the reproductive system. It was hurt by the
announcement that its marketing partner, Schering-Plough, was delaying the FDA
review of Zonagen's Vasomex drug. The manager liquidated this holding because of
the product delay.
Despite disappointing performance for the 12-month period, the Fund showed
strong performance in the second quarter of 1999, as the market broadened and
smaller-capitalization and lower valuation stocks became more attractive to
investors. Looking ahead, the manager is optimistic that, as this market
environment continues, the Fund's strong performance will continue as well.
See page 61 for financial details. 17
<PAGE>
June 30, 1999
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
$202.0 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 6/30/99
Inst'l Class Admin. Class S&P 500 Lipper Equity
(Incep. 3/8/91) (Incep. 11/30/94) Index Income Fund Average
- --------------------------------------------------------------------------------
1 year 12.56% 12.31% 22.76% 11.36%
3 years 20.53% 20.27% 29.11% 19.48%
5 years 21.01% -- 27.87% 19.19%
Inception 16.88% 22.54% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO S&P 500
Equity Income Index
Fund
- ------------------------------------------------------
<S> <C> <C>
03/31/91 5,000,000 5,000,000
04/30/91 5,034,636 5,012,000
05/31/91 5,319,615 5,228,518
06/30/91 5,134,629 4,989,052
07/31/91 5,421,923 5,221,542
08/31/91 5,502,697 5,345,293
09/30/91 5,532,987 5,256,026
10/31/91 5,571,975 5,326,457
11/30/91 5,349,510 5,111,801
12/31/91 5,820,738 5,696,591
01/31/92 5,965,177 5,590,634
02/29/92 6,116,657 5,663,312
03/31/92 6,017,412 5,552,878
04/30/92 6,125,605 5,716,132
05/31/92 6,136,148 5,744,142
06/30/92 6,141,420 5,658,669
07/31/92 6,416,503 5,889,825
08/31/92 6,230,286 5,769,261
09/30/92 6,283,491 5,837,050
10/31/92 6,291,695 5,857,187
11/30/92 6,481,829 6,056,624
12/31/92 6,678,968 6,130,939
01/31/93 6,713,379 6,182,194
02/28/93 6,852,877 6,266,457
03/31/93 7,009,814 6,398,680
04/30/93 6,872,708 6,244,023
05/31/93 6,925,440 6,411,051
06/30/93 7,048,480 6,429,835
07/31/93 7,037,196 6,403,987
08/31/93 7,285,359 6,646,954
09/30/93 7,279,450 6,595,972
10/31/93 7,338,489 6,732,443
11/30/93 7,264,797 6,668,283
12/31/93 7,244,360 6,748,903
01/31/94 7,485,093 6,978,365
02/28/94 7,323,454 6,788,973
03/31/94 7,031,262 6,492,973
04/30/94 7,086,480 6,576,213
05/31/94 7,130,340 6,684,129
06/30/94 7,030,089 6,520,301
07/31/94 7,261,756 6,734,427
08/31/94 7,559,317 7,010,539
09/30/94 7,420,033 6,839,131
10/31/94 7,508,099 6,992,806
11/30/94 7,105,537 6,738,128
12/31/94 7,128,119 6,838,055
01/31/95 7,360,723 7,015,365
02/28/95 7,600,312 7,288,754
03/31/95 7,819,936 7,503,845
04/30/95 8,022,855 7,724,833
05/31/95 8,318,505 8,033,595
06/30/95 8,345,382 8,220,215
07/31/95 8,637,759 8,492,798
08/31/95 8,759,800 8,514,115
09/30/95 8,990,321 8,873,410
10/31/95 8,955,485 8,841,732
11/30/95 9,263,351 9,229,884
12/31/95 9,513,516 9,407,652
01/31/96 9,656,255 9,727,888
02/29/96 9,784,719 9,818,066
03/31/96 9,980,549 9,912,614
04/30/96 10,232,220 10,058,726
05/31/96 10,397,604 10,318,140
06/30/96 10,419,988 10,357,452
07/31/96 9,941,075 9,899,860
08/31/96 10,282,119 10,108,648
09/30/96 10,636,733 10,677,563
10/31/96 10,878,310 10,972,050
11/30/96 11,698,210 11,801,427
12/31/96 11,556,478 11,567,641
01/31/97 11,812,152 12,290,387
02/28/97 12,153,051 12,386,744
03/31/97 11,746,786 11,877,772
04/30/97 12,175,500 12,586,875
05/31/97 12,938,613 13,353,165
06/30/97 13,303,510 13,951,386
07/31/97 14,149,548 15,061,498
08/31/97 13,830,125 14,217,753
09/30/97 14,693,065 14,996,459
10/31/97 14,241,238 14,495,577
11/30/97 14,832,089 15,166,577
12/31/97 15,183,146 15,426,988
01/31/98 15,242,961 15,597,610
02/28/98 16,140,192 16,722,510
03/31/98 16,902,461 17,578,870
04/30/98 16,662,284 17,755,713
05/31/98 16,552,203 17,450,492
06/30/98 16,209,160 18,159,332
07/31/98 15,574,494 17,965,934
08/31/98 13,448,868 15,368,420
09/30/98 14,436,778 16,352,921
10/31/98 15,349,856 17,683,067
11/30/98 16,404,968 18,754,838
12/31/98 16,454,558 19,835,492
01/31/99 16,098,100 20,665,012
02/28/99 15,580,661 20,022,744
03/31/99 15,719,974 20,823,854
04/30/99 17,480,796 21,630,362
05/31/99 17,863,080 21,119,669
06/30/99 18,245,156 22,291,811
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 4/1/91, the first full month following the Fund's
Institutional Class inception on 3/8/91, compared to the S&P 500 Index, an
unmanaged market index. The performance of the Administrative Class (shown
above) reflects the payment of a service fee in an amount not to exceed 0.25% on
an annualized basis. The Administrative Class commenced operations on 11/30/94.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
USX-U.S. Steel Group, Inc. 4.1%
Integrated steel producer
- -------------------------------------------------------
Union Planters Corp. 4.0%
Commercial banking
- -------------------------------------------------------
Harris Corp. 3.9%
Govt. systems/communications
- -------------------------------------------------------
B.F. Goodrich Co. 2.2%
Aerospace/special chemicals
- -------------------------------------------------------
Whirlpool Corp. 2.2%
Major household appliances
- -------------------------------------------------------
Bell Atlantic Corp. 2.2%
Telephone services
- -------------------------------------------------------
Hubbell, Inc. 2.2%
Electric wiring devices
- -------------------------------------------------------
Springs Industries, Inc. 2.2%
Finished fabrics/home furnishing
- -------------------------------------------------------
GTE Corp. 2.2%
Largest independent telephone system
- -------------------------------------------------------
Repsol 2.1%
Integrated oil company
- -------------------------------------------------------
Top Ten Total 27.3%
- -------------------------------------------------------
Top 5 Industries % of Total Investments
- -------------------------------------------------------
Financial & Business Services 19.8%
- -------------------------------------------------------
Consumer Discretionary 15.7%
- -------------------------------------------------------
Utilities 11.5%
- -------------------------------------------------------
Energy 10.3%
- -------------------------------------------------------
Materials & Processing 9.9%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stock 100.0%
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Equity Income Fund Institutional Class shares returned 12.6% for the
one-year period ended June 30, 1999, outperforming the Lipper Equity Income Fund
Average, which returned 11.4% for the same period.
For much of the year, the market was extremely narrow, with the largest of
the large-cap growth stocks completely dominating the market, which hurt the
performance of the Fund. However, in the second quarter of 1999, the market
rotated away from these stocks and towards lower valuation issues. As a result,
PIMCO Equity Income Fund saw strong performance in that quarter.
One of the best performing sectors for the Fund this period was technology.
The sector received attention from investors seeking stocks with the greatest
growth expectations. Technology also benefited from an improving global economy,
which caused increased demand for items like PCs and semiconductors.
Another sector that contributed to the Fund's performance was
telecommunications. The sector benefited from increased demand from corporations
for data communications capabilities. One standout in this sector was GTE. GTE
provides inter-networking services ranging from dial-up Internet access for
consumers to Web-based applications for Fortune 500 companies. The company
benefited from increased revenues, new product development, and the sale of some
of its business units.
Bell Atlantic also turned in a strong performance this year. The
telecommunications company is still benefiting from economies of scale resulting
from its merger with NYNEX two years ago. The company also experienced higher
usage of its network facilities and an increase in access lines in service. As
the demand for telecommunications capabilities widens, the manager is optimistic
that this company will continue to see strong earnings growth.
One disappointment for the Fund during this period was J.C. Penney. The
department store chain was plagued by disappointing earnings throughout the
year. In addition, the company's management was not able to offer a strategy for
the company's turnaround that was satisfactory to Wall Street. However, the
manager remains optimistic about the company because it owns the Eckerd Drug
chain, which offers strong earnings and growth potential. In addition, the
company's valuations are extremely low, which makes it relatively attractive to
investors.
A broadening of the market in the second quarter of 1999 has been beneficial
to the Fund's performance, and the manager believes that the Fund is poised to
continue its second quarter outperformance in this environment.
18 See page 62 for financial details.
<PAGE>
June 30, 1999
PIMCO Value Fund
Objective
Long-term growth of capital and income
Portfolio
Primarily common stocks having below average price-to-earnings ratios relative
to their industry groups
Total Net Assets
$231.6 million
Number of Securities in the Portfolio
41 (not including short-term instruments)
PIMCO Advisors Institutional Manager
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
Inst'l Class Admin. Class S&P 500 Lipper Growth and
(Incep. 12/30/91) (Incep. 8/21/97) Index Income Fund Average
- --------------------------------------------------------------------------------
1 year 12.30% 11.91% 22.76% 14.49%
3 years 19.20% -- 29.11% 16.57%
5 years 21.23% -- 27.87% 21.72%
Inception 17.08% 13.31% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO S&P 500
Value Fund Index
- --------------------------------------------------------
<S> <C> <C>
12/31/91 5,000,000 5,000,000
01/31/92 5,144,543 4,907,000
02/29/92 5,318,513 4,970,791
03/31/92 5,199,220 4,873,861
04/30/92 5,222,775 5,017,152
05/31/92 5,177,665 5,041,736
06/30/92 5,067,395 4,966,715
07/31/92 5,247,250 5,169,606
08/31/92 5,095,741 5,063,784
09/30/92 5,166,445 5,123,283
10/31/92 5,199,464 5,140,958
11/30/92 5,478,838 5,316,008
12/31/92 5,657,265 5,381,235
01/31/93 5,776,676 5,426,222
02/28/93 5,839,127 5,500,182
03/31/93 6,021,274 5,616,236
04/30/93 5,916,309 5,480,491
05/31/93 6,000,080 5,627,094
06/30/93 6,041,965 5,643,582
07/31/93 6,013,326 5,620,895
08/31/93 6,340,080 5,834,151
09/30/93 6,355,890 5,789,403
10/31/93 6,576,391 5,909,186
11/30/93 6,510,186 5,852,872
12/31/93 6,585,324 5,923,633
01/31/94 6,890,617 6,125,037
02/28/94 6,778,756 5,958,803
03/31/94 6,415,209 5,698,999
04/30/94 6,337,376 5,772,060
05/31/94 6,337,376 5,866,780
06/30/94 6,191,689 5,722,985
07/31/94 6,450,687 5,910,928
08/31/94 6,722,772 6,153,276
09/30/94 6,518,708 6,002,828
10/31/94 6,588,249 6,137,712
11/30/94 6,257,410 5,914,176
12/31/94 6,317,178 6,001,883
01/31/95 6,489,231 6,157,512
02/28/95 6,779,505 6,397,470
03/31/95 6,966,570 6,586,260
04/30/95 7,155,132 6,780,225
05/31/95 7,427,832 7,051,231
06/30/95 7,557,689 7,215,031
07/31/95 7,890,844 7,454,281
08/31/95 7,988,826 7,472,991
09/30/95 8,210,920 7,788,352
10/31/95 8,234,873 7,760,547
11/30/95 8,589,768 8,101,235
12/31/95 8,774,957 8,257,265
01/31/96 9,026,323 8,538,342
02/29/96 9,224,369 8,617,492
03/31/96 9,300,160 8,700,479
04/30/96 9,422,631 8,828,724
05/31/96 9,613,992 9,056,417
06/30/96 9,572,367 9,090,922
07/31/96 9,057,641 8,689,285
08/31/96 9,411,035 8,872,542
09/30/96 9,668,844 9,371,889
10/31/96 9,807,853 9,630,365
11/30/96 10,649,629 10,358,325
12/31/96 10,559,934 10,153,126
01/31/97 10,916,251 10,787,494
02/28/97 11,102,507 10,872,067
03/31/97 10,714,973 10,425,334
04/30/97 11,137,719 11,047,727
05/31/97 11,796,226 11,720,312
06/30/97 12,097,138 12,245,382
07/31/97 12,897,623 13,219,747
08/31/97 12,628,072 12,479,177
09/30/97 13,388,728 13,162,661
10/31/97 12,716,422 12,723,028
11/30/97 13,027,978 13,311,977
12/31/97 13,327,284 13,540,544
01/31/98 13,382,242 13,690,302
02/28/98 14,179,131 14,677,647
03/31/98 14,755,186 15,429,289
04/30/98 14,461,368 15,584,508
05/31/98 14,406,277 15,316,610
06/30/98 14,438,304 15,938,771
07/31/98 13,829,793 15,769,023
08/31/98 11,847,523 13,489,138
09/30/98 12,527,952 14,353,252
10/31/98 13,639,900 15,520,746
11/30/98 14,427,531 16,461,458
12/31/98 14,682,095 17,409,967
01/31/99 14,315,043 18,138,052
02/28/99 13,790,682 17,574,322
03/31/99 13,750,211 18,277,470
04/30/99 15,204,256 18,985,357
05/31/99 15,615,182 18,537,112
06/30/99 16,214,406 19,565,922
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 1/1/92, the first full month following the Fund's
Institutional Class inception on 12/30/91, compared to the S&P 500 Index, an
unmanaged market index. The performance of the Administrative Class (shown
above) reflects the payment of a service fee in an amount not to exceed 0.25% on
an annual basis. The Administrative Class commenced operations on 8/21/97.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
Bell Atlantic Corp. 4.2%
Telephone service
- -------------------------------------------------------
GTE Corp. 4.0%
Independent telephone service
- -------------------------------------------------------
Thomas & Betts Corp. 3.9%
Electric conductors components
- -------------------------------------------------------
Mobil Corp. 3.9%
Int'l oil/gas exploration & development
- -------------------------------------------------------
SUPERVALU, Inc. 3.8%
Large food wholesaler
- -------------------------------------------------------
Public Service Enterprise Group, Inc. 3.7%
Public service electric & gas
- -------------------------------------------------------
Kimberly-Clark Corp. 3.7%
Consumer products/newsprint
- -------------------------------------------------------
Mallinckrodt, Inc. 3.7%
Healthcare products/spec. chemicals
- -------------------------------------------------------
NICOR, Inc. 3.6%
Utility holding/natural gas
- -------------------------------------------------------
DTE Energy Co. 3.5%
Electric & steam utility
- -------------------------------------------------------
Top Ten Total 38.0%
- -------------------------------------------------------
Top 5 Industries % of Total Investments
- -------------------------------------------------------
Consumer Discretionary 13.7%
- -------------------------------------------------------
Consumer Staples 13.5%
- -------------------------------------------------------
Utilities 10.9%
- -------------------------------------------------------
Energy 9.6%
- -------------------------------------------------------
Communications 8.2%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stock 95.0%
- -------------------------------------------------------
Cash Equivalents 5.0%
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Value Fund returned 12.3% for
Institutional Class shares.
Lower valuation issues were out of favor for most of this one-year period, as
the largest of the large-cap growth stocks dominated the market. However, in the
second quarter of 1999, the market rotated toward lower valuation and
smaller-capitalization stocks. This shift came about as a result of the
improving global economy, which caused an increased demand for capital goods, as
well as rising interest rates, which caused investors to shy away from higher
valuation growth stocks. As a result, PIMCO Value Fund saw strong performance in
the last quarter of this one-year period, despite less impressive performance in
the first three quarters.
The technology sector performed well for the Fund this year. As the global
economy began to improve, demand increased for semiconductors, PCs and other
technology. Apple Computer, for instance, was a standout performer this year.
The PC maker experienced better-than-expected sales of its iMac computer, its
latest product offering, which was enthusiastically received by consumers. The
company has continued its successful comeback with more innovative product
offerings and has gained significant market share.
Another sector that contributed to the Fund's performance was
telecommunications. The sector benefited from increased demand from corporations
for data communications capabilities. One standout in this sector was GTE. GTE
provides inter-networking services ranging from dial-up Internet access for
consumers to Web-based applications for Fortune 500 companies. The company
benefited from increased revenues, new product development, and the sale of some
of its business units.
The basic materials sector, while a strong performer for the Fund in the
second quarter of 1999, performed poorly for the one-year period. Companies such
as John Deere and U.S. Steel suffered under extreme pricing pressures, which
greatly narrowed their profit margins. However, this sector was a strong
contributor to the Fund's performance in the second quarter, as the global
economy improved, demand for basic materials increased, and pricing pressures
eased.
While the Fund's performance was hurt by the narrowness of the market for
most of the past year, the Fund turned in a strong performance in the second
quarter, as lower valuation and cyclical stocks finally outperformed growth
stocks. Looking ahead, we believe the Fund is poised to continue this
performance in the current market environment.
See page 63 for financial details. 19
<PAGE>
June 30, 1999
PIMCO Value 25 Fund
Objective
Long-term growth of capital and income
Portfolio
Approximately 25 common stocks of companies with medium market capitalizations
that have below-average price-to-earnings ratios relative to their industry
groups
Total Net Assets
$2.2 million
Number of Securities in the Portfolio
25 (not including short-term instruments)
PIMCO Advisors Institutional Manager
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Inst'l Class S&P 500 Lipper Mid-Cap
(Incep. 7/10/98 ) Index Fund Average
- --------------------------------------------------------------------------------
Inception -9.48% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO S&P 500
Value 25 Index
Fund
- ------------------------------------------------------
<S> <C> <C>
07/31/98 5,000,000 5,000,000
08/31/98 4,107,143 4,277,100
09/30/98 4,139,610 4,551,091
10/31/98 4,458,874 4,921,277
11/30/98 4,550,866 5,219,555
12/31/98 4,625,864 5,520,306
01/31/99 4,369,779 5,751,165
02/28/99 4,222,667 5,572,419
03/31/99 4,271,704 5,795,372
04/30/99 4,767,527 6,019,826
05/31/99 4,871,051 5,877,698
06/30/99 4,898,294 6,203,911
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Fund's Institutional Class shares
commenced operations on 7/10/98. Since the fund is less than 1-year old, the
reported returns are cumulative. The S&P 500 Index is an unmanaged index and it
is not possible to invest in an unmanaged index.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- ----------------------------------------------------
American National Insurance Co. 5.6%
Life insurance
- ----------------------------------------------------
Cordant Technologies, Inc. 5.4%
Aerospace propulsion systems
- ----------------------------------------------------
Golden West Financial Corp. 5.0%
Savings and loan
- ----------------------------------------------------
Cooper Tire & Rubber Co. 4.6%
Auto/truck tires/rubber products
- ----------------------------------------------------
Clayton Homes, Inc. 4.5%
Produce/finance manufactured homes
- ----------------------------------------------------
Warnaco Group, Inc. 4.3%
Womens intimate apparel
- ----------------------------------------------------
Lafarge Corp. 3.9%
Major cement producer
- ----------------------------------------------------
USX-U.S. Steel Group, Inc. 3.8%
Integrated steel producer
- ----------------------------------------------------
Manpower, Inc. 3.8%
World wide employment service
- ----------------------------------------------------
Meritor Automotive, Inc. 3.8%
International air express/freight
- ----------------------------------------------------
Top Ten Total 44.7%
- ----------------------------------------------------
Top 5 Industries % of Total Investments
- ----------------------------------------------------
Consumer Discretionary 19.6%
- ----------------------------------------------------
Financial & Business Services 17.6%
- ----------------------------------------------------
Capital Goods 13.3%
- ----------------------------------------------------
Building 12.1%
- ----------------------------------------------------
Materials & Processing 7.6%
- ----------------------------------------------------
Portfolio Composition
- ----------------------------------------------------
Common Stock 94.7%
- ----------------------------------------------------
Cash Equivalents 5.3%
- ----------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the period since inception through June 30, 1999, the PIMCO Value 25 Fund
posted a return of -9.5%. It is important to note that, for the three-month
period ended June 30, 1999, the Fund returned 14.7%.
PIMCO Value 25 Fund was started on July 10, 1998. The Fund's objective is to
seek long-term growth of capital and income through investment in approximately
25 mid-cap value stocks. The Fund manager maintains this concentrated portfolio
in order to maximize these holdings' potential returns.
For much of the year, smaller-capitalization and lower valuation stocks
suffered as a result of an extremely narrow market dominated by large-cap growth
stocks. However, in the second quarter of 1999, the market rotated away from
these large-cap, higher valuation stocks in favor of lower valuation and
smaller-capitalization issues. As a result, the Fund saw strong performance in
that quarter.
The financial and business services sector made a significant contribution to
the Fund's performance this year. A strong economy, tight labor market and
consumer confidence boosted home buying. For much of the year, a benign interest
rate environment also increased demand for homes and mortgages. One beneficiary
of this trend was Golden West Financial, a savings and loan holding company. The
tight labor market also resulted in fewer defaults and higher credit quality,
which also benefited the company.
Another standout for the Fund this year was Airborne Freight, a company that
provides door-to-door express delivery of small packages and documents
throughout the U.S. as well as foreign countries. Airborne Freight benefited
from an increase in revenue this year, which reflected an increase in its higher
profit margin segment of lower-weight overnight shipments.
One disappointment for the Fund this year was Old Republic International, a
holding company engaged in the underwriting and managing of property, liability,
life, disability, title, and mortgage guaranty insurance. The company suffered
from a rise in interest rates, which caused a drop-off in demand for title and
mortgage guaranty insurance. The company was also hurt by higher underwriting
and acquisition costs.
Looking ahead, the manager is optimistic that the Fund's strong performance
in the second quarter of 1999 will continue, given the current broadening of the
market and strong global economy.
20 See page 64 for financial details.
<PAGE>
June 30, 1999
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
$397.6 million
Number of Securities in the Portfolio
102 (not including short-term instruments)
PIMCO Advisors Institutional Manager
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
Inst'l Class Admin. Class Russell 2000 Lipper Small-Cap
(Incep. 10/1/91) (Incep. 11/1/95) Index Fund Average
- --------------------------------------------------------------------------------
1 year -5.11% -5.40% 1.50% 1.93%
3 years 13.83% 13.52% 11.21% 10.45%
5 years 15.78% -- 15.39% 16.52%
Inception 14.43% 15.43% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO
Small-Cap
Value Russell 2000
MONTH Fund Index
- --------------------------------------------------------------
<S> <C> <C>
09/30/91 5,000,000 5,000,000
10/31/91 5,057,765 5,132,200
11/30/91 4,942,474 4,894,682
12/31/91 5,307,711 5,286,354
01/31/92 5,669,482 5,715,078
02/29/92 5,861,326 5,881,901
03/31/92 5,810,840 5,682,857
04/30/92 5,692,503 5,483,332
05/31/92 5,697,568 5,556,260
06/30/92 5,515,246 5,295,172
07/31/92 5,683,331 5,479,232
08/31/92 5,596,835 5,324,279
09/30/92 5,652,803 5,446,897
10/31/92 5,755,927 5,618,801
11/30/92 6,164,818 6,049,089
12/31/92 6,302,353 6,259,658
01/31/93 6,581,536 6,471,360
02/28/93 6,549,919 6,322,130
03/31/93 6,718,541 6,527,220
04/30/93 6,541,983 6,347,787
05/31/93 6,653,133 6,628,549
06/30/93 6,669,012 6,669,713
07/31/93 6,692,411 6,761,821
08/31/93 6,915,669 7,053,797
09/30/93 6,979,457 7,252,855
10/31/93 7,112,529 7,439,616
11/30/93 6,984,825 7,197,233
12/31/93 7,174,310 7,443,163
01/31/94 7,443,124 7,676,357
02/28/94 7,431,872 7,648,492
03/31/94 7,099,942 7,245,646
04/30/94 7,124,167 7,288,612
05/31/94 6,954,544 7,206,616
06/30/94 6,830,154 6,963,464
07/31/94 6,936,926 7,077,944
08/31/94 7,215,540 7,472,185
09/30/94 7,039,274 7,446,854
10/31/94 6,908,581 7,416,769
11/30/94 6,748,316 7,117,058
12/31/94 6,909,938 7,307,581
01/31/95 6,947,635 7,215,286
02/28/95 7,258,630 7,515,659
03/31/95 7,302,170 7,644,477
04/30/95 7,472,713 7,814,337
05/31/95 7,654,211 7,948,666
06/30/95 7,898,295 8,361,043
07/31/95 8,291,107 8,842,639
08/31/95 8,454,664 9,025,593
09/30/95 8,618,222 9,186,790
10/31/95 8,281,407 8,775,957
11/30/95 8,622,778 9,144,635
12/31/95 8,669,760 9,385,870
01/31/96 8,629,498 9,375,733
02/29/96 8,817,388 9,667,975
03/31/96 9,086,486 9,864,718
04/30/96 9,396,789 10,392,185
05/31/96 9,700,346 10,801,741
06/30/96 9,635,021 10,358,221
07/31/96 9,105,773 9,453,534
08/31/96 9,540,028 10,002,407
09/30/96 9,831,792 10,393,301
10/31/96 10,021,779 10,233,140
11/30/96 10,686,731 10,654,745
12/31/96 11,072,978 10,934,006
01/31/97 11,435,630 11,152,467
02/28/97 11,483,984 10,882,020
03/31/97 11,048,801 10,368,498
04/30/97 11,161,626 10,397,426
05/31/97 12,120,640 11,554,139
06/30/97 12,717,001 12,049,350
07/31/97 13,369,775 12,610,006
08/31/97 13,732,427 12,898,775
09/30/97 14,739,794 13,842,965
10/31/97 14,489,967 13,235,259
11/30/97 14,659,205 13,149,230
12/31/97 14,950,861 13,379,342
01/31/98 14,696,739 13,167,948
02/28/98 15,620,050 14,142,376
03/31/98 16,238,414 14,725,042
04/30/98 16,187,590 14,806,472
05/31/98 15,450,635 14,008,403
06/30/98 14,976,274 14,037,820
07/31/98 13,892,018 12,900,757
08/31/98 11,850,569 10,395,430
09/30/98 12,189,399 11,209,392
10/31/98 12,672,231 11,666,735
11/30/98 13,112,710 12,278,072
12/31/98 13,581,889 13,038,085
01/31/99 13,050,655 13,211,491
02/28/99 12,386,612 12,141,361
03/31/99 12,209,534 12,330,766
04/30/99 13,254,295 13,435,602
05/31/99 13,705,844 13,631,762
06/30/99 14,210,516 14,247,918
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 10/1/91, the Fund's Institutional Class inception,
compared to the Russell 2000 Index, an unmanaged market index. The performance
of the Administrative Class (shown above) reflects the payment of a service fee
in an amount not to exceed 0.25% on an annualized basis. The Administrative
Class commenced operations on 11/1/95. The Fund may invest in stocks of small
and intermediate sized companies which may have less liquidity than those of
larger companies and may be subject to greater price volatility than the overall
stock market.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
Pilgrim's Pride Corp. 1.4%
Chicken products
- -------------------------------------------------------
Burlington Coat Factory 1.3%
Off-price apparel stores
- -------------------------------------------------------
GenCorp, Inc. 1.1%
Aerospace, auto, polymer products
- -------------------------------------------------------
Westinghouse Air Brake Co. 1.1%
Train air brakes
- -------------------------------------------------------
MDC Holdings, Inc. 1.1%
Home building/mortgage banking
- -------------------------------------------------------
World Fuel Services Corp. 1.1%
Aviation fueling services, oil recycling
- -------------------------------------------------------
Enesco Group, Inc. 1.1%
Consumer producer of household products
- -------------------------------------------------------
C&D Technologies, Inc. 1.1%
Battery power systems
- -------------------------------------------------------
Kaman Corp. 1.0%
Aerospace/defense equip.
- -------------------------------------------------------
Kelly Services, Inc. 1.0%
Temporary help services
- -------------------------------------------------------
Top Ten Total 11.3%
- -------------------------------------------------------
Top 5 Industries % of Total Investments
- -------------------------------------------------------
Financial & Business Services 26.0%
- -------------------------------------------------------
Consumer Discretionary 12.3%
- -------------------------------------------------------
Capital Goods 11.3%
- -------------------------------------------------------
Utilities 9.1%
- -------------------------------------------------------
Building 6.7%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stock 94.4%
- -------------------------------------------------------
Cash Equivalents 5.6%
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Small-Cap Value Fund
Institutional Class shares returned -5.1%. It is important to note that, for the
three months ended June 30, 1999, the Fund returned 16.4%.
For much of the year, smaller-capitalization and lower valuation stocks
suffered as a result of an extremely narrow market dominated by large-cap growth
stocks. However, in the second quarter of 1999, the market rotated away from
these large-capitalization and higher-valuation stocks in favor of
lower-valuation and smaller-capitalization issues. As a result, the Fund saw
strong performance in that quarter.
The technology sector positively impacted the Fund this year. The sector in
general benefited from investor interest in stocks with the greatest growth
potential, as well as an improving global economy, which resulted in increased
demand for many technological products. Fund holding Dallas Semiconductor, a
maker of semiconductor chips, benefited from a strong product line and increased
sales due to the improved global economic outlook.
The materials and processing sector, which saw strong performance in the
second quarter, aided the Fund's performance for the year. Investors were
attracted to the low valuations and positive fundamentals offered by this
sector. One standout was Westinghouse Air Brake, a manufacturer of value-added
equipment for locomotives, railway freight cars and passenger transit vehicles.
The company benefited from increased demand for its products, receiving two
large transit contracts during the second quarter. It also announced in early
June that it would merge with MotivePower Industries in order to create a
premier rail equipment supply company, boosting the company's stock price.
One disappointment for the Fund this year was Chiquita Brands, an
international marketer, producer and distributor of bananas and other fresh and
processed food products. It was hurt by import barriers erected in Europe, which
resulted in decreased demand for its products. Chiquita also suffered for much
of the year from weak banana pricing.
Despite its underperformance for the year, PIMCO Small-Cap Value Fund saw
strong performance in the second quarter of 1999 as a result of the market's
broadening. The manager is optimistic that, going forward, PIMCO Small-Cap Value
Fund is poised to outperform in this broader market.
See page 65 for financial details. 21
<PAGE>
June 30, 1999
PIMCO Enhanced Equity Fund
Objective
Total return which equals or exceeds that of the S&P 500 Index
Portfolio
Common stocks represented in the Standard & Poor's 500 Composite Price Index
Total Net Assets
$66.6 million
Number of Securities in the Portfolio
201 (not including short-term instruments)
PIMCO Advisors Institutional Manager
Parametric Portfolio Associates
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
Inst'l Class Admin. Class S&P 500 Lipper Growth and
(Incep. 2/11/91) (Incep. 8/21/97) Index Income Fund Average
- --------------------------------------------------------------------------------
1 year 17.95% 17.63% 22.76% 14.49%
3 years 27.07% -- 29.11% 21.57%
5 years 25.44% -- 27.87% 21.72%
Inception 17.71% 22.45% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO S&P 500
Enhanced Index
Equity
Fund
- ----------------------------------------------------------
<S> <C> <C>
02/28/91 5,000,000 5,000,000
03/31/91 5,144,566 5,121,000
04/30/91 5,115,155 5,133,290
05/31/91 5,300,523 5,355,049
06/30/91 5,075,075 5,109,787
07/31/91 5,333,939 5,347,903
08/31/91 5,480,005 5,474,649
09/30/91 5,419,564 5,383,222
10/31/91 5,465,540 5,455,357
11/30/91 5,283,355 5,235,506
12/31/91 5,952,777 5,834,448
01/31/92 5,802,938 5,725,928
02/29/92 5,823,246 5,800,365
03/31/92 5,655,707 5,687,258
04/30/92 5,745,137 5,854,463
05/31/92 5,780,821 5,883,150
06/30/92 5,689,062 5,795,608
07/31/92 5,951,493 6,032,359
08/31/92 5,890,137 5,908,877
09/30/92 6,002,622 5,978,306
10/31/92 6,088,490 5,998,931
11/30/92 6,269,695 6,203,195
12/31/92 6,345,501 6,279,308
01/31/93 6,344,518 6,331,803
02/28/93 6,386,122 6,418,105
03/31/93 6,490,130 6,553,528
04/30/93 6,278,351 6,395,129
05/31/93 6,424,602 6,566,198
06/30/93 6,393,262 6,585,437
07/31/93 6,319,865 6,558,964
08/31/93 6,550,824 6,807,811
09/30/93 6,472,088 6,755,595
10/31/93 6,590,333 6,895,368
11/30/93 6,519,411 6,829,656
12/31/93 6,581,173 6,912,226
01/31/94 6,709,580 7,147,242
02/28/94 6,566,472 6,953,266
03/31/94 6,296,768 6,650,103
04/30/94 6,377,723 6,735,358
05/31/94 6,460,694 6,845,885
06/30/94 6,300,283 6,678,092
07/31/94 6,508,397 6,897,400
08/31/94 6,786,534 7,180,194
09/30/94 6,586,276 7,004,638
10/31/94 6,707,298 7,162,032
11/30/94 6,489,129 6,901,191
12/31/94 6,549,132 7,003,536
01/31/95 6,755,489 7,185,137
02/28/95 6,989,421 7,465,142
03/31/95 7,143,473 7,685,438
04/30/95 7,302,946 7,911,774
05/31/95 7,589,561 8,228,008
06/30/95 7,772,994 8,419,145
07/31/95 8,015,780 8,698,323
08/31/95 8,056,089 8,720,156
09/30/95 8,395,839 9,088,147
10/31/95 8,352,166 9,055,702
11/30/95 8,681,857 9,453,247
12/31/95 8,803,247 9,635,317
01/31/96 9,059,190 9,963,303
02/29/96 9,094,903 10,055,663
03/31/96 9,156,282 10,152,499
04/30/96 9,281,710 10,302,147
05/31/96 9,490,758 10,567,839
06/30/96 9,538,857 10,608,103
07/31/96 9,083,198 10,139,437
08/31/96 9,305,032 10,353,277
09/30/96 9,838,632 10,935,960
10/31/96 10,114,426 11,237,574
11/30/96 10,863,864 12,087,022
12/31/96 10,664,922 11,847,578
01/31/97 11,388,613 12,587,815
02/28/97 11,480,027 12,686,503
03/31/97 10,969,634 12,165,215
04/30/97 11,441,938 12,891,478
05/31/97 12,089,451 13,676,311
06/30/97 12,538,901 14,289,010
07/31/97 13,712,042 15,425,986
08/31/97 12,942,644 14,561,822
09/30/97 13,742,514 15,359,373
10/31/97 13,194,032 14,846,370
11/30/97 13,750,131 15,533,609
12/31/97 13,954,567 15,800,321
01/31/98 14,164,608 15,975,072
02/28/98 15,241,065 17,127,195
03/31/98 16,068,100 18,004,278
04/30/98 16,186,248 18,185,401
05/31/98 15,910,569 17,872,794
06/30/98 16,593,201 18,598,787
07/31/98 16,278,140 18,400,710
08/31/98 13,692,016 15,740,336
09/30/98 14,414,031 16,748,661
10/31/98 15,687,401 18,110,998
11/30/98 16,606,329 19,208,705
12/31/98 17,653,581 20,315,511
01/31/99 18,363,348 21,165,105
02/28/99 17,653,581 20,507,294
03/31/99 18,242,537 21,327,791
04/30/99 18,937,203 22,153,816
05/31/99 18,408,652 21,630,765
06/30/99 19,571,463 22,831,272
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost.. The line graph above assumes the
investment of $5,000,000 on 3/1/91, the first full month following the Fund's
Institutional Class inception on 2/11/91, compared to the S&P 500 Index, an
unmanaged market index. The performance of the Administrative Class (shown
above) reflects the payment of a service fee in an amount not to exceed 0.25% on
an annual basis. The Administrative Class commenced operations on 8/21/97.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
Microsoft Corp. 5.0%
Computer software
- -------------------------------------------------------
General Electric Co. 3.2%
Consumer/ industrial prod.,broadcast
- -------------------------------------------------------
Intel Corp. 2.3%
Semiconductor memory circuits
- -------------------------------------------------------
Lucent Technologies, Inc. 2.3%
Telecommunications systems/software
- -------------------------------------------------------
AT&T Corp. 1.9%
Telephone services
- -------------------------------------------------------
International Business Machines Corp. 1.9%
Business machines
- -------------------------------------------------------
Wal-Mart Stores, Inc. 1.7%
Discount stores
- -------------------------------------------------------
Bristol-Myers Squibb Co. 1.6%
Pharmaceutical medical prod.
- -------------------------------------------------------
Exxon Corp. 1.5%
Leading oil co.
- -------------------------------------------------------
Ameritech Corp. 1.5%
Telecommunication services
- -------------------------------------------------------
Top Ten Total 22.9%
- -------------------------------------------------------
Top 5 Industries % of Total Investments
- -------------------------------------------------------
Technology 19.7%
- -------------------------------------------------------
Financial & Business Services 17.5%
- -------------------------------------------------------
Consumer Discretionary 12.0%
- -------------------------------------------------------
Health Care 10.6%
- -------------------------------------------------------
Capital Goods 8.8%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stock 99.9%
- -------------------------------------------------------
Cash Equivalents 0.1%
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Enhanced Equity Fund Institutional Class shares posted a return of 18.0%
for the one-year period ended June 30, 1999, outperforming the Lipper Growth and
Income Fund Average return of 14.5% for the same period.
The year proved to be difficult a one for active stock selection. After the
market correction of the third quarter, a narrow group of large-capitalization
stocks emerged and dominated the market in the last quarter of 1998 and the
first quarter of 1999. It was not until the second quarter of 1999 that the
market broadened. This up-and-down second quarter ended with a record high
closing level on June 30. Surprising strength in the U.S. economy helped broaden
the market and also raised the specter of inflation. The Fed raised the federal
funds rate an expected quarter point and returned to a neutral "bias" on the
last day of the quarter, easing interest rate fears that plagued the market much
of the second quarter.
Technology was a strong performer for the Fund this year, despite a difficult
second quarter. As companies increasingly realized that technology is a
necessary means in gaining a competitive advantage in today's global
marketplace, there was an increase in corporate demand for technology products
and services. For instance, Microsoft proved to be an outstanding holding this
year. The software company benefited from its market dominance and strong
earnings growth. It also received a boost from investor enthusiasm over its new
product pipeline, which includes updated versions of Microsoft Office and
Microsoft Windows. In addition, Lucent benefited from an increased demand for
data communications capabilities.
Another technology standout was Sun Microsystems, a maker of high-end
servers. The company benefited from a large increase in Internet applications as
well as other applications that require a high degree of speed which can only be
obtained from high-end servers.
One disappointment for the Fund this year was the retail apparel sector. In
particular, Fund holdings VF Corp. and Liz Claiborne saw poor performance. VF
was hurt by a decrease in sales, especially in Europe. The company also suffered
from disappointing sales in its Jantzen women's sportswear line, and
subsequently closed it. Liz Claiborne's stock got hit hard in the market
correction of the third quarter but never experienced a full recovery.
Looking ahead, the manager intends to continue with its disciplined,
long-term approach to stock selection based on fundamental valuations and the
principles of portfolio diversification and risk control. The manager is
optimistic that, with interest rates in check and earnings growth on the rise,
the Fund will continue its strong performance.
22 See page 66 for financial details.
<PAGE>
June 30, 1999
PIMCO Tax-Efficient Equity Fund
Objective
Maximum after-tax growth of capital
Portfolio
Broadly diversified portfolio of at least 250 common stocks of companies with
larger market capitalizations
Total Net Assets
$28.0 million
Number of Securities in the Portfolio
244 (not including short-term instruments)
PIMCO Advisors Institutional Manager
Parametric Portfolio Associates
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Admin. Class S&P 500 Lipper Growth & Income
(Incep. 9/30/98) Index Fund Average
- --------------------------------------------------------------------------------
Inception 16.10% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH Tax-Efficient S&P 500
Equity Index
Fund
- --------------------------------------------------
<S> <C> <C>
09/30/98 5,000,000 5,000,000
10/31/98 5,468,208 5,406,700
11/30/98 5,745,665 5,734,400
12/31/98 6,089,290 6,064,816
01/31/99 6,291,688 6,318,447
02/28/99 6,077,725 6,122,070
03/31/99 6,303,254 6,367,014
04/30/99 6,534,566 6,613,608
05/31/99 6,343,733 6,457,461
06/30/99 6,713,833 6,815,850
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Fund's Administrative Shares
commenced operations on 9/30/98. Since the Fund is less than 1-year old, the
reported returns are cumulative. The S&P 500 Index is an unmanaged index and it
is not possible to invest in an unmanaged index.
- --------------------------------------------------------------------------------
PORTFOLIO Composition
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
Microsoft Corp. 4.7%
Computer software
- -------------------------------------------------------
General Electric Co. 3.0%
Consumer/Indus. products broadcasting
- -------------------------------------------------------
Intel Corp. 2.3%
Semiconductors memory circuits
- -------------------------------------------------------
International Business Machines Corp. 2.2%
Business machines
- -------------------------------------------------------
Cisco Systems, Inc. 1.9%
Computer network products
- -------------------------------------------------------
Wal-Mart Stores, Inc. 1.9%
Discount stores
- -------------------------------------------------------
AT&T Corp. 1.8%
Telecommunications services
- -------------------------------------------------------
Exxon Corp. 1.7%
Leading oil co.
- -------------------------------------------------------
Lucent Technologies, Inc. 1.6%
Telecommunications systems/software
- -------------------------------------------------------
Merck & Co., Inc. 1.6%
Ethical drugs/spec. chemicals
- -------------------------------------------------------
Top Ten Total 22.7%
- -------------------------------------------------------
Top 5 Industries % of Total Investments
- -------------------------------------------------------
Technology 20.3%
- -------------------------------------------------------
Financial & Business Services 16.2%
- -------------------------------------------------------
Consumer Discretionary 12.3%
- -------------------------------------------------------
Health Care 10.9%
- -------------------------------------------------------
Communications 8.2%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stock 98.9%
- -------------------------------------------------------
Cash Equivalents 1.1%
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the period since inception through June 30, 1999, PIMCO Tax-Efficient Equity
Fund returned 16.1%.
PIMCO Tax-Efficient Equity Fund was started on September 30, 1998. The Fund
is an actively managed stock fund seeking low tax exposure without compromising
return potential. Its manager uses an innovative investment process featuring
quantitative stock selection and active tax management.
The technology sector performed well for the Fund this year. Increased demand
for technology, coupled with investor enthusiasm for stocks with the greatest
expectations for earnings growth, helped to boost the prices of many tech
stocks. For instance, Microsoft proved to be an outstanding holding for the Fund
this year. The software company benefited from its market dominance and strong
earnings growth. It also received a boost from investor enthusiasm over its new
product pipeline, which includes updated versions of Microsoft Office and
Microsoft Windows. Cisco Systems was another standout for the Fund this year.
The company continued to successfully position itself as the industry leader
within the Internet networking sector.
Another technology standout was IBM, which has been successful in
implementing its turnaround strategy. The company has changed its focus from the
PC and mainframe business to consulting and other higher profit margin
businesses. Its stock received a large boost in May when the company unveiled
its plans for expanding into the Internet business, which investors greeted with
much enthusiasm.
The health care sector made a solid contribution to the Fund's performance
this year. In particular, high-growth companies such as Amgen, Pfizer and Merck
all performed well for much of the year, until interest rate concerns caused
their stock prices to drop in the second quarter of 1999.
One disappointment for the Fund this year was Coca-Cola. The beverage
producer and bottler suffered for much of the year from its exposure to the
weakened global economy, from which it derives much of its sales.
Looking ahead, the manager intends to continue with its disciplined,
long-term, approach to stock selection based on fundamental valuations and the
principles of portfolio diversification and risk control. The manager is
optimistic that, with interest rates in check and earnings growth on the rise,
the Fund will continue its strong performance.
See page 68 for financial details. 23
<PAGE>
June 30, 1999
PIMCO Structured Emerging Markets Fund
Objective
Long-term growth of capital
Portfolio
Common stocks of companies located in emerging market countries
Total Net Assets
$46.6 million
Number of Securities in the Portfolio
376 (not including short-term instruments)
PIMCO Advisors Institutional Manager
Parametric Portfolio Associates
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Inst'l Class IFC Investable Lipper Emerging Mkts.
(Incep. 6/30/98) Composite Index Fund Average
- --------------------------------------------------------------------------------
Inception 29.21% 26.63% 16.02%
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO
Structured
Emerging IFC Investable
Markets Composite
MONTH Fund Index
- ------------------------------------------------------------
<S> <C> <C>
06/30/98 5,000,000 5,000,000
07/31/98 5,110,000 5,199,590
08/31/98 3,870,000 3,737,595
09/30/98 3,970,000 3,914,989
10/31/98 4,350,000 4,364,821
11/30/98 4,700,000 4,693,492
12/31/98 4,647,944 4,621,682
01/31/99 4,564,852 4,508,451
02/28/99 4,580,432 4,588,701
03/31/99 4,917,992 5,117,778
04/30/99 5,707,364 5,814,820
05/31/99 5,873,547 5,709,572
06/30/99 6,460,383 6,331,334
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Fund may invest in foreign securities
which involve potentially higher risks including foreign currency fluctuations
and political or economic uncertainty. The Fund's reported return since
inception is equal to its one-year performance.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
Brazil/Petroleo Brasileiro SA 1.6%
- -------------------------------------------------------
Baltic Nations/Baltic Fund 'A' 1.4%
- -------------------------------------------------------
Taiwan/Taiwan Fund, Inc. 1.2%
- -------------------------------------------------------
Brazil/Telecomunicacoes 1.2%
Brasileiras SA SP - ADR
- -------------------------------------------------------
Taiwan/R.O.C. Taiwan Fund 1.1%
- -------------------------------------------------------
Indonesia/PT Astra International, Inc. 1.0%
- -------------------------------------------------------
Argentina/Perez Companc SA 'B' 0.9%
- -------------------------------------------------------
Venezuela/Compania Anonima 0.9%
Nacional Telefonos de V
- -------------------------------------------------------
South Korea/Hite 0.9%
Brewery Co. Limited
- -------------------------------------------------------
Malaysia/Commerce Asset- 0.9%
Holding Bhd.
- -------------------------------------------------------
Top Ten Total 11.1%
- -------------------------------------------------------
Top 5 Countries % of Total Investments
- -------------------------------------------------------
South Korea 6.2%
- -------------------------------------------------------
Mexico 5.5%
- -------------------------------------------------------
Greece 4.8%
- -------------------------------------------------------
China 4.8%
- -------------------------------------------------------
Brazil 4.7%
- -------------------------------------------------------
Regional Breakdown
- -------------------------------------------------------
Asia 42.1%
- -------------------------------------------------------
Latin America 24.2%
- -------------------------------------------------------
Europe 20.2%
- -------------------------------------------------------
Africa 11.1%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stock 97.6%
- -------------------------------------------------------
Cash Equivalents 2.4%
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Structured Emerging Markets
Fund returned 29.2%.
Emerging markets were severely hurt in the third quarter as a result of
extreme market uncertainty due to the Asian economic crisis, the Russian debt
default, and the Long-Term Capital Management debacle. However, emerging markets
saw improvement in the fourth quarter as a result of several key events. Three
cuts in the Federal Funds rate by the United States as well as the accompanying
central bank rate cuts in Europe sent a clear signal that developed markets,
even those with strong current growth, are vigilant enough to prevent a
worldwide credit crunch. In addition, the U.S.'s $18 billion funding of the
International Monetary Fund in October and the G-7 policy statement backing
countries such as Brazil confirmed that developed country governments would take
action toward containment. In the first and second quarters of 1999, the global
economy showed strong signs of recovery, propelling emerging markets higher.
Latin America performed well for much of the year as a result of the
surprisingly benign inflationary impact of Brazil's currency devaluation and the
continued strengthening of commodity prices. However, fears of the U.S. Federal
Reserve's impending interest rate rise stalled the Latin American move in May,
with only a slight resurgence in June after the Federal Reserve raised rates by
only 0.25% and removed its "tightening bias."
Exposure to Asia, particularly China and Korea, was beneficial to the Fund
this year. The Fund's unique sector structure that emphasizes the
underrepresented sectors and stocks within individual emerging markets paid off
handsomely as investors bid up many of the more undervalued stocks in these
countries. The Fund also benefited from its exposure to Indonesia, which
experienced a large uptick in the second quarter.
Overall, the Fund showed strong defensiveness during the meltdown in the
third quarter. It also responded well during the rebound of the fourth, first
and second quarters. Much of this was due to the Fund's strategy of disciplined
investing within its broad and balanced structure.
The Fund's unique approach to emerging markets again showed its ability to
outperform in good as well as bad market environments.Looking ahead, the manager
is optimistic about the Fund's performance, given the swift recovery of the
global economy. The manager is encouraged by the return of demand by investors
in these markets on top of improving fundamentals and sentiment, but remains
guarded given any significant decline in the U.S. market.
24 See page 70 for financial details.
<PAGE>
June 30, 1999
PIMCO Tax-Efficient Structured Emerging Markets Fund
Objective
Maximum after-tax growth of capital
Portfolio
Common stocks of companies located in emerging market countries
Total Net Assets
$72.5 million
Number of Securities in the Portfolio
366 (not including short-term instruments)
PIMCO Advisors Institutional Manager
Parametric Portfolio Associates
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Inst'l Class IFC Investable Lipper Emerging Mkts.
(Incep. 6/30/98) Composite Index Fund Average
- --------------------------------------------------------------------------------
Inception 33.39% 26.63% 16.02%
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO IFC Investable
Tax-Efficient Composite
Structured Index
Emerging Markets
Fund
- ---------------------------------------------------------
<S> <C> <C>
06/30/98 5,000,000 5,000,000
07/31/98 5,100,000 5,199,590
08/31/98 3,835,000 3,737,595
09/30/98 3,970,000 3,914,989
10/31/98 4,385,000 4,364,821
11/30/98 4,770,000 4,693,492
12/31/98 4,731,710 4,621,682
01/31/99 4,636,069 4,508,451
02/28/99 4,681,372 4,588,701
03/31/99 5,023,666 5,117,778
04/30/99 5,854,232 5,814,820
05/31/99 6,045,514 5,709,572
06/30/99 6,669,697 6,331,344
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Fund may invest in foreign securities
which involve potentially higher risks including foreign currency fluctuations
and political or economic uncertainty. The Fund's reported return since
inception is equal to its one-year performance.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- -------------------------------------------------------
South Korea/Trigem Computer, Inc. 1.9%
Brasileiras SA SP - ADR
- -------------------------------------------------------
Brazil/Telecomunicacoes 1.5%
- -------------------------------------------------------
India/The India Fund, Inc. 1.5%
- -------------------------------------------------------
Taiwan/Taiwan Fund, Inc. 1.4%
- -------------------------------------------------------
Brazil/Petroleo Brasileiro SA 1.3%
- -------------------------------------------------------
Indonesia/PT Hanjaya Mandala 1.3%
Sampoerna
- -------------------------------------------------------
Indonesia/PT Astra 1.2%
International, Inc.
- -------------------------------------------------------
Baltic Nations/Baltic Fund 'A' 1.2%
- -------------------------------------------------------
Indonesia/PT Indofood 1.1%
Sukses Makmur
- -------------------------------------------------------
South Korea/Korea Asia Fund 1.1%
- -------------------------------------------------------
Top Ten Total 13.5%
- -------------------------------------------------------
Top 5 Countries % of Total Investments
- -------------------------------------------------------
South Korea 6.4%
- -------------------------------------------------------
China 5.3%
- -------------------------------------------------------
Indonesia 5.3%
- -------------------------------------------------------
Malaysia 5.2%
- -------------------------------------------------------
Greece 5.0%
- -------------------------------------------------------
Regional Breakdown
- -------------------------------------------------------
Asia 45.2%
- -------------------------------------------------------
Latin America 22.6%
- -------------------------------------------------------
Europe 20.2%
- -------------------------------------------------------
Africa 11.5%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stock 99.5%
- -------------------------------------------------------
Cash Equivalents 0.5%
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Tax-Efficient Structured
Emerging Markets Fund returned 33.4%, outperforming the IFC Investable Composite
Index return of 26.6% and its Lipper Average return of 16.0%.
Emerging markets were severely hurt in the third quarter as a result of
extreme market uncertainty due to the Asian economic crisis, the Russian debt
default, and the Long-Term Capital Management debacle. However, emerging markets
saw improvement in the fourth quarter as a result of several key events. Three
cuts in the federal funds rate by the United States as well as the accompanying
central bank rate cuts in Europe sent a clear signal that developed markets,
even those with strong current growth, are vigilant enough to prevent a
worldwide credit crunch. In addition, the U.S.'s $18 billion funding of the
International Monetary Fund in October and the G-7 policy statement backing
countries such as Brazil confirmed that developed country governments would take
action toward containment. In the first and second quarters of 1999, the global
economy showed strong signs of recovery, propelling emerging markets higher.
Exposure to Asian markets greatly benefited the Fund, as many of these
countries experienced large upswings as a result of the global economic
recovery. In particular, the Fund's exposure to Korea positively contributed to
its performance. The Fund's unique sector structure that emphasizes the
underrepresented sectors and stocks within individual emerging markets paid off
handsomely as investors bid up many of the more undervalued stocks in these
countries.
Exposure to Latin America also benefited the Fund's performance, as this
region also participated in the global economic recovery. Latin America advanced
in the first and second quarters on the surprisingly benign inflationary impact
of Brazil's currency devaluation and the continued strengthening of commodity
prices, despite stalling in May over fears of the Federal Reserve's impending
interest rate rise.
Overall, the Fund showed strong defensiveness during the meltdown in the
third quarter of 1998. It also responded well during the rebound of the fourth,
first and second quarters. Much of this was due to the Fund's strategy of
disciplined investing within its broad and balanced structure.
The Fund's unique approach to emerging markets again showed its ability to
outperform in good as well as bad market environments. Looking ahead, the
manager is optimistic about the Fund's performance, given the swift recovery of
the global economy. The manager is encouraged by the return of demand by
investors in these markets on top of improving fundamentals and sentiment, but
remains guarded given any significant decline in the U.S. market.
See page 74 for financial details. 25
<PAGE>
June 30, 199
PIMCO International Fund
Objective
Capital appreciation; income is incidental
Portfolio
Primarily stocks of foreign (non-U.S.) companies
Total Net Assets
$149.1 million
Number of Securities in the Portfolio
273 (not including short-term instruments)
PIMCO Advisors Institutional Manager
Blairlogie Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Inst'l Class Admin. Class MSCI Lipper International
(Incep. 9/30/98) (Incep. 9/30/98) EAFE Index Fund Average
- --------------------------------------------------------------------------------
Inception 23.07% 22.47% -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MONTH PIMCO MSCI
International EAFE
Fund Index
- --------------------------------------------------------
<S> <C> <C>
09/30/98 5,000,000 5,000,000
10/31/98 5,377,268 5,522,500
11/30/98 5,692,455 5,806,909
12/31/98 5,846,447 6,037,443
01/31/99 5,851,743 6,021,142
02/28/99 5,687,576 5,879,043
03/31/99 5,931,178 6,125,963
04/30/99 6,153,597 6,375,289
05/31/99 5,925,882 6,048,237
06/30/99 6,153,597 6,285,328
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The Institutional and Administrative
Classes of the International Fund were opened on September 30, 1998. Since the
Fund is less than 1-year old, the reported returns are cumulative. The Fund may
invest in foreign securities which involve potentially higher risks including
foreign currency fluctuations and political or economic uncertainty. The
performance of the Administrative Class reflects the payment of a service fee in
an amount not to exceed 0.25% on an annualized basis.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top Holdings in % of Total
Selected Countries Investments
- -------------------------------------------------------
United Kingdom/WEBS Index Fund 4.3%
- -------------------------------------------------------
Sweden/MSCI Sweden Opal Series B 3.1%
- -------------------------------------------------------
Finland/Nokia OYJ 3.0%
- -------------------------------------------------------
France/France Telecom SA 1.6%
- -------------------------------------------------------
Netherlands/Royal Dutch Petroleum 1.2%
- -------------------------------------------------------
France/Total SA 1.2%
- -------------------------------------------------------
France/L'OREAL 1.0%
- -------------------------------------------------------
Switzerland/UBS AG 1.0%
- -------------------------------------------------------
France/Carrefour Supermarche 0.9%
- -------------------------------------------------------
Japan/Toyota Motor Corp. 0.9%
- -------------------------------------------------------
Top Ten Total 18.2%
- -------------------------------------------------------
Top 5 Countries % of Total Investments
- -------------------------------------------------------
France 15.0%
- -------------------------------------------------------
Japan 14.5%
- -------------------------------------------------------
Switzerland 7.3%
- -------------------------------------------------------
Germany 6.7%
- -------------------------------------------------------
Finland 4.7%
- -------------------------------------------------------
Regional Breakdown
- -------------------------------------------------------
Eastern Europe 52.1%
- -------------------------------------------------------
Asia 22.4%
- -------------------------------------------------------
Europe 10.9%
- -------------------------------------------------------
Latin America 7.0%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stock 92.4%
- -------------------------------------------------------
Cash Equivalents 7.6%
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO International Fund returned
23.1% for Institutional Class shares.
In the second half of 1998, European developed markets were strong performers
for the Fund. Concerns over a weak global economy prompted a "flight to safety"
among investors, causing them to move away from emerging markets and towards
international developed markets in countries with stable economies. In
particular, Finland and Ireland produced strong returns. However, in the first
half of 1999, signs of an improving global economy resulted in investors fleeing
developed markets in favor of emerging markets in order to capitalize on the
recovery.
One emerging market standout for the Fund this year was Korea Telecom. The
company benefited from the economic resurgence in Asia, which resulted in an
increased demand by corporations for telecommunications capabilities. This
company is one of the primary players in the Korean phone industry and, as the
economy continues to improve, the manager is optimistic that it will continue
its outperformance.
Another strong performer for the Fund this year was Cemex, the Mexican cement
maker. The company benefited from the strong United States economy, which
boosted the Mexican economy and resulted in increased demand for basic materials
such as cement.
AstraZeneca, a British pharmaceuticals company, contributed to the Fund's
performance this year. The company is engaged in the research, development,
manufacture and marketing of pharmaceuticals, agricultural and specialty
chemicals products, and the supply of healthcare services. The company benefited
from a strong product pipeline as well as consolidation in the pharmaceuticals
industry, which caused its stock price to rise on rumors of a takeover.
One disappointment for the Fund this year was British consumer products giant
Unilever. Second only to Procter & Gamble in terms of size, the company suffered
from many of the same problems facing P&G. Despite implementing cost-cutting
measures, including layoffs, investors punished its stock for not showing
results quickly enough. However, the manager remains confident that the
company's strong fundamentals and earnings growth will be rewarded by investors
in the future.
The Fund's performance can be attributed to its heavy weighting in Europe,
which did not show strong performance for much of the year. However, the manager
remains cautious about overexposure to Asia and believes that European markets
offer strong fundamentals and reasonable valuations and are well-poised for
outperformance in the coming year.
26 See page 78 for financial details.
<PAGE>
June 30, 1999
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
$72.6 million
Number of Securities in the Portfolio
192 (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 6/30/99
Inst'l Class Lipper Balanced 60% S&P 500 Index Lipper
(Incep. 6/25/92) Index and 40% Lehman Bros. Balanced
Aggregate Bond Index Fund Average
- --------------------------------------------------------------------------------
1 year 8.26% 11.54% 15.21% 9.98%
3 years 16.04% 16.66% 20.29% 15.85%
5 years 16.28% 16.06% 19.72% 16.15%
Inception 13.19% -- -- --
Change in Value
$5,000,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
60% S&P 500
Index and
PIMCO Lipper 40% Lehman
MONTH Balanced Fund Balanced Index Bros. Aggregate
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
06/30/92 5,000,000 5,000,000 5,000,000
07/31/92 5,193,158 5,146,799 5,163,355
08/31/92 5,183,200 5,098,831 5,120,861
09/30/92 5,267,844 5,157,571 5,181,243
10/31/92 5,284,484 5,158,034 5,164,491
11/30/92 5,375,770 5,275,740 5,270,468
12/31/92 5,452,066 5,351,289 5,342,793
01/31/93 5,495,132 5,422,836 5,410,574
02/28/93 5,561,584 5,489,808 5,492,707
03/31/93 5,612,702 5,603,117 5,571,400
04/30/93 5,540,308 5,560,253 5,506,122
05/31/93 5,607,307 5,657,725 5,597,299
06/30/93 5,638,230 5,717,697 5,647,716
07/31/93 5,613,394 5,740,796 5,646,870
08/31/93 5,779,717 5,914,283 5,815,007
09/30/93 5,753,729 5,926,998 5,794,635
10/31/93 5,816,510 5,987,929 5,875,231
11/30/93 5,757,487 5,892,002 5,821,644
12/31/93 5,799,077 5,990,869 5,876,495
01/31/94 5,893,306 6,147,830 6,028,113
02/28/94 5,789,146 6,027,149 5,888,059
03/31/94 5,591,788 5,808,122 5,675,961
04/30/94 5,634,149 5,821,074 5,701,492
05/31/94 5,661,767 5,865,837 5,757,308
06/30/94 5,573,389 5,764,008 5,667,552
07/31/94 5,725,776 5,894,215 5,824,256
08/31/94 5,876,161 6,041,690 5,970,424
09/30/94 5,753,625 5,932,697 5,847,688
10/31/94 5,819,956 5,951,148 5,924,442
11/30/94 5,696,247 5,812,427 5,789,718
12/31/94 5,744,038 5,868,285 5,857,227
01/31/95 5,890,519 5,941,227 5,994,720
02/28/95 6,060,930 6,114,353 6,191,901
03/31/95 6,151,815 6,222,455 6,316,730
04/30/95 6,264,701 6,339,126 6,463,641
05/31/95 6,488,235 6,541,979 6,718,702
06/30/95 6,585,673 6,657,903 6,832,050
07/31/95 6,678,606 6,798,651 6,961,877
08/31/95 6,748,055 6,851,680 7,005,970
09/30/95 6,927,463 7,015,299 7,210,625
10/31/95 6,951,677 6,997,550 7,232,688
11/30/95 7,162,157 7,215,033 7,466,550
12/31/95 7,292,520 7,328,598 7,594,747
01/31/96 7,433,500 7,460,880 7,770,035
02/29/96 7,369,418 7,464,461 7,759,228
03/31/96 7,371,821 7,492,602 7,782,486
04/30/96 7,410,586 7,542,247 7,833,808
05/31/96 7,513,959 7,619,352 7,948,665
06/30/96 7,582,005 7,644,512 8,009,534
07/31/96 7,373,565 7,447,742 7,805,984
08/31/96 7,419,161 7,565,252 7,899,528
09/30/96 7,690,524 7,845,097 8,221,345
10/31/96 7,881,144 8,011,492 8,430,238
11/30/96 8,328,115 8,384,828 8,870,342
12/31/96 8,249,779 8,281,695 8,731,919
01/31/97 8,509,553 8,535,115 9,069,956
02/28/97 8,525,297 8,566,695 9,121,646
03/31/97 8,308,693 8,317,404 8,856,329
04/30/97 8,538,609 8,567,758 9,226,592
05/31/97 8,895,376 8,918,179 9,598,509
06/30/97 9,126,126 9,204,453 9,902,088
07/31/97 9,717,486 9,728,186 10,481,645
08/31/97 9,509,711 9,419,803 10,093,573
09/30/97 9,903,777 9,795,653 10,484,813
10/31/97 9,726,780 9,617,371 10,335,540
11/30/97 9,887,686 9,793,369 10,641,636
12/31/97 10,058,979 9,938,310 10,794,124
01/31/98 10,085,684 10,007,878 10,921,185
02/28/98 10,486,263 10,405,192 11,390,281
03/31/98 10,809,467 10,723,589 11,756,120
04/30/98 10,782,622 10,797,582 11,851,625
05/31/98 10,755,778 10,688,527 11,774,356
06/30/98 10,943,031 10,881,989 12,101,263
07/31/98 10,690,846 10,754,670 12,034,233
08/31/98 9,736,145 9,827,617 11,068,627
09/30/98 10,169,292 10,252,170 11,597,735
10/31/98 10,559,372 10,635,601 12,139,222
11/30/98 10,967,595 11,024,864 12,608,235
12/31/98 11,289,520 11,431,683 13,059,290
01/31/99 11,352,885 11,614,590 13,424,257
02/28/99 10,983,256 11,335,839 13,080,183
03/31/99 11,087,208 11,615,835 13,423,181
04/30/99 11,597,943 11,996,834 13,752,118
05/31/99 11,534,101 11,812,082 13,509,124
06/30/99 11,846,488 12,138,096 13,941,763
</TABLE>
*Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that fund shares, when redeemed, may be worth
more or less than their original cost. The line graph above assumes the
investment of $5,000,000 on 7/1/92, the first full month following the Fund's
Institutional Class inception on 6/25/92, compared to a static 60/40 blend of
the Standard and Poor's 500 Index and the Lehman Brothers Aggregate Bond Index,
and the Lipper Balanced Index, each an unmanaged market index. The Fund may
invest in foreign securities which involve potentially higher risks including
foreign currency fluctuations and political or economic uncertainty.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 5 Holdings % of Total Investments
- -------------------------------------------------------
Government National 3.9%
Mortgage Assn., 6.500%
- -------------------------------------------------------
Federal National Mortgage 2.7%
Assn., 8.500%
- -------------------------------------------------------
Federal Home Loan 2.5%
Mortgage Corp., 6.500%
- -------------------------------------------------------
New England Educational 2.5%
Loan Marketing, 5.270%
- -------------------------------------------------------
Conagra, Inc., 5.298% 2.5%
- -------------------------------------------------------
Top Five Total 14.1%
- -------------------------------------------------------
Portfolio Composition
- -------------------------------------------------------
Common Stocks 49.6%
- -------------------------------------------------------
Mortgage-Backed Securities 21.9%
- -------------------------------------------------------
Short-Term Instruments 16.5%
- -------------------------------------------------------
Corporate Bonds & Notes 10.5%
- -------------------------------------------------------
Asset-Backed Securities 1.2%
- -------------------------------------------------------
U.S. Treasury Obligations 0.3%
- -------------------------------------------------------
Bond Analysis
- -------------------------------------------------------
Average Quality AA+
- -------------------------------------------------------
Duration 3.9 years
- -------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Balanced Fund posted a return of 8.3%for the one-year period ended June
30, 1999.
At the end of this period, the Fund's assets were allocated approximately 60%
to stocks and 40% to bonds. This allocation should offer investors the broad
diversification needed in any type of market.
The telecom sector greatly contributed to the Fund's performance this year.
The sector benefited from increased demand from corporations for data
communications capabilities. One standout in this sector was GTE. GTE provides
inter-networking services ranging from dial-up Internet access for consumers to
Web-based applications for Fortune 500 companies. The company benefited from
increased revenues, new product development, and the sale of some of its
business units.
Bell Atlantic also turned in a strong performance this year. This
telecommunications company is still benefiting from economies of scale resulting
from its merger with NYNEX two years ago. The company experienced higher usage
of its network facilities as well as an increase in access lines in service. As
the demand for telecommunications capabilities continues to grow, the manager is
optimistic that this company will continue to see earnings growth.
The Fund maintained an above-benchmark weighting in mortgage-backed
securities, which has significantly contributed to performance over the past
year, but was negative for performance in the second quarter of 1999. However,
this position will be maintained as the manager's outlook for a range-bound
interest rate environment makes this sector a good way to enhance yield without
adding significant risk. The manager also plans to maintain the portfolio
duration slightly above the benchmark, as long-term interest rates approach the
top of the forecasted secular range of 5% to 6.5%.
Effective on or about September 24, 1999, PIMCO Balanced Fund will be merged
into PIMCO Strategic Balanced Fund. The Strategic Balanced Fund seeks maximum
total return, consistent with preservation of capital and prudent investment
management, by investing in the securities eligible for purchase by the PIMCO
StocksPLUS and Total Return Funds. Full descriptions of these two Funds and the
Strategic Balanced Fund can be found in the PIMCO Funds: Pacific Investment
Management Series prospectus. The allocation of assets between equity and fixed
income is determined by Pacific Investment Management Company.
See page 81 for financial details. 27
<PAGE>
Financial Highlights -
Institutional and Administrative Classes
<TABLE>
<CAPTION>
Net Asset Net Realized/ Total Dividends
Value Unrealized Income from from Net
Selected Per Share Data Beginning Net Investment Gain (Loss) on Investment Investment
for the Year or Period Ended: of Period Income (Loss) Investments Operations Income
--------- -------------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
International Fund
Institutional Class
09/30/1998-06/30/1999 $ 10.47 $ 0.14 (a) $ 2.16 (a) $ 2.30 $ 0.00
- -----------------------------------------------------------------------------------------------------------
Administrative Class
09/30/98-06/30/1999 10.47 0.09 (a) 2.15 (a) 2.24 0.00
- -----------------------------------------------------------------------------------------------------------
Capital Appreciation Fund
Institutional Class
06/30/1999 $ 26.13 $ 0.16 (a) $ 2.35 (a) $ 2.51 $ (0.15)
- -----------------------------------------------------------------------------------------------------------
06/30/1998 21.19 0.15 (a) 6.59 (a) 6.74 (0.12)
- -----------------------------------------------------------------------------------------------------------
06/30/1997 18.10 0.24 5.08 5.32 (0.10)
- -----------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 16.94 0.35 1.99 2.34 (0.15)
- -----------------------------------------------------------------------------------------------------------
10/31/1995 13.34 0.18 3.60 3.78 (0.18)
- -----------------------------------------------------------------------------------------------------------
Administrative Class
06/30/1999 25.99 0.09 (a) 2.34 (a) 2.43 (0.13)
- -----------------------------------------------------------------------------------------------------------
06/30/1998 21.16 0.10 (a) 6.55 (a) 6.65 (0.14)
- -----------------------------------------------------------------------------------------------------------
07/31/1996-06/30/1997 17.19 0.16 6.03 6.19 (0.09)
- -----------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund
Institutional Class
06/30/1999 $ 24.09 $ 0.12 (a) $ (0.11)(a) $ 0.01 $ (0.02)
- -----------------------------------------------------------------------------------------------------------
06/30/1998 20.28 0.11 (a) 5.11 (a) 5.22 (0.07)
- -----------------------------------------------------------------------------------------------------------
06/30/1997 19.44 (0.07) 5.25 5.18 (0.05)
- -----------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 18.16 0.32 1.53 1.85 (0.14)
- -----------------------------------------------------------------------------------------------------------
10/31/1995 13.97 0.07 4.19 4.26 (0.07)
- -----------------------------------------------------------------------------------------------------------
Administrative Class
06/30/1999 23.96 0.06 (a) (0.06)(a) 0.00 (0.01)
- -----------------------------------------------------------------------------------------------------------
06/30/1998 20.24 0.05 (a) 5.08 (a) 5.13 (0.07)
- -----------------------------------------------------------------------------------------------------------
06/30/1997 19.44 (0.13) 5.25 5.12 (0.03)
- -----------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 18.17 0.28 1.53 1.81 (0.11)
- -----------------------------------------------------------------------------------------------------------
11/30/1994-10/31/1995 13.31 0.03 4.85 4.88 (0.02)
- -----------------------------------------------------------------------------------------------------------
Micro-Cap Growth Fund
Institutional Class
06/30/1999 $ 23.66 $ (0.14)(a) $ (2.89)(a) $ (3.03) $ 0.00
- -----------------------------------------------------------------------------------------------------------
06/30/1998 19.85 (0.11)(a) 6.54 (a) 6.43 0.00
- -----------------------------------------------------------------------------------------------------------
06/30/1997 18.47 0.00 3.41 3.41 0.00
- -----------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 15.38 0.00 3.43 3.43 0.00
- -----------------------------------------------------------------------------------------------------------
10/31/1995 11.87 (0.04) 3.55 3.51 0.00
- -----------------------------------------------------------------------------------------------------------
Administrative Class
06/30/1999 23.52 (0.19)(a) (2.88)(a) (3.07) 0.00
- -----------------------------------------------------------------------------------------------------------
06/30/1998 19.78 (0.17)(a) 6.53 (a) 6.36 0.00
- -----------------------------------------------------------------------------------------------------------
06/30/1997 18.46 (0.06) 3.41 3.35 0.00
- -----------------------------------------------------------------------------------------------------------
04/01/1996-06/30/1996 16.73 0.03 1.70 1.73 0.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
28 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Dividends in Distributions Distributions Ratio of Investment
Excess of Net from Net in Excess of Net Asset Expenses to Income (Loss)
Investment Realized Net Realized Total Value End Net Assets End Average Net to Average Net
Income Capital Gains Capital Gains Distributions of Period Total Return of Period (000s) Assets Assets
- ------------- ------------- ------------- ------------- --------- ------------ --------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ (1.15) $ 0.00 $ (1.15) $ 11.62 23.07% $ 3,627 1.09%* 1.70%*
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.15) 0.00 (1.15) 11.56 22.47 15,797 1.34* 1.06%
- ----------------------------------------------------------------------------------------------------------------------------------
$ 0.00 $ (1.65) $ 0.00 $ (1.80) $ 26.84 10.57% $ 645,967 0.71% 0.64%
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.68) 0.00 (1.80) 26.13 32.97 805,856 0.71 0.64
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (2.13) 0.00 (2.23) 21.19 31.52 536,187 0.71 1.02
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.03) 0.00 (1.18) 18.10 14.65 348,728 0.70* 1.33*
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 (0.18) 16.94 28.47 236,220 0.70 1.22
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.65) 0.00 (1.78) 26.64 10.30 229,831 0.95 0.38
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.68) 0.00 (1.82) 25.99 32.55 132,384 0.96 0.39
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (2.13) 0.00 (2.22) 21.16 38.26 3,115 0.96* 0.66*
- ----------------------------------------------------------------------------------------------------------------------------------
$ 0.00 $ (1.07) $ 0.00 $ (1.09) $ 23.01 0.33% $ 581,544 0.70% 0.54%
- ----------------------------------------------------------------------------------------------------------------------------------
(0.01) (1.33) 0.00 (1.41) 24.09 26.16 437,985 0.71 0.46
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (4.29) 0.00 (4.34) 20.28 30.58 291,374 0.71 0.53
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.43) 0.00 (0.57) 19.44 10.37 231,011 0.70* 1.11*
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 (0.07) 18.16 30.54 189,320 0.70 0.43
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.07) 0.00 (1.08) 22.88 0.31 104,337 0.95 0.30
- ----------------------------------------------------------------------------------------------------------------------------------
(0.01) (1.33) 0.00 (1.41) 23.96 25.75 73,614 0.95 0.22
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (4.29) 0.00 (4.32) 20.24 30.23 2,066 0.96 0.28
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.43) 0.00 (0.54) 19.44 10.17 1,071 0.95* 0.89*
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 (0.02) 18.17 36.64 892 0.94* 0.23*
- ----------------------------------------------------------------------------------------------------------------------------------
$ 0.00 $ 0.00 $ (0.63) $ (0.63) $ 20.00 (12.66)% $ 234,439 1.50% (0.71)%
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (2.62) 0.00 (2.62) 23.66 33.95 257,842 1.51 (0.50)
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (2.03) 0.00 (2.03) 19.85 20.05 164,139 1.52 (0.49)
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.34) 0.00 (0.34) 18.47 22.64 83,973 1.50* (0.45)*
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00 15.38 29.54 69,775 1.50 (0.37)
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 (0.63) (0.63) 19.82 (12.91) $ 3,000 1.75 (0.97)
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (2.62) 0.00 (2.62) 23.52 33.70 4,779 1.76 (0.74)
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 (2.03) 0.00 (2.03) 19.78 19.72 2,116 1.77 (0.74)
- ----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00 18.46 10.34 566 1.73* (0.74)*
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Portfolio
Turnover Rate
-------------
<S>
55%
- ---------------
55
- ---------------
120%
- ---------------
75
- ---------------
87
- ---------------
73
- ---------------
83
- ---------------
120
- ---------------
75
- ---------------
87
- ---------------
85%
- ---------------
66
- ---------------
82
- ---------------
79
- ---------------
78
- ---------------
85
- ---------------
66
- ---------------
82
- ---------------
79
- ---------------
72
- ---------------
73%
- ---------------
72
- ---------------
84
- ---------------
54
- ---------------
87
- ---------------
73
- ---------------
72
- ---------------
84
- ---------------
54
- ---------------
</TABLE>
See accompanying notes 29
<PAGE>
Financial Highlights -
Institutional and Administrative Classes (Cont.)
<TABLE>
<CAPTION>
Net Asset Net Realized/ Total Dividends
Value Unrealized Income from from Net
Selected Per Share Data Beginning Net Investment Gain (Loss) on Investment Investment
for the Year or Period Ended: of Period Income (Loss) Investments Operations Income
--------- -------------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Small-Cap Growth Fund
Institutional Class
06/30/1999 $ 14.01 $ (0.01)(a) $ (2.12)(a) $ (2.13) $ 0.00
06/30/1998 13.40 (0.03)(a) 2.52 (a) 2.49 0.00
06/30/1997 20.83 (0.01)(a) 3.17 (a) 3.16 0.00
11/01/1995-06/30/1996 21.02 2.02 (0.61) 1.41 0.00
10/31/1995 19.38 (0.05) 3.12 3.07 0.00
Administrative Class
06/30/1999 13.97 (0.04)(a) (2.12)(a) (2.16) 0.00
06/30/1998 13.41 (0.07)(a) 2.51 (a) 2.44 0.00
06/30/1997 20.82 (0.06)(a) 3.24 (a) 3.18 0.00
11/01/1995-06/30/1996 21.01 2.02 (a) (0.61)(a) 1.41 0.00
09/27/1995-10/31/1995 21.90 (0.02) (0.87) (0.89) 0.00
Growth Fund
Institutional Class
03/31/1999-06/30/1999 $ 31.27 $ (0.01)(a) $ (0.02)(a) $ (0.03) $ 0.00
Administrative Class
03/31/1999-06/30/1999 31.27 (0.04)(a) 0.00 (a) (0.04) 0.00
Target Fund
Institutional Class
03/31/1999-06/30/1999 $ 16.34 $ (0.02)(a) $ 1.42 (a) $ 1.40 $ 0.00
Administrative Class
03/31/1999-06/30/1999 16.34 (0.03)(a) 1.42 (a) 1.39 0.00
Renaissance Fund
Institutional Class
06/30/1999 $ 19.07 $ 0.06 (a) $ 1.43 (a) $ 1.49 $ 0.00
12/30/1997-06/30/1998 16.73 0.05 2.29 2.34 0.00
Administrative Class
08/31/1998-06/30/1999 15.37 0.02 (a) 5.12 (a) 5.14 0.00
Opportunity Fund
Institutional Class
03/31/1999-06/30/1999 $ 21.40 $ (0.03)(a) $ 2.89 (a) $ 2.86 $ 0.00
Administrative Class
03/31/1999-06/30/1999 21.40 (0.05)(a) 2.91 (a) 2.86 0.00
Innovation Fund
Institutional Class
03/05/1999-06/30/1999 $ 32.73 $ (0.05)(a) $ 4.82 (a) $ 4.77 $ 0.00
</TABLE>
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
30 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Dividends in Distributions Distributions Ratio of Investment
Excess of Net from Net in Excess of Net Asset Expenses to Income (Loss)
Investment Realized Net Realized Total Value End Net Assets End Average Net to Average Net
Income Capital Gains Capital Gains Distributions of Period Total Return of Period (000s) Assets Assets
- ------------- ------------- ------------- ------------- --------- ------------ ---------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ 0.00 $ (0.47) $ (0.47) $ 11.41 (14.99)% $ 66,393 1.25% (0.09)%
0.00 (1.88) 0.00 (1.88) 14.01 19.33 47,641 1.26 (0.20)
0.00 (10.59) 0.00 (10.59) 13.40 22.82 33,390 1.32 (0.05)
0.00 (1.60) 0.00 (1.60) 20.83 7.22 32,954 1.25* (0.20)*
0.00 (1.43) 0.00 (1.43) 21.02 17.39 73,977 1.25 (0.27)
0.00 0.00 (0.47) (0.47) 11.34 (15.26) 2,229 1.50 (0.33)
0.00 (1.88) 0.00 (1.88) 13.97 18.90 981 1.49 (0.51)
0.00 (10.59) 0.00 (10.59) 13.41 23.12 1 1.54 (0.36)
0.00 (1.60) 0.00 (1.60) 20.82 7.18 112 1.50* (0.41)*
0.00 0.00 0.00 0.00 21.01 (5.34) 544 1.60* (0.82)*
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 31.24 (0.10)% $ 948 0.74%* (0.19)%
0.00 0.00 0.00 0.00 31.23 (0.13) 6,164 0.97* (0.53)*
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 17.74 8.57% $ 1,298 0.79%* (0.39)%
0.00 0.00 0.00 0.00 17.73 8.51 $ 5,513 1.02* (0.61)*
$ 0.00 $ (2.33) $ 0.00 $ (2.33) $ 18.23 10.24% $ 136 0.86% 0.38%
0.00 0.00 0.00 0.00 19.07 13.99 851 0.86* 0.55*
0.00 (2.33) 0.00 (2.33) 18.18 36.41 $ 427 1.09* 0.13*
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 24.26 13.36% $ 417 0.88* (0.54)*
0.00 0.00 0.00 0.00 24.26 13.36 $ 2,010 1.12* (0.82)*
$ 0.00 $ 0.00 $ 0.00 $ 0.00 37.50 14.57% $ 444 0.88%* (0.15)%
</TABLE>
Portfolio
Turnover Rate
- -------------
94%
77
129
59
86
94
77
129
59
9
131%
131
229%
229
221%
192
221
175%
175
119%
See accompanying notes 31
<PAGE>
Financial Highlights -
Institutional and Administrative Classes (Cont.)
<TABLE>
<CAPTION>
Net Asset Net Realized/ Total Dividends
Value Unrealized Income from from Net
Selected Per Share Data Beginning Net Investment Gain (Loss) on Investment Investment
for the Year or Period Ended: of Period Income (Loss) Investments Operations Income
--------- -------------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Core Equity Fund
Institutional Class
06/30/1999 $ 20.39 $ (0.04)(a) $ 5.24 (a) $ 5.20 $ (0.00)
- -------------------------------------------------------------------------------------------------------------
06/30/1998 15.55 0.03 (a) 6.11 (a) 6.14 0.00
- -------------------------------------------------------------------------------------------------------------
06/30/1997 13.55 0.03 (a) 2.78 (a) 2.81 (0.02)
- -------------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 12.72 0.51 0.65 1.16 (0.04)
- -------------------------------------------------------------------------------------------------------------
12/28/1994-10/31/1995 10.00 0.07 2.71 2.78 (0.06)
- -------------------------------------------------------------------------------------------------------------
Administrative Class
06/30/1999 20.32 (0.03)(a) 5.11 (a) 5.08 (0.00)
- -------------------------------------------------------------------------------------------------------------
06/30/1998 15.53 (0.01)(a) 6.10 (a) 6.09 0.00
- -------------------------------------------------------------------------------------------------------------
06/30/1997 13.56 0.00 (a) 2.77 (a) 2.77 (0.01)
- -------------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 12.73 0.49 0.65 1.14 (0.02)
- -------------------------------------------------------------------------------------------------------------
05/31/1995-10/31/1995 11.45 0.02 1.28 1.30 (0.02)
- -------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund
Institutional Class
06/30/1999 $ 13.53 $ (0.03)(a) $ 2.99 (a) $ 2.96 $ 0.00
- -------------------------------------------------------------------------------------------------------------
06/30/1998 14.04 (0.03)(a) 3.61 (a) 3.58 0.00
- -------------------------------------------------------------------------------------------------------------
06/30/1997 14.66 (0.06)(a) 1.31 (a) 1.25 0.00
- -------------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 12.92 0.49 1.62 2.11 0.00
- -------------------------------------------------------------------------------------------------------------
12/28/1994-10/31/1995 10.00 0.02 2.92 2.94 (0.02)
- -------------------------------------------------------------------------------------------------------------
International Growth Fund
Institutional Class
06/30/1999 $ 13.55 $ (0.02)(a) $ 3.56 (a) $ 3.54 $ (0.02)
- -------------------------------------------------------------------------------------------------------------
12/31/1997-06/30/1998 10.00 0.00 (a) 3.55 (a) 3.55 0.00
- -------------------------------------------------------------------------------------------------------------
Equity Income Fund
Institutional Class
06/30/1999 $ 16.09 $ 0.44 (a) $ 1.28 (a) $ 1.72 $ (0.43)
- -------------------------------------------------------------------------------------------------------------
06/30/1998 15.41 0.44 (a) 2.75 (a) 3.19 (0.42)
- -------------------------------------------------------------------------------------------------------------
06/30/1997 14.36 0.40 3.17 3.57 (0.55)
- -------------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 13.09 0.78 1.31 2.09 (0.34)
- -------------------------------------------------------------------------------------------------------------
10/31/1995 11.75 0.46 1.67 2.13 (0.46)
- -------------------------------------------------------------------------------------------------------------
Administrative Class
06/30/1999 16.08 0.41 (a) 1.28 (a) 1.69 (0.40)
- -------------------------------------------------------------------------------------------------------------
06/30/1998 15.40 0.40 (a) 2.75 (a) 3.15 (0.38)
- -------------------------------------------------------------------------------------------------------------
06/30/1997 14.35 0.27 3.26 3.53 (0.51)
- -------------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 13.13 0.75 1.31 2.06 (0.36)
- -------------------------------------------------------------------------------------------------------------
11/30/1994-10/31/1995 11.12 0.39 2.35 2.74 (0.40)
- -------------------------------------------------------------------------------------------------------------
Value Fund
Institutional Class
06/30/1999 $ 15.66 $ 0.28 (a) $ 1.36 (a) $ 1.64 $ (0.28)
- -------------------------------------------------------------------------------------------------------------
06/30/1998 14.81 0.25 (a) 2.47 (a) 2.72 (0.24)
- -------------------------------------------------------------------------------------------------------------
06/30/1997 12.46 1.05 2.11 3.16 (0.31)
- -------------------------------------------------------------------------------------------------------------
11/01/1995-06/30/1996 12.53 0.25 1.62 1.87 (0.17)
- -------------------------------------------------------------------------------------------------------------
10/31/1995 11.55 0.30 2.18 2.48 (0.30)
- -------------------------------------------------------------------------------------------------------------
Administrative Class
06/30/1999 15.65 0.26 (a) 1.32 (a) 1.58 (0.25)
- -------------------------------------------------------------------------------------------------------------
08/21/1997-06/30/1998 15.66 0.19 (a) 1.65 (a) 1.84 (0.22)
- -------------------------------------------------------------------------------------------------------------
Value 25 Fund
Institutional Class
07/10/1998-06/30/1999 $ 10.00 $ 0.15 (a) $ (1.10)(a) $ (0.95) $ (0.06)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
(b) Ratio of expenses to average net assets excluding trustees' fees and
interest expense is 0.82%.
32 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Dividends in Distributions Distributions Ratio of Investment
Excess of Net from Net in Excess of Net Asset Expenses to Income (Loss)
Investment Realized Net Realized Total Value End Net Assets End Average Net to Average Net
Income Capital Gains Capital Gains Distributions of Period Total Return of Period (000s) Assets Assets
- ------------- ------------- ------------- ------------- --------- ------------ ---------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ (0.73) $ 0.00 $ (0.73) $ 24.86 26.34% $ 1,184 1.01% (0.20)%
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.30) 0.00 (1.30) 20.39 41.83 1,915 0.83 0.20
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.79) 0.00 (0.81) 15.55 21.59 6,444 0.87 0.23
- -----------------------------------------------------------------------------------------------------------------------------------
(0.01) (0.28) 0.00 (0.33) 13.55 9.41 10,452 0.82* 0.53*
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 (0.06) 12.72 27.86 7,791 0.82* 0.79*
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.73) 0.00 (0.73) 24.67 25.84 15 1.08 (0.17)
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.30) 0.00 (1.30) 20.32 41.54 128,666 1.08 (0.07)
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.79) 0.00 (0.80) 15.53 21.20 29,332 1.13 (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
(0.01) (0.28) 0.00 (0.31) 13.56 9.23 33,575 1.07* 0.28*
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 (0.02) 12.73 11.34 24,645 1.06* 0.34*
- -----------------------------------------------------------------------------------------------------------------------------------
$ 0.00 $ (0.65) $ 0.00 $ (0.65) $ 15.84 23.18% $ 7,399 0.89% (0.22)%
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (4.09) 0.00 (4.09) 13.53 30.40 8,488 0.89 (0.25)
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.87) 0.00 (1.87) 14.04 9.61 7,591 1.15 (0.43)
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.37) 0.00 (0.37) 14.66 16.72 8,378 0.88* (0.32)*
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 (0.02) 12.92 29.34 8,357 0.88* 0.24*
- -----------------------------------------------------------------------------------------------------------------------------------
$ 0.00 $ (1.03) $ 0.00 $ (1.05) $ 16.04 28.62% $ 8,408 1.39% (0.15)%
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 0.00 0.00 0.00 13.55 35.50% 6,822 1.36* 0.08*
- -----------------------------------------------------------------------------------------------------------------------------------
$ 0.00 $ (1.76) $ 0.00 $ (2.19) $ 15.62 12.56% $ 123,012 0.71% 3.00%
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (2.09) 0.00 (2.51) 16.09 21.84 138,650 0.71 2.71
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.97) 0.00 (2.52) 15.41 27.67 121,138 0.72 3.03
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.48) 0.00 (0.82) 14.36 16.35 116,714 0.70* 3.41*
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.33) 0.00 (0.79) 13.09 19.36 118,015 0.70 3.83
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.76) 0.00 (2.16) 15.61 12.31 13,797 0.96 2.80
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (2.09) 0.00 (2.47) 16.08 21.58 11,699 0.96 2.45
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.97) 0.00 (2.48) 15.40 27.40 8,145 0.97 2.79
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.48) 0.00 (0.84) 14.35 16.08 6,097 0.95* 3.19*
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.33) 0.00 (0.73) 13.13 25.69 140 0.95* 3.43*
- -----------------------------------------------------------------------------------------------------------------------------------
$ 0.00 $ (1.72) $ 0.00 $ (2.00) $ 15.30 12.30% $ 69,181 0.71% 1.99%
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.63) 0.00 (1.87) 15.66 19.35 83,219 0.71 1.59
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (0.50) 0.00 (0.81) 14.81 26.38 74,613 0.73 2.02
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.77) 0.00 (1.94) 12.46 16.24 52,727 0.70* 2.40*
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.20) 0.00 (1.50) 12.53 24.98 14,443 0.70 2.50
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.72) 0.00 (1.97) 15.26 11.91 23,164 0.95 1.81
- -----------------------------------------------------------------------------------------------------------------------------------
0.00 (1.63) 0.00 (1.85) 15.65 12.71 10,349 0.96* 1.40*
- -----------------------------------------------------------------------------------------------------------------------------------
$ 0.00 $ 0.00 $ 0.00 $ (0.06) $ 8.99 (9.48)% $ 229 0.85%* 1.89%*
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Portfolio
Turnover Rate
- -------------
<S>
95%
- -------------
120
- -------------
139
- -------------
73
- -------------
123
- -------------
95
- -------------
120
- -------------
139
- -------------
73
- -------------
58
- -------------
273%
- -------------
268
- -------------
202
- -------------
97
- -------------
132
- -------------
269%
- -------------
60
- -------------
76%
- -------------
45
- -------------
45
- -------------
52
- -------------
46
- -------------
76
- -------------
45
- -------------
45
- -------------
52
- -------------
43
- -------------
101%
- -------------
77
- -------------
71
- -------------
29
- -------------
71
- -------------
101
- -------------
77
- -------------
182%
- -------------
</TABLE>
See accompanying notes 33
<PAGE>
Financial Highlights -
Institutional and Administrative Classes (Cont.)
<TABLE>
<CAPTION>
Net Asset Net Realized/ Total Dividends Dividends in
Value Unrealized Income from from Net Excess of Net
Selected Per Share Data Beginning Net Investment Gain (Loss) on Investment Investment Investment
for the Year or Period Ended: of Period Income (Loss) Investments Operations Income Income
--------- -------------- -------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Small-Cap Value Fund
Institutional Class
06/30/1999 $ 17.68 $ 0.32 (a) $ (1.29)(a) $ (0.97) $ (0.21) $ 0.00
06/30/1998 15.78 0.29 (a) 2.50 (a) 2.79 (0.13) 0.00
06/30/1997 14.20 0.46 3.63 4.09 (0.13) 0.00
11/01/1995-06/30/1996 13.10 0.56 1.49 2.05 (0.21) 0.00
10/31/1995 12.07 0.28 1.92 2.20 (0.28) 0.00
Administrative Class
06/30/1999 17.63 0.29 (a) (1.30)(a) (1.01) (0.20) 0.00
06/30/1998 15.76 0.25 (a) 2.49 (a) 2.74 (0.11) 0.00
06/30/1997 14.20 0.38 3.68 4.06 (0.12) 0.00
11/01/1995-06/30/1996 13.16 0.54 1.43 1.97 (0.19) 0.00
Enhanced Equity Fund
Institutional Class
06/30/1999 $ 12.64 $ 0.08 (a) $ 1.91 (a) $ 1.99 $ (0.06) $ 0.00
06/30/1998 16.46 0.11 (a) 3.91 (a) 4.02 (0.11) 0.00
06/30/1997 15.91 1.18 3.10 4.28 (0.10) 0.00
11/01/1995-06/30/1996 14.44 0.34 1.67 2.01 (0.16) 0.00
10/31/1995 11.99 0.25 2.62 2.87 (0.25) 0.00
Administrative Class
06/30/1999 12.59 0.05 (a) 1.90 (a) 1.95 (0.06) 0.00
08/21/1997-06/30/1998 17.53 0.05 (a) 2.85 (a) 2.90 (0.11) 0.00
Structured Emerging Markets Fund
Institutional Class
06/30/1999 $ 10.00 $ 0.15 (a) $ 2.57 (a) $ 2.72 $ (0.07) $ 0.00
Tax-Efficient Structured
Emerging Markets Fund
Institutional Class
06/30/1999 $ 10.00 $ 0.16 (a) $ 3.10 (a) $ 3.26 $ (0.06) $ 0.00
Tax-Efficient Equity Fund
Administrative Class
09/30/1998-06/30/1999 $ 8.65 $ 0.03 (a) $ 2.93 (a) $ 2.96 $ 0.00 $ 0.00
Balanced Fund
Institutional Class
06/30/1999 $ 12.15 $ 0.31 (a) $ 0.53 (a) $ 0.84 $ (0.29) $ 0.00
06/30/1998 11.42 0.35 (a) 1.81 (a) 2.16 (0.34) 0.00
06/30/1997 11.64 0.89 1.21 2.10 (0.36) 0.00
11/01/1995-06/30/1996 11.89 0.27 0.76 1.03 (0.27) 0.00
10/31/1995 10.35 0.44 1.54 1.98 (0.44) 0.00
</TABLE>
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
34 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Distributions Distributions Fund Ratio of Investment
from Net in Excess of Reimbusement Net Asset Expenses to Income (Loss)
Realized Net Realized Total Fee Added to Value End Net Assets End Average Net to Average Net
Capital Gains Capital Gains Distributions Paid-in-Capital of Period Total Return of Period (000s) Assets Assets
- ------------- ------------- ------------- --------------- --------- ------------ ---------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ (0.45) $ (0.66) $ 0.00 $ 16.05 (5.11)% $ 59,132 0.85% 2.12%
(0.76) 0.00 (0.89) 0.00 17.68 17.77 47,432 0.85 1.65
(2.38) 0.00 (2.51) 0.00 15.78 31.99 34,639 0.90 1.92
(0.74) 0.00 (0.95) 0.00 14.20 16.35 29,017 0.85* 2.12*
(0.89) 0.00 (1.17) 0.00 13.10 19.88 35,093 0.85 2.25
0.00 (0.45) (0.65) 0.00 15.97 (5.40) 21,022 1.10 1.92
(0.76) 0.00 (0.87) 0.00 17.63 17.41 10,751 1.10 1.39
(2.38) 0.00 (2.50) 0.00 15.76 31.70 5,916 1.16 1.68
(0.74) 0.00 (0.93) 0.00 14.20 15.64 4,433 1.10* 1.86*
$ (1.61) $ 0.00 $ (1.67) $ 0.00 $ 12.96 17.95% $ 42,619 0.71% 0.66%
(7.73) 0.00 (7.84) 0.00 12.64 32.33 36,584 0.71 0.63
(3.63) 0.00 (3.73) 0.00 16.46 31.45 44,838 0.74 1.31
(0.38) 0.00 (0.54) 0.00 15.91 14.21 83,425 0.70* 1.58*
(0.17) 0.00 (0.42) 0.00 14.44 24.46 73,999 0.70 1.91
(1.61) 0.00 (1.67) 0.00 12.87 17.63 24,015 0.96 0.41
(7.73) 0.00 (7.84) 0.00 12.59 23.85 10,409 0.95* 0.47*
$ (0.28) $ 0.00 $ (0.35) $ 0.05 $ 12.42 29.21% $ 46,577 0.95% 1.56%
$ 0.00 $ 0.00 $ (0.06) $ 0.05 $ 13.25 33.39% $ 72,509 0.95% 1.57%
$ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 11.61 34.28% $ 3,391 0.92% 0.31%*
$ (1.64) $ 0.00 $ (1.93) $ 0.00 $ 11.06 8.26% $ 37,630 0.73% 2.81%
(1.09) 0.00 (1.43) 0.00 12.15 19.91 41,222 0.72 2.91
(1.96) 0.00 (2.32) 0.00 11.42 20.37 61,518 0.74 3.33
(1.01) 0.00 (1.28) 0.00 11.64 9.07 82,562 0.70* 3.46*
0.00 0.00 (0.44) 0.00 11.89 19.47 72,638 0.70 3.73
</TABLE>
Portfolio
Turnover Rate
- -------------
60%
41
48
35
50
60
41
48
35
34%
65
91
53
21
34
65
30%
28%
13%
221%
186
199
140
43
See accompanying notes 35
<PAGE>
Statements of Assets and Liabilities
June 30, 1999
<TABLE>
<CAPTION>
Capital Mid-Cap
International Appreciation Growth Micro-Cap Small-Cap
Amounts in thousands, except per share amounts Fund Fund Fund Growth Fund Growth Fund Growth Fund
---------------- ------------ ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at value $ 141,510 $ 1,156,787 $ 1,022,454 $ 236,733 $ 70,603 $ 2,432,141
Cash and foreign currency 5,913 0 140 1 112 623
Receivable for investments and foreign currency sold 6,397 5,177 4,923 2,179 104 18,944
Receivable for Fund shares sold 436 2,353 4,079 85 5 4,074
Variation margin receivable 0 0 0 0 0 0
Interest and dividends receivable 648 1,193 958 92 31 813
154,904 1,165,510 1,032,554 239,090 70,855 2,456,595
Liabilities:
Payable for investments and foreign currency purchased $ 4,583 $ 40,234 $ 14,879 $ 1,291 $ 1,660 $ 15,517
Written options outstanding 0 0 0 0 0 0
Payable for Fund shares redeemed 993 15,807 8,744 70 504 4,610
Accrued investment advisory fee 63 405 363 241 55 933
Accrued administration fee 72 253 240 48 14 746
Accrued distribution fee 67 81 119 0 0 1,273
Accrued servicing fee 28 89 84 1 0 466
Variation margin payable 11 0 0 0 0 0
Due to custodial bank 0 5,015 0 0 0 0
5,817 61,884 24,429 1,651 2,233 23,545
Net Assets $ 149,087 $ 1,103,626 $ 1,008,125 $ 237,439 $ 68,622 $ 2,433,050
Net Assets Consist of:
Paid in capital $ 121,576 $ 756,091 $ 859,420 $ 198,895 $ 67,921 $ 1,484,604
Undistributed (overdistributed) net investment income (1,499) 1,527 1,312 0 12 1
Accumulated undistributed net realized gain (loss) 14,242 123,654 640 (9,322) (10,137) 374,990
Net unrealized appreciation (depreciation) 14,768 222,354 146,753 47,866 10,826 573,455
$ 149,087 $ 1,103,626 $ 1,008,125 $ 237,439 $ 68,622 $ 2,433,050
Net Assets:
Institutional Class $ 3,627 $ 645,967 $ 581,544 $ 234,439 $ 66,393 $ 948
Administrative Class 15,797 229,831 104,337 3,000 2,229 6,164
Other Classes 129,663 227,828 322,244 0 0 2,425,938
Shares Issued and Outstanding:
Institutional Class 312 24,067 25,278 11,725 5,820 30
Administrative Class 1,367 8,627 4,559 151 197 197
Net Asset Value and Redemption Price Per Share
(Net Assets Per Share Outstanding)
Institutional Class $ 11.62 $ 26.84 $ 23.01 $ 20.00 $ 11.41 $ 31.24
Administrative Class 11.56 26.64 22.88 19.82 11.34 31.23
Cost of Investments Owned $ 126,506 $ 934,433 $ 875,701 $ 188,866 $ 59,777 $ 1,858,686
Cost of Foreign Currency Held $ 5,998 $ 0 $ 0 $ 0 $ 0 $ 0
</TABLE>
36 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Renaissance Opportunity Innovation Core Mid-Cap International Equity
Target Fund Fund Fund Fund Equity Fund Equity Fund Growth Fund Income Fund Value Fund Value 25 Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$1,146,022 $ 651,001 $ 430,142 $1,294,717 $ 1,060 $ 9,075 $ 8,774 $ 199,430 $ 229,367 $ 2,541
- ------------------------------------------------------------------------------------------------------------------------------------
565 6,508 234 1,420 1 1 160 0 9 0
- ------------------------------------------------------------------------------------------------------------------------------------
43,271 22,149 22,024 58,078 584 787 0 8,862 4,806 625
- ------------------------------------------------------------------------------------------------------------------------------------
5,397 854 330 7,026 1,000 0 0 373 342 39
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
110 658 55 102 1 3 21 573 672 2
- ------------------------------------------------------------------------------------------------------------------------------------
1,195,365 681,170 452,785 1,361,343 2,646 9,866 8,955 209,238 235,196 3,207
====================================================================================================================================
$ 24,462 $ 17,499 $ 17,895 $ 92,960 $ 7 $ 41 $ 530 $ 4,285 $ 3,062 $ 736
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
3,023 2,828 1,207 1,752 1,439 2,419 0 260 233 257
- ------------------------------------------------------------------------------------------------------------------------------------
488 322 219 606 1 5 11 75 91 1
- ------------------------------------------------------------------------------------------------------------------------------------
355 215 135 373 0 2 6 50 68 1
- ------------------------------------------------------------------------------------------------------------------------------------
574 347 183 516 0 0 0 29 71 1
- ------------------------------------------------------------------------------------------------------------------------------------
222 134 84 233 0 0 0 16 33 0
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 2,518 0 22
- ------------------------------------------------------------------------------------------------------------------------------------
29,124 21,345 19,723 96,440 1,447 2,467 547 7,233 3,558 1,018
====================================================================================================================================
$1,166,241 $ 659,825 $ 433,062 $1,264,903 $ 1,199 $ 7,399 $ 8,408 $ 202,005 $ 231,638 $ 2,189
====================================================================================================================================
$ 822,586 $ 542,158 $ 290,503 $ 799,215 $ (1,469) $ 3,098 $ 5,367 $ 157,826 $ 189,075 $ 2,215
- ------------------------------------------------------------------------------------------------------------------------------------
67,742 41,268 12,827 0 0 2,766 1,459 4,946 10,727 10
- ------------------------------------------------------------------------------------------------------------------------------------
43,636 53,387 73,039 58,521 2,492 154 224 19,846 12,987 (84)
- ------------------------------------------------------------------------------------------------------------------------------------
232,277 23,012 56,693 407,167 176 1,381 1,358 19,387 18,849 48
- ------------------------------------------------------------------------------------------------------------------------------------
$1,166,241 $ 659,825 $ 433,062 $1,264,903 $ 1,199 $ 7,399 $ 8,408 $ 202,005 $ 231,638 $ 2,189
====================================================================================================================================
$ 1,298 $ 136 $ 417 $ 444 $ 1,184 $ 7,399 $ 8,408 $ 123,012 $ 69,181 $ 229
- ------------------------------------------------------------------------------------------------------------------------------------
5,513 427 2,010 0 15 0 0 13,797 23,164 0
- ------------------------------------------------------------------------------------------------------------------------------------
1,159,430 659,262 430,635 1,264,459 0 0 0 65,196 139,293 1,960
- ------------------------------------------------------------------------------------------------------------------------------------
73 7 17 12 48 467 524 7,874 4,520 26
- ------------------------------------------------------------------------------------------------------------------------------------
311 23 83 0 1 0 0 884 1,518 0
- ------------------------------------------------------------------------------------------------------------------------------------
$ 17.74 $ 18.23 $ 24.26 $ 37.50 $ 24.86 $ 15.84 $ 16.04 $ 15.62 $ 15.30 $ 8.99
- ------------------------------------------------------------------------------------------------------------------------------------
17.73 18.18 24.26 0.00 24.67 0.00 0.00 15.61 15.26 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
$ 913,744 $ 627,988 $ 373,449 $ 887,549 $ 884 $ 7,694 $ 7,414 $ 180,043 $ 210,518 $ 2,492
====================================================================================================================================
$ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 88 $ 0 $ 0 $ 0
====================================================================================================================================
</TABLE>
See accompanying notes 37
<PAGE>
Statements of Assets and Liabilities (Cont.)
June 30, 1999
<TABLE>
<CAPTION>
Tax-Efficient
Structured Structured
Small-Cap Enhanced Emerging Emerging Tax-Efficient Balanced
Amounts in thousands, except per share amounts Value Fund Equity Fund Markets Fund Markets Fund Equity Fund Fund
------------ ------------ ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at value $ 396,722 $ 66,609 $ 47,881 $ 72,675 $ 28,146 $ 80,463
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and foreign currency 1,054 0 362 561 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable for investments
and foreign currency sold 760 0 0 0 0 432
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 1,508 56 0 0 249 165
- ------------------------------------------------------------------------------------------------------------------------------------
Variation margin receivable 0 0 0 0 0 53
- ------------------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 1,006 55 113 153 20 218
- ------------------------------------------------------------------------------------------------------------------------------------
401,050 66,720 48,356 73,389 28,415 81,331
====================================================================================================================================
Liabilities:
Payable for investments and foreign
currency purchased $ 1,297 $ 0 $ 1,363 $ 684 $ 197 $ 8,445
- ------------------------------------------------------------------------------------------------------------------------------------
Written options outstanding 0 0 0 0 0 7
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 1,605 44 240 0 155 73
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued investment advisory fee 192 23 17 25 10 26
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued administration fee 118 13 18 27 8 19
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued distribution fee 127 0 0 0 10 15
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued servicing fee 68 4 0 0 5 7
- ------------------------------------------------------------------------------------------------------------------------------------
Variation margin payable 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Due to custodial bank 0 2 141 144 79 97
- ------------------------------------------------------------------------------------------------------------------------------------
3,407 86 1,779 880 464 8,689
====================================================================================================================================
Net Assets $ 397,643 $ 66,634 $ 46,577 $ 72,509 $ 27,951 $ 72,642
====================================================================================================================================
Net Assets Consist of:
Paid in capital $ 414,727 $ 45,703 $ 40,008 $ 84,253 $ 24,894 $ 63,012
- ------------------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net
investment income 3,303 321 967 307 (5) 6
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) (12,072) 2,293 264 (10,388) (228) 3,937
- ------------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) (8,315) 18,317 5,338 (1,663) 3,290 5,687
- ------------------------------------------------------------------------------------------------------------------------------------
$ 397,643 $ 66,634 $ 46,577 $ 72,509 $ 27,951 $ 72,642
====================================================================================================================================
Net Assets:
Institutional Class $ 59,132 $ 42,619 $ 46,577 $ 72,509 $ 0 $ 37,630
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 21,022 24,015 0 0 3,391 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 317,489 0 0 0 24,560 35,012
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Institutional Class 3,685 3,289 3,750 5,474 0 3,403
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 1,316 1,865 0 0 292 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share
(Net Assets Per Share Outstanding)
Institutional Class $ 16.05 $ 12.96 $ 12.42 $ 13.25 $ 0.00 $ 11.06
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 15.97 12.87 0.00 0.00 11.61 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 405,037 $ 48,292 $ 42,405 $ 74,196 $ 24,856 $ 74,786
====================================================================================================================================
Cost of Foreign Currency Held $ 0 $ 0 $ 228 $ 311 $ 0 $ 0
====================================================================================================================================
</TABLE>
38 See accompanying notes
<PAGE>
Statements of Operations
For the period ended June 30, 1999
<TABLE>
<CAPTION>
Capital Mid-Cap Micro-Cap Small-Cap
International Appreciation Growth Growth Growth
Amounts in thousands Fund Fund Fund Fund Fund Growth Fund
------------- ------------ ---------- ------------- ---------- -----------
Investment Income:
<S> <C> <C> <C> <C> <C> <C>
Dividends, net of foreign taxes $ 2,071 $ 13,332 $ 8,522 $ 1,291 $ 497 $ 12,164
- ------------------------------------------------------------------------------------------------------------------------------------
Interest 155 1,771 2,371 636 175 3,340
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income 2,226 15,103 10,893 1,927 672 15,504
====================================================================================================================================
Expenses:
Investment advisory fees 754 5,058 3,927 3,035 574 10,729
- ------------------------------------------------------------------------------------------------------------------------------------
Administration fees 878 3,130 2,642 607 144 8,581
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees -
Administrative Class 17 515 235 8 3 0
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees -
Other Classes 1,197 1,457 2,312 0 0 20,053
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 11 86 64 19 4 165
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense 130 2 0 0 0 24
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 2,987 10,248 9,180 3,669 725 39,552
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (761) 4,855 1,713 (1,742) (53) (24,048)
====================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 18,157 127,483 867 (9,322) (9,957) 412,268
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and written options contracts 85 0 0 0 0 1,267
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
foreign currency transactions (2,202) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (16,468) (27,333) 7,029 (26,056) 799 (30,494)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on futures and written
options contracts (87) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on translation of assets and
liabilities denominated in foreign currencies (108) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) (623) 100,150 7,896 (35,378) (9,158) 383,041
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Assets
Resulting from Operations $ (1,384) $ 105,005 $ 9,609 $ (37,120) $ (9,211) $ 358,993
====================================================================================================================================
</TABLE>
See accompanying notes 39
<PAGE>
Statements of Operations (Cont.)
For the period ended June 30, 1999
<TABLE>
<CAPTION>
Renaissance Opportunity Innovation Core Mid-Cap
Amounts in thousands Target Fund Fund Fund Fund Equity Fund Equity Fund
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 3,734 $ 6,743 $ 672 $ 523 $ 432 $ 45
Interest 3,131 923 1,496 2,234 223 35
Total Income 6,865 7,666 2,168 2,757 655 80
Expenses:
Investment advisory fees 5,838 3,771 3,171 4,454 413 75
Administration fees 4,244 2,514 1,951 2,740 181 29
Distribution and/or
servicing fees - Administrative Class 2 1 0 0 177 8
Distribution and/or
servicing fees - Other Classes 9,563 5,636 3,859 5,574 0 0
Trustees' fees 82 49 41 44 8 1
Interest expense 16 7 17 1 1 0
Total Expenses 19,745 11,978 9,039 12,813 780 113
Net Investment Income (Loss) (12,880) (4,312) (6,871) (10,056) (125) (33)
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 123,732 101,571 91,858 85,853 46,990 2 ,964
Net realized gain (loss) on
futures and written options contracts 1,262 (642) 1,089 (3,778) 86 0
Net realized gain (loss) on
foreign currency transactions 0 (1) 0 0 0 0
Net change in unrealized appreciation
(depreciation) on investments 38,444 (42,439) (86,017) 250,480 (29,090) (130)
Net change in unrealized appreciation
(depreciation) on futures and
written options contracts 0 (77) 0 324 0 0
Net change in unrealized appreciation
(depreciation) on translation of assets and
liabilities denominated in foreign currencies 0 (2) 0 0 0 0
Net Gain 163,438 58,410 6,930 332,879 17,986 2 ,834
Net Increase in Assets
Resulting from Operations $ 150,558 $ 54,098 $ 59 $322,823 $ 17,861 $ 2, 801
</TABLE>
* For the period July 10, 1998 to June 30, 1999.
40 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Structured Tax-Efficient
Enhanced Emerging Structured
International Equity Value 25 Small-Cap Equity Markets Emerging Tax-Efficient Balanced
Growth Fund Income Fund Value Fund Fund Value Fund Fund Fund Markets Fund Equity Fund * Fund
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 70 $ 7,107 $ 6,038 $ 39 $ 10,292 $ 707 $ 851 $ 1,156 $ 157 $ 829
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
16 278 250 4 707 21 30 38 14 1,626
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
86 7,385 6,288 43 10,999 728 881 1,194 171 2,455
============ ============ ============== ======= ============== =========== ========== ============= ============= =======
58 893 1,044 8 2,215 238 156 212 57 311
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
34 580 778 6 1,373 132 174 236 49 220
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
0 29 39 0 41 42 0 0 2 0
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
0 443 1,164 10 2,324 0 0 0 89 244
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
1 15 18 0 28 4 2 3 1 5
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
3 1 0 1 0 2 3 4 0 17
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
96 1,961 3,043 25 5,981 418 335 455 198 797
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
(10) 5,424 3,245 18 5,018 310 546 739 (27) 1,658
============ ============ ============== ======= ============== =========== ========== ============= ============= =======
1,919 28,130 29,420 (84) (11,944) 3,923 1,993 (10,388) (228) 4,055
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
0 0 0 0 0 0 0 0 0 427
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
(3) 0 0 0 0 0 (76) (132) 0 0
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
(117) (8,864) (6,992) 48 (15,379) 5,764 7,957 27,044 3,290 (716)
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
0 0 0 0 0 0 0 0 0 (97)
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
(2) 0 0 0 0 0 2 2 0 0
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
1,797 19,266 22,428 (36) (27,323) 9,687 9,876 16,526 3,062 3,669
- ------------ ------------ -------------- ------- -------------- ----------- ---------- ------------- ------------- -------
$ 1,787 $ 24,690 $ 25,673 $ (18) $ (22,305) $ 9,997 $ 10,422 $ 17,265 $ 3,035 $ 5,327
============ ============ ============== ======= ============== =========== ========== ============= ============= =======
See accompanying notes 41
</TABLE>
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Amounts in thousands International Fund Capital Appreciation Fund
----------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income (loss) $ (761) $ (580) $ 4,855 $ 4,296
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 16,040 8,506 127,483 89,980
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (16,663) 7,290 (27,333) 125,025
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations (1,384) 15,216 105,005 219,301
====================================================================================================================================
Distributions to Shareholders:
From net investment income
Institutional Class 0 0 (4,163) (3,482)
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 (1,045) (171)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 (398) (177)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Institutional Class (67) 0 (43,876) (44,474)
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (129) 0 (12,574) (1,807)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (11,816) (13,713) (14,257) (4,063)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Institutional Class 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (12,012) (13,713) (76,313) (54,174)
====================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Institutional Class 5,567 0 439,612 261,189
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 16,127 0 152,828 134,100
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 736,111 559,851 98,940 165,130
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 67 0 35,601 37,066
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 129 0 13,612 1,973
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 11,029 12,731 13,712 4,064
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (2,213) 0 (649,159) (164,429)
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (1,579) 0 (76,012) (18,481)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (757,207) (615,042) (77,743) (24,147)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions 8,031 (42,460) (48,609) 396,465
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (5,365) (40,957) (19,917) 561,592
====================================================================================================================================
Net Assets:
Beginning of period 154,452 195,409 1,123,543 561,951
- ------------------------------------------------------------------------------------------------------------------------------------
End of period * $ 149,087 $ 154,452 $ 1,103,626 $ 1,123,543
- ------------------------------------------------------------------------------------------------------------------------------------
* Including net undistributed (overdistributed) investment income of: $ (1,499) $ (338) $ 1,527 $ 2,964
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
42 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Mid-Cap Growth Fund Micro-Cap Growth Fund Small-Cap Growth Fund Growth Fund Target Fund
- -------------------------- ------------------------ ----------------------- ----------------------- ------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30, June 30,
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,713 $ 841 $ (1,742) $ (1,116) $ (53) $ (84) $ (24,048) $ (17,931) $ (12,880) $ (13,703)
- ------------------------------------------------------------------------------------------------------------------------------------
867 58,714 (9,322) 24,846 (9,957) 3,966 413,535 344,619 124,994 242,973
- ------------------------------------------------------------------------------------------------------------------------------------
7,029 57,682 (26,056) 36,520 799 2,887 (30,494) 312,858 38,444 56,862
- ------------------------------------------------------------------------------------------------------------------------------------
9,609 117,237 (37,120) 60,250 (9,211) 6,769 358,993 639,546 150,558 286,132
====================================================================================================================================
(342) (1,419) 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(48) (35) 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(33) (41) 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
(21,475) (21,350) 0 (22,885) 0 (4,791) 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(4,502) (510) 0 (396) 0 (8) 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(15,306) (8,377) 0 0 0 0 (263,490) (273,650) (68,199) (302,786)
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 (7,982) 0 (2,229) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 (83) 0 (52) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(41,706) (31,732) (8,065) (23,281) (2,281) (4,799) (263,490) (273,650) (68,199) (302,786)
====================================================================================================================================
640,912 273,380 98,906 69,180 36,581 13,396 1,212 0 1,265 0
- ------------------------------------------------------------------------------------------------------------------------------------
104,472 77,781 2,225 4,130 1,691 1,166 6,217 0 5,508 0
- ------------------------------------------------------------------------------------------------------------------------------------
199,882 249,617 0 0 0 0 1,197,934 717,015 1,337,208 1,289,984
- ------------------------------------------------------------------------------------------------------------------------------------
19,896 22,222 6,383 19,223 2,229 4,781 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
4,543 544 83 396 52 7 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
14,079 7,672 0 0 0 0 246,482 256,426 64,479 284,165
- ------------------------------------------------------------------------------------------------------------------------------------
(505,497) (208,995) (84,282) (31,187) (8,682) (5,918) (268) 0 (36) 0
- ------------------------------------------------------------------------------------------------------------------------------------
(74,169) (8,950) (3,312) (2,345) (379) (171) (288) 0 (275) 0
- ------------------------------------------------------------------------------------------------------------------------------------
(157,774) (92,467) 0 0 0 0 (1,227,582) (942,831) (1,510,466) (1,558,833)
- ------------------------------------------------------------------------------------------------------------------------------------
246,344 320,804 20,003 59,397 31,492 13,261 223,707 30,610 (102,317) 15,316
- ------------------------------------------------------------------------------------------------------------------------------------
214,247 406,309 (25,182) 96,366 20,000 15,231 319,210 396,506 (19,958) (1,338)
====================================================================================================================================
793,878 387,569 262,621 166,255 48,622 33,391 2,113,840 1,717,334 1,186,199 1,187,537
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,008,125 $ 793,878 $ 237,439 $ 262,621 $ 68,622 $ 48,622 $ 2,433,050 $ 2,113,840 $ 1,166,241 $1,186,199
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,312 $ 52 $ 0 $ 0 $ 12 $ 4 $ 1 $ 54,147 $ 67,742 $ 37,813
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes 43
</TABLE>
<PAGE>
Statements of Changes in Net Assets (Cont.)
<TABLE>
<CAPTION>
Amounts in thousands Renaissance Fund Opportunity Fund
------------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (4,312) $ (1,489) $ (6,871) $ (11,377)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 100,928 123,570 92,947 134,358
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (42,518) 4,045 (86,017) (16,839)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 54,098 126,126 59 106,142
====================================================================================================================================
Distributions to Shareholders:
From net investment income
Institutional Class 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 (425) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Institutional Class (11) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (25) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (80,825) (80,722) (88,374) (53,260)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Institutional Class 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (80,861) (81,147) (88,374) (53,260)
====================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Institutional Class 105 761 428 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 1,000 0 1,990 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 305,834 464,673 1,722,778 1,143,829
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 25 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 74,634 74,240 81,564 48,833
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (744) 0 (38) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (634) 0 (101) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (350,656) (311,714) (1,986,190) (1,387,528)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions 29,564 227,960 (179,569) (194,866)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 2,801 272,939 (267,884) (141,984)
====================================================================================================================================
Net Assets:
Beginning of period 657,024 384,085 700,946 842,930
- ------------------------------------------------------------------------------------------------------------------------------------
End of period * $ 659,825 $ 657,024 $ 433,062 $ 700,946
- ------------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed (overdistributed) investment income of: $ 41,268 $ 46,534 $ 12,827 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Share class was redeemed on May 27, 1999.
44 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Innovation Fund Core Equity Fund Mid-Cap Equity Fund International Growth Fund Equity Income Fund
- --------------------------- ------------------------ ------------------------- --------------------------- -----------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period from Year Ended Year Ended
June 30, June 30, June 30, June 30, June 30, June 30, June 30, December 31,1997 June 30, June 30,
1999 1998 1999 1998 1999 1998 1999 to June 30, 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ (10,056) $ (4,786) $ (125) $ (48) $ (33) $ (23) $ (10) $ 0 $ 5,424 $ 4,503
- ------------------------------------------------------------------------------------------------------------------------------------
82,075 18,138 47,076 7,541 2,964 1,680 1,916 305 28,130 23,527
- ------------------------------------------------------------------------------------------------------------------------------------
250,804 109,570 (29,090) 23,946 (130) 714 (119) 1,473 (8,864) 4,261
- ------------------------------------------------------------------------------------------------------------------------------------
322,823 122,922 17,861 31,439 2,801 2,371 1,787 1,778 24,690 32,291
====================================================================================================================================
0 0 0 0 0 0 (8) 0 (3,796) (3,573)
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 (331) (251)
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 (1,192) (611)
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 (59) (310) (425) (2,113) (519) 0 (15,114) (16,363)
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 (5,514) (7,237) (168)+ (138) 0 0 (1,194) (1,189)
- ------------------------------------------------------------------------------------------------------------------------------------
(23,554) (15,217) 0 0 0 0 0 0 (6,359) (3,155)
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
0 (2,685) 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(23,554) (17,902) (5,573) (7,547) (593) (2,251) (527) 0 (27,986) (25,142)
====================================================================================================================================
895 0 1,782 998 1,457 1,655 355 5,044 28,202 16,221
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 34,758 87,923 2,607 2,245 0 0 7,079 4,124
- ------------------------------------------------------------------------------------------------------------------------------------
1,310,384 462,206 0 0 0 0 0 0 38,810 44,411
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 57 308 184 618 2 0 18,538 19,487
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 5,514 7,237 168 138 0 0 1,521 1,437
- ------------------------------------------------------------------------------------------------------------------------------------
22,135 16,937 0 0 0 0 0 0 7,112 3,576
- ------------------------------------------------------------------------------------------------------------------------------------
(505) 0 (2,915) (6,755) (4,344) (1,428) (31) 0 (59,589) (24,500)
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 (180,866) (18,798) (5,740) (80) 0 0 (6,530) (2,429)
- ------------------------------------------------------------------------------------------------------------------------------------
(753,602) (468,412) 0 0 0 0 0 0 (31,549) (7,993)
- ------------------------------------------------------------------------------------------------------------------------------------
579,307 10,731 (141,670) 70,913 (5,668) 3,148 326 5,044 3,594 54,334
- ------------------------------------------------------------------------------------------------------------------------------------
878,576 115,751 (129,382) 94,805 (3,460) 3,268 1,586 6,822 298 61,483
====================================================================================================================================
386,327 270,576 130,581 35,776 10,859 7,591 6,822 0 201,707 140,224
- ------------------------------------------------------------------------------------------------------------------------------------
$ 1,264,903 $ 386,327 $ 1,199 $ 130,581 $ 7,399 $ 10,859 $ 8,408 $ 6,822 $ 202,005 $ 201,707
- ------------------------------------------------------------------------------------------------------------------------------------
-
$ 0 $ 0 $ 0 $ 1,369 $ 2,766 $ 413 $ 1,459 $ 302 $ 4,946 $ 4,754
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes 45
</TABLE>
<PAGE>
Statements of Changes in Net Assets (Cont.)
<TABLE>
<CAPTION>
Amounts in thousands
Increase (Decrease) in Net Assets from:
Value Fund Value 25 Fund
---------------------------------------------------------
Year Ended Year Ended Period from
June 30, 1999 June 30, 1998 July 10, 1998
to June 30, 1999
<S> <C> <C> <C>
Operations:
Net investment income (loss) $ 3,245 $ 2,032 $ 18
- -------------------------------------------------------------------- ----------------------------- ------------------
Net realized gain (loss) 29,420 29,304 (84)
- -------------------------------------------------------------------- ----------------------------- ------------------
Net change in unrealized appreciation (depreciation) (6,992) 3,088 48
- -------------------------------------------------------------------- ----------------------------- ------------------
Net increase (decrease) resulting from operations 25,673 34,424 (18)
==================================================================== ============================= ==================
Distributions to Shareholders:
From net investment income
Institutional Class (1,539) (1,220) (1)
- -------------------------------------------------------------------- ----------------------------- ------------------
Administrative Class (310) (72) 0
- -------------------------------------------------------------------- ----------------------------- ------------------
Other Classes (1,228) (723) (7)
- -------------------------------------------------------------------- ----------------------------- ------------------
From net realized capital gains
Institutional Class (9,693) (7,693) 0
- -------------------------------------------------------------------- ----------------------------- ------------------
Administrative Class (1,646) (412) 0
- -------------------------------------------------------------------- ----------------------------- ------------------
Other Classes (14,992) (12,584) 0
- -------------------------------------------------------------------- ----------------------------- ------------------
In excess of net realized capital gains
Institutional Class 0 0 0
- -------------------------------------------------------------------- ---------------------------- ------------------
Administrative Class 0 0 0
- -------------------------------------------------------------------- ---------------------------- -------------------
Other Classes 0 0 0
- -------------------------------------------------------------------- ---------------------------- ------------------
Total Distributions (29,408) (22,704) (8)
==================================================================== ============================ ==================
Fund Share Transactions:
Receipts for shares sold
Institutional Class 19,355 17,292 388
- -------------------------------------------------------------------- ---------------------------- ------------------
Administrative Class 14,684 10,641 0
- -------------------------------------------------------------------- ---------------------------- ------------------
Other Classes 65,101 62,175 3,941
- -------------------------------------------------------------------- ---------------------------- ------------------
Issued in Reorganization
Institutional Class 0 0 0
- -------------------------------------------------------------------- ---------------------------- ------------------
Issued as reinvestment of distributions
Institutional Class 11,141 8,878 1
- -------------------------------------------------------------------- ---------------------------- ------------------
Administrative Class 1,950 483 0
- -------------------------------------------------------------------- ---------------------------- ------------------
Other Classes 14,980 12,266 6
- -------------------------------------------------------------------- ---------------------------- ------------------
Cost of shares redeemed
Institutional Class (43,290) (22,371) (149)
- -------------------------------------------------------------------- ---------------------------- ------------------
Administrative Class (4,695) (725) 0
- -------------------------------------------------------------------- ---------------------------- ------------------
Other Classes (83,212) (40,804) (1,972)
- -------------------------------------------------------------------- ---------------------------- ------------------
Net increase (decrease) resulting from Fund share transactions (3,986) 47,835 2,215
- -------------------------------------------------------------------- ---------------------------- ------------------
Fund Reimbursement Fee: 0 0 0
==================================================================== ============================ ==================
Total Increase (Decrease) in Net Assets (7,721) 59,555 2,189
==================================================================== ============================ ==================
Net Assets:
Beginning of period 239,359 179,804 0
- -------------------------------------------------------------------- ---------------------------- ------------------
End of period * $ 231,638 $ 239,359 $ 2,189
- -------------------------------------------------------------------- ---------------------------- ------------------
*Including net undistributed (overdistributed) investment income of: $ 10,727 $ 5,621 $ 10
- --------------------------------------------------------------------- ---------------------------- ------------------
</TABLE>
46 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Structured Tax-Efficient
Emerging Structured
Markets Emerging Tax-Effiecient
Small-Cap Value Fund Enhanced Equity Fund Fund Markets Fund Equity Fund Balanced Fund
- -------------------------- -------------------------- ----------- -------------- -------------- -----------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period From Year Ended Year Ended
June 30, June 30, June 30, June 30, June 30, June 30, September 30, June 30, June 30,
1999 1998 1999 1998 1999 1999 1998 to June 1999 1998
30, 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 5,018 $ 2,083 $ 310 $ 332 $ 546 $ 739 $ (27) $ 1,658 $ 1,822
- ------------------------------------------------------------------------------------------------------------------------------------
(11,944) 15,567 3,923 8,536 1,917 (10,520) (228) 4,482 11,033
- ------------------------------------------------------------------------------------------------------------------------------------
(15,379) (3,548) 5,764 3,781 7,959 27,046 3,290 (813) (1,046)
- ------------------------------------------------------------------------------------------------------------------------------------
(22,305) 14,102 9,997 12,649 10,422 17,265 3,035 5,327 11,809
====================================================================================================================================
(796) (339) (201) (414) (252) (300) 0 (994) (1,462)
- ------------------------------------------------------------------------------------------------------------------------------------
(247) (55) (83) (30) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(1,810) (946) 0 0 0 0 0 (579) (328)
- ------------------------------------------------------------------------------------------------------------------------------------
0 (1,659) (4,601) (16,994) (980) 0 0 (5,061) (5,071)
- -----------------------------------------------------------------------------------------------------------------------------------
0 (373) (1,928) (1,166) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
0 (6,325) 0 0 0 0 0 (4,529) (1,027)
- ------------------------------------------------------------------------------------------------------------------------------------
(1,632) 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(543) 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(9,214) 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(14,242) (9,697) (6,813) (18,604) (1,232) (300) 0 (11,163) (7,888)
====================================================================================================================================
37,773 44,619 8,851 4,869 2,664 12,518 0 4,412 5,975
- ------------------------------------------------------------------------------------------------------------------------------------
22,238 6,309 15,340 9,937 0 0 3,320 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
183,088 307,809 0 0 0 0 26,786 18,323 26,009
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 35,582 44,157 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
2,202 1,770 4,790 17,291 1,209 300 0 6,005 6,512
- ------------------------------------------------------------------------------------------------------------------------------------
790 427 2,005 1,196 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
10,426 6,863 0 0 0 0 0 4,041 1,271
- ------------------------------------------------------------------------------------------------------------------------------------
(24,130) (38,130) (9,355) (24,666) (2,261) (1,678) 0 (10,716) (36,139)
- ------------------------------------------------------------------------------------------------------------------------------------
(12,454) (2,525) (5,174) (517) 0 0 (158) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(160,295) (35,827) 0 0 0 0 (5,032) (11,841) (3,224)
- ------------------------------------------------------------------------------------------------------------------------------------
59,638 291,315 16,457 8,110 37,194 55,297 24,916 10,224 404
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 0 0 0 0 0 0 0
====================================================================================================================================
23,091 295,720 19,641 2,155 46,577 72,509 27,951 4,388 4,325
====================================================================================================================================
374,552 78,832 46,993 44,838 0 0 0 68,254 63,929
- ------------------------------------------------------------------------------------------------------------------------------------
$ 397,643 $ 374,552 $ 66,634 $ 46,993 $ 46,577 $ 72,509 $ 27,951 $ 72,642 $ 68,254
- ------------------------------------------------------------------------------------------------------------------------------------
$ 3,303 $ 6,285 $ 321 $ 1,429 $ 967 $ 307 $ (5) $ 6 $ 2,578
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes 47
</TABLE>
<PAGE>
Schedule of Investments
Renaissance Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 95.8%
- --------------------------------------------------------------------------------
Aerospace 1.3%
Lockheed Martin Corp. 235,000 $ 8,754
Capital Goods 2.3%
New Holland NV 508,000 8,700
Valmet Corp. OYJ 484,000 5,488
Harnischfeger Industries, Inc. 373,300 747
---------
14,935
Communications 4.6%
MediaOne Group, Inc. (b) 204,000 15,173
ICO Global Communications (b) 1,268,178 7,649
Comsat Corp. 233,900 7,602
---------
30,424
Consumer Discretionary 7.0%
Hitachi Limited 1,417,000 13,295
Ikon Office Solutions, Inc. 600,000 9,000
K Mart Corp. (b) 450,000 7,397
International Game Technology 300,000 5,550
Rite Aid Corp. 225,000 5,541
Exide Corp. 213,000 3,142
Ford Motor Co. 27,600 1,558
Mirage Resorts, Inc. (b) 40,200 673
---------
46,156
Consumer Staples 4.2%
Tate & Lyle PLC 1,338,000 8,404
Dole Food Co. 211,000 6,198
Philip Morris Cos., Inc. 145,000 5,827
Corn Products International, Inc. 180,000 5,479
Suiza Foods Corp. (b) 50,000 2,094
---------
28,002
Energy 14.5%
Valero Energy Corp. 850,900 18,241
Nabors Industries, Inc. (b) 666,600 16,290
Union Pacific Resources Group 778,400 12,698
Atlantic Richfield Co. 129,500 10,821
Rowan Cos., Inc. (b) 475,000 8,758
Kerr McGee Corp. 148,000 7,428
Tosco Corp. 257,500 6,679
R&B Falcon Corp. (b) 648,000 6,075
Gulf Canada Resources Limited 1,116,600 4,676
Ocean Energy, Inc. (b) 400,000 3,850
---------
95,516
Environmental Services 0.5%
Browning Ferris Industries, Inc. 77,700 3,341
Financial & Business Services 17.6%
Aetna, Inc. 332,600 29,747
Conseco, Inc. 645,000 19,632
Fleet Financial Group, Inc. 354,400 15,726
Chase Manhattan Corp. 128,200 11,105
Fremont General Corp. 567,000 10,702
Everest Reinsurance Holdings, Inc. 208,200 6,793
Pacific Century Financial Corp. 303,500 6,543
Cdn Hotel Income Trust (b) 981,500 6,332
Federal National Mortgage Association 50,500 3,453
Loews Corp. 40,000 3,165
Catellus Development Corp. (b) 171,700 2,661
---------
115,859
Health Care 10.2%
Foundation Health Systems, Inc. 'A' (b) 1,007,000 15,105
CIGNA Corp. 150,600 13,403
Tenet Healthcare Corp. (b) 701,500 13,022
Beverly Enterprises, Inc. (b) 1,166,900 9,408
Pacificare Health Systems 'B' (b) 90,000 6,474
ICN Pharmaceuticals, Inc. 141,400 4,551
Oxford Health Plans, Inc. (b) 213,400 3,321
Omnicare, Inc. 100,000 1,262
Pacificare Health Systems, Inc. 'B' 10,000 719
---------
67,265
Materials & Processing 14.4%
Asia Pulp & Paper Co. Limited SP-ADR 1,965,800 18,921
Smurfit-Stone Container Corp. (b) 832,000 17,108
Ucar International, Inc. (b) 526,000 13,282
Gaylord Container Corp. 'A' (b) 1,128,000 8,954
Hercules, Inc. 199,000 7,823
Rayonier, Inc. 142,400 $ 7,093
Cabot Corp. 220,000 5,321
Norsk Hydro AS SP - ADR 122,800 4,697
Arch Chemicals, Inc. 166,600 4,050
Mercer International, Inc. 557,500 3,345
LTV Corp. 273,000 1,826
Reynolds Metals Co. 20,000 1,180
Longview Fibre Co. 68,000 1,063
---------
94,663
Technology 16.0%
Micron Technology, Inc. (b) 569,000 22,938
Arrow Electronics, Inc. 996,000 18,924
Teradyne, Inc. (b) 169,200 12,140
NEC Corp. 902,000 11,222
Vishay Intertechnology, Inc. (b) 418,125 8,781
Seagate Technology, Inc. (b) 322,200 8,256
Koninklijke Philips Electronics
NV SP -ADR 65,688 6,625
Kulicke & Soffa Industries (b) 191,100 5,124
Thermo Electron Corp. (b) 202,000 4,053
Hutchinson Technology (b) 90,000 2,498
Motorola, Inc. 22,100 2,094
Xerox Corp. 27,100 1,601
Amkor Technology, Inc. (b) 127,000 1,302
---------
105,558
Transportation 0.2%
Burlington Northern Santa Fe Corp. 50,000 1,550
Utilities 3.0%
Midamerican Energy Holdings Co. 209,000 7,237
Niagara Mohawk Holdings, Inc. 317,800 5,105
Citizens Utilities Co. 'B' 416,100 4,629
Western Resources, Inc. 100,000 2,662
---------
19,633
---------
Total Common Stocks 631,656
(Cost $608,643) ---------
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 2.9%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 2.9%
State Street Bank
3.500% due 07/01/1999 $ 19,345 19,345
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $19,734,286. Repurchase
proceeds are $19,346,881.)
-----------
Total Short-Term Instruments 19,345
(Cost $19,345) ===========
Total Investments (a) 98.7% $ 651,001
(Cost $627,988)
Other Assets and Liabilities (Net) 1.3% 8,824
-----------
Net Assets 100.0% $ 659,825
===========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $628,733 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 48,351
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (26,083)
-----------
Unrealized appreciation-net $ 22,268
===========
(b) Non-income producing security.
48 See accompanying notes
<PAGE>
Schedule of Investments
Growth Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 96.6%
- --------------------------------------------------------------------------------
Capital Goods 14.2%
Tyco International Limited 900,000 $ 85,275
General Electric Co. 650,000 73,450
Illinois Tool Works, Inc. 800,000 65,600
AlliedSignal, Inc. 1,000,000 63,000
United Technologies Corp. 800,000 57,350
---------
344,675
Communications 8.1%
Nokia Corp. SP- ADR 850,000 77,828
MCI WorldCom, Inc. (b) 900,000 77,624
AT&T Corp. 500,000 27,906
AT&T Corp. - Liberty Media Group 'A' (b) 350,000 12,862
---------
196,220
Consumer Discretionary 14.1%
Wal-Mart Stores, Inc. 1,700,000 82,025
Home Depot, Inc. 1,200,000 77,324
Kohls Corp. (b) 800,000 61,750
Staples, Inc. (b) 1,500,000 46,406
Costco Cos., Inc. (b) 400,000 32,024
Clear Channel Communications (b) 350,000 24,128
Time Warner, Inc. 250,000 18,375
---------
342,032
Energy 1.3%
Enron Corp. 400,000 32,700
Financial & Business Services 22.9%
Citigroup, Inc. 1,800,000 85,500
Morgan Stanley, Dean Witter, Discover and Co. 800,000 82,000
Omnicom Group 1,000,000 80,000
Capital One Financial Corp. 1,200,000 66,824
American Express Co. 500,000 65,062
American International Group, Inc. 550,000 64,383
Federal National Mortgage Association 750,000 51,281
Paychex, Inc. 1,200,000 38,250
Charles Schwab Corp. 225,000 24,722
---------
558,022
Health Care 6.6%
United Healthcare Corp. 750,000 46,969
Guidant Corp. 800,000 41,150
Schering-Plough Corp. 725,000 38,424
Bristol-Myers Squibb Co. 500,000 35,219
---------
161,762
Technology 29.4%
Cisco Systems, Inc. (b) 1,650,000 106,424
Microsoft Corp. (b) 1,000,000 90,187
Lucent Technologies, Inc. 1,237,500 83,454
EMC Corp. (b) 1,500,000 82,500
Motorola, Inc. 800,000 75,800
Tellabs, Inc. (b) 1,000,000 67,562
America Online, Inc. (b) 600,000 66,300
International Business Machines Corp. 500,000 64,641
Solectron Corp. (b) 800,000 53,350
Thermo Electron Corp. (b) 1,200,000 24,074
---------
714,292
---------
Total Common Stocks 2,349,703
(Cost $1,776,172) =========
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 0.0%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Banking & Finance 0.0%
Cabbell Financial Grantor Trust
7.188% due 12/31/2002 $ 535 455
-------
Total Corporate Bonds & Notes 455
(Cost $531) =======
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 3.4%
- --------------------------------------------------------------------------------
Repurchase Agreement 3.4%
State Street Bank
3.500% due 07/01/1999 $ 81,983 $ 81,983
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 4.875% 03/31/2001
valued at $51,000,770 and U.S. Treasury
Note 6.500% 05/31/2001 valued
at $32,625,577. Repurchase proceeds
are $81,990,970.)
----------
Total Short-Term Instruments 81,983
(Cost $81,983) ==========
Total Investments (a) 100.0% $2,432,141
(Cost $1,858,686)
Other Assets and Liabilities (Net) 0.0% 909
----------
Net Assets 100.0% $2,433,050
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $1,859,678 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 585,598
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (13,135)
----------
Unrealized appreciation-net $ 572,463
==========
(b) Non-income producing security.
See accompanying notes 49
<PAGE>
Schedule of Investments
Core Equity Fund
June 30, 1999
Shares Value
(000s) (000s)
- ----------------------------------------------------------------------------
COMMON STOCKS 87.0%
- ----------------------------------------------------------------------------
Capital Goods 2.3%
Tyco International Limited 300 $ 28
Communications 4.3%
Chancellor Media Corp. 500 28
AT&T Corp. 409 23
---------
51
Consumer Discretionary 18.3%
Cendant Corp. (b) 1,900 40
Home Depot, Inc. 400 26
CVS Corp. 500 25
Nike, Inc. 'B' 400 25
Wal-Mart Stores, Inc. 500 24
Circuit City Stores 200 19
Wendy's International, Inc. 500 14
General Motors Corp. 200 13
Pitney Bowes, Inc. 200 13
Federated Department Stores,
Inc. (b) 200 11
Northwest Airlines Corp. (b) 300 10
---------
220
Consumer Services 1.3%
Tricon Global Restaurants, Inc. (b) 300 16
Consumer Staples 5.1%
Anheuser Busch Cos., Inc. 500 35
Safeway, Inc. (b) 300 15
Kimberly-Clark Corp. 200 11
---------
61
Energy 4.7%
Enron Corp. 400 33
AES Corp. (b) 400 23
---------
56
Financial & Business Services 12.1%
Citigroup, Inc. 725 35
Omnicom Group 300 24
Capital One Financial Corp. 400 22
Wells Fargo & Co. 500 21
MBNA Corp. 600 18
Chase Manhattan Corp. 200 17
Waterhouse Group, Inc. (b) 300 8
---------
145
Health Care 10.3%
Schering-Plough Corp. 500 27
Bausch & Lomb, Inc. 300 23
Boston Scientific Corp. (b) 500 22
Columbia/HCA Healthcare 900 21
Oxford Health Plans, Inc. (b) 800 12
Guidant Corp. 200 10
VISX, Inc. (b) 100 8
Triad Hopitals, Inc. (b) 0 0
LifePoint Hospitals, Inc. (b) 0 0
---------
123
Materials & Processing 1.6%
Alcoa, Inc. 300 19
Technology 25.6%
Motorola, Inc. 400 38
Microsoft Corp. (b) 400 37
Lucent Technologies, Inc. 460 31
Intel Corp. 500 30
Cisco Systems, Inc. (b) 400 26
First Data Corp. 500 24
Global Telesystems Group, Inc. (b) 300 24
America Online, Inc. (b) 200 22
Ciena Corp. (b) 700 21
Adaptec, Inc. (b) 500 18
National Semiconductor Corp. (b) 600 15
PE Corp.-PE Biosystems Group 100 11
Atmel Corp. (b) 400 10
---------
307
Transportation 1.4%
Union Pacific Corp. 300 17
---------
Total Common Stocks 1,043
(Cost $867) =========
Principal
Amount Value
(000s) (000s)
- ----------------------------------------------------------------------------
SHORT TERM INSTRUMENTS 1.4%
- ----------------------------------------------------------------------------
Repurchase Agreement 1.4%
State Street Bank
3.500% due 07/01/1999 $ 17 $ 17
(Dated 06/30/1999. Collateralized
by U.S. Treasury Bond 8.000%
11/15/2021 valued at $18,016.
Repurchase proceeds are $17,002.)
---------
Total Short-Term Instruments 17
(Cost $17) =========
Total Investments (a) 88.4% $ 1,060
(Cost $884)
Other Assets and Liabilities (Net) 11.6% 139
---------
Net Assets 100.0% $ 1,199
=========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments
based on cost for federal income tax purposes
of $953 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value
over tax cost. $ 181
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax
cost over value. (74)
---------
Unrealized appreciation-net $ 107
=========
(b) Non-income producing security.
50 See accompanying notes
<PAGE>
Schedule of Investments
Target Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 93.3%
- --------------------------------------------------------------------------------
Capital Goods 2.0%
Weatherford International, Inc. (b) 350,000 $ 12,819
Molex, Inc. 300,000 11,100
------------
23,919
Communications 7.8%
WinStar Communications, Inc. (b) 475,000 23,156
General Instrument Corp. (b) 400,000 17,000
Echostar Communications Corp. (b) 100,000 15,344
At Home Corp. (b) 250,000 13,484
Nextlink Communications 'A' 150,000 11,156
Adelphia Communications (b) 175,000 11,134
------------
91,274
Consumer Discretionary 22.5%
Abercrombie & Fitch Co. 'A' (b) 600,000 28,800
Gemstar International Group Limited (b) 425,000 27,731
Tiffany & Co. 275,000 26,538
Lowe's Cos., Inc. 450,000 25,509
Bed, Bath & Beyond, Inc. (b) 650,000 25,025
Clear Channel Communications (b) 350,000 24,128
Best Buy Co., Inc. (b) 350,000 23,625
Harley-Davidson, Inc. 400,000 21,750
Kohls Corp. (b) 250,000 19,297
Staples, Inc. (b) 600,000 18,563
Cintas Corp. 200,000 13,438
Dial Corp. 200,000 7,438
------------
261,842
Consumer Services 2.6%
Royal Caribbean Cruises Limited 400,000 17,500
SFX Entertainment, Inc. 'A' (b) 200,000 12,800
------------
30,300
Energy 1.5%
Montana Power Co. 250,000 17,625
Financial & Business Services 9.2%
Young & Rubicam, Inc. 500,000 22,719
AFLAC, Inc. 350,000 16,756
Knight/Trimark Group, Inc. 'A' (b) 250,000 15,078
Providian Financial Corp. 150,000 14,025
Charles Schwab Corp. 125,000 13,734
Marshall & Ilsley Corp. 200,000 12,875
Paychex, Inc. 375,000 11,953
------------
107,140
Health Care 19.0%
VISX, Inc. (b) 450,000 35,634
Immunex Corp. (b) 225,000 28,673
Allergan, Inc. 250,000 27,750
Biogen, Inc. (b) 400,000 25,725
Minimed, Inc. (b) 300,000 23,081
TLC The Laser Center (b) 350,000 16,800
Biomet, Inc. 400,000 15,900
Medimmune, Inc. 200,000 13,550
QLT Phototherapeutics, Inc. (b) 225,000 12,375
Express Scripts, Inc. 'A' (b) 200,000 12,038
Renal Care Group, Inc. (b) 400,000 10,350
------------
221,876
Technology 26.2%
Comverse Technology, Inc. (b) 450,000 33,976
Sanmina Corp. (b) 400,000 30,350
Citrix Systems, Inc. (b) 500,000 28,250
Jabil Circuit, Inc. (b) 500,000 22,563
RF Micro Devices, Inc. (b) 300,000 22,387
Linear Technology Corp. 300,000 20,175
Maxim Integrated Products, Inc. (b) 300,000 19,950
Altera Corp. (b) 500,000 18,406
Inktomi Corp. (b) 125,000 16,320
Rambus, Inc. 175,000 16,133
Exodus Communications, Inc. (b) 125,000 14,992
PMC - Sierra, Inc. (b) 240,000 14,145
Network Appliance, Inc. (b) 250,000 13,969
Novell, Inc. (b) 500,000 13,250
Apple Computer, Inc. 250,000 11,578
Psinet, Inc. (b) 200,000 8,750
American Satellite Network, Inc. Warrants (b) 53,250 0
------------
305,194
Transportation 2.5%
Kansas City Southern Industries, Inc. 450,000 28,716
------------
Total Common Stocks 1,087,886
(Cost $855,608) ============
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 5.0%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 5.0%
State Street Bank
3.500% due 07/01/1999 $ 58,136 58,136
(Dated 06/30/1999. Collateralized by U.S.
Treasury Bond 7.250% 05/15/2016 valued
at $51,004,170 and U.S. Treasury Note 6.875%
05/15/2006 valued are $58,141,652.)
------------
Total Short-Term Instruments 58,136
(Cost $58,136) ============
Total Investments (a) 98.3% $ 1,146,022
(Cost $913,744) ------------
Other Assets and Liabilities (Net) 1.7% 20,219
------------
Net Assets 100.0% $ 1,166,241
============
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $915,807 was as follows:
Aggregate gross unrealized appreciation for $ 239,453
all investments in which there was an excess
of value over tax cost.
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (9,238)
------------
Unrealized appreciation-net $ 230,215
------------
(b) Non-income producing security.
See accompanying notes 51
<PAGE>
Schedule of Investments
Mid-Cap Equity Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 120.0%
- --------------------------------------------------------------------------------
Capital Goods 4.9%
SPX Corp. 2,650 $ 221
Weatherford International, Inc. (b) 3,900 143
--------
364
Communications 10.1%
Qualcomm, Inc. (b) 2,350 337
Adelphia Communications (b) 2,100 134
Rogers Cantel Mobile Communications 'B' (b) 7,400 122
WinStar Communications, Inc. (b) 1,600 78
CenturyTel, Inc. 1,900 76
--------
747
Consumer Discretionary 29.8%
Intimate Brands, Inc. 5,895 279
Catalina Marketing Corp. (b) 2,750 253
Circuit City Stores 2,600 242
Bed, Bath & Beyond, Inc. (b) 6,250 241
Jones Apparel Group, Inc. (b) 5,400 185
Northwest Airlines Corp. (b) 4,650 151
Hasbro, Inc. 4,900 137
Cintas Corp. 1,950 131
Hertz Corp. 'A' (b) 1,800 112
Family Dollar Stores, Inc. 4,400 106
Lands' End, Inc. 2,100 102
Ross Stores, Inc. 1,900 96
Harley-Davidson, Inc. 1,700 92
International Speedway Corp. 'B' 1,600 76
--------
2,203
Consumer Services 6.0%
Nielsen Media Research, Inc. 6,950 203
Celestica (b) 3,450 150
Reader's Digest Assn., Inc. 'A' 2,300 91
--------
444
Consumer Staples 2.4%
Church & Dwight, Inc. 4,150 181
Energy 5.8%
Montana Power Co. 2,300 162
Apache Corp. 3,700 144
Noble Drilling Corp. (b) 6,300 124
--------
430
Financial & Business Services 6.5%
Zions Bancorporation 3,200 203
Providian Financial Corp. 1,050 98
Firstar Corp. 3,284 92
Valassis Communications, Inc. (b) 2,300 84
--------
477
Health Care 18.3%
Bausch & Lomb, Inc. 2,850 218
Allergan, Inc. 1,900 211
Stryker Corp. 3,100 186
Oxford Health Plans, Inc. (b) 10,000 156
IDEC Pharmaceuticals Corp. (b) 2,000 154
ICN Pharmaceuticals, Inc. 4,700 151
Express Scripts, Inc. 'A' (b) 2,400 144
Biomet, Inc. 3,400 135
--------
1,355
Materials & Processing 2.2%
Willamette Industries 3,500 161
Technology 32.8%
Global Telesystems Group, Inc. (b) 3,450 279
Comdisco, Inc. 8,600 220
Linear Technology Corp. 3,150 212
National Semiconductor Corp. (b) 7,650 194
AVX Corp. 7,450 182
Ciena Corp. (b) 5,350 162
Intuit, Inc. (b) 1,700 153
Check Point Software Technologies Limited (b) 2,700 145
Conexant Systems, Inc. (b) 2,450 142
RF Micro Devices, Inc. (b) 1,800 134
Concord Computing Corp. 3,100 131
Symbol Technologies, Inc. 3,100 114
Exodus Communications, Inc. (b) 800 96
Psinet, Inc. (b) 2,100 92
Research In Motion Limited (b) 4,300 87
Adaptec, Inc. (b) 2,400 85
--------
2,428
Utilities 1.2%
Citizens Utilities Co. 'B' 8,200 91
--------
Total Common Stocks 8,881
(Cost $7,500) ========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 2.6%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 2.6%
State Street Bank
3.500% due 07/01/1999 $ 194 194
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.500% 08/31/2001
valued at $202,157. Repurchase proceeds
are $194,019.)
--------
Total Short-Term Instruments 194
(Cost $194) ========
Total Investments (a) 122.6% $ 9,075
(Cost $7,694)
Other Assets and Liabilities (Net) (22.6%) (1,676)
--------
Net Assets 100.0% $ 7,399
========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation(depreciation) ofinvestments
based on cost for federal income tax
purposes of $7,737 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost. $ 1,495
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value. (157)
--------
Unrealized appreciation-net $ 1,338
========
(b) Non-income producing security.
52 See accompanying notes
<PAGE>
Schedule of Investments
Opportunity Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.9%
- --------------------------------------------------------------------------------
Capital Goods 1.8%
Tower Automotive, Inc. (b) 203,500 $ 5,177
SLI, Inc. (b) 91,300 2,465
----------
7,642
Communications 11.0%
WinStar Communications, Inc. (b) 219,900 10,720
True North Communications 215,000 6,450
Pinnacle Holdings, Inc. (b) 246,000 6,027
ICG Communications, Inc. (b) 246,500 5,269
Orckit Communications Limited (b) 169,400 4,193
Young Broadcasting Corp. (b) 97,250 4,139
Millicom International Cellular SA (b) 130,100 4,098
Citadel Communications Corp. (b) 106,600 3,858
Powertel, Inc. (b) 95,500 2,853
----------
47,607
Consumer Discretionary 15.1%
Premier Parks, Inc. 222,100 8,162
B.J.'s Wholesale Club, Inc. (b) 225,000 6,764
Furniture Brands International, Inc. (b) 214,300 5,974
Zale Corp. (b) 130,500 5,220
Bally Total Fitness Holdings (b) 180,000 5,108
Williams-Sonoma, Inc. (b) 142,600 4,964
The Men's Wearhouse, Inc. (b) 184,250 4,698
K-Swiss, Inc. 'A' 93,000 4,325
Cinar Corp. 'B' (b) 176,500 4,324
Pacific Sunwear of California (b) 172,650 4,208
Station Casinos, Inc. (b) 202,400 4,124
School Specialty, Inc. (b) 208,300 3,346
Saucony, Inc. 'B' (b) 103,200 2,335
Hanover Direct, Inc. (b) 726,500 2,043
----------
65,595
Consumer Services 8.6%
SFX Entertainment, Inc. 'A' (b) 135,700 8,685
Sotheby's Holdings 'A' 166,300 6,340
Iron Mountain, Inc. (b) 140,300 4,016
United Rental, Inc. (b) 135,000 3,983
Avis Rent A Car, Inc. (b) 132,375 3,855
The Cheesecake Factory (b) 106,900 3,260
Anesta Corp. (b) 137,600 2,812
Sylvan Learning Systems, Inc. (b) 100,000 2,719
Parexel International Corp. (b) 71,800 956
Cornell Corrections, Inc. (b) 44,500 731
----------
37,357
Consumer Staples 3.2%
Jones Pharma, Inc. 130,000 5,119
Wild Oats Markets, Inc. (b) 144,000 4,370
Performance Food Group Co. (b) 156,100 4,244
----------
13,733
Energy 5.7%
Newfield Exploration Co. (b) 159,200 4,527
Ocean Energy, Inc. (b) 436,000 4,197
Global Industries Limited (b) 311,800 3,995
Rowan Cos., Inc. (b) 205,200 3,783
Basin Exploration, Inc. (b) 169,250 3,396
Key Energy Group, Inc. (b) 710,200 2,530
Superior Energy Services (b) 462,700 2,357
----------
24,785
Environmental Services 1.0%
IT Group, Inc. (b) 275,300 4,422
Financial & Business Services 5.0%
Meristar Hospitality Corp. 248,300 5,571
Hambrecht & Quist, Inc. (b) 129,200 4,797
Allied Capital Corp. Funds 170,300 4,087
Annuity and Life Re 156,800 3,518
Healthcare Financial Partners (b) 56,100 1,921
E-Loan, Inc. (b) 42,100 1,623
Internet Capital Group, Inc. Rights (b) 5,730 0
----------
21,517
Health Care 10.1%
MID Atlantic Medical Services (b) 522,400 $ 5,159
TLC The Laser Center (b) 96,700 4,642
ResCare, Inc. (b) 202,000 4,595
Renal Care Group, Inc. (b) 165,800 4,290
Medicis Pharmaceutical 'A' (b) 150,900 3,829
Magellan Health Services (b) 349,200 3,492
Minimed, Inc. (b) 42,300 3,254
Beverly Enterprises, Inc. (b) 379,200 3,057
Hanger Orthopedic Group, Inc. (b) 210,300 2,984
Enzon, Inc. (b) 138,350 2,862
Matria Healthcare, Inc. (b) 336,400 2,439
LifePoint Hospitals, Inc. (b) 138,800 1,865
Province Healthcare Co. (b) 65,000 1,267
----------
43,735
Materials & Processing 2.3%
Gaylord Container Corp. 'A' (b) 470,200 3,732
Boise Cascade Corp. 80,100 3,434
Bethlehem Steel Corp. (b) 350,200 2,692
----------
9,858
Technology 30.3%
Advanced Energy Industries (b) 150,000 6,084
Visual Networks, Inc. (b) 181,300 5,802
Apex PC Solutions, Inc. (b) 275,000 5,638
Infocure Corp. (b) 101,800 5,389
Peregrine Systems, Inc. (b) 209,200 5,374
IMRglobal Corp. (b) 269,400 5,186
Aeroflex, Inc. (b) 262,550 5,185
Sykes Enterprises, Inc. (b) 154,300 5,150
About.com, Inc. (b) 95,000 4,928
TranSwitch Corp. (b) 99,500 4,714
Sterling Software, Inc. (b) 171,700 4,582
Verio, Inc. (b) 65,400 4,545
Concentric Network Corp. (b) 112,500 4,472
L-3 Communications Holdings, Inc. (b) 91,100 4,401
Global Imaging Systems, Inc. (b) 230,000 4,198
GST Telecommunications, Inc. (b) 317,400 4,186
CBT Group PLC SP - ADR (b) 241,000 3,977
International Network Services (b) 98,150 3,963
MMC Networks, Inc. (b) 88,000 3,938
Flextronics International Limited (b) 69,800 3,874
Safeguard Scientifics, Inc. (b) 57,300 3,553
Complete Business Solutions (b) 191,350 3,432
Beyond.com Corp. (b) 117,900 3,382
New Era of Networks, Inc. (b) 76,000 3,339
International Telecommunication Data Systems,
Inc. (b) 187,600 3,002
Dendrite International, Inc. (b) 82,900 2,995
Concur Technologies, Inc. (b) 100,800 2,835
Micromuse, Inc. (b) 55,400 2,763
nFront, Inc. (b) 181,550 2,757
Multex.com, Inc. (b) 104,700 2,735
Software.Com, Inc. (b) 90,200 2,092
Mediconsult.com, Inc. (b) 157,700 1,646
BindView Development Corp. (b) 39,950 949
Ask Jeeves, Inc. (b) 2,150 30
Interactive Rights 2,865 0
----------
131,096
Transportation 0.8%
Atlantic Coast Airlines Holdings (b) 177,200 3,367
----------
Total Common Stocks 410,714
(Cost $354,021) ==========
See accompanying notes 53
<PAGE>
Schedule of Investments (Cont.)
Opportunity Fund
June 30, 1999
Value
(000s)
- ---------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 4.5%
- ---------------------------------------------------------------------------
Principal
Amount
Repurchase Agreement 4.5% (000s)
State Street Bank
3.500% due 07/01/1999 $ 19,428 19,428
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.500% 08/31/2001
valued at $19,816,616. Repurchase
proceeds are $19,429,889.)
---------
Total Short-Term Instruments 19,428
(Cost $19,428) =========
Total Investments (a) 99% $ 430,142
(Cost $373,449)
Other Assets and Liabilities (Net) 0.6% 2,920
---------
Net Assets 100.0% $ 433,062
=========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments
based on cost for federal income tax purposes
of $374,671 was as follows:
Aggregate gross unrealize appreciation for all
investments in which there was an excess of
value over tax cost. $ 66,453
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (10,982)
--------
Unrealized appreciation-net $ 55,471
========
(b) Non-income producing security.
54 See accompanying notes
<PAGE>
Schedule of Investments
Innovation Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 95.0%
- --------------------------------------------------------------------------------
Communications 10.5%
Nokia Corp. SP- ADR 480,000 $ 43,950
MCI WorldCom, Inc. (b) 470,000 40,537
General Instrument Corp. (b) 880,000 37,400
Qwest Communications International, Inc. (b) 310,000 10,249
------------
132,136
Consumer Discretionary 6.4%
Corning, Inc. 480,000 33,660
Gemstar International Group Limited (b) 428,000 27,927
Time Warner, Inc. 270,000 19,845
------------
81,432
Health Care 6.1%
United Healthcare Corp. 305,000 19,101
IDEC Pharmaceuticals Corp. (b) 247,500 19,073
Medtronic, Inc. 203,190 15,823
Minimed, Inc. (b) 155,000 11,925
Bausch & Lomb, Inc. 140,000 10,710
------------
76,632
Technology 72.0%
Cisco Systems, Inc. (b) 1,030,000 66,435
Lucent Technologies, Inc. 895,000 60,357
Microsoft Corp. (b) 590,000 53,211
America Online, Inc. (b) 479,600 52,996
Motorola, Inc. 514,900 48,787
Siebel Systems, Inc. (b) 670,000 44,471
Tellabs, Inc. (b) 645,000 43,578
Sun Microsystems, Inc. (b) 630,000 43,391
Xilinx, Inc. (b) 715,000 40,934
Yahoo, Inc. (b) 219,500 37,809
Broadcom Corp. (b) 260,000 37,586
Dell Computer Corp. (b) 1,005,000 37,185
Oracle Corp. (b) 810,000 30,071
Maxim Integrated Products, Inc. (b) 430,000 28,595
Jabil Circuit, Inc. (b) 590,000 26,624
Inktomi Corp. (b) 193,000 25,199
International Business Machines Corp. 190,000 24,558
Uniphase Corp. (b) 140,000 23,240
Covad Communications Group, Inc. (b) 395,000 21,058
Texas Instruments, Inc. 120,000 17,400
Teradyne, Inc. (b) 260,000 18,655
Veritas Software Corp. (b) 185,000 17,563
Vitesse Semiconductor Co. (b) 250,000 16,859
Altera Corp. (b) 440,000 16,198
Electronics for Imaging, Inc. (b) 270,000 13,871
LSI Logic Corp. (b) 291,500 13,445
EMC Corp. (b) 220,000 12,100
I2 Technologies, Inc. (b) 270,000 11,610
Adaptec, Inc. (b) 300,000 10,594
Atmel Corp. (b) 350,000 9,166
ASM Lithography Holding NV (b) 129,000 7,659
------------
911,205
------------
Total Common Stocks 1,201,405
(Cost $794,237) ============
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 7.4%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 7.4%
State Street Bank
3.500% due 07/01/1999 $ 93,312 93,312
(Dated 06/30/1999. Collateralized by U.S.
Treasury Note 6.625% 06/30/2001 valued at
$44,181,524 and U.S. Treasury Note 7.875%
08/15/2001 valued at $51,001,879. Repurchase
proceeds are $93,321,072.)
------------
Total Short-Term Instruments 93,312
(Cost $93,312) ============
Total Investments (a) 102.4% $ 1,294,717
(Cost $887,549)
Other Assets and Liabilities (Net) (2.4%) (29,814)
------------
Net Assets 100.0% $ 1,264,903
============
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes of $898,378 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of
value over tax cost. $ 405,714
Aggregate gross unrealized depreciation for all
investments in which there was an excess of
tax cost over value. (9,375)
------------
Unrealized appreciation-net $ 396,339
============
(b) Non-income producing security.
See accompanying notes 55
<PAGE>
Schedule of Investments
International Growth
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.3%
- --------------------------------------------------------------------------------
Australia (c)(d) 3.0%
E*TRADE Australia Limited (b) 25,000 $ 99
Broken Hill Proprietary Co. Limited 3,400 81
Woodside Petroleum Limited 11,000 74
-------
254
Canada 6.1%
TLC The Laser Center (b) 4,700 225
Research In Motion Limited (b) 7,200 146
Rogers Cantel Mobile Communications 'B' (b) 8,500 140
-------
511
Finland 3.9%
Nokia Corp. SP - ADR 2,600 237
Jot Automation Group OYJ 2,300 93
-------
330
France 2.5%
Coflexip SA SP - ADR 3,000 131
Bouygues Offshore 2,500 79
-------
210
Germany 3.3%
Mannesmann AG 1,050 157
Primacom AG (b) 5,600 124
-------
281
Greece 1.3%
National Bank of Greece SP - GDR 8,690 112
Hong Kong 2.5%
Cathay Pacific Airways 90,000 138
Legend Holdings Limited 77,000 74
-------
212
Ireland 3.3%
CRH PLC 8,063 143
Jefferson Smurfit Group PLC 59,000 138
-------
281
Italy 3.4%
Mediaset SpA 15,700 140
Gruppo Editoriale L'Espresso SpA 4,600 74
Seat-Pagine Gialle SpA 85,000 72
-------
286
Japan (c)(d) 17.3%
Takeda Chemical Industries 6,000 279
Murata Manufacturing Co. 3,000 197
Softbank Corp. 800 162
Nikko Securities Co. Limited 25,000 161
Fuji Bank Limited 20,000 140
Enix Corp. 3,000 131
Oracle Corp. Japan 1,000 112
Hikari Tsushin, Inc. 300 93
TDK Corp. 1,000 92
Acom Co. Limited 1,000 86
-------
1,453
Mexico 3.6%
Grupo Televisa SA SP - GDR (b) 5,000 224
Telefonos de Mexico SP - ADR 1,000 81
-------
305
Netherlands 13.5%
Koninklijke Philips Electronics NV SP - ADR 2,484 251
STMicroelectronics NV (b) 3,400 236
Equant (b) 2,440 229
United Pan-Europe Communication NV (b) 3,500 193
ING Groep NV 2,122 115
ASM Lithography Holding NV (b) 1,880 112
-------
1,136
Singapore 6.4%
Natsteel Electronics Limited 41,200 180
Asia Pulp & Paper Co. Limited SP-ADR (b) 14,600 141
Development Bank of Singapore Limited 7,300 89
Singapore Airlines Limited 8,000 76
Allgreen Properties Limited (b) 50,000 53
-------
539
South Korea 3.5%
Korea Telecom (b) 7,000 280
Samsung Electronics 196 11
-------
291
Spain 1.2%
Telefonica Publicidad de Informacion SA (b) 5,000 100
Sweden 2.2%
Icon MediaLab International AB (b) 2,800 102
Telefonaktiebolaget LM Ericsson 2,600 86
-------
188
Switzerland 3.9%
UBS AG 465 139
Holderbank Financiere Glarus AG 90 106
Disetronic Holding AG 26 83
Holderbank Financiere Glarus AG Rights (b) 90 1
-------
329
Thailand 0.5%
Hana Microelectronics Public Co. Limited (b) 13,000 39
United Kingdom 11.9%
Vodafone Group PLC SP - ADR 1,000 197
Colt Telecom Group PLC SP-ADR (b) 2,000 173
WPP Group PLC 1,700 145
Logica PLC 12,000 126
Royal Bank of Scotland Group PLC 5,800 118
BP Amoco PLC (b) 1,025 111
Pace Micro Technology PLC 30,000 96
The Future Network PLC (b) 5,000 33
-------
999
United States 1.0%
Check Point Software Technologies Limited (b) 1,500 80
-------
Total Common Stocks 7,936
(Cost $6,576) =======
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 10.0%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreements 10.0%
State Street Bank
3.500% due 07/01/1999 $ 838 838
(Dated 06/30/1999. Collateralized by U.S.
Treasury Note 6.250% 02/15/2007 valued at
$857,775. Repurchase proceeds are $838,081.)
-------
Total Short-Term Instruments 838
(Cost $838) =======
Total Investments (a) 104.3% $ 8,774
(Cost $7,414)
Other Assets and Liabilities (Net) (4.3%) (366)
-------
Net Assets 100.0% $ 8,408
=======
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $7,414 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of
value over tax cost. $ 1,471
Aggregate gross unrealized depreciation for all
investments in which there was an excess of
tax cost over value. (111)
-------
Unrealized appreciation-net $ 1,360
=======
(b) Non-income producing security.
(C) Foreign forward currency contracts
outstanding at June 30, 1999.
Principal
Amount Unrealized
Covered by Expiration Appreciation/
Type Contract Month (Depreciation)
- ----------------------------------------------------------------------------
Buy A$ 60 07/1999 $ 0
Buy BP 78 07/1999 (1)
Buy JY 22,312 07/1999 0
Buy TB 1,445 07/1999 0
-----
$ (1)
=====
(d) Principal amount denoted in indicated currency:
A$ - Australian Dollar
BP - British Pound
JY - Japanese Yen
TB - Thai Baht
56 See accompanying notes
<PAGE>
Schedule of Investments
Capital Appreciation Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 101.0%
- --------------------------------------------------------------------------------
Building 2.0%
Centex Corp. 305,800 $ 11,487
Lafarge Corp. 289,450 10,257
----------
21,744
Capital Goods 10.4%
Tyco International Limited 224,800 21,300
Johnson Controls, Inc. 256,000 17,744
Honeywell, Inc. 147,700 17,115
AlliedSignal, Inc. 268,600 16,922
United Technologies Corp. 210,600 15,097
Textron, Inc. 170,900 14,067
General Electric Co. 113,000 12,769
General Dynamics Corp. 4,000 274
----------
115,288
Communications 4.5%
GTE Corp. 204,000 15,453
SBC Communications, Inc. 227,600 13,201
ALLTEL Corp. 182,400 13,042
Qualcomm, Inc. (b) 53,300 7,649
----------
49,345
Consumer Discretionary 16.6%
Wal-Mart Stores, Inc. 383,700 18,514
TJX Cos., Inc. 487,600 16,243
Home Depot, Inc. 233,900 15,072
Lowe's Cos., Inc. 256,600 14,546
Gap, Inc. 270,300 13,616
Harley-Davidson, Inc. 245,900 13,371
Tandy Corp. 269,900 13,191
CVS Corp. 251,500 12,764
Cintas Corp. 184,000 12,362
Circuit City Stores 132,500 12,322
Dayton Hudson Corp. 174,900 11,368
Ford Motor Co. 190,400 10,746
Mohawk Industries, Inc. (b) 335,800 10,200
General Motors Corp. 135,800 8,963
B.J.'s Wholesale Club, Inc. (b) 10,000 301
Delphi Automotive Systems (b) 1 0
Mattel, Inc. 1 0
----------
183,579
Consumer Services 6.0%
Gannett, Inc. 200,000 14,275
New York Times Co. 385,800 14,202
McGraw-Hill Companies, Inc. 248,500 13,403
Waste Management, Inc. 241,900 13,002
CBS Corp. 256,500 11,142
----------
66,024
Consumer Staples 3.5%
Anheuser Busch Cos., Inc. 188,200 13,350
Kroger Co. (b) 475,600 13,287
Safeway, Inc. (b) 234,500 11,608
----------
38,245
Energy 5.6%
Royal Dutch Petroleum Co. 224,800 13,544
Atlantic Richfield Co. 161,100 13,462
Unicom Corp. 311,600 12,016
Peco Energy Co. 285,700 11,964
Energy East Corp. 411,400 10,696
----------
61,682
Financial & Business Services 22.2%
Omnicom Group 198,000 15,840
Chase Manhattan Corp. 160,500 13,903
Bank of New York 370,800 13,604
Hartford Financial Services Group, Inc. 213,000 12,421
Fleet Financial Group, Inc. 273,100 12,119
Citigroup, Inc. 252,250 11,982
Bank of America Corp. 162,915 11,944
Associates First Capital Corp. 'A' 267,374 11,848
American Express Co. 88,900 11,568
Wells Fargo & Co. 270,100 11,547
Bank One Corp. 193,100 11,501
Capital One Financial Corp. 205,400 11,438
Alliance Capital Management LP 344,400 11,128
Marsh & Mclennan Cos. 147,300 11,121
Federal National Mortgage Association 157,800 10,790
Equity Residential Properties Trust 239,400 10,788
Southtrust Corp. 280,650 10,770
Federal Home Loan Mortgage Corp. 183,200 10,626
Comerica, Inc. 176,400 10,485
Countrywide Credit Industries, Inc. 230,000 9,832
Morgan Stanley, Dean Witter, Discover and Co. 58,300 5,976
Lehman Brothers Holdings, Inc. 60,100 3,741
----------
244,972
Health Care 7.7%
Boston Scientific Corp. (b) 313,200 13,761
Bristol-Myers Squibb Co. 178,000 12,538
CIGNA Corp. 136,700 12,166
Warner-Lambert Co. 171,500 11,898
United Healthcare Corp. 177,000 11,085
Wellpoint Health Networks, Inc. (b) 125,500 10,652
Biogen, Inc. (b) 107,000 6,881
Schering-Plough Corp. 122,600 6,498
----------
85,479
Materials & Processing 2.4%
Weyerhaeuser Co. 197,700 13,592
Georgia-Pacific Corp. 270,600 12,820
----------
26,412
Technology 16.9%
Lucent Technologies, Inc. 333,910 22,518
Microsoft Corp. (b) 238,600 21,519
Tellabs, Inc. (b) 310,000 20,944
Texas Instruments, Inc. 118,100 17,125
International Business Machines Corp. 131,000 16,932
Cisco Systems, Inc. (b) 230,200 14,848
BMC Software, Inc. (b) 258,500 13,959
Motorola, Inc. 142,800 13,530
Uniphase Corp. (b) 81,000 13,446
Altera Corp. (b) 308,700 11,364
Compuware Corp. (b) 341,200 10,854
Computer Associates International, Inc. 177,100 9,740
----------
186,779
Transportation 1.0%
Southwest Airlines Co. 338,000 10,520
Utilities 2.2%
Ameritech Corp. 181,400 13,333
Consolidated Edison, Inc. 237,700 10,756
----------
24,089
----------
Total Common Stocks 1,114,158
(Cost $891,804) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 3.9%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 3.9%
State Street Bank
3.500% Due 07/01/1999 (Dated 06/30/1999. $ 42,629 42,629
Collateralized by U.S. Treasury Note 5.250%
05/31/2001 valued at $43,483,170. Repurchase
proceeds are $42,633,144.)
----------
Total Short-Term Instruments 42,629
(Cost $42,629) ==========
Total Investments (a) 104.9% $1,156,787
(Cost $934,433)
Other Assets and Liabilities (Net) (4.9%) (53,161)
----------
Net Assets 100.0% $1,103,626
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $934,542 was as follows:
Aggregate gross unrealized appreciation for all $ 232,473
investments in which there was an excess of
value over
tax cost.
Aggregate gross unrealized depreciation for all (10,228)
investments in which there was an excess of ----------
tax cost over value.
Unrealized appreciation-net $ 222,245
==========
(b) Non-income producing security.
See accompanying notes 57
<PAGE>
Schedule of Investments
Mid-Cap Growth Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 97.8%
- --------------------------------------------------------------------------------
Aerospace 0.0%
Howmet International, Inc. (b) 25,000 $ 430
Building 2.0%
Lennar Corp. 443,300 10,639
Pulte Corp. 410,400 9,465
-------------
20,104
Capital Goods 7.3%
Waters Corp. (b) 276,800 14,705
General Dynamics Corp. 204,900 14,035
Lear Corp. (b) 265,100 13,189
Tower Automotive, Inc. (b) 427,700 10,880
Rockwell International Corp. 176,200 10,704
Federal-Mogul Corp. 188,900 9,823
-------------
73,336
Communications 1.5%
CenturyTel, Inc. 280,350 11,144
Superior Telecom, Inc. 154,678 3,867
-------------
15,011
Consumer Discretionary 22.3%
Best Buy Co., Inc. (b) 219,400 14,810
Premark International, Inc. 375,300 14,074
Hertz Corp. 'A' (b) 226,600 14,049
Bed, Bath & Beyond, Inc. (b) 358,200 13,791
Abercrombie & Fitch Co. 'A' (b) 273,600 13,133
Intimate Brands, Inc. 261,240 12,376
Family Dollar Stores, Inc. 513,400 12,322
Dial Corp. 306,800 11,409
Galileo International, Inc. (b) 212,900 11,377
Outback Steakhouse, Inc. (b) 286,000 11,243
Snyder Communications, Inc. 327,900 10,739
B.J.'s Wholesale Club, Inc. (b) 345,300 10,381
Dollar Tree Stores, Inc. 226,000 9,944
Hasbro, Inc. 346,950 9,693
Shaw Industries, Inc. 578,200 9,540
Tommy Hilfiger Corp. (b) 128,800 9,467
Maytag Corp. 132,500 9,233
Mandalay Resort Group (b) 434,700 9,183
Westpoint Stevens, Inc. (b) 297,200 8,860
Furniture Brands International, Inc.(b) 306,100 8,533
Mattel, Inc. 1 0
-------------
224,157
Consumer Services 3.2%
ACNielsen Corp. (b) 374,200 11,319
Reader's Digest Assn., Inc. 'A' 278,200 11,058
Darden Restaurants, Inc. 454,700 9,918
-------------
32,295
Consumer Staples 5.4%
Food Lion, Inc. 'A' 1,169,700 13,890
SUPERVALU, Inc. 450,700 11,577
Kroger Co. (b) 391,400 10,935
Flowers Industries, Inc. 439,450 9,531
McCormick & Co. 276,100 8,714
-------------
54,647
Energy 0.9%
Kerr McGee Corp. 95,800 4,808
Occidental Petroleum Corp. 169,400 3,578
Dynegy, Inc. 29,400 599
-------------
8,985
Financial & Business Services 21.2%
Liberty Property Trust 507,200 12,617
Duke Realty Investments 531,400 11,990
Protective Life Corp. 331,200 10,930
Allmerica Financial Corp. 171,300 10,417
Deluxe Corp. 265,500 10,338
Apartment Investment & Management Co. 'A' (b) 235,800 10,080
Zions Bancorporation 157,400 9,995
Bank United Corp. 'A' 245,300 9,858
Travelers Property Casualty 'A' 249,600 9,766
Huntington Bancshares 278,100 9,734
Valassis Communications, Inc. (b) 261,450 9,576
Dime Bancorp, Inc. 474,000 9,539
Ambac Financial Group, Inc. 164,400 9,391
First Tennessee National Corp. 240,900 9,229
Mutual Risk Management Limited 274,962 9,177
BB&T Corp. 248,400 9,113
Finova Group, Inc. 170,100 8,952
CCB Financial Corp. 167,400 8,851
Providian Financial Corp. 94,350 8,822
Equity Residential Properties Trust 193,100 8,701
Meristar Hospitality Corp. 363,500 8,156
Peoples Heritage Financial Group 307,600 5,787
Bear Stearns Co., Inc. 53,800 2,515
-------------
213,534
Health Care 6.4%
Medimmune, Inc. 187,300 12,690
Allergan, Inc. 109,100 12,110
Trigon Healthcare, Inc. (b) 315,100 11,462
C.R. Bard, Inc. 198,200 9,476
VISX, Inc. (b) 99,400 7,871
Bausch & Lomb, Inc. 100,100 7,658
Pacificare Health Systems 'B' (b) 53,300 3,834
-------------
65,101
Materials & Processing 4.7%
Southdown, Inc. 210,300 13,512
Boise Cascade Corp. 241,800 10,367
Temple-Inland, Inc. 143,500 9,794
Willamette Industries 205,100 9,447
Martin Marietta Materials, Inc. 73,800 4,354
-------------
47,474
Technology 17.4%
Veritas Software Corp. (b) 147,800 14,032
Citrix Systems, Inc. (b) 246,800 13,944
Vitesse Semiconductor Co. (b) 195,800 13,204
Comverse Technology, Inc. (b) 172,950 13,058
Lexmark International Group, Inc. 'A' (b) 197,200 13,028
Unisys Corp. (b) 321,300 12,511
Symbol Technologies, Inc. 333,300 12,290
NCR Corp. (b) 242,600 11,842
Legato Systems, Inc. (b) 200,800 11,596
PMC - Sierra, Inc. (b) 192,600 11,351
Adobe Systems, Inc. 137,100 11,264
The Reynolds & Reynolds Co. 475,000 11,073
Xilinx, Inc. (b) 186,600 10,683
CSG Systems International, Inc. 384,600 10,072
Adaptec, Inc. (b) 143,700 5,074
-------------
175,022
Utilities 5.5%
Florida Progress Corp. 263,900 10,902
DQE, Inc. 232,200 9,317
BEC Energy 223,900 9,236
NiSource, Inc. 353,700 9,130
Minnesota Power, Inc. 447,700 8,898
IPALCO Enterprises, Inc. 388,300 8,227
-------------
55,710
-------------
Total Common Stocks 985,806
(Cost $839,053) =============
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 3.6%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 3.6%
State Street Bank
3.500% due 07/01/1999 $ 36,648 36,648
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $37,381,579. Repurchase
proceeds are $36,651,563.)
-------------
Total Short-Term Instruments 36,648
(Cost $36,648) =============
Total Investments (a) 101.4% $ 1,022,454
(Cost $875,701)
Other Assets and Liabilities (Net) (1.4%) (14,329)
-------------
Net Assets 100.0% $ 1,008,125
=============
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $875,778 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 166,941
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (20,265)
-------------
Unrealized appreciation-net $ 146,676
=============
(b) Non-income producing security.
58 See accompanying notes
<PAGE>
Schedule of Investments
Small-Cap Growth Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 100.7%
- --------------------------------------------------------------------------------
Aerospace 1.2%
Newport News Shipbuilding, Inc. 26,800 $ 791
Building 5.8%
Lone Star Industries, Inc. 28,500 1,071
NVR, Inc. (b) 14,400 751
D.R. Horton, Inc. 44,500 740
Kaufman & Broad Home Corp. 24,100 599
MDC Holdings, Inc. 20,800 447
U.S. Home Corp. (b) 10,500 373
--------
3,981
Capital Goods 13.6%
Manitowoc Co., Inc. 29,750 1,238
Dura Automotive Systems, Inc. (b) 26,600 884
Terex Corp. (b) 28,800 877
Astec Industries, Inc. (b) 21,000 856
GenCorp, Inc. 33,700 851
A.O. Smith Corp. 30,200 846
Arvin Industries, Inc. 19,600 742
MotivePower Industries, Inc. (b) 39,550 702
Kellstrom Industries, Inc. (b) 31,900 582
Optical Coating Laboratory 5,700 477
Briggs & Stratton 8,000 462
Barnes Group, Inc. 16,300 355
Oshkosh Truck Corp. 'B' 5,400 272
US Can Corp. 8,700 194
--------
9,338
Communications 0.9%
Superior Telecom, Inc. 24,350 609
Consumer Discretionary 19.9%
Ames Department Stores, Inc. (b) 31,600 1,442
American Eagle Outfitters (b) 29,300 1,333
Ethan Allen Interiors, Inc. 31,650 1,195
CEC Entertainment, Inc. (b) 27,100 1,145
Chattem, Inc. (b) 28,200 897
Movado Group, Inc. 32,100 831
Fossil, Inc. (b) 14,100 682
Canandaigua Wine Co. 'A' (b) 12,900 676
AnnTaylor Stores Corp. (b) 14,100 635
Monaco Coach Corp. (b) 14,400 609
Action Performance Cos., Inc. (b) 17,000 561
Talbots, Inc. 13,300 507
Toro Co. 12,300 484
Childrens Place (b) 11,900 482
Metro Networks, Inc. (b) 7,300 390
Timberland Co. 'A' (b) 5,600 381
Station Casinos, Inc. (b) 17,100 348
Winsloew Furniture, Inc. (b) 10,300 346
MGM Grand, Inc. (b) 6,900 338
Stride Rite Corp. 24,500 253
Burlington Coat Factory Warehouse Corp. 5,900 114
--------
13,649
Consumer Services 6.7%
Foodmaker, Inc. (b) 40,700 1,155
Ruby Tuesday, Inc. 46,700 887
Rent-A-Center, Inc. (b) 32,700 785
Central Newspapers, Inc. 'A' 18,300 689
Andrx Corp. (b) 8,200 632
Avis Rent A Car, Inc. (b) 15,400 449
--------
4,597
Consumer Staples 3.7%
Michael Foods, Inc. 34,500 811
Earthgrains Co. 26,300 679
Keebler Foods Co. 20,400 620
Universal Foods 20,600 435
--------
2,545
Energy 1.2%
Barrett Resources Corp. (b) 12,400 476
Cross Timbers Oil Co. 25,500 379
--------
855
Environmental Services 1.2%
Allied Waste Industries, Inc. (b) 22,300 440
U.S. Liquids, Inc. (b) 18,400 384
--------
824
Financial & Business Services 23.9%
Hooper Holmes, Inc. 61,900 1,261
Westamerica BanCorp 27,900 1,018
Mail-Well, Inc. (b) 60,500 979
City National Corp. 25,900 970
Blanch (EW) Holdings, Inc. 14,000 955
Associated Banc-Corp 21,955 911
Colonial BancGroup, Inc. 64,200 895
Prentiss Properties Trust 37,300 876
Peoples Heritage Financial Group 45,200 850
Metris Companies 20,000 815
Highwoods Properties, Inc. 29,700 815
Hudson United Bancorp 26,500 812
Chittenden Corp. 25,000 781
Protective Life Corp. 23,500 775
Federated Investors, Inc. 'B' 39,000 700
SEI Investments Co. 7,900 697
Parkway Properties, Inc. 20,200 669
Developers Diversified Realty Corp. 27,200 452
Knight/Trimark Group, Inc. 'A' (b) 6,400 386
Reinsurance Group of America 10,875 383
LNR Property Corp. 17,300 370
--------
16,370
Health Care 5.5%
Wesley Jessen VisionCare, Inc. (b) 24,600 796
Medquist, Inc. (b) 15,600 683
Osteotech, Inc. (b) 21,900 630
Roberts Pharmaceutical Corp. (b) 22,200 538
Health Care REIT, Inc. 17,200 400
IDEC Pharmaceuticals Corp. (b) 5,100 393
Medical Manager Corp. (b) 7,500 332
--------
3,772
Materials & Processing 2.7%
Florida Rock Industries, Inc. 16,600 755
Martin Marietta Materials, Inc. 12,200 720
Mueller Industries, Inc. (b) 10,100 343
Comfort Systems USA, Inc. (b) 3,300 59
--------
1,877
Technology 10.7%
AVT Corp. (b) 31,200 1,182
Sykes Enterprises, Inc. (b) 29,500 984
Visio Corp. (b) 21,600 822
International Telecommunication Data Systems,
Inc. (b) 46,000 736
Mastech Corp. (b) 38,600 719
Broadvision, Inc. (b) 9,200 679
New Era of Networks, Inc. (b) 13,900 611
Dendrite International, Inc. (b) 15,900 574
TranSwitch Corp. (b) 11,100 526
Power Integrations, Inc. (b) 6,900 504
--------
7,337
Transportation 3.7%
USFreightways Corp. 13,800 639
American Freightways Corp. (b) 21,700 425
Forward Air Corp. (b) 14,500 408
Midwest Express Holdings, Inc. (b) 11,300 384
Eagle USA Airfreight, Inc. (b) 8,200 348
Coach USA, Inc. (b) 7,900 331
--------
2,535
--------
Total Common Stocks 69,080
(Cost $58,254) ========
See accompanying notes 59
<PAGE>
Schedule of Investments (Cont.)
Small-Cap Growth Fund
June 30, 1999
Principal
Amount Value
(000s) (000s)
- -----------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 2.2%
- -----------------------------------------------------------------------
Repurchase Agreement 2.2%
State Street Bank
3.500% due 07/01/1999 $ 1,523 $ 1,523
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 8.500% 11/15/2000
valued at $1,556,697. Repurchase
proceeds are $1,523,148.)
---------
Total Short-Term Instruments 1,523
(Cost $1,523) =========
Total Investments (a) 102.9% $ 70,603
(Cost $59,777)
Other Assets and Liabilities (Net) (2.9%) (1,981)
---------
Net Assets 100.0% $ 68,622
=========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $59,899 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost $ 11,865
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value (1,161)
---------
Unrealized appreciation-net $ 10,704
=========
(b) Non-income producing security.
60 See accompanying notes
<PAGE>
Schedule of Investments
Micro-Cap Growth Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.4%
- --------------------------------------------------------------------------------
Aerospace 1.1%
Howmet International, Inc. (b) 157,100 $ 2,700
Building 7.7%
Crossmann Communities, Inc. (b) 190,250 5,528
Dal-Tile International, Inc. (b) 327,100 3,721
Beazer Homes USA, Inc. (b) 156,600 3,631
Meritage Corp. (b) 258,000 2,822
Dayton Superior Corp. 'A' (b) 143,700 2,667
--------
18,369
Capital Goods 11.2%
Astec Industries, Inc. (b) 135,300 5,513
Strattec Strategy Corp. (b) 140,200 4,732
Quixote Corp. 332,700 4,055
HEICO Corp. 137,700 3,425
Brooks Automation, Inc. (b) 107,600 2,912
HEICO Corp. 'A' 87,300 2,117
MYR Group, Inc. 110,500 1,941
Engineered Support Systems, Inc. 99,350 1,174
Transportation Technologies Industries, Inc. 50,000 663
--------
26,532
Consumer Discretionary 26.6%
K-Swiss, Inc. 'A' 142,600 6,630
Dover Downs Entertainment, Inc. 321,800 5,692
Shoe Carnival, Inc. (b) 314,400 5,345
Movado Group, Inc. 192,212 4,973
Chico's Fas, Inc. (b) 192,400 4,521
Winsloew Furniture, Inc. (b) 130,100 4,375
Stanley Furniture Co, Inc. (b) 187,600 4,221
Haverty Furniture Cos., Inc. 113,700 4,008
Brookstone, Inc. (b) 241,600 3,745
Craftmade International, Inc. 282,900 3,678
United Natural Foods, Inc. (b) 124,100 3,071
Koala Corp. (b) 113,300 3,031
Rare Hospitality International, Inc. (b) 118,100 3,012
Rush Enterprises, Inc. (b) 129,700 2,091
The Rowe Companies 186,700 1,949
REX Stores Corp. (b) 51,700 1,541
Roadhouse Grill, Inc. (b) 200,000 1,288
--------
63,171
Consumer Services 8.3%
Morton's Restaurant Group, Inc. (b) 275,100 5,244
Taco Cabana, Inc. 'A' (b) 480,400 4,894
Seaway Food Town, Inc. 133,900 2,628
INTRAV, Inc. 125,300 2,224
Group 1 Automotive, Inc. (b) 96,800 2,045
Dollar Thrifty Automotive Group (b) 62,600 1,455
Rock of Ages Corp. (b) 108,100 1,108
--------
19,598
Consumer Staples 5.5%
Pilgrim's Pride Corp. 130,000 3,900
Hain Food Group, Inc. (b) 176,800 3,647
J & J Snack Foods Corp. (b) 99,800 2,395
Sanderson Farms, Inc. 167,500 2,387
Hansen Natural Corp. (b) 175,000 766
--------
13,095
Energy 1.8%
St. Mary Land & Exploration 122,100 2,511
HS Resources, Inc. 107,300 1,583
Key Production Co., Inc. (b) 28,400 261
--------
4,355
Environmental Services 0.4%
Waste Industries, Inc. (b) 60,600 1,083
Financial & Business Services 14.8%
Premier National Bancorp, Inc. 274,557 5,490
Community First Bankshares, Inc. 198,900 4,749
AG Services of America, Inc. (b) 254,100 4,383
Chittenden Corp. 139,743 4,367
Provident Bankshares Corp. 168,866 3,926
Alabama National Bancorp 155,300 3,883
West Coast Bancorp 164,500 2,879
Sterling Bancorp-NY 113,500 2,157
Abington Bancorp, Inc. 150,200 2,028
John Nuveen Co. 'A' 28,400 1,212
--------
35,074
Health Care 2.1%
Empi, Inc. (b) 132,600 3,232
Osteotech, Inc. (b) 64,475 1,854
--------
5,086
Materials & Processing 1.6%
Building Material Holding Corp. (b) 324,100 3,727
Technology 9.6%
Catalyst International, Inc. (b) 244,100 4,379
Dendrite International, Inc. (b) 102,200 3,692
Cybex Computer Products (b) 131,350 3,661
Ansys, Inc. (b) 356,400 3,542
AVT Corp. (b) 83,300 3,155
Ardent Software, Inc. (b) 144,900 3,079
Lightbridge, Inc. (b) 74,200 932
Vicon Industries, Inc. (b) 29,100 260
--------
22,700
Transportation 3.7%
Providence & Worcester Railroad Co. 235,100 3,321
Railamerica, Inc. (b) 295,000 3,042
MS Carriers, Inc. (b) 80,600 2,390
--------
8,753
--------
Total Common Stocks 224,243
(Cost $176,376) ========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 5.3%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 5.3%
State Street Bank
3.500% due 07/01/1999 $ 12,490 12,490
(Dated 06/30/1999. Collateralized by
U.S. Treasury Bond 7.250% 05/15/2016
valued at $12,740,060. Repurchase
proceeds are $12,491,214.)
----------
Total Short-Term Instruments 12,490
(Cost $12,490) ==========
Total Investments (a) 99.7% $ 236,733
(Cost $188,866)
Other Assets and Liabilities (Net) 0.3% 706
----------
Net Assets 100.0% $ 237,439
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $188,866 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost $ 53,019
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value (5,152)
----------
Unrealized appreciation-net $ 47,867
==========
(b) Non-income producing security
See accompanying notes 61
<PAGE>
Schedule of Investments
Equity Income Fund
June 30, 1999
Value
Shares (000s)
- -------------------------------------------------------------------------------
COMMON STOCKS 98.7%
- -------------------------------------------------------------------------------
Aerospace 2.2%
BFGoodrich Co. 105,000 $ 4,462
Capital Goods 8.0%
Hubbell, Inc. 'B' 96,000 4,356
GATX Corp. 109,000 4,149
Deere & Co. 102,600 4,066
Dana Corp. 79,900 3,680
-----------
16,251
Communications 6.3%
Bell Atlantic Corp. 66,932 4,376
GTE Corp. 56,800 4,303
U.S. West, Inc. 69,000 4,054
-----------
12,733
Consumer Discretionary 15.5%
Whirlpool Corp. 59,200 4,381
Springs Industries, Inc. 'A' 99,000 4,319
Armstrong World Industries 72,000 4,162
Ford Motor Co. 71,400 4,030
Penny J.C., Inc. 81,000 3,934
Eastman Kodak Co. 56,000 3,794
UST, Inc. 129,400 3,785
American Greetings Corp. 'A' 98,000 2,952
-----------
31,357
Consumer Staples 7.9%
SUPERVALU, Inc. 164,600 4,228
RJ Reynolds Tobacco Holdings, Inc. 126,600 3,988
Anheuser Busch Cos., Inc. 56,000 3,972
Kimberly-Clark Corp. 65,500 3,733
-----------
15,921
Energy 10.1%
Repsol SA SP - ADR 208,500 4,235
USX Marathon Group 129,000 4,201
Kerr McGee Corp. 81,000 4,065
Mobil Corp. 41,000 4,059
Ultramar Diamond Shamrock Corp. 180,500 3,937
-----------
20,497
Environmental Services 2.0%
Browning Ferris Industries, Inc. 94,000 4,042
Financial & Business Services 19.6%
Union Planters Corp. 180,000 8,044
Edwards (A.G.), Inc. 128,000 4,128
Morgan, J.P. & Co., Inc. 29,100 4,088
Deluxe Corp. 105,000 4,088
KeyCorp 123,000 3,951
Republic New York Corp. 57,900 3,948
HRPT Properties Trust 252,600 3,868
PNC Bank Corp. 65,000 3,746
Ohio Casualty Corp. 102,400 3,699
-----------
39,560
Health Care 2.0%
Mallinckrodt, Inc. 109,700 3,990
Materials & Processing 9.8%
USX-U.S. Steel Group, Inc. 299,400 8,084
Georgia-Pacific Corp. (Timber Group) 156,700 3,957
Tenneco, Inc. 164,000 3,916
Westvaco Corp. 134,000 3,886
-----------
19,843
Technology 3.9%
Harris Corp. 199,400 7,814
Utilities 11.4%
NICOR, Inc. 105,000 3,997
Constellation Energy Group, Inc. 133,000 3,940
Peoples Energy Corp. 103,000 3,882
Public Service Enterprise Group, Inc. 94,500 3,863
DTE Energy Co. 95,000 3,800
Central & South West Corp. 148,800 3,478
-----------
22,960
-----------
Total Common Stocks 199,430
(Cost $180,043) ===========
Total Investments (a) 98.7% $ 199,430
(Cost $180,043)
Other Assets and Liabilities (Net) 1.3% 2,575
-----------
Net Assets 100.0% $ 202,005
===========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $180,175 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 27,086
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (7,831)
-----------
Unrealized appreciation-net $ 19,255
===========
62 See accompanying notes
<PAGE>
Schedule of Investments
Value Fund
June 30, 1999
Value
Shares (000s)
- -------------------------------------------------------------------------------
COMMON STOCKS 94.0%
- -------------------------------------------------------------------------------
Aerospace 1.9%
Northrop Grumman Corp. 66,000 $ 4,376
Capital Goods 3.9%
Dana Corp. 102,700 4,731
Deere & Co. 108,000 4,280
--------
9,011
Communications 8.1%
Bell Atlantic Corp. 146,000 9,545
GTE Corp. 122,000 9,242
--------
18,787
Consumer Discretionary 13.5%
Thomas & Betts Corp. 191,000 9,025
UST, Inc. 272,400 7,968
Whirlpool Corp. 64,000 4,736
Tupperware Corp. 183,000 4,667
American Greetings Corp. 'A' 128,000 3,856
Brunswick Corp. 40,400 1,125
--------
31,377
Consumer Services 3.8%
King World Productions, Inc. 129,000 4,491
Central Newspapers, Inc. 'A' 115,000 4,327
--------
8,818
Consumer Staples 13.3%
SUPERVALU, Inc. 342,000 8,785
Kimberly-Clark Corp. 150,000 8,550
Whitman Corp. 261,000 4,698
IBP, Inc. 193,000 4,584
Anheuser Busch Cos., Inc. 60,000 4,256
--------
30,873
Energy 9.5%
Mobil Corp. 90,000 8,910
Kerr McGee Corp. 88,000 4,416
Repsol SA SP - ADR 216,000 4,388
Ultramar Diamond Shamrock Corp. 194,000 4,232
--------
21,946
Environmental Services 1.9%
Browning Ferris Industries, Inc. 103,000 4,429
Financial & Business Services 7.7%
Union Planters Corp. 103,000 4,603
PNC Bank Corp. 78,000 4,495
Republic New York Corp. 65,000 4,432
Loews Corp. 55,500 4,391
--------
17,921
Health Care 7.5%
Mallinckrodt, Inc. 235,000 8,547
American Home Products Corp. 81,000 4,658
CIGNA Corp. 30,700 2,732
Mylan Laboratories, Inc. 58,200 1,542
--------
17,479
Materials & Processing 6.2%
USG Corp. 80,000 4,480
USX-U.S. Steel Group, Inc. 160,000 4,320
Westvaco Corp. 144,000 4,176
IMC Global, Inc. 76,700 1,333
--------
14,309
Technology 5.9%
Harris Corp. 117,000 4,585
Sterling Software, Inc. (b) 169,000 4,510
Apple Computer, Inc. 96,000 4,446
--------
13,541
Utilities 10.8%
Public Service Enterprise Group, Inc. 210,000 8,584
NICOR, Inc. 219,700 8,362
DTE Energy Co. 200,000 8,000
--------
24,946
--------
Total Common Stocks 217,813
(Cost $198,964) ========
Principal
Amount Value
(000s) (000s)
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 5.0%
- -------------------------------------------------------------------------------
Repurchase Agreement 5.0%
State Street Bank
3.500% due 07/01/1999 $ 11,554 $ 11,554
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.375% 09/30/2001
valued at $11,790,033. Repurchase
proceeds are $11,555,123.)
----------
Total Short-Term Instruments 11,554
(Cost $11,554) ==========
Total Investments (a) 99.0% $ 229,367
(Cost $210,518)
Other Assets and Liabilities (Net) 1.0% 2,271
----------
Net Assets 100.0% $ 231,638
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $211,558 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost $ 25,023
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value (7,214)
----------
Unrealized appreciation-net $ 17,809
==========
(b) Non-income producing security.
See accompanying notes 63
<PAGE>
Schedule of Investments
Value 25 Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 109.9%
- --------------------------------------------------------------------------------
Aerospace 6.2%
Cordant Technologies, Inc. 3,000 $ 137
Building 14.0%
Clayton Homes, Inc. 10,000 114
Lafarge Corp. 2,800 99
York International Corp. 2,200 94
--------
307
Capital Goods 15.5%
Meritor Automotive, Inc. 3,800 97
GATX Corp. 2,400 91
Snap-On, Inc. 2,400 87
Paccar, Inc. 1,200 64
--------
339
Consumer Discretionary 22.8%
Cooper Tire & Rubber Co. 5,000 118
Warnaco Group, Inc. 'A' 4,100 110
U.S. Industries, Inc. 5,600 95
Armstrong World Industries 1,600 93
UST, Inc. 2,800 82
--------
498
Consumer Services 4.4%
Manpower, Inc. 4,300 97
Consumer Staples 2.9%
IBP, Inc. 2,700 64
Energy 3.0%
Ultramar Diamond Shamrock Corp. 3,000 65
Financial & Business Services 20.5%
American National Insurance Co. 2,000 143
Golden West Financial Corp. 1,300 127
Crescent Real Estate Equities Co. 3,800 90
Old Republic International Corp. 5,100 88
--------
448
Materials & Processing 8.8%
USX-U.S. Steel Group, Inc. 3,600 97
IMC Global, Inc. 5,500 96
--------
193
Transportation 8.7%
Airborne Freight Corp. 3,500 97
Ryder System, Inc. 3,600 93
--------
190
Utilities 3.1%
Constellation Energy Group, Inc. 2,300 68
--------
Total Common Stocks 2,406
(Cost $2,357) ========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 6.2%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 6.2%
State Street Bank
3.500% due 07/01/1999 $ 135 135
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.500% 05/31/2002
valued at $138,166. Repurchase
proceeds are $135,013.)
--------
Total Short-Term Instruments 135
(Cost $135) ========
Total Investments (a) 116.1% $ 2,541
(Cost $2,492)
Other Assets and Liabilities (Net) (16.1%) (352)
--------
Net Assets 100.0% $ 2,189
========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $2,504 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 97
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (60)
--------
Unrealized appreciation-net $ 37
========
(b) Non-income producing security.
64 See accompanying notes
<PAGE>
Schedule of Investments
Small-Cap Value Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.2%
- --------------------------------------------------------------------------------
Aerospace 2.7%
Kaman Corp. 259,000 $ 4,063
Newport News Shipbuilding, Inc. 127,000 3,747
Cordant Technologies, Inc. 70,000 3,163
----------
10,973
Building 6.7%
MDC Holdings, Inc. 202,900 4,362
Hughes Supply, Inc. 129,000 3,830
Lennar Corp. 159,000 3,816
Lone Star Industries, Inc. 100,000 3,756
Hussmann International, Inc. 224,000 3,710
Fleetwood Enterprises, Inc. 140,000 3,701
Butler Manufacturing Co. 118,000 3,297
----------
26,472
Capital Goods 11.3%
GenCorp, Inc. 178,000 4,495
Westinghouse Air Brake Co. 173,000 4,487
C&D Technologies, Inc. 138,000 4,226
Precision Castparts Corp. 93,000 3,953
Intermet Corp. 259,000 3,917
Meritor Automotive, Inc. 144,000 3,672
Standard Products 143,000 3,664
Barnes Group, Inc. 163,000 3,545
Gleason Corp. 198,000 3,329
Borg-Warner Automotive, Inc. 60,000 3,300
Tecumseh Products Co. 'A' 53,000 3,210
MTS Systems Corp. 261,700 3,189
----------
44,987
Consumer Discretionary 12.3%
Burlington Coat Factory Warehouse Corp. 259,000 5,002
Enesco Group, Inc. 183,000 4,232
Harman International Industries, Inc. 88,000 3,872
Brown Shoe Co., Inc. 177,000 3,850
Lancaster Colony Corp. 111,500 3,847
Haverty Furniture Cos., Inc. 109,000 3,842
Russ Berrie & Co., Inc. 153,000 3,787
Kimball International 'B' 210,000 3,544
Banta Corp. 166,000 3,486
Jostens, Inc. 165,000 3,475
Guilford Mills, Inc. 315,000 3,268
Sturm Ruger & Co., Inc. 305,000 3,260
Ennis Business Forms 380,000 3,254
----------
48,719
Consumer Services 3.5%
Norrell Corp. 190,000 3,574
Chemed Corp. 107,000 3,558
Lubys Cafeterias, Inc. 226,000 3,390
Sbarro, Inc. 125,000 3,383
----------
13,905
Consumer Staples 5.8%
Pilgrim's Pride Corp. 189,300 5,678
Michael Foods, Inc. 168,000 3,948
Universal Corp. 137,000 3,896
Chiquita Brands International 395,000 3,555
Universal Foods 155,000 3,274
Nash Finch Co. 278,000 2,806
----------
23,157
Energy 3.0%
World Fuel Services Corp. 288,000 4,248
Mitchell Energy & Development Corp. 'B' 219,000 4,024
Santa Fe Snyder Corp. (b) 477,650 3,642
----------
11,914
Financial & Business Services 25.9%
Orion Capital Corp. 110,000 3,947
Kelly Services, Inc. 'A' 127,000 4,080
PXRE Corp. 214,000 3,879
Raymond James Financial, Inc. 161,000 3,854
Dain Rauscher Corp. 71,000 3,843
TriNet Corp. Realty Trust, Inc. 138,000 3,821
AmerUs Life Holdings, Inc. 'A' 139,000 3,753
UST Corp. 123,000 3,721
Glimcher Realty Trust 228,000 3,705
American Health Properties, Inc. 184,000 3,703
United Dominion Realty Trust 315,000 3,701
Shurgard Storage Centers, Inc. 134,000 3,635
McGrath Rentcorp 179,200 3,584
National Golf Properties, Inc. 146,300 3,557
Flagstar Bancorp, Inc. 140,000 3,535
Merrill Corp. 242,000 3,509
Washington Federal, Inc. 155,100 3,480
Franchise Finance Corp. of America 158,000 3,476
Arthur J. Gallagher & Co. 70,000 3,465
Presidential Life Corp. 176,000 3,454
Rollins Truck Leasing Co. 308,500 3,432
Selective Insurance Group 177,000 3,374
Hudson United Bancorp 109,000 3,338
Esg Re Limited 221,800 3,327
Commercial Federal Corp. 143,000 3,316
Innkeepers USA Trust 328,000 3,280
BankAtlantic Bancorp, Inc. 'A' 450,000 3,262
New Plan Excel Realty Trust 174,000 3,132
Cabot Industrial Trust 133,200 2,830
----------
102,993
Health Care 2.8%
Arrow International, Inc. 157,000 4,062
Owens & Minor, Inc. 333,000 3,663
Invacare Corp. 129,000 3,249
----------
10,974
Materials & Processing 6.5%
Wausau-Mosinee Paper Corp. 224,000 4,032
Caraustar Industries, Inc. 159,000 3,925
Ethyl Corp. 653,000 3,918
Universal Forest Products, Inc. 180,000 3,870
Commercial Metals Co. 135,000 3,848
Lincoln Electric Holdings, Inc. 160,400 3,288
Cleveland-Cliffs, Inc. 95,000 3,076
----------
25,957
Technology 1.9%
Dallas Semiconductor Corp. 78,000 3,939
Autodesk, Inc. 125,000 3,695
----------
7,634
Transportation 2.7%
USFreightways Corp. 84,000 3,890
Airborne Freight Corp. 132,000 3,655
Sea Containers Limited 'A' 98,000 3,289
----------
10,834
Utilities 9.1%
Eastern Enterprises 100,000 3,975
Washington Gas Light Co. 149,000 3,874
Public Service Co. of New Mexico 190,000 3,776
CMP Group, Inc. 142,000 3,719
United Illuminating Co. 86,200 3,658
National Fuel Gas Co. 74,000 3,589
Commonwealth Energy System 83,000 3,486
Avista Corp. 206,800 3,360
Energen Corp. 180,000 3,353
Rochester Gas & Electric Corp. 124,000 3,294
----------
36,084
----------
Total Common Stocks 374,603
(Cost $382,918) ==========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 5.6%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 5.6%
State Street Bank
3.500% due 07/01/1999 $ 22,119 22,119
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $22,563,432. Repurchase
proceeds are $22,121,150.)
----------
Total Short-Term Instruments 22,119
(Cost $22,119) ==========
Total Investments (a) 99.8% $ 396,722
(Cost $405,037)
Other Assets and Liabilities (Net) 0.2% 921
----------
Net Assets 100.0% $ 397,643
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $405,824 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost $ 26,505
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value (35,607)
----------
Unrealized depreciation-net $ (9,102)
==========
(b) Non-income producing security.
See accompanying notes 65
<PAGE>
Schedule of Investments
Enhanced Equity Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 99.9%
- --------------------------------------------------------------------------------
Aerospace 0.6%
Raytheon Co. 'B' 2,200 $ 155
Northrop Grumman Corp. 2,000 133
BFGoodrich Co. 2,700 115
---------
403
Building 0.8%
Centex Corp. 7,200 270
Owens Corning 4,000 138
Crane Co. 2,000 63
Fleetwood Enterprises, Inc. 1,800 48
---------
519
Capital Goods 8.8%
General Electric Co. 18,800 2,124
AlliedSignal, Inc. 9,200 580
Honeywell, Inc. 4,200 487
United Technologies Corp. 6,600 473
Navistar International Corp. (b) 6,900 345
Ingersoll-Rand Co. 4,700 304
Tyco International Limited 2,700 256
W.R. Grace & Co. (b) 11,600 213
McDermott International, Inc. 7,200 203
Johnson Controls, Inc. 2,400 166
Paccar, Inc. 3,100 165
General Dynamics Corp. 2,400 164
ITT Industries, Inc. 3,000 114
Avery Dennison Corp. 1,700 103
Briggs & Stratton 1,000 58
Engelhard Corp. 2,100 48
Dana Corp. 800 37
---------
5,840
Communications 8.1%
AT&T Corp. 23,000 1,284
BellSouth Corp. 17,640 827
SBC Communications, Inc. 13,400 777
MCI WorldCom, Inc. (b) 7,100 612
Bell Atlantic Corp. 8,518 557
GTE Corp. 5,200 394
U.S. West, Inc. 6,600 388
MediaOne Group, Inc. (b) 2,600 193
Nortel Networks Corp. 2,000 174
General Instrument Corp. (b) 2,500 106
CenturyTel, Inc. 1,500 60
---------
5,372
Consumer Discretionary 12.0%
Wal-Mart Stores, Inc. 22,800 1,100
Gap, Inc. 14,850 748
Ford Motor Co. 12,600 711
Procter & Gamble Co. 7,200 643
Dayton Hudson Corp. 7,300 475
TJX Cos., Inc. 13,000 433
Costco Cos., Inc. (b) 4,600 368
Federated Department Stores, Inc. (b) 5,900 312
Time Warner, Inc. 4,000 294
Eastman Kodak Co. 3,800 257
VF Corp. 5,600 239
Masco Corp. 7,900 228
Home Depot, Inc. 3,500 226
Whirlpool Corp. 3,000 222
General Motors Corp. 3,200 211
Hasbro, Inc. 7,425 207
Lowe's Cos., Inc. 3,300 187
Cendant Corp. (b) 7,300 150
Black & Decker Corp. 2,300 145
Toys R US, Inc. (b) 7,000 145
Harrah's Entertainment, Inc. (b) 6,200 136
Pitney Bowes, Inc. 1,700 109
Alberto-Culver Co. 'B' 4,000 106
Colgate-Palmolive Co. 1,000 99
Liz Claiborne, Inc. 2,600 95
Cooper Tire & Rubber Co. 3,000 71
Tandy Corp. 1,000 49
Delphi Automotive Systems (b) 2,236 42
---------
8,008
Consumer Services 3.2%
Viacom, Inc. 'B' (b) 15,800 695
CBS Corp. 6,000 261
Gannett, Inc. 3,100 221
Carnival Corp. 'A' 4,500 218
Knight-Ridder, Inc. 3,800 209
New York Times Co. 4,500 166
Darden Restaurants, Inc. 6,000 131
King World Productions, Inc. 3,600 125
Mckesson HBOC, Inc. 2,553 82
Tricon Global Restaurants, Inc. (b) 1,000 54
---------
2,162
Consumer Staples 6.7%
Coca-Cola Co. 12,400 775
Philip Morris Cos., Inc. 16,900 679
Quaker Oats Co. 6,400 425
Albertson's, Inc. 6,500 335
Pepsico, Inc. 8,000 310
Anheuser Busch Cos., Inc. 3,500 248
Adolph Coors Co. 'B' 5,000 248
SUPERVALU, Inc. 9,200 236
Unilever NV - NY 2,857 199
Kroger Co. (b) 7,000 196
General Mills, Inc. 2,400 193
Sara Lee Corp. 8,200 186
Fortune Brands, Inc. 4,400 182
Safeway, Inc. (b) 3,000 149
Clorox Co. 500 53
Sysco Corp. 1,600 48
---------
4,462
Energy 5.3%
Exxon Corp. 13,000 1,003
Mobil Corp. 7,700 762
Chevron Corp. 6,400 609
Royal Dutch Petroleum Co. 8,100 488
Sunoco, Inc. 6,700 202
USX Marathon Group 4,700 153
Ashland, Inc. 3,000 120
Anadarko Petroleum Corp. 3,000 110
Amerada Hess Corp. 1,000 60
---------
3,507
Financial & Business Services 17.5%
Chase Manhattan Corp. 10,958 949
Citigroup, Inc. 16,510 784
Bank of America Corp. 9,274 680
Federal National Mortgage Association 9,500 650
American International Group, Inc. 5,050 591
Morgan Stanley, Dean Witter, Discover and Co. 5,730 587
First Union Corp. 12,430 584
Bank One Corp. 9,144 545
Allstate Corp. 11,300 405
Conseco, Inc. 12,600 384
State Street Corp. 3,800 324
Sun Trust Banks, Inc. 4,500 312
Fleet Financial Group, Inc. 6,900 306
Countrywide Credit Industries, Inc. 7,100 304
BankBoston Corp. 5,200 266
Deluxe Corp. 6,800 265
Lincoln National Corp. 5,000 262
Bank of New York 6,900 253
Lehman Brothers Holdings, Inc. 4,000 249
Omnicom Group 2,900 232
Merrill Lynch & Co. 2,900 232
Federal Home Loan Mortgage Corp. 3,700 215
MGIC Investment Corp. 4,200 204
Mellon Bank Corp. 5,400 196
American Express Co. 1,400 182
Bear Stearns Co., Inc. 3,780 177
Golden West Financial Corp. 1,700 167
Aon Corp. 3,900 161
Paychex, Inc. 5,000 159
Northern Trust Corp. 1,600 155
Donnelley (R.R.) & Sons Co. 4,000 148
Loews Corp. 1,800 142
66 See accompanying notes
<PAGE>
Value
Shares (000s)
- -------------------------------------------------------------------------------
Aetna, Inc. 1,400 $ 125
National City Corp. 1,800 118
Southtrust Corp. 3,000 115
Household International, Inc. 2,000 95
Comerica, Inc. 1,500 89
H&R Block, Inc. 1,100 55
---------
11,667
Health Care 10.6%
Bristol-Myers Squibb Co. 14,800 1,042
Merck & Co., Inc. 13,000 962
Schering-Plough Corp. 15,600 827
Pfizer, Inc. 6,600 724
Johnson & Johnson 6,900 676
Warner-Lambert Co. 7,400 513
Eli Lilly & Co. 5,800 415
Amgen, Inc. (b) 4,300 262
Bausch & Lomb, Inc. 3,100 237
Allergan, Inc. 1,900 211
C.R. Bard, Inc. 4,000 191
Guidant Corp. 3,600 185
CIGNA Corp. 2,000 178
Becton Dickinson & Co. 5,500 165
Abbott Laboratories 3,000 136
HEALTHSOUTH Corp. (b) 5,000 75
Watson Pharmaceuticals, Inc. (b) 2,000 70
Cardinal Health, Inc. 1,050 67
St. Jude Medical Inc. 1,800 64
Humana, Inc. (b) 4,500 58
---------
7,058
Materials & Processing 2.3%
Georgia-Pacific Corp. 6,200 294
Fort James Corp. 5,400 205
Placer Dome, Inc. 15,800 187
Ball Corp. 3,500 148
Louisiana-Pacific Corp. 5,500 131
Rohm & Haas Co. 3,000 129
Alcoa, Inc. 2,000 124
FMC Corp. (b) 1,600 109
Armco, Inc. (b) 16,300 108
USX-U.S. Steel Group, Inc. 2,400 65
Air Products & Chemicals 1,400 56
---------
1,556
Technology 19.7%
Microsoft Corp. (b) 37,200 3,355
Intel Corp. 26,000 1,547
Lucent Technologies, Inc. 22,400 1,511
International Business Machines Corp. 9,800 1,267
Sun Microsystems, Inc. (b) 12,700 875
Cisco Systems, Inc. (b) 11,900 768
Dell Computer Corp. (b) 17,400 644
Unisys Corp. (b) 13,400 522
America Online, Inc. (b) 4,500 497
Tellabs, Inc. (b) 6,900 466
Oracle Corp. (b) 9,450 351
Applied Materials, Inc. (b) 3,000 222
Computer Sciences Corp. (b) 3,000 207
Xerox Corp. 3,200 189
Computer Associates International, Inc. 3,300 182
Compaq Computer Corp. (b) 6,974 165
Solectron Corp. (b) 2,000 133
IMS Health, Inc. (b) 3,300 103
Apple Computer, Inc. 1,700 79
BMC Software, Inc. (b) 1,200 65
---------
13,148
Transportation 0.7%
Southwest Airlines Co. 8,050 251
AMR Corp. (b) 1,100 75
Delta Air Lines, Inc. 1,200 69
Kansas City Southern Industries, Inc. 1,000 64
---------
459
Utilities 3.6%
Ameritech Corp. 13,200 970
FPL Group, Inc. 5,000 273
DTE Energy Co. 5,600 224
Consolidated Edison, Inc. 4,600 208
Texas Utilities Co. 4,100 169
Reliant Energy, Inc. 5,000 138
Coastal Corp. 3,000 120
Edison International 4,200 112
Dominion Resources, Inc. 2,500 108
Eastern Enterprises 2,000 80
---------
2,402
---------
Total Common Stocks 66,563
(Cost $48,246) =========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 0.1%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 0.1%
State Street Bank
3.500% due 07/01/1999 $ 46 46
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.500% 10/15/2006
valued at $51,855. Repurchase
proceeds are $46,004.)
---------
Total Short-Term Instruments 46
(Cost $46) =========
Total Investments (a) 100.0% $ 66,609
(Cost $48,292)
Other Assets and Liabilities (Net) 0.0% 25
---------
Net Assets 100.0% $ 66,634
---------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $48,294 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 19,577
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (1,262)
---------
Unrealized appreciation-net $ 18,315
=========
(b) Non-income producing security.
See accompanying notes 67
<PAGE>
Schedule of Investments
Tax-Efficient Equity Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 99.6%
- --------------------------------------------------------------------------------
Aerospace 0.4%
Boeing Co. 1,800 $ 80
Raytheon Co. 'B' 600 42
------
122
Building 0.4%
Crane Co. 1,700 53
Centex Corp. 1,100 41
Kaufman & Broad Home Corp. 900 22
------
116
Capital Goods 8.2%
General Electric Co. 7,400 836
AlliedSignal, Inc. 2,600 164
Tyco International Limited 1,500 142
United Technologies Corp. 1,800 129
Honeywell, Inc. 1,000 116
McDermott International, Inc. 4,000 113
Dana Corp. 2,200 101
Ingersoll-Rand Co. 1,200 78
Johnson Controls, Inc. 1,000 69
Caterpillar, Inc. 1,100 66
Paccar, Inc. 1,200 64
Avery Dennison Corp. 1,000 60
Navistar International Corp. (b) 1,200 60
Textron, Inc. 700 58
General Dynamics Corp. 800 55
Briggs & Stratton Corp. 900 52
Nacco Industries, Inc. 'A' 600 44
PPG Industries, Inc. 500 30
Engelhard Corp. 1,300 29
Parker Hannifin Corp. 500 23
Minnesota Mining & Manufacturing Co. 100 9
Dover Corp. 100 4
------
2,302
Communications 8.3%
AT&T Corp. 9,150 511
MCI WorldCom, Inc. (b) 4,900 423
SBC Communications, Inc. 5,600 325
Bell Atlantic Corp. 4,300 281
BellSouth Corp. 5,100 239
GTE Corp. 2,400 182
Nortel Networks Corp. 1,100 95
U.S. West, Inc. 1,500 88
Vodafone Group PLC SP - ADR 400 79
ALLTEL Corp. 1,000 72
CenturyTel, Inc. 500 20
------
2,315
Consumer Discretionary 12.3%
Wal-Mart Stores, Inc. 11,100 535
Procter & Gamble Co. 3,200 286
Home Depot, Inc. 3,500 225
Gap, Inc. 4,275 215
Time Warner, Inc. 2,400 176
Ford Motor Co. 2,900 163
General Motors Corp. 1,700 112
Avon Products, Inc. 2,000 111
TJX Cos., Inc. 3,000 100
Federated Department Stores, Inc. (b) 1,700 90
VF Corp. 2,000 86
Eastman Kodak Co. 1,200 81
Pitney Bowes, Inc. 1,200 77
Walgreen Co. 2,600 76
Cendant Corp. (b) 3,700 76
Dayton Hudson Corp. 1,100 72
Sears Roebuck & Co. 1,600 71
Alberto-Culver Co. 2,500 67
Brunswick Corp. 2,300 64
Masco Corp. 2,200 64
Lowe's Cos., Inc. 1,100 62
Liz Claiborne, Inc. 1,700 62
Harrah's Entertainment, Inc. (b) 2,300 51
Emerson Electric Co. 800 50
Maytag Corp. 700 49
Costco Cos., Inc. (b) 600 48
UST, Inc. 1,600 47
American Greetings Corp. 'A' 1,500 45
MAY Department Stores Co. 1,100 45
Armstrong World Industries 700 40
Corning, Inc. 500 35
Hasbro, Inc. 1,200 34
Colgate-Palmolive Co. 300 30
Dollar General Corp. 906 26
Cooper Tire & Rubber Co. 1,000 24
Consolidated Stores Corp. (b) 700 19
Newell Rubbermaid, Inc. 400 19
Wm. Wrigley Jr. Co. 100 9
Goodyear Tire & Rubber Co. 100 6
------
3,448
Consumer Services 3.9%
McDonald's Corp. 3,600 149
King World Productions, Inc. 3,600 125
Viacom, Inc. 'B' (b) 2,800 123
Gannett, Inc. 1,600 114
Waste Management, Inc. 2,100 113
Interpublic Group of Companies, Inc. 1,300 113
Carnival Corp. 'A' 2,200 107
Times Mirror Co. 'A' 1,300 77
Knight-Ridder, Inc. 1,300 71
Tribune Co. 500 44
McGraw-Hill Companies, Inc. 800 43
New York Times Co. 600 22
------
1,101
Consumer Staples 5.9%
Coca-Cola Co. 6,400 400
Philip Morris Cos., Inc. 4,600 185
General Mills, Inc. 1,700 137
Anheuser Busch Cos., Inc. 1,900 135
Kimberly-Clark Corp. 2,000 114
SUPERVALU, Inc. 3,900 100
Safeway, Inc. (b) 1,800 89
Brown-Forman Corp. 1,200 78
Clorox Co. 700 75
H.J. Heinz Co. 1,300 65
Albertson's, Inc. 1,200 62
Bestfoods 1,200 59
Sysco Corp. 1,600 48
Sara Lee Corp. 1,700 39
Adolph Coors Co. 'B' 700 35
Pepsico, Inc. 300 12
Kellogg Co. 200 7
------
1,640
Energy 5.6%
Exxon Corp. 6,200 478
Mobil Corp. 2,700 267
Chevron Corp. 1,900 181
Royal Dutch Petroleum Co. 2,500 151
Rowan Cos., Inc. (b) 4,800 89
Sunoco, Inc. 2,300 69
Phillips Petroleum Co. 1,200 60
Texaco, Inc. 900 56
Atlantic Richfield Co. 600 50
AES Corp. (b) 700 41
Ashland, Inc. 1,000 40
Peco Energy Co. 800 34
Southern Co. 1,000 27
Enron Corp. 300 25
------
1,568
Financial & Business Services 16.4%
Citigroup, Inc. 9,200 437
American International Group, Inc. 2,513 294
Bank of America Corp. 3,639 267
Bank One Corp. 3,824 228
Chase Manhattan Corp. 2,500 216
Morgan Stanley, Dean Witter, Discover and Co. 2,000 205
Federal National Mortgage Association 2,300 157
First Union Corp. 2,800 131
Charles Schwab Corp. 1,150 126
Allstate Corp. 3,000 108
MBNA Corp. 3,500 107
Bank of New York 2,900 106
American Express Co. 800 104
Wells Fargo & Co. 2,400 103
Sun Trust Banks, Inc. 1,400 97
Conseco, Inc. 3,100 94
MGIC Investment Corp. 1,800 88
Mellon Bank Corp. 2,400 87
68 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
Omnicom Group 1,000 $ 80
Automatic Data Processing, Inc. 1,800 79
Countrywide Credit Industries, Inc. 1,800 77
State Street Corp. 900 77
SLM Holding Corp. 1,400 64
Washington Mutual, Inc. 1,800 64
Lehman Brothers Holdings, Inc. 1,000 62
Regions Financial Corp. 1,600 62
National City Corp. 900 59
Northern Trust Corp. 600 58
Federal Home Loan Mortgage Corp. 1,000 58
Progressive Corp. 400 58
Fleet Financial Group, Inc. 1,300 58
Lincoln National Corp. 1,000 52
Aon Corp. 1,200 50
Bear Stearns Co., Inc. 1,025 48
Hartford Financial Services Group, Inc. 800 47
Equifax, Inc. 1,300 46
Marsh & Mclennan Cos 600 45
Torchmark Corp. 1,300 44
Associates First Capital Corp. 'A' 1,000 44
BankBoston Corp. 800 41
PNC Bank Corp. 700 40
Golden West Financial Corp. 400 39
Deluxe Corp. 1,000 39
MBIA, Inc. 600 39
Unum Corp. 700 38
Capital One Financial Corp. 600 33
KeyCorp 900 29
Franklin Resources, Inc. 700 28
BB&T Corp. 600 22
Provident Cos., Inc. 'B' 400 16
Republic New York Corp. 200 14
-------
4,565
Health Care 11.0%
Merck & Co., Inc. 6,000 444
Bristol-Myers Squibb Co. 5,600 394
Johnson & Johnson 3,400 333
Pfizer, Inc. 2,900 318
Schering-Plough Corp. 4,800 254
Abbott Laboratories 4,600 209
Amgen, Inc. (b) 3,000 182
Warner-Lambert Co. 2,400 167
American Home Products Corp. 2,100 121
Medtronic, Inc. 1,400 109
Eli Lilly & Co. 1,500 107
HEALTHSOUTH Corp. (b) 5,500 82
Cardinal Health, Inc. 900 58
Guidant Corp. 1,100 57
Biomet, Inc. 1,300 52
Watson Pharmaceuticals, Inc. (b) 1,100 39
United Healthcare Corp. 600 38
St. Jude Medical Inc. 1,000 36
Becton Dickinson & Co. 1,100 33
CIGNA Corp. 300 27
-------
3,060
Materials & Processing 2.9%
Rohm & Haas Co. 4,100 176
E.I. Du Pont de Nemours, Inc. 2,300 157
Alcoa, Inc. 1,400 87
Owens-Illinois, Inc. (b) 2,000 65
Allegheny Teledyne, Inc. 2,800 63
Fort James Corp. 1,600 61
Air Products & Chemicals 1,100 44
Praxair, Inc. 900 44
Tenneco, Inc. 1,500 36
Hercules, Inc. 700 28
FMC Corp. (b) 400 27
Nucor Corp. 400 19
-------
807
Technology 20.4%
Microsoft Corp. (b) 14,800 1,335
Intel Corp. 11,000 655
International Business Machines Corp. 4,700 607
Cisco Systems, Inc. (b) 8,400 542
Lucent Technologies, Inc. 6,800 459
Hewlett Packard Co. 3,300 332
Dell Computer Corp. (b) 6,800 251
America Online, Inc. (b) 2,200 243
Oracle Corp. (b) 6,000 223
Sun Microsystems, Inc. (b) 2,600 179
Tellabs, Inc. (b) 2,400 162
EMC Corp. (b) 2,400 132
Compuware Corp. (b) 3,000 95
Applied Materials, Inc. (b) 1,200 89
BMC Software, Inc. (b) 1,500 81
Gateway, Inc. (b) 1,100 65
Xerox Corp. 1,000 59
Solectron Corp. (b) 800 53
Computer Sciences Corp. 700 48
Ceridian Corp. (b) 1,200 39
Unisys Corp. (b) 700 27
EG&G, Inc. 600 21
IMS Health, Inc. 400 13
-------
5,710
Transportation 1.0%
Delta Air Lines, Inc. 1,500 86
Burlington Northern Santa Fe Corp. 2,400 74
Southwest Airlines Co. 1,800 56
AMR Corp. (b) 500 34
Kansas City Southern Industries, Inc. 500 32
-------
282
Utilities 2.9%
Ameritech Corp. 3,500 257
Central & South West Corp. 3,500 82
Columbia Gas Systems, Inc. 1,300 81
Coastal Corp. 2,000 80
Duke Energy Corp. 1,200 65
GPU, Inc. 1,200 51
DTE Energy Co. 1,200 48
Edison International 1,500 40
Consolidated Edison, Inc. 700 32
Public Service Enterprise Group, Inc. 600 25
Constellation Energy Group, Inc. 400 12
Sempra Energy 500 11
Peoples Energy Corp. 200 8
-------
792
-------
Total Common Stocks 27,828
(Cost $24,538) =======
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 1.1%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 1.1%
State Street Bank
3.500% due 07/01/1999 $ 318 318
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.375% 03/31/2001
valued at $328,672. Repurchase
proceeds are $318,031.)
--------
Total Short-Term Instruments 318
(Cost $318) ========
Total Investments (a) 100.7% $ 28,146
(Cost $24,856)
Other Assets and Liabilities (Net) (0.7%) (195)
--------
Net Assets 100.0% $ 27,951
========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $24,882 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost $ 3,640
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value (376)
--------
Unrealized appreciation-net $ 3,264
========
(b) Non-income producing security.
See accompanying notes 69
<PAGE>
Schedule of Investments
Structured Emerging Markets Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 100.3%
- --------------------------------------------------------------------------------
Argentina 3.9%
Perez Companc SA 'B' 76,189 $ 442
Banco de Galicia y Buenos Aires SA de CV 'B' 45,968 240
Telefonica de Argentina SA 63,014 202
Acindar Industria Argentina de Aceros SA 'B' 180,041 200
Telecom Argentina SA 'B' 24,749 140
Nobleza Piccardo SAI.C. y F 40,467 134
Molinos Rio de la Plata SA 77,337 130
Siderca SA 'A' 94,817 127
Banco Frances SA 18,485 123
Astra Cia Argentina de Petro SA 49,820 90
Banco Frances SA - Rights (b) 18,485 0
Buenos Aires Embotella 113 0
---------
1,828
Baltic Nations 1.5%
Baltic Fund 'A' 7,116 676
Botswana 1.0%
Sechaba Breweries Limited 181,100 208
Standard Chart Bank Botswana 33,946 191
Sefalana Holding Co. Limited 80,500 80
---------
479
Brazil 4.8%
Petroleo Brasileiro SA 49,850 768
Telecomunicacoes Brasileiras SA SP - ADR 6,300 568
Companhia Cervejaria Brahma 234,531 129
Banco Estado de Sao Paul 2,410,000 103
Brasmotor SA (b) 1,270,000 96
Telecomunicacoes Brasileiras SA 971,323 87
Companhia Fabricadora de Pecas 22,047 83
Petroleo Brasileiro SA 534,543 82
Itausa-Investimentos Itau SA 123,700 66
Companhia Vidraria Santa Marina 48,000 57
Banco Do Brasil SA 10,300,000 54
Centrais Electricas Brasileiras SA 'B' 2,310,490 47
Telecomunicacoes de Sao Paulo SA 388,495 46
Companhia Suzano de Papel e Celulose 46,000 37
Telesp Celular SA 'B' (b) 371,057 19
Ligh-Servicos de Electricidade SA 174,301 14
Telecomunicacoes Brasileiras SA Rights (b) 87,140 0
Casa Anglo Brasileira SA 4,360,773 0
---------
2,256
Bulgaria 0.3%
Framlington Bulgaria Fund (b) 33,920 153
Chile 3.8%
Compania de Telecomunicaciones
de Chile SA SP - ADR 8,745 216
Masisa SA SP - ADR 18,400 193
Administradora de Fondos
de Pensiones Provida SA SP - ADR 7,900 174
Banco Santiago SA SP - ADR 8,400 161
Compania Cervecerias Unidas SA SP - ADR 5,600 160
Cristalerias de Chile SP - ADR 9,200 142
Sociedad Quimica y Minera de Chile SA SP - ADR 4,000 142
Madeco SA SP - ADR 11,400 115
Enersis SA SP - ADR 4,514 103
Laboratorio Chile SA SP - ADR 4,600 83
Empresa Nacional de Electricidad SA SP - ADR 6,059 73
Embotelladora Andina SA SP - ADR 'A' 3,500 70
Gener SA SP - ADR 3,900 69
Embotelladora Andina SA SP - ADR 'B' 4,300 66
Quimica Y Minera DE Chile 231 8
---------
1,775
China 4.9%
China Telecom Limited (b) 119,000 331
Yizheng Chemical Fibre Co. Limited 'H' 988,000 258
China Merchants Shekou Port Service Co. Limited 390,940 206
Shanghai Petrochemical Co. Limited 'H' 813,000 192
Shanghai Diesel Engine Co. Limited 'B' 592,000 157
Shanghai New Asia Group Co. Limited 'B' 554,840 150
Jilin Chemical Industrial Co. Limited 1,181,000 143
Qingling Motors Co. 'H' 502,000 122
China Resources Enterprise Limited 68,000 120
Shanghai Dazhong Taxi Co. 'B' 169,000 115
China Travel International Investment
Hong Kong Limted 621,000 100
Maanshan Iron & Steel Co. 'H' 1,044,000 96
China Overseas Land & Investment 595,000 84
Harbin Power Equipment Co. Limited 'H' 600,000 67
Guangshen Railway Co. Limited 'H' (b) 428,000 66
Guangdong Investment Limited 271,000 57
Shanghai Dajiang Group Co. Limited 'B' 181,200 24
---------
2,288
Colombia 0.5%
Bancolumbia SP - ADR 17,400 83
Carulla y Compania SP - ADR 34,700 56
Cadena Almacenes SP - ADR 31,040 47
Banco Ganadero SA SP - ADR 4,966 38
Cementos Diamante SA SP - GDR 144A 5,800 7
Cementos Diamante SA SP - GDR 2,300 3
---------
234
Croatia 0.5%
Pliva D.D 16,790 254
Czech Republic 2.4%
SPT Telecom AS 13,270 215
SPT Telecom AS SP - GDR (b) 12,100 196
Ceske Radiokomunikace (b) 4,500 156
Komercni Banka AS 7,033 133
Ceske Energeticke Zavody AS 58,432 120
Skoda Plzen AS 19,058 81
ZDB (b) 10,273 64
Synthesia AS 24,784 63
Ceska Pojistovna 1,058 48
Vodni Stavby Praha AS 10,580 42
---------
1,118
Egypt 2.1%
Mobinil-Egyptian Mobile Network (b) 11,200 252
Suez Cement Co. 14,311 199
Commercial International Bank 18,818 170
Al-Ahram Beverages Co. SAE 2,425 135
Egyptian International Pharmaceutical Industries Co. 1,647 73
Paints & Chemical Industries Co. SAE 3,034 59
Egyptian Financial & Industrial Co. 3,432 42
Heliopolis Housing & Development Co. 778 25
---------
955
Ghana 0.8%
Ashanti Goldfields Co. Limited SP- GDR 21,434 149
Unilever Ghana Limited (b) 113,960 74
Mobil Oil Ghana Limited (b) 8,631 55
Standard Chartered Bank Ghana Limited 4,700 39
Aluworks Ghana Limited (b) 32,200 33
Social Security Bank Limited (b) 40,000 29
---------
379
Greece 4.9%
Attica Enterprises SA 23,210 265
J. Boutaris & Son Holdings 18,990 215
Intracom SA 3,100 200
General Construction Rights (b) 8,586 163
Ergo Bank SA 1,506 161
Titan Cement Co. SA 1,630 150
General Construction SA 8,586 148
National Bank of Greece SA 2,024 132
Aluminium of Greece SA 3,270 129
Commercial Bank of Greece SA 1,760 126
Elais Co. SA 4,340 115
Hellenic Telecommunication Organization SA 5,239 112
Alpha Credit Bank 1,668 107
Alpha Leasing SA 4,023 103
Aegek SA 7,100 74
Aegek SA - Rights 7,100 47
Hellenic Bottling Co. SA 1,780 43
Naoussa Spinning Mills 20 0
Radio Athinai 4 0
---------
2,290
70 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
Hungary 3.5%
Antenna Hungaria Rt. (b) 11,278 $ 225
Gedeon Richter Rt. 3,752 163
OTP Bank Rt. 3,841 160
Demasz Rt. 2,100 155
BorsodChem Rt. 5,681 137
MOL Magyar Olaj-es Gazipari Rt. 5,630 136
Magyar Tavkozlesi Rt. SP - ADR 4,800 132
Danubius Hotel and Spa Rt. 6,990 127
Inter-Europa Bank Rt. 2,362 107
Pick Szeged Rt. 3,800 107
Pannonplast Rt. 4,760 92
Graboplast Rt. 11,870 71
--------
1,612
India 3.6%
The India Fund, Inc. 25,600 254
Indo Gulf Corp. Limited SP - GDR 132,600 156
Ranbaxy Laboratories Limited SP - GDR 8,000 132
CESC Limited SP - GDR 176,000 123
Hindalco Industries Limited SP - GDR 6,000 117
I.T.C. Limited SP - GDR 3,700 104
State Bank of India SP - GDR 7,800 96
Bajaj Auto Limited SP - GDR 5,702 94
Tata Engineering and Locomotive Co.
Limited SP - GDR 15,850 92
Mahindra & Mahindra Limited SP - GDR 13,129 87
Southern Petrochemical SP - GDR 23,200 73
UTI India IT Fund (b) 2,800 68
Reliance Industries SP - GDR 6,208 62
Tata Electric Cos. SP - GDR 410 61
Indian Rayon & Industries Limited SP - GDR 13,300 47
Indian Hotels Limited SP - ADR 5,600 45
Grasim Industries SP - GDR 8,600 44
Indian Hotels Limited SP - GDR 3,300 26
--------
1,681
Indonesia 4.8%
PT Astra International, Inc. 1,069,000 486
PT Indofood Sukses Makmur 229,500 312
PT Hanjaya Mandala Sampoerna 111,000 253
PT Indah Kiat Pulp & Paper Corp. 534,000 247
PT Telekomunikasi Indonesia 392,580 227
PT Indocement Tunggal Prakarsa 444,500 226
PT Jakarta International Hotels 2,023,500 197
PT Indosat (Persero) 83,500 159
PT Mayora Indah 724,500 102
PT Bank Internasional Indonesia 991,800 29
PT Bank Dagang Nasional Indonesia 'F' 1,022,750 0
--------
2,238
Israel 3.3%
Bezek Israeli Telecommunication Corp. Limited 112,579 453
Koor Industries Limited 1,670 192
Bank Hapoalim Limited 66,186 170
Bank Leumi Le-Israel 85,489 162
Israel Chemicals Limited 99,033 121
Leumi Insurance Holdings (b) 121,262 105
Nice Systems Limited 3,505 95
Teva Pharmaceutical Industries Limited 1,986 94
Industrial Buildings Corp. 36,596 69
Blue Square Chain Investments and Properties
Limited (b) 4,167 68
--------
1,529
Kenya 0.7%
Uchumi Supermarket Limited 132,100 87
Firestone East Africa Limited 303,150 69
Kenya Airways Limited 364,500 41
Kenya Power & Lighting Co. Limited 25,050 39
Sasini Tea & Coffee Limited 43,600 32
National Industrial Credit Bank 63,460 26
Athi River Mining Limited 256,800 19
Kenya Commercial Bank Limited 28,451 18
--------
331
Malaysia 4.3%
Commerce Asset-Holding Bhd. 188,000 421
Malayan Banking Bhd. 76,400 207
Leader Universal Holdings Bhd. 524,000 198
Sime Darby Bhd. 159,700 189
Edaran Otomobil Nasional Bhd. 53,000 179
Telekom Malaysia Bhd. 41,000 139
Malaysia Internation Shipping Bhd. 67,000 111
Genting Bhd. 30,200 104
Rashid Hussain Bhd. 95,000 101
United Engineers (Malaysia) Bhd. 67,200 97
Technology Resources Industries Bhd. 113,000 83
Magnum Corp. Bhd. 122,000 80
Nestle Malaysia Bhd. 16,000 57
Tenaga Nasional Bhd. 16,000 33
Rashid Hussain Bhd. - Rights (b) 33,250 14
Aokam Perdana Bhd. 30,166 0
--------
2,013
Mauritius Island 0.7%
New Mauritius Hotels Limited 31,515 58
State Bank of Mauritius Limited (b) 63,350 42
Sun Resorts Limited 'A' 18,800 38
The United Basalt Products (b) 39,500 37
Mauritius Commercial Bank (b) 9,034 36
Shell Mauritius Limited (b) 26,979 29
Mon Tresor & Mon Desert Limited (b) 23,449 27
Air Mauritius Limited 19,100 20
Ireland Blyth Limited (b) 29,400 18
Rogers & Co. Limited 6,455 17
--------
322
Mexico 5.7%
Grupo Financiero Banamex Accival SA 127,000 320
Grupo Financiero Bancomer SA 833,000 300
Carso Global Telecom 'A1' 41,000 260
Alfa SA de CV 'A' 58,572 243
Grupo Carso SA de CV 'A1' (b) 47,000 218
Cemex SA de CV 'CPO' 41,630 205
Grupo Televisa SA 'CPO' 8,000 179
Grupo Mexico SA 'B' 41,000 174
Coca-Cola Femsa SA 'L' 78,000 150
Telefonos de Mexico SA (b) 36,200 145
Grupo Industrial Bimbo SA de CV 'A' 64,000 143
Cifra SA de CV 'V' 68,569 132
Kimberly-Clark de Mexico SA de CV 'A' 23,000 94
Industrias Penoles SA 'CP' (b) 32,000 93
Grupo Situr SA de CV 'B' 641,000 0
--------
2,656
Morocco 1.5%
Omnium Nord Africain SA 1,348 148
Cie Transports LN 3,121 124
Societe Marocaine de l'Industrie du Raffinage 1,510 111
Wafabank 674 70
Banque Commercial du Maroc 684 69
Ciments du Maroc 648 63
Lesieur Cristal 414 62
Brasseries du Nord Marocain 259 59
--------
706
Peru 4.2%
Ferreyros SA 584,487 384
Telefonica del Peru SA 'B' 250,949 377
Cerveceria Backus & Johnston SA 'T' 757,560 266
Alicorp SA (b) 899,556 216
Credicorp Limited 15,737 173
Cementos Lima SA 9,904 153
Compania de Minas Buenaventura SA 'B' 16,157 124
Southern Peru Limited 'T' 27,374 99
Banco Wiese Limited 295,309 80
Indeco SA Trabajo 529,222 54
Telefonica Del Peru SA 2,530 38
Minsur SA 1 0
--------
1,964
See accompanying notes 71
<PAGE>
Schedule of Investments (Cont.)
Structured Emerging markets Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
Philippines 3.7%
Philippine Long Distance Telephone Co. 10,230 $ 312
Ayala Corp. 652,036 214
Manila Electric Co. 'B' 57,580 207
San Miguel Corp. 'B' 94,820 207
SM Prime Holdings, Inc. 883,000 200
Aboitiz Equity Ventures, Inc. (b) 3,141,000 172
Ayala Land, Inc. 432,600 136
International Container Term Services, Inc. 832,245 108
Petron Corp. 739,100 79
Fortune Cement Corp. 1,022,250 43
First Philippine Holdings Corp. 'B' 28,520 32
Philex Mining Corp. 'B' 1,689,745 17
Sanitary Wares Manufacturing Corp. 589 0
---------
1,727
Poland 4.0%
Elektrim Spolka Akcyjna SA 17,295 244
Zaklady Piwowarskie W Zywcu SA 1,920 222
Telekomunikacja Polska SA 28,100 197
Bank Rozwoju Eksportu SA 4,860 153
Stalexport SA 18,715 143
KGHM Polska Miedz SA 21,000 132
Wielkopolski Bank Kredytowy SA 21,628 127
Bank Handlowy W. Warszawie 7,285 101
Fabryka Kotlow Rafako SA (b) 55,460 97
Bank Slaski SA W Katowicach 1,865 91
Prokom Software SA 2,562 85
Mostostal Export SA 53,490 67
Przedsiebiorstwo Farmaceutyczne JELFA SA 6,130 54
Krosnienskie Huty SZKLA SA 6,910 47
Zaklady Metali Lekkich Kety (b) 3,845 40
Huta Szkla Gospodarczego Irena 30,840 37
Agros Holding SA 2,515 17
---------
1,854
Romania 1.0%
Romania Investment Fund 511 230
Society Generale Romania Fund 3,870 203
Romanian Growth Fund 24,300 35
---------
468
Russia 2.7%
Surgutneftegaz SP - ADR 21,000 167
LUKoil Holding SP - ADR 3,700 147
Uralmash-Zavody SP - ADR 80,000 112
Uralmash-Zavody (b) 67,000 94
Baltika Brewery (b) 300 87
Electrosila 31,200 73
Trade House GUM SP - ADR 44,100 68
Irkutskenergo SP - ADR 11,385 58
Mosenergo SP - ADR 12,001 54
Gorkovsky Auto Plant 1,400 52
Orenburgneft 100,000 50
Trading House TSUM 263,100 46
Vimpel-Communications SP - ADR (b) 1,900 44
Samson 25,791 39
Rao Gazprom SP - ADR 3,100 35
Chernogorneft SP - ADR (b) 12,050 27
Avtov 500 21
LUKoil Holding SP - ADR 2,650 19
Unified Energy System SP - ADR 2,030 18
Rostelecom 1,666 16
Trading House TSUM SP - ADR 3,200 8
A.O. Tatneft SP - ADR 1,700 6
Moscow City Telephone 50 6
---------
1,247
South Africa 4.0%
Impala Platinum Holdings Limited 10,570 266
Sasol Limited 32,836 234
Nedcor Limited 8,900 204
Datatec Limited (b) 11,500 166
Liberty Life Association of Africa Limited 12,916 165
Comparex Holdings Limited 24,100 152
Anglo American PLC (b) 2,568 120
De Beers Centenary 4,640 111
Barlow Limited 16,400 95
South African Breweries PLC SAB - LN (b) 9,865 85
South African Breweries PLC SAB - SJ 7,802 68
Pepkor Limited (b) 13,840 56
Liberty International PLC (b) 6,022 41
Wooltru Limited 18,870 32
Wooltru Limited 'N' 18,500 30
Edgars Consolidated Stores 285 2
---------
1,827
South Korea 6.3%
Hite Brewery Co. Limited 12,220 425
SK Corp. 11,110 320
Shinhan Bank 23,144 260
Korean Air 12,070 235
Hanwha Chemical Corp. 27,882 203
Pohang Iron & Steel Co. Limited 1,650 195
Samsung Fire and Marine Insurance 273 192
Trigem Computer, Inc. 4,850 189
LG Electronics 6,550 181
Korea Electric Power Corp. 3,720 155
Korea Telecom (b) 2,250 149
Daewoo Securities Co. 7,091 138
SK Telecom Co. Limited SP - ADR 7,740 132
SK Telecom Co. Limited 94 126
SK Telecom Co. Limited - Rights (b) 43 11
---------
2,911
Taiwan 4.1%
Taiwan Fund, Inc. 28,435 590
R.O.C. Taiwan Fund 66,010 532
Acer, Inc. SP - GDR (b) 15,389 192
Yang Ming Marine Transport SP - GDR (b) 14,486 113
China Steel Corp. SP - GDR 6,285 96
Asia Cement Corp. SP - GDR 7,874 78
Tuntex Distinct Corp. SP - GDR (b) 22,552 68
President Enterprise Corp. SP - GDR (b) 7,090 64
Walsin Lihwa Corp. SP - GDR (b) 15,571 60
Macronix International Co. Limited SP - ADR 5,786 52
Yageo Corp. SP - GDR (b) 9,236 44
Teco Electric & Machinery SP - GDR (b) 2,002 19
---------
1,908
Thailand 4.7%
Shinawatra Computer Co. Limited 82,200 383
Advanced Info Service Public Co. Limited 24,600 334
Siam Cement Public Co. Limited 'R' 6,600 200
Hana Microelectronics Public Co. Limited 62,800 189
Siam Cement Public Co. Limited 9,700 182
Land & Houses Public Co. Limited 80,000 145
TelecomAsia Corp. Public Co. Limited 132,000 133
Electricity Generating Public Co. Limited 65,700 126
Thai Farmers Bank Public Co. Limited 37,000 114
Bangkok Bank Public Co. 29,700 111
BEC World Public Co. Limited 16,000 100
United Communication Industries 102,000 94
I.C.C. International PLC 26,750 65
Banpu Public Co. Limited 17,800 35
---------
2,211
Turkey 3.4%
Migros Turk TAS 295,650 368
Dogan Sirketler Grubu Holding AS 21,562,770 286
Akbank TAS 9,979,250 147
Petrol Ofisi AS 354,200 126
Koc Holding AS 1,755,580 110
Turk Hava Yollari Anonim Ortakligi 2,360,000 105
Netas Northern Electric Telekomunikasyon AS 4,328,800 91
Eregli Demir Ve Celik Fabrikalari TAS 5,903,610 83
Vestel Elektronik Sanayi 740,000 81
Arcelik AS 1,895,220 67
Bursa Cimento Fabrikasi AS 1,600,000 55
Aksa Akrilik Kimya Sanayii AS 2,410,640 43
Cukurova Elektrik (AS) 59,840 38
---------
1,600
72 See accompanying notes
<PAGE>
Value
Shares (000s)
- -------------------------------------------------------------------------------
Venezuela 2.0%
Compania Anonima Nacional Telefonos
de Venezuela SP - ADR 16,000 $ 436
Electridad de Caracas (b) 7,800 153
Mavesa SA SP - ADR 32,000 104
Banco Venezolano de Creditio SP - ADR 26,753 81
Mantex SAC.A. SP - ADR 8,800 64
Siderurgica Venezolana Sivensa SP - ADR 17,433 52
International Briquettes Holding, Inc. (b) 6,667 24
---------
914
Zimbabwe 0.7%
Wankie Colliery Co. Limited 1,364,428 90
Delta Corp. Limited 287,308 82
Barclays Bank of Zimbabwe 561,400 80
Interfresh Limited 1,829,700 55
---------
307
---------
Total Common Stocks 46,711
(Cost $41,235) =========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 2.5%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreements 2.5%
State Street Bank
3.500% due 07/01/1999 $ 1,170 1,170
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.250% 02/15/2007
valued at $1,193,651. Repurchase
proceeds are $1,170,114.)
--------
Total Short-Term Instruments 1,170
(Cost $1,170) ========
Total Investments (a) 102.8% $ 47,881
(Cost $42,405)
Other Assets and Liabilities (Net)(2.8%) (1,304)
--------
Net Assets 100.0% $ 46,577
========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $42,405 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 13,381
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (7,905)
--------
Unrealized appreciation-net $ 5,476
========
(b) Non-income producing security.
See accompanying notes 73
<PAGE>
Schedule of Investments
Tax-Efficient Structured Emerging Markets Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 99.8%
- --------------------------------------------------------------------------------
Argentina 3.7%
Perez Companc SA 'B' 107,579 $ 624
Telefonica de Argentina SA 133,634 429
Telecom Argentina SA 'B' 66,499 375
Banco Frances SA 40,346 268
Acindar Industria Argentina de Aceros SA 'B' 216,373 240
Banco de Galicia y Buenos Aires SA de CV 'B' 40,589 212
Nobleza Piccardo SAI.C. y F 49,664 164
Molinos Rio de la Plata SA 94,638 159
Siderca SA 'A' 110,620 148
Astra Cia Argentina de Petro SA 49,820 90
Banco Frances SA - Rights 40,346 0
Buenos Aires Embotella 134 0
---------
2,709
Baltic Nations 1.2%
Baltic Fund 'A' 9,107 865
Botswana 1.1%
Sechaba Breweries Limited 382,400 438
Standard Chart Bank Botswana 40,335 227
Sefalana Holding Co. Limited 93,100 93
---------
758
Brazil 4.2%
Telecomunicacoes Brasileiras SA SP - ADR 12,080 1,089
Petroleo Brasileiro SA 63,200 973
Companhia Cervejaria Brahma 277,000 153
Banco Estado de Sao Paul 2,800,457 119
Petroleo Brasileiro SA 630,000 97
Telecomunicacoes Brasileiras SA 1,068,397 96
Brasmotor SA (b) 1,063,000 80
Itausa-Investimentos Itau SA 147,500 78
Companhia Fabricadora de Pecas 18,777 71
Companhia Vidraria Santa Marina 57,700 68
Banco Do Brasil SA 12,274,300 64
Centrais Electricas Brasileiras SA 'B' 2,800,000 56
Telecomunicacoes de Sao Paulo SA 468,534 56
Companhia Suzano de Papel e Celulose 55,200 45
Telesp Celular SA 'B' (b) 447,502 23
Light -Servicos de Electricidade SA 20,000 2
Telecomunicacoes Brasileiras SA Rights (b) 95,849 0
Casa Anglo Brasileira SA 5,208,000 0
---------
3,070
Bulgaria 0.3%
Framlington Bulgaria Fund (b) 44,260 199
Chile 3.7%
Masisa SA SP - ADR 27,900 293
Banco Santiago SA SP - ADR 13,800 265
Madeco SA SP - ADR 26,100 264
Administradora de Fondos de Pensiones
Provida SA SP - ADR 10,600 233
Enersis SA SP - ADR 9,916 227
Sociedad Quimica y Minera de Chile SA SP - ADR 6,300 223
Empresa Nacional de Electricidad SA SP - ADR 17,088 207
Cristalerias de Chile SP - ADR 13,100 202
Compania Cervecerias Unidas SA SP - ADR 6,700 192
Compania de Telecomunicaciones
de Chile SA SP - ADR 5,396 134
Laboratorio Chile SA SP - ADR 6,800 122
Embotelladora Andina SA SP - ADR 'B' 6,700 102
Gener SA SP - ADR 5,500 98
Embotelladora Andina SA SP - ADR 'A' 4,200 84
Quimica Y Minera de Chile 364 13
---------
2,659
China 5.3%
China Telecom Limited (b) 223,000 619
Shanghai Diesel Engine Co. Limited 'B' 1,265,120 337
Yizheng Chemical Fibre Co. Limited 'H' 1,170,000 305
Shanghai New Asia Group Co. Limited 'B' 1,067,500 288
Jilin Chemical Industrial Co. Limited 2,354,000 285
Maanshan Iron & Steel Co. 'H' 2,866,000 262
China Merchants Shekou Port Service Co. Limited 463,518 244
Shanghai Petrochemical Co. Limited 'H' 962,000 227
Shanghai Dazhong Taxi Co. 'B' 331,000 225
China Resources Enterprise Limited 122,000 215
Qingling Motors Co. 'H' 672,000 163
Harbin Power Equipment Co. Limited 'H' 1,444,000 162
Guangshen Railway Co. Limited 'H' (b) 946,000 145
Guangdong Investment Limited 631,800 133
China Travel International Investment
Hong Kong Limted 800,000 129
China Overseas Land & Investment 762,000 108
Shanghai Dajiang Group Co. Limited 'B' 214,800 28
---------
3,875
Colombia 0.7%
Cadena Almacenes SP - ADR 118,100 177
Bancolumbia SP - ADR 29,100 138
Banco Ganadero SA SP - ADR 14,600 112
Carulla y Compania SP - ADR 41,200 67
Cementos Diamante SA SP - GDR 144A 6,900 9
Cementos Diamante SA SP - GDR 2,800 4
---------
507
Croatia 0.6%
Pliva D.D 28,050 425
Czech Republic 1.8%
SPT Telecom AS SP - GDR (b) 19,300 313
SPT Telecom AS 15,730 254
Komercni Banka AS 8,337 157
CEZ 69,256 142
Ceske Radiokomunikace (b) 3,000 104
Skoda Plzen AS 22,591 96
ZDB (b) 12,178 76
Synthesia AS 29,377 74
Ceska Pojistovna 1,255 57
Vodni Stavby Praha AS 12,541 50
---------
1,323
Egypt 1.8%
Mobinil-Egyptian Mobile Network (b) 15,900 358
Egyptian Financial & Industrial Co. 11,926 147
Commercial International Bank 14,833 134
Al-Ahram Beverages Co. SAE 2,325 130
Paints & Chemical Industries Co. SAE 6,469 127
Suez Cement Co. 8,814 123
Egyptian International Pharmaceutical Industries Co. 2,613 115
Alexandria National Iron & Steel Co. (b) 2,546 113
Heliopolis Housing & Development Co. 922 30
---------
1,277
Ghana 1.0%
Ashanti Goldfields Co. Limited SP - GDR 60,366 419
Unilever Ghana Limited (b) 135,040 88
Mobil Oil Ghana Limited (b) 10,174 64
Standard Chartered Bank Ghana Limited 5,500 46
Aluworks Ghana Limited (b) 38,100 39
Social Security Bank Limited (b) 47,400 34
---------
690
Greece 5.0%
Attica Enterprises SA 39,500 451
Intracom SA 5,025 323
General Construction Rights (b) 15,918 303
Alpha Leasing SA 11,275 290
General Construction SA 15,918 275
J. Boutaris & Son Holdings 20,910 237
Titan Cement Co. SA 2,565 236
Commercial Bank of Greece SA 3,120 223
Aegek SA 18,140 190
Ergo Bank SA 1,634 175
Hellenic Telecommunication Organization SA 7,626 163
Aluminium of Greece SA 3,900 154
National Bank of Greece SA 1,880 123
Aegek SA 18,140 121
Alpha Credit Bank 1,848 119
Elais Co. SA 4,280 113
Hellenic Bottling Co. SA 3,620 87
Heracles General Cement SA 2,790 75
---------
3,658
74 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
Hungary 3.8%
Magyar Tavkozlesi Rt. SP - ADR 15,600 $ 429
OTP Bank Rt. 9,171 382
MOL Magyar Olaj-es Gazipari Rt. 15,475 373
Antenna Hungaria Rt. (b) 13,970 277
Gedeon Richter Rt. 5,800 252
Demasz Rt. 2,700 199
BorsodChem Rt. (b) 6,964 168
Pick Szeged Rt. 5,790 162
Graboplast Rt. 25,772 154
Danubius Hotel and Spa Rt. 7,558 137
Pannonplast Rt. 6,800 132
Inter-Europa Bank Rt. 2,390 109
---------
2,774
India 4.0%
The India Fund, Inc. 107,200 1,065
I.T.C. Limited SP - GDR 16,533 465
Morgan Stanley India Investment Fund 30,000 291
Reliance Industries - GDR 24,000 241
Indo Gulf Corp. Limited SP - GDR 138,300 163
Hindalco Industries Limited SP- GDR 7,067 138
UTI India IT Fund (b) 5,600 136
Bajaj Auto Limited SP - GDR 6,775 111
Mahindra & Mahindra Limited SP - GDR 15,490 103
CESC Limited SP - GDR 109,800 77
Ranbaxy Laboratories Limited SP - GDR 2,400 40
Tata Electric Cos. SP - GDR 100 15
Tata Engineering and Locomotive Co.
Limited SP - GDR 2,400 14
Indian Hotels Limited SP - GDR 700 6
---------
2,865
Indonesia 5.3%
PT Hanjaya Mandala Sampoerna 422,000 963
PT Astra International, Inc. 1,963,000 893
PT Indofood Sukses Makmur 612,000 831
PT Indah Kiat Pulp & Paper Corp. 725,221 335
PT Indocement Tunggal Prakarsa 526,500 268
PT Indosat (Persero) 103,500 197
PT Telekomunikasi Indonesia 287,820 166
PT Mayora Indah 922,000 130
PT Bank Internasional Indonesia 1,175,693 34
PT Bank Dagang Nasional Indonesia 'F' 2,067,500 0
---------
3,817
Israel 3.1%
Bezek Israeli Telecommunication Corp. Limited 108,053 435
Koor Industries Limited 2,712 313
Bank Hapoalim Limited 120,978 310
Bank Leumi Le-Israel 143,110 270
Israel Chemicals Limited 173,297 211
Leumi Insurance Holdings (b) 207,322 180
Industrial Buildings Corp. 76,709 144
Nice Systems Limited 5,178 141
Blue Square Chain Investments
and Properties Limited (b) 8,150 133
Teva Pharmaceutical Industries Limited 2,355 112
---------
2,249
Kenya 0.5%
Uchumi Supermarket Limited 156,500 103
Firestone East Africa Limited 359,250 81
Kenya Airways Limited 432,000 49
Kenya Power & Lighting Co. Limited 29,700 46
Sasini Tea & Coffee Limited 51,620 38
National Industrial Credit Bank 83,661 34
Athi River Mining Limited 304,400 23
Kenya Commercial Bank Limited 33,755 21
---------
395
Malaysia 5.2%
Commerce Asset-Holdings Bhd. 322,000 721
United Engineers (Malaysia) Bhd. 396,800 572
Leader Universal Holdings Bhd. 1,217,000 461
Sime Darby Bhd. 263,000 312
Rashid Hussain Bhd. 247,000 262
Malayan Banking Bhd. 90,400 245
Edaran Otomobil Nasional Bhd. 63,000 213
Genting Bhd. 50,100 173
Telekom Malaysia Bhd. 48,000 162
Magnum Corp. Bhd. 245,500 162
Tenaga Nasional Bhd. 75,000 156
Malaysia Internation Shipping Bhd. 80,000 132
Technology Resources Industries Bhd. 135,000 100
Nestle Malaysia Bhd. 20,000 71
Rashid Hussain Bhd. - Rights (b) 86,450 38
Aokam Perdana Bhd. 35,733 0
---------
3,780
Mauritius Island 0.5%
New Mauritius Hotels Limited 37,200 69
State Bank of Mauritius Limited (b) 75,070 49
Sun Resorts Limited 'A' 22,200 45
The United Basalt Products (b) 46,900 44
Mauritius Commercial Bank (b) 10,700 43
Shell Mauritius Limited (b) 32,000 35
Mon Tresor & Mon Desert Limited (b) 27,800 32
Air Mauritius Limited 22,600 24
Ireland Blyth Limited (b) 34,809 21
Rogers & Co. Limited 7,600 20
---------
382
Mexico 4.6%
Grupo Financiero Banamex Accival SA 167,000 421
Grupo Financiero Bancomer SA 948,000 342
Alfa SA de CV 'A' 78,000 324
Grupo Carso SA de CV 'A1' (b) 64,000 297
Carso Global Telecom 'A1' 46,000 291
Cemex SA de CV 'CPO' 55,136 272
Grupo Mexico SA 'B' 55,369 235
Grupo Televisa SA 'CPO' 10,000 224
Telefonos de Mexico SA (b) 50,000 200
Coca-Cola Femsa SA 'L' 93,000 178
Grupo Industrial Bimbo SA de CV 'A' 75,777 169
Cifra SA de CV 'V' 82,151 158
Industrias Penoles SA 'CP' (b) 43,000 124
Kimberly-Clark de Mexico SA de CV 'A' 28,000 114
Grupo Situr SA de CV 'B' 759,751 0
---------
3,349
Morocco 2.1%
Omnium Nord Africain SA 3,131 343
Brasseries du Nord Marocain 1,007 231
Ciments du Maroc 2,335 229
Cie Transports LN 4,961 197
Banque Commercial du Maroc 1,652 167
Societe Marocaine de l'Industrie du Raffinage 1,790 132
Wafabank 1,242 128
Lesieur Cristal 491 73
---------
1,500
Peru 3.9%
Credicorp Limited 37,832 416
Telefonica del Peru SA 'B' 268,617 404
Alicorp SA (b) 1,317,921 316
Ferreyros SA 464,244 304
Telefonica Del Peru SA 19,800 299
Cerveceria Backus & Johnston SA 'T' 694,085 244
Cementos Lima SA 14,532 225
Compania de Minas Buenaventura SA 'B' 24,428 187
Southern Peru Limited 'T' 32,448 117
Indeco SA Trabajo 1,077,843 110
Buenaventura SA 5,500 84
Credicorp Limited 7,300 77
Banco Wiese Limited 220,361 60
---------
2,843
Philippines 3.9%
Petron Corp. 3,884,200 413
Ayala Corp. 1,173,613 386
San Miguel Corp. 'B' 175,100 382
Philippine Long Distance Telephone Co. 10,180 310
Ayala Land, Inc. 856,801 270
SM Prime Holdings, Inc. 1,104,860 250
Manila Electric Co. 'B' 64,008 230
International Container Term Services, Inc. 1,620,887 211
See accompanying notes 75
<PAGE>
Schedule of Investments (Cont.)
Tax-Efficient Structured Emerging Markets Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
Aboitiz Equity Ventures, Inc. (b) 3,722,205 $ 203
Fortune Cement Corp. 1,212,125 51
Sanitary Wares Manufacturing Corp. 2,616,401 41
First Philippine Holdings Corp. 'B' 33,792 38
Philex Mining Corp. 'B' 2,003,300 20
---------
2,805
Poland 4.2%
Telekomunikacja Polska 47,800 341
Elektrim Spolka Akcyjna SA 23,940 338
KGHM Polska Miedz SA 43,640 275
Zaklady Piwowarskie W Zywcu SA 2,280 263
Telekomunikacja Polska SA 35,400 248
Prokom Software SA 6,649 221
Bank Rozwoju Eksportu SA 5,760 181
Stalexport SA 22,185 170
Bank Handlowy W. Warszawie 11,670 162
KGHM Polska Miedz SA 11,300 153
Wielkopolski Bank Kredytowy SA 25,638 150
Bank Slaski SA W Katowicach 3,050 149
Fabryka Kotlow Rafako SA (b) 65,740 115
Mostostal Export SA 63,410 80
Przedsiebiorstwo Farmaceutyczne JELFA SA 7,270 64
Krosnienskie Huty SZKLA SA 8,190 56
Zaklady Metali Lekkich Kety (b) 4,555 48
Huta Szkla Gospodarczego Irena 36,560 44
Agros Holding SA 2,985 20
---------
3,078
Portugal 0.0%
Banco Espirito Santo e Comercial de Lisboa SA 712 17
Romania 0.9%
Society Generale Romania Fund 6,515 342
Romania Investment Fund 651 293
Romanian Growth Fund 28,700 42
---------
677
Russia 2.3%
Fleming Russia Securities 49,000 338
Surgutneftegaz SP - ADR 18,200 144
Uralmash-Zavody SP - ADR (b) 94,000 132
Mosenergo SP - ADR 27,100 121
Vimpel-Communications SP - ADR (b) 5,180 120
Irkutskenergo SP - ADR 23,300 119
LUKoil Holding SP - ADR 2,850 113
Gorkovsky Auto Plant 2,600 96
Samson 60,400 91
Electrosila 36,800 86
Trade House GUM SP - ADR 54,990 85
Baltika Brewery (b) 250 73
Trading House TSUM 311,900 54
Rostelecom 3,333 32
Chernogorneft SP - ADR (b) 14,200 31
Avtov 500 21
Trading House TSUM SP - ADR 3,800 10
Moscow City Telephone 50 6
---------
1,672
South Africa 3.8%
Sasol Limited 112,510 803
Impala Platinum Holdings Limited 12,601 317
Nedcor Limited 10,583 243
De Beers Centenary 8,791 211
Anglo American PLC (b) 3,900 182
Comparex Holdings Limited 28,500 179
Datatec Limited (b) 9,800 142
Liberty Life Association of Africa Limited 10,830 139
Barlow Limited 19,375 112
Pepkor Limited (b) 26,323 106
South African Breweries PLC (b) 12,000 104
Wooltru Limited 'N' 55,000 89
Wooltru Limited 22,298 38
Liberty International PLC (b) 5,049 34
Edgars Consolidated Stores 438 3
---------
2,702
South Korea 6.5%
Trigem Computer, Inc. 35,360 $ 1,375
Korea Asia Fund (b) 500 788
Samsung Fire and Marine Insurance 865 609
Hanwha Chemical Corp. 78,856 573
Daewoo Securities Co. 11,698 227
Korean Air 10,930 212
Shinhan Bank 18,106 203
Korea Telecom (b) 2,250 149
Samsung Electronics 1,337 147
Hite Brewery Co. Limited 3,880 135
LG Electronics 4,463 123
SK Telecom Co. Limited 37 50
Korea Electric Power Corp. 930 39
SK Telecom Co. Limited SP - ADR 2,250 38
Hite Brewery Co. Rights (b) 638 13
SK Telecom Co. Limited - Rights (b) 16 4
---------
4,685
Taiwan 4.3%
Taiwan Fund, Inc. 48,503 1,006
R.O.C. Taiwan Fund 97,782 788
Acer, Inc. SP - GDR (b) 24,450 305
Tuntex Distinct Corp. SP - GDR (b) 52,304 158
President Enterprise Corp. SP - GDR (b) 16,119 145
Asia Cement Corp. SP - GDR 14,394 143
China Steel Corp. SP - GDR 9,030 138
Yang Ming Marine Transport SP - GDR (b) 17,066 134
Macronix International Co. Limited SP - ADR 10,860 98
Teco Electric & Machinery SP - GDR (b) 7,649 73
Walsin Lihwa Corp. SP - GDR (b) 18,479 71
Yageo Corp. SP - GDR (b) 11,060 53
---------
3,112
Thailand 4.3%
Land & Houses Public Co. Limited 296,000 538
Shinawatra Computer Co. Limited 97,600 455
Advanced Info Service Public Co. Limited 29,100 395
Thai Farmers Bank Public Co. Limited 119,900 371
Banpu Public Co. Limited 113,200 226
Hana Microelectronics Public Co. Limited 74,400 224
Siam Cement Public Co. Limited 11,400 214
BEC World Public Co. Limited 27,600 172
TelecomAsia Corp. Public Co. Limited 156,400 158
Siam Makro Public Co. 86,300 157
Electricity Generating Public Co. Limited 77,900 149
Krung Thai Bank Public Co. Limited 124,800 83
---------
3,142
Turkey 3.5%
Migros Turk TAS 350,250 436
Petrol Ofisi AS 958,170 340
Dogan Sirketler Grubu Holding AS 25,557,000 339
Akbank TAS 20,991,060 308
Eregli Demir Ve Celik Fabrikalari TAS 14,182,000 198
Bursa Cimento Fabrikasi AS 5,510,000 189
Turk Hava Yollari Anonim Ortakligi 3,366,000 150
Arcelik AS 4,180,000 149
Koc Holding AS 2,047,960 129
Cukurova Elektrik AS 150,000 96
Vestel Elektronik Sanayi 875,000 95
Netas Northern Electric Telekomunikasyon AS 4,350,000 92
Aksa Akrilik Kimya Sanayii AS 1,908,800 34
---------
2,555
Venezuela 1.8%
Electridad de Caracas (b) 19,900 389
Compania Anonima Nacional Telefonos
de Venezuela SP - ADR 13,400 364
Mavesa SA SP - ADR 57,900 188
Banco Venezolano de Creditio SP - ADR 37,936 115
Mantex SAC.A. SP - ADR 15,033 110
Siderurgica Venezolana Sivensa SP - ADR 26,067 78
International Briquettes Holdings, Inc. 8,000 29
---------
1,273
76 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
Zimbabwe 0.9%
Delta Corp. Limited 638,684 $ 182
Interfresh Limited 5,547,900 168
Barclays Bank of Zimbabwe 1,105,400 157
Wankie Colliery Co. Limited 2,199,200 145
---------
652
---------
Total Common Stocks 72,339
(Cost $73,860) =========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 0.4%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreements 0.4%
State Street Bank
3.500%due07/01/1999 $ 336 336
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.500% 08/31/2001
valued at $347,296. Repurchase
proceeds are $336,033.)
--------
Total Short-Term Instruments 336
(Cost $336) ========
Total Investments (a) 100.2% $ 72,675
(Cost $74,196)
Other Assets and Liabilities (Net)(0.2%) (166)
--------
Net Assets 100.0%$ 72,509
========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $74,215 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost $ 16,421
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value (17,961)
--------
Unrealized depreciation-net $ (1,540)
========
(b) Non-income producing security.
See accompanying notes 77
<PAGE>
Schedule of Investments
International Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 87.7%
- --------------------------------------------------------------------------------
Brazil 0.0%
Companhia Vale do Rio Doce - Bonus Shares 27,368 $ 0
Chile 2.7%
Compania de Telecomunicaciones
de Chile SA SP - ADR 36,955 915
Banco Santander Chile SP - ADR 41,850 649
Enersis SA SP - ADR 24,122 552
Empresa Nacional de Electricidad SA SP - ADR 39,367 477
Gener SA SP - ADR 20,933 372
Compania Cervecerias Unidas SA SP - ADR 11,400 326
Sociedad Quimica y Minera de Chile SA SP - ADR 9,200 325
Masisa SA SP - ADR 21,000 221
Madeco SA SP - ADR 20,742 210
Quimica Y Minera de Chile 531 19
--------
4,066
Finland 4.4%
Nokia OYJ 49,012 4,296
Sonera Group OYJ (b) 16,500 361
Sanoma-WSOY OYJ 'B' (b) 6,120 351
UPM-Kymmene Corp. 12,026 345
Hartwall OY AB 16,200 240
Viking Line AB 5,750 229
Kemira OYJ 33,100 200
Rautaruukki OY 25,525 154
Okobank 14,164 124
Yit-Yhtyma OY 13,344 124
Metsa Serla 'B' 13,570 115
Fortum Corp. 15,500 75
Rauma Group OY 630 7
--------
6,621
France 14.2%
France Telecom SA 30,871 2,331
Total SA 13,030 1,680
Banque National de Paris 19,880 1,656
Elf Aquitaine SA 9,812 1,439
AXA-UAP 11,300 1,378
L'OREAL 2,030 1,372
Carrefour Supermarche 9,130 1,341
Alcatel Alsthom 9,130 1,285
Vivendi (Ex-Generale Des Eaux) 14,858 1,204
Hermes International 8,545 854
Lafarge SA 8,901 846
Groupe GTM 7,600 815
Castorama Dubois 3,200 759
Pinault-Printemps Redout 4,350 746
Renault SA 14,900 648
Groupe Danone 2,360 608
Compagnie de Saint Gobain 3,750 597
Cie Generale D'Optique Essilor International SA 1,850 578
Sodexho Alliance SA 3,050 525
Societe BIC SA 9,440 498
VIVENDI Warrants (b) 2,750 7
Schneider SA 1 0
--------
21,167
Germany 6.4%
DaimlerChrysler AG 13,999 1,222
Deutsche Telekom AG 24,000 1,008
Mannesmann AG 6,100 912
Bayer AG 18,400 765
Allianz AG 2,517 703
Siemens AG 8,243 636
VEBA AG 7,810 461
BASF AG 9,900 435
Deutsche Bank 7,122 434
Volkswagen AG 6,590 425
Dresdner Bank AG 9,820 382
Bayerische Vereinsbank AG 6,000 382
SAP AG-Vorzug 870 346
Muenchener Rueckversicherungs-Gesellschaft AG 1,590 299
Muenchener Rueckversicher (b) 1,590 297
Viag AG 620 288
RWE AG 5,960 276
Metro AG 3,900 248
Deutsche Telekom AG - Rights (b) 11,000 0
--------
9,519
Hungary 1.6%
Magyar Tavkozlesi Rt 215,400 1,164
MOL Magyar Olaj-es Gazipari Rt 25,000 602
OTP Bank Rt 8,010 334
Gedeon Richter Rt 4,745 206
Danubius Hotel and Spa Rt 2,890 52
Pick Szeged Rt 1,090 31
--------
2,389
Indonesia 1.4%
PT Telekomunikasi Indonesia 1,361,880 787
PT Indah Kiat Pulp & Paper Corp. 795,000 367
PT Indofood Sukses Makmur 239,000 324
PT Gudang Garam 95,000 257
PT Semen Gresik 85,000 185
PT Astra International, Inc. 298,000 136
PT Tambang Timah 74,000 64
--------
2,120
Ireland 1.9%
Allied Irish Banks PLC 80,200 1,055
CRH PLC 35,600 631
Kerry Group PLC 33,800 401
Irish Life & Permanent PLC 34,441 364
Jefferson Smurfit Group PLC 101,200 237
Bank of Ireland 9,400 158
--------
2,846
Israel 1.4%
ECI Telecommunications Limited 10,100 335
Teva Pharmaceutical Industries Limited 6,520 310
Bank Hapoalim Limited 118,000 303
Koor Industries Limited 2,040 235
Bezek Israeli Telecommunication Corp. Limited 45,500 183
Blue Square Chain Investments and Properties
Limited (b) 10,800 177
Makhteshim-Agan Industries Limited (b) 66,400 149
Israel Chemicals Limited 98,200 120
Formula Systems Limited (b) 3,600 109
Bank Leumi Le-Israel 56,500 107
Elite Industries Limited 2,260 106
--------
2,134
Italy 3.2%
ENI SpA 144,600 863
Telecom Italia Mobile SpA 90,600 541
Banca Commerciale Italiana 67,000 489
Telecom Italia SpA 45,565 473
Assicuazioni Generali 12,280 425
Fiat SpA 114,300 362
Istituto Bancario San Paolo di Torino 20,757 282
Banca Popolare di Milano 34,700 268
Italcementi SpA 53,000 266
Cartiere Burgo SpA 33,200 213
Benetton Group SpA 107,900 212
Montedison SpA 121,844 141
Istituto Nazionale delle Assicurazioni 56,500 131
Italgas 22,200 93
--------
4,759
Japan 13.8%
Nippon Telegraph & Telephone 144 1,678
Toyota Motor Corp. 41,000 1,298
Fanuc 22,200 1,193
Bank of Tokyo-Mitsubishi Limited 83,000 1,182
Kirin Brewery Co. Limited 96,000 1,151
Hitachi Limited 115,000 1,079
Sumitomo Electric Industries 84,000 955
Fujisawa Pharmaceutical 58,000 945
Sharp Corp. 67,000 792
Murata Manufacturing Co. 12,000 790
Tokio Marine & Fire Insurance Co. 71,000 772
Sekisui Chemical Co. Limited 125,000 725
Fuji Photo Film 19,000 719
Mitsubishi Heavy Industries Limited 174,000 706
Matsushita Electric Industrial Co. Limited 36,000 699
78 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
Bridgestone Corp. 21,000 $ 635
NEC Corp. 51,000 634
Sankyo Co. Limited 24,000 605
Tokyo Electric Power 28,300 598
Asahi Chemical Industry Co. Limited 101,000 560
Shiseido Co. Limited 35,000 525
Canon, Inc. 18,000 518
Aoyama Trading Co. Limited 15,500 489
Nippon Light Metal Co. 312,000 467
Mitsui O.S.K. Lines Limited 185,000 398
Sega Enterprises 30,000 397
--------
20,510
Mexico 2.6%
Telefonos de Mexico SP - ADR 12,070 975
Grupo Modelo SA de CV 'C' 137,600 392
Cifra SA de CV 'V' 180,593 347
Grupo Mexico SA 'B' 64,800 276
Grupo Televisa SA SP - GDR (b) 5,900 264
Cemex SA de CV 'CPO' 52,839 260
Grupo Financiero Banamex Accival 'L' (b) 105,181 254
Grupo Carso SA de CV 'A1' (b) 40,350 187
Formento Economico Mexicano SP - ADR 4,440 177
Kimberly-Clark de Mexico SA de CV 'A' 39,350 161
Grupo Industrial Bimbo SA de CV 'A' 71,836 160
Alfa SA de CV 'A' 30,150 125
Empresas La Moderna SA de CV (b) 15,400 87
Desc SA de CV 'B' 37,600 41
Industrias Penoles SA 'CP' (b) 12,100 35
Controladora Comercial Mexicana SA de CV 27,000 28
TV Azteca SA de CV SP - ADR 4,100 21
Desc SA de CV 'C' 7,835 9
Transport Maritima SP - ADR 750 4
Grupo Industrial Bimbo Rights (b) 1,704 0
--------
3,803
Netherlands 4.1%
Royal Dutch Petroleum Co. 29,670 1,737
ING Groep NV 14,585 789
Unilever NV 10,554 711
Fortis NL 15,660 483
Koninklijke Philips Electronics NV 3,901 385
ABN-AMRO Holdings 16,700 362
Koninklijke KPN NV 7,290 342
Verernigde Nederlandse Uitgeversbedrijven
verenigd Bezit 7,880 315
Elsevier NV 17,630 204
TNT Post Groep NV (b) 7,290 174
Akzo Noble NV 3,980 167
Koninklijke Ahold NV 4,700 162
Heineken NV 3,100 159
Aegon NV 2,100 152
--------
6,142
Norway 1.7%
Norsk Hydro ASA 19,070 719
Orkla ASA 'B' 20,800 282
Storebrand ASA 37,700 254
Christiania Bank Og Kreditkasse 66,100 237
Petroleum Geo-Services (b) 14,500 218
Den Norske Bank ASA 61,060 201
Merkantildata ASA 17,900 173
Norske Skogindustrier ASA 5,600 169
Tomra Systems ASA 3,200 120
Tandberg Television ASA (b) 8,500 87
Hafslund ASA 'B' 20,200 84
Unitor ASA 4,000 35
--------
2,579
Peru 1.4%
Telefonica del Peru SA 'B' 776,500 1,167
Credicorp Limited 30,600 337
Cerveceria Backus & Johnston SA 'T' 530,552 186
Compania de Minas Buenaventura SA 'A' 22,480 171
Cementos Lima SA 52,121 64
Luz del Sur Servicios SA 'B' 83,400 54
Compania de Minas Buenaventura SA 'B' 4,700 36
Banco Wiese SP - ADR 18,700 22
--------
2,037
Poland 1.8%
Telekomunikacja Polska 125,500 $ 895
Elektrim Spolka Akcyjna SA 23,380 330
Bank Handlowy W. Warszawie 23,070 320
Bank Rozwoju Eksportu SA 7,480 235
Wielkopolski Bank Kredytowy SA 30,790 180
Bank Slaski SA W Katowicach 3,620 177
Big Bank Gdanski SA 76,100 169
Softbank SA 3,260 113
Stomil Olsztyn SA 14,500 81
Debica SA 4,930 60
Bank Przemyslowo-Handlow SA 1,150 59
--------
2,619
Portugal 3.7%
EDP-Electricidade de Portugal SA 88,600 1,595
Portugal Telecom SA 30,690 1,248
Banco Comercial Portugues SA 'R' 23,818 617
Jeronimo Martins - SGPS SA 14,500 479
BPI-SGPS SA 18,400 386
Sonae Investimentos-Sociedade Gestora de
Participacoes Sociais SA 10,280 349
Banco Espirito Santo e Comercial de Lisboa SA 14,245 331
Cimpor-Cimentos de Portugal SGPS SA 10,495 270
Brisa-Auto Estradas de Portugal SA 5,340 220
Portugal Telecom SA Rights (b) 38,190 0
--------
5,495
Singapore 1.1%
Singapore Press Holdings 15,400 262
Development Bank of Singapore Limited 21,000 257
Overseas Chinese Banking 30,000 250
Singapore Airlines Limited 18,000 171
City Developments Limited 24,000 154
Singapore Telecommunications 84,000 144
United Overseas Bank Limited 18,900 132
Singapore Tech Engineering Limited 84,000 95
Overseas Union Bank 17,270 83
Keppel Corp. Limited 22,000 75
--------
1,623
South Korea 0.5%
Samsung Electronics 2,100 230
Samsung Electro-Mechanics 5,200 180
Samsung Heavy Industries 22,000 120
Korea Telecom 1,510 100
SK Corp. Rights (b) 2,074 27
Samsung Electronics Rights (b) 456 22
Samsung Electro-Mechanics Rights (b) 1,031 17
Samsung Heavy Industries Rights (b) 7,290 8
--------
704
Sweden 2.9%
MSCI Sweden Opal Series B (b) 18,000 4,328
Switzerland 6.9%
Roche Holding AG 226 2,322
Novartis AG 1,564 2,283
UBS AG (b) 4,570 1,364
Nestle SA 670 1,207
Credit Suisse Group 6,585 1,140
New ABB Limited (b) 6,225 586
Swisscom AG 1,520 572
Zurich Allied AG 545 310
Schindler Holding AG 164 253
Holderbank Financiere Glarus AG 194 229
Clariant AG (b) 153 63
Holderbank Financiere Glarus AG (b) 194 3
Ciba Specialty Chemicals AG 4 0
--------
10,332
Taiwan 3.1%
Taiwan Fund, Inc. 56,300 1,168
Asustek Computer, Inc. (b) 42,000 605
Evergreen Marine Corp. 29,000 537
Winbond Electronics Corp. (b) 41,420 462
China Steel Corp. SP - GDR 29,900 457
Asia Cement Corp. SP - GDR 34,000 337
Advanced Semiconductor Engineering SP - GDR (b) 13,000 286
Standards Foods Taiwan Limited (b) 32,000 250
See accompanying notes 79
<PAGE>
Schedule of Investments (Cont.)
International Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
Nan Ya Plastics Corp. 161,000 $ 193
Formosa Chem & Fibre Corp. (b) 144,000 167
Far Eastern Department Stores 100,000 91
---------
4,553
Turkey 2.9%
Turkiye Is Bankasi 'C' 60,625,400 1,077
Migros Turk TAS 409,400 509
Turkiye Garanti Bankasi AS 64,732,200 483
Yapi ve Kredi Bankasi AS 32,671,060 472
Eregli Demir Ve Celik Fabrikalari TAS 20,991,000 293
Arcelik AS 6,292,500 224
Yapi ve Kredi Bankasi AS Rights (b) 25,131,590 182
Aygaz AS 1,888,000 168
Haci Omer Sabanci Holding AS 7,242,000 161
Ege Biracilik ve Malt Sanayii AS 2,020,000 151
Vestel Elektronik Sanayi 1,291,000 141
Adana Cimento Sanayii 'A' 8,110,570 129
Brisa Bridgestone Sabanci Lastik San. ve Tic AS 4,265,000 98
Netas Northern Electric Telekomunikasyon AS 4,227,600 89
Cukurova Elektrik AS 134,000 86
Akbank TAS 4,187,330 62
Akbank TAS (b) 2,093,660 31
Akbank TAS Rights (b) 4,187,330 26
Adana Cimento Sanayii Turk Anonim Sirketi (b) 901,010 12
---------
4,394
United Kingdom 4.0%
WEBS Index Fund 280,000 6,020
---------
Total Common Stocks 130,760
(Cost $115,756) =========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 7.2%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Time Deposits 7.2%
State Street Bank
4.500%due07/01/1999 $ 10,750 10,750
---------
Total Short-Term Instruments 10,750
(Cost $10,750) =========
Total Investments (a) 94.9% $ 141,510
(Cost $126,506)
Other Assets and Liabilities (Net) 5.1% 7,577
---------
Net Assets 100.0% $ 149,087
=========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $126,619 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 21,688
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (6,797)
---------
Unrealized appreciation-net $ 14,891
=========
(b) Non-income producing security.
(c) Foreign forward currency contracts outstanding at June 30, 1999.
Principal
Amount
Covered by Expiration Unrealized
Type Contract Month Appreciation
- -------------------------------------------------------------------------------
Buy EC 88 07/1999 $ 0
Buy JY 247,269 07/1999 0
---------
$ 0
(d) Principal amount denoted in indicated currency:
EC - European Currency Unit
JY - Japanese Yen
(e) Assets with an aggregate market value of $228,556 have been
segregated with the custodian to cover margin requirements for
the following open futures contracts at June 30, 1999:
# of Unrealized
Type Contracts (Depreciation)
- --------------------------------------------------------------------------------
FTSE 100 Index Futures (09/1999) 48 $ (87)
80 See accompanying notes
<PAGE>
Schedule of Investments
Balanced Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 54.9%
- --------------------------------------------------------------------------------
Aerospace 0.6%
Northrop Grumman Corp. 6,600 $ 438
Building 0.6%
Centex Corp. 5,600 210
Lafarge Corp. 5,700 202
------
412
Capital Goods 4.1%
Deere & Co. 11,500 455
Dana Corp. 9,500 438
Tyco International Limited 4,100 388
Johnson Controls, Inc. 4,800 333
Honeywell, Inc. 2,700 313
AlliedSignal, Inc. 4,800 302
United Technologies Corp. 3,900 280
Textron, Inc. 3,000 247
General Electric Co. 2,000 226
------
2,982
Communications 4.0%
GTE Corp. 17,300 1,310
Bell Atlantic Corp. 15,300 1,000
SBC Communications, Inc. 4,200 244
ALLTEL Corp. 3,400 243
Qualcomm, Inc. (b) 900 129
------
2,926
Consumer Discretionary 9.0%
Thomas & Betts Corp. 20,500 969
UST, Inc. 28,800 842
Tupperware Corp. 20,400 520
Whirlpool Corp. 6,900 511
American Greetings Corp. 'A' 11,400 342
Wal-Mart Stores, Inc. 7,000 338
TJX Cos., Inc. 8,600 286
Lowe's Cos., Inc. 5,000 283
Home Depot, Inc. 4,300 277
Tandy Corp. 5,100 249
Gap, Inc. 4,900 247
Harley-Davidson, Inc. 4,400 239
CVS Corp. 4,700 239
Circuit City Stores 2,400 223
Cintas Corp. 3,300 222
Dayton Hudson Corp. 3,200 208
Ford Motor Co. 3,400 192
Mohawk Industries, Inc. (b) 6,100 185
General Motors Corp. 2,500 165
------
6,537
Consumer Services 2.3%
Central Newspapers, Inc. 'A' 12,700 478
McGraw-Hill Companies, Inc. 4,700 254
CBS Corp. 5,700 248
New York Times Co. 6,600 243
Waste Management, Inc. 4,200 226
Gannett, Inc. 3,100 221
------
1,670
Consumer Staples 3.4%
Kimberly-Clark Corp. 15,300 872
Anheuser Busch Cos., Inc. 9,400 667
SUPERVALU, Inc. 18,500 475
Kroger Co. (b) 8,600 240
Safeway, Inc. (b) 4,500 223
------
2,477
Energy 4.7%
Mobil Corp. 8,900 881
Repsol SA SP - ADR 23,000 467
Kerr McGee Corp. 9,300 467
Ultramar Diamond Shamrock Corp. 20,700 452
Royal Dutch Petroleum Co. 4,100 247
Atlantic Richfield Co. 2,900 242
Peco Energy Co. 5,200 218
Unicom Corp. 5,600 216
Energy East Corp. 7,800 203
------
3,393
Environmental Services 0.6%
Browning Ferris Industries, Inc. 10,400 447
Financial & Business Services 8.1%
Republic New York Corp. 7,100 484
Union Planters Corp. 10,400 465
PNC Bank Corp. 8,000 461
Omnicom Group 3,600 288
Chase Manhattan Corp. 2,800 243
Bank of New York 6,500 238
Citigroup, Inc. 4,700 223
Fleet Financial Group, Inc. 5,000 222
Associates First Capital Corp. 'A' 4,996 221
Bank of America Corp. 3,013 221
Wells Fargo & Co. 5,100 218
Capital One Financial Corp. 3,900 217
Hartford Financial Services Group, Inc. 3,700 216
Bank One Corp. 3,600 214
American Express Co. 1,600 208
Marsh & Mclennan Cos 2,700 204
Southtrust Corp. 5,300 203
Equity Residential Properties Trust 4,500 203
Alliance Capital Management LP 6,200 200
Comerica, Inc. 3,200 190
Federal Home Loan Mortgage Corp. 3,200 186
Federal National Mortgage Association 2,700 185
Countrywide Credit Industries, Inc. 4,100 175
Morgan Stanley, Dean Witter, Discover and Co. 1,200 123
Lehman Brothers Holdings, Inc. 1,200 75
------
5,883
Health Care 4.4%
Mallinckrodt, Inc. 25,900 942
American Home Products Corp. 8,800 506
Boston Scientific Corp. (b) 5,900 259
Bristol-Myers Squibb Co. 3,300 232
Warner-Lambert Co. 3,100 215
CIGNA Corp. 2,400 214
United Healthcare Corp. 3,300 207
Wellpoint Health Networks, Inc. (b) 2,400 204
Mylan Laboratories, Inc. 5,400 143
Biogen, Inc. (b) 2,000 129
Schering-Plough Corp. 2,300 122
------
3,173
Materials & Processing 2.4%
Westvaco Corp. 15,200 441
USG Corp. (b) 7,600 426
USX-U.S. Steel Group, Inc. 15,300 413
Weyerhaeuser Co. 3,600 248
Georgia-Pacific Corp. 4,500 213
------
1,741
Technology 6.2%
Harris Corp. 13,000 509
Apple Computer, Inc. 10,900 505
Lucent Technologies, Inc. 6,385 431
Microsoft Corp. (b) 4,500 406
Tellabs, Inc. (b) 6,000 405
Texas Instruments, Inc. 2,100 305
International Business Machines Corp. 2,300 297
Cisco Systems, Inc. (b) 4,150 268
BMC Software, Inc. (b) 4,800 259
Uniphase Corp. (b) 1,500 249
Motorola, Inc. 2,600 246
Altera Corp. (b) 6,400 236
Compuware Corp. (b) 6,400 204
Computer Associates International, Inc. 3,400 187
------
4,507
Transportation 0.2%
Southwest Airlines Co. 6,000 187
Utilities 4.3%
NICOR, Inc. 24,400 929
Public Service Enterprise Group, Inc. 22,400 916
DTE Energy Co. 21,000 840
See accompanying notes 81
<PAGE>
Schedule of Investments (Cont.)
Balanced Fund
June 30, 1999
Value
Shares (000s)
- ------------------------------------------------------------------------------
Ameritech Corp. 3,400 $ 250
Consolidated Edison, Inc. 4,100 186
--------
3,121
--------
Total Common Stocks 39,894
(Cost $34,086) ========
- ------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 11.6%
- ------------------------------------------------------------------------------
Principal
Amount
(000s)
Banking & Finance 5.5%
Ford Motor Credit Corp.
5.838% due 10/15/2002(d) $1,000 998
General Motors Acceptance Corp.
5.788% due 08/15/2003(d) 1,000 994
New England Educational Loan Marketing
5.270% due 06/11/2001(d) 2,000 2,001
-------
3,993
Industrials 6.1%
AMR Corp.
10.000% due 02/01/2001 400 419
9.430% due 05/10/2001 1,000 1,044
Conagra, Inc.
5.298% due 06/12/2000(d) 2,000 1,999
U.S. West Capital Funding
5.546% due 06/15/2000(d) 1,000 1,000
-------
4,462
-------
Total Corporate Bonds & Notes 8,455
(Cost $8,405) =======
- -------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES 0.4%
- -------------------------------------------------------------------------------
Student Loan Marketing Assn.
5.080% due 04/25/2004(d) 257 257
-------
Total U.S. Government Agencies 257
(Cost $257) =======
- -------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 24.3%
- -------------------------------------------------------------------------------
Collateralized Mortgage Obligations 2.8%
Federal Home Loan Mortgage Corp.
10.150% due 04/15/2006 11 11
Federal National Mortgage Association
6.740% due 08/25/2007 145 146
9.500% due 06/25/2018 264 282
First Plus Home Loan Trust
6.060% due 09/10/2011 1,000 1,002
GMAC Commercial Mortgage Securities, Inc.
6.150% due 11/15/2007 287 280
Independent National Mortgage Corp.
7.540% due 11/25/2024(d) 216 217
7.600% due 11/25/2024(d) 119 120
-------
2,058
Federal Home Loan Mortgage Corporation 4.6%
6.000% due 07/14/2028 1,000 940
6.500% due 07/14/2026 2,100 2,027
8.500% due 03/01/2023 320 337
-------
3,304
Federal Housing Administration 3.2%
6.000% due 03/20/2028 1,921 1,789
7.000% due 07/01/2014(d) 549 509
-------
2,298
Federal National Mortgage Association 4.5%
5.500% due 07/14/2029 1,000 912
6.842% due 12/01/2023(d) 170 175
8.500% due 07/01/2002-07/01/2025(e) 2,065 2,155
-------
3,242
Government National Mortgage Association 8.4%
6.000% due 07/22/2029 1,000 935
6.500% due 01/15/2024-07/21/2028(e) 3,216 3,096
6.620% due 08/20/2024(d) 468 472
6.875% due 04/20/2023(d) 922 941
7.500% due 05/15/2017 6 6
8.000% due 09/15/2006-11/15/2026(e) 283 291
9.500% due 09/15/2009-10/15/2009(e) 98 105
10.750% due 09/15/2000-10/15/2000(e) 38 40
16.000% due 10/15/2011-04/15/2012(e) 170 204
-------
6,090
Other Mortgage-Backed Securities 0.8%
Home Savings of America
5.530% due 05/25/2027(d) 630 619
-------
Total Mortgage-Backed Securities 17,611
(Cost $17,798) -------
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 1.4%
- -------------------------------------------------------------------------------
MBNA Master Credit Card Trust
5.121% due 01/15/2002 1,000 1,001
-------
Total Asset-Backed Securities 1,001
(Cost $998) =======
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 18.2%
- -------------------------------------------------------------------------------
Commercial Paper 15.1%
BellSouth Telecommunications, Inc.
5.230% due 07/07/1999 1,000 999
Coca-Cola Co.
4.760% due 07/30/1999 100 100
Emerson Electric Co.
5.000% due 07/09/1999 500 498
Federal Home Loan Mortgage Corp.
5.020% due 07/16/1999 5,000 4,990
4.910% due 07/22/1999 100 100
Ford Motor Credit Co.
4.780% due 07/26/1999 100 100
Kellogg Co.
4.950% due 07/16/1999 1,000 998
Motorola, Inc.
5.080% due 08/03/1999 900 896
National Rural Utilities Cooperative
4.780% due 07/23/1999 600 598
Procter & Gamble Co.
4.830% due 07/06/1999 400 400
Shell Oil Co.
5.190% due 07/09/1999 300 300
U.S. West Communications
5.960% due 03/24/2000 1,000 958
-------
10,937
=======
Repurchase Agreement 2.9%
State Street Bank
3.500% due 07/01/1999 2,144 2,144
-------
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.875% 05/15/2006
valued at $415,984, U.S. Treasury Note
6.875% 05/15/2006 valued at $321,203
and U.S. Treasury Note 8.500% 11/15/2000
valued at $1,462,352. Repurchase
proceeds are $2,144,208.)
U.S. Treasury Bills (c) 0.2%
4.543% due 09/16/1999 165 164
-------
Total Short-Term Instruments
(Cost $13,242) 13,245
=======
Total Investments (a) 110.8% $80,463
(Cost $74,786)
Written Options (f)(0.0%) (7)
(Premiums $9)
Other Assets and Liabilities (Net)(10.8%) (7,814)
-------
Net Assets 100.0% $72,642
=======
82 See accompanying notes
<PAGE>
- --------------------------------------------------------------------------------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for
federal income tax purposes of $74,867 was as
follows:
Aggregate gross unrealized appreciation for all
tax cost. $ 6,618
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (1,022)
---------
Unrealized appreciation-net $ 5,596
=========
(b) Non-income producing security
(c) Securities with an aggregate market value of $2,143 have been segregated
with the custodian to cover margin requirements for the following open futures
contracts at June 30, 1999:
Unrealized
# of Appreciation/
Type Contracts (Depreciation)
- --------------------------------------------------------------------------------
Eurodollar March Futures (03/2000) 6 $ (14)
Eurodollar March Futures (03/2001) 1 (1)
Eurodollar June Futures (06/2001) 1 (1)
Eurodollar September Futures (09/2001) 3 (5)
Eurodollar December Futures (12/1999) 6 (12)
U.S. Treasury 5 Year Note (09/1999) 3 3
U.S. Treasury 10 Year Note (09/1999) 16 12
U.S. Treasury 30 Year Bond (09/1999) 35 26
---------
$ 8
=========
(d) Variable rate security. The rate listed is as of June 30, 1999.
(e) Securities are grouped by coupon or range of coupons
and represent a range of maturities.
(f) Premiums received on written options:
# of
Type Contracts Premium Value
- --------------------------------------------------------------------------------
Call - CBOT U.S. Treasury Bond September Futures
Strike @ 124.00 Exp. 08/21/1999 1 $ 0 $ 0
Put - CBOT U.S. Treasury Bond September Futures
Strike @ 112.00 Exp. 08/21/1999 1 1 0
Call - CBOT U.S. Treasury Bond September Futures
Strike @ 126.00 Exp. 08/21/1999 8 1 0
Put - CBOT U.S. Treasury Bond September Futures
Strike @ 114.00 Exp. 08/21/1999 9 7 7
--------------------------
$ 9 $ 7
==========================
See accompanying notes 83
<PAGE>
Notes to Financial Statements
June 30, 1999
1. Organization
PIMCO Funds: Multi-Manager Series (the "Trust" is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company organized as a Massachusetts business trust. The Trust currently
consists of twenty-six 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). Information presented in these financial statements pertains
to the Institutional and Administrative Classes (the "Institutional Classes") of
the Trust. Certain detailed financial information for the A, B, C and D Classes
(the "Other Classes") is provided separately and is available upon request. On
June 3, 1999, the Board of Trustees approved the merger of the PIMCO Funds:
Multi-Manager Series Balanced Fund to PIMCO Funds: Pacific Investment Management
Series Stategic Balanced Fund.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements 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
Renaissance, Equity Income, 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
84
<PAGE>
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.
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: International Fund - $331,529; Mid-Cap
Growth Fund - $8,992; Growth Fund - $57,735; Renaissance Fund - $70,391;
Innovation Fund - $24,825; Core Equity Fund - $190; International Growth Fund -
$5,923; Equity Income Fund - $22,999; Value Fund - $52,615; Value 25 Fund -
$110; Small-Cap Value Fund - $2,070; Enhanced Equity Fund - $8,911; Structured
Emerging Markets Fund - $80,685; Tax-Efficient Structured Emerging Markets Fund
- - $100,130; Tax-Efficient Equity Fund - $35; and Balanced Fund - $1,122.
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's 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 agreements. 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.
Delayed Delivery Transactions. A Fund may purchase or sell securities on a
when-issued or delayed delivery basis. These transactions involve a commitment
by a Fund to purchase or sell securities for a prede-
85
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1999
termined price or yield, with payment and delivery taking place beyond the
customary settlement period. When delayed delivery purchases are outstanding, a
Fund will set aside and maintain until the settlement date in a segregated
account, liquid assets in an amount sufficient to meet the purchase price. When
purchasing a security on a delayed delivery basis, a Fund assumes the rights and
risks of ownership of the security, including the risk of price and yield
fluctuations, and takes such fluctuations into account when determining its net
asset value. A Fund may dispose of or renegotiate a delayed delivery transaction
after it is entered into, and may sell when-issued securities before they are
delivered, which may result in a capital gain or loss. When the Fund has sold a
security on a delayed delivery basis, the Fund does not participate in future
gains and losses with respect to the security. Forward sales commitments are
accounted for by the Fund in the same manner as forward currency contracts
discussed above.
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 and
Value 25 Funds; 0.55% for the International and Target Funds; 0.57% for the Core
Equity Fund; 0.60% for the Renaissance and Small-Cap Value Funds; 0.63% for the
Mid-Cap Equity Fund; 0.65% for the Opportunity and Innovation Funds; 0.85% for
the International Growth Fund; 1.00% for the Small-Cap Growth Fund; 1.25% for
the Micro-Cap Growth Fund; 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's assets. 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 provides administrative services to the Trust for
which it receives from each Fund a monthly administrative fee based on each
share class' average daily net assets. The Administration Fee for the
Institutional and Administrative Classes is charged at the annual rate of 0.50%
for the International and International Growth, Structured Emerging Markets and
Tax-Efficient Structured Emerging Markets Funds and 0.25% for all other Funds.
The Administration Fee for the A, B and C Classes is charged at the annual rate
of 0.65% for the International Fund; 0.45% for the Precious Metals Fund and
0.40% for all other Funds. The Administration Fee for Class D is charged at the
annual rate of 0.40%.
Fund Reimbursement Fee. Investors in Institutional Class and Administrative
Class shares of the Structured Emerging Markets and Tax-Efficient Structured
Emerging Markets Funds are subject to a fee ("Fund Reimbursement Fees"), both at
the time of purchase and at the time of redemption, equal to 1.00% of the net
asset value of the shares purchased or redeemed. The Fund Reimbursement Fee,
which is retained by each respective fund, are accounted for as an addition to
paid in capital. Any shares of these Funds held on or before July 1, 1998 will
not be subject to Fund Reimbursement Fees upon the subsequent redemption
(including any redemption in connection with an exchange).
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, to 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 A, B, C and
D Classes of the Trust, the Trust compensates PFD or an affiliate with respect
to Class D for services provided and expenses
86
<PAGE>
incurred in connection with assistance rendered in the sale of shares and
services rendered to shareholders and for maintenance of shareholder accounts of
the A, B, C 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's
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 Class A, B
and C shares. For the period ended June 30, 1999, PFD received $8,118,872
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; and (vii) any expenses allocated or allocable to a
specific class of shares, which include service fees payable with respect to the
Administrative Class shares 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, as disclosed in the
Financial Highlights, may differ from the annual fund operating expenses 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 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
entire Board receives and additional annual retainer of $3,000. These expenses
are allocated to the Funds of the Trust according to their respective net
assets.
4. In-Kind Transaction
For the year ended June 30, 1999, the following funds realized gains (losses)
from in-kind redemptions of approximately (amounts in thousands):
Capital Appreciation Fund $ 2,839
Core Equity Fund 44,520
87
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1999
5. Reorganization
On July 1,1998, the Structured Emerging Markets and Tax-Efficient Structured
Emerging Markets Funds commenced investment operations immediately following a
transaction (the "Transaction") in which each Fund issued Institutional Class
shares to unit holders of the Parametric Portfolio Associates Emerging Markets
Trust (the "E.M. Trust") a separate account managed by Parametric, in a tax free
exchange for the E.M. Trust's net assets. Net assets in the E.M. Trust were
transferred in exchange for shares to the Structured Emerging Markets and
Tax-Efficient Structured Emerging Markets Funds as follows (shares and amounts
in thousands):
Fund's
Shares Value of Total Net Unrealized
Fund Issued Shares Issued Assets Depreciation
- --------------------------------------------------------------------------------
Structured 3,558 $35,582 $35,582 $(2,621)
Emerging
Markets Fund
Tax-Efficient 4,416 44,157 44,157 (28,709)
Structured
Emerging
Markets Fund
6. Federal Income Tax Matters
As of June 30, 1999, the Funds listed in the table below had remaining capital
loss carryforwards that were realized in current and prior years. Additionally,
the Micro Cap Growth Fund, Small Cap Growth Fund, Small Cap Value Fund,
Tax-Efficient Equity Fund, Tax-Efficient Structured Emerging Markets Fund, Value
25 Fund and International Fund realized capital losses and/or foreign currency
losses during the period November 1, 1998 through June 30, 1999, which the Funds
elected to defer to the following fiscal year pursuant to income tax
regulations. The amounts are $452,591, $5,341,188, $573,480, $174,775,
$8,839,879, $5,496 and $332,309 respectively.
The Fund will resume capital gain distributions in the future to the extent
gains are realized in excess of the available carryforwards.
Capital Loss Carryforwards
-------------------------------
Realized
Losses Expiration
- --------------------------------------------------------------------------------
Micro Cap Growth Fund $ 8,869,703 6/30/2007
Small Cap Growth Fund 4,673,719 6/30/2007
Small Cap Value Fund 10,713,421 6/30/2007
Tax-Efficient Equity Fund 27,778 6/30/2007
Tax-Efficient Structured Emerging Markets Fund 1,625,269 6/30/2007
Value 25 Fund 67,139 6/30/2007
88
<PAGE>
7. Purchases and Sales of Securities
Purchases and sales of securities (excluding short-term investments) for the
year ended June 30, 1999 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
U.S. Government/Agency All Other
---------------------------------------------------------
Purchases Sales Purchases Sales
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Fund $ 72,005 $ 103,899
Capital Appreciation Fund 1,324,269 1,298,054
Mid-Cap Growth Fund 915,099 700,331
Micro-Cap Growth Fund 177,623 166,714
Small-Cap Growth Fund 84,868 51,007
Growth Fund 2,700,173 2,783,041
Target Fund 2,263,365 2,448,230
Renaissance Fund 1,341,957 1,391,833
Opportunity Fund 767,967 1,029,559
Innovation Fund 1,267,035 761,668
Core Equity Fund 89,993 66,838
Mid-Cap Equity Fund 29,610 33,606
International Growth Fund 17,218 17,786
Equity Income Fund 143,274 157,110
Value Fund 226,607 263,988
Value 25 Fund 5,210 2,768
Small-Cap Value Fund 268,878 209,792
Enhanced Equity Fund 28,382 17,779
Structured Emerging Markets Fund 12,422 10,307
Tax-Efficient Structured Emerging Markets Fund 27,853 13,189
Tax-Efficient Equity Fund 26,595 1,829
Balanced Fund $ 95,179 $ 93,336 62,227 63,077
</TABLE>
8. Transactions in Written Call and Put Options
Transactions in written call and put options were as follows (amounts in
thousands):
<TABLE>
<CAPTION>
Growth Fund Target Fund Renaissance Fund Opportunity Fund
---------------------------------------------------------------------------------------------
Premium Contracts Premium Contracts Premium Contracts Premium Contracts
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at 06/30/1998 $ 0 0 $ 0 0 $ 132 630 $ 0 0
Sales 1,316 4,436 1,590 112,700 704 4,351 2,957 11,687
Closing Buys (340) (956) (1,140) (111,775) (571) (3,675) (340) (1,000)
Expirations (976) (3,480) (450) (925) (132) (630) (775) (3,500)
Exercised 0 0 0 0 (133) (676) (1,842) (7,187)
---------------------------------------------------------------------------------------------
Balance at 06/30/1999 $ 0 0 $ 0 0 $ 0 0 $ 0 0
=============================================================================================
<CAPTION>
Innovation Fund Core Equity Balanced Fund
----------------------------------------------------------------
Premium Contracts Premium Contracts Premium Contracts
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at 06/30/1998 $ 650 1,500 $ 0 0 $ 0 0
Sales 4,219 7,425 88 306 27 66
Closing Buys (3,566) (6,598) (21) (60) 0 0
Expirations (1,141) (2,000) (67) (246) (18) (47)
Exercised (162) (327) 0 0 0 0
----------------------------------------------------------------
Balance at 06/30/1999 $ 0 0 $ 0 0 $ 9 19
================================================================
89
</TABLE>
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1999
9. 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>
International Fund Capital Appreciation Fund
---------------------------------------------- ----------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998 Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
---------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 495 $ 5,567 0 $ 0 17,583 $ 439,612 10,851 $ 261,189
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 1,494 16,127 0 0 6,022 152,828 5,609 134,100
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 61,433 736,111 42,826 559,851 4,010 98,940 6,924 165,130
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 6 67 0 0 1,505 35,601 1,599 37,066
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 13 129 0 0 579 13,612 85 1,973
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 1,045 11,029 1,129 12,731 590 13,712 176 4,064
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (189) (2,213) 0 0 (25,867) (649,159) (6,904) (164,429)
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (140) (1,579) 0 0 (3,068) (76,012) (748) (18,481)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (62,751) (757,207) (46,890) (615,042) (3,149) (77,743) (1,007) (24,147)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions 1,406 $ 8,031 (2,935) $ (42,460) (1,795) $ (48,609) 16,585 $ 396,465
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Mid-Cap Growth Fund
------------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount
------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 29,207 $ 640,912 11,844 $ 273,380
- --------------------------------------------------------------------------------------------
Administrative Class 4,726 104,472 3,327 77,781
- --------------------------------------------------------------------------------------------
Other Classes 9,113 199,882 10,834 249,617
- --------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 925 19,896 975 22,222
- --------------------------------------------------------------------------------------------
Administrative Class 213 4,543 24 544
- --------------------------------------------------------------------------------------------
Other Classes 665 14,079 339 7,672
- --------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (23,032) (505,497) (9,011) (208,995)
- --------------------------------------------------------------------------------------------
Administrative Class (3,452) (74,169) (381) (8,950)
- --------------------------------------------------------------------------------------------
Other Classes (7,361) (157,774) (3,985) (92,467)
- --------------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions 11,004 $ 246,344 13,966 $ 320,804
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Renaissance Fund Opportunity Fund
--------------------------------------------- ---------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998 Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 6 $ 105 44 $ 761 19 $ 428 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 58 1,000 0 0 87 1,990 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 17,896 305,834 25,025 464,673 71,407 1,722,778 38,787 1,143,829
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 2 25 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 4,947 74,634 4,447 74,240 3,979 81,564 1,787 48,833
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (43) (744) 0 0 (2) (38) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (37) (634) 0 0 (4) (101) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (20,668) (350,656) (16,657) (311,714) (81,838) (1,986,190) (47,100) (1,387,528)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 2,161 $ 29,564 12,859 $ 227,960 (6,352) $ (179,569) (6,526) $ (194,866)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Innovation Fund
----------------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount
----------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 27 $ 895 0 $ 0
- --------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- --------------------------------------------------------------------------------------------------
Other Classes 43,277 1,310,384 22,666 462,206
- --------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 0 0 0 0
- --------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- --------------------------------------------------------------------------------------------------
Other Classes 829 22,135 930 16,937
- --------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (15) (505) 0 0
- --------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- --------------------------------------------------------------------------------------------------
Other Classes (25,673) (753,602) (23,091) (468,412)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 18,445 $ 579,307 505 $ 10,731
==================================================================================================
</TABLE>
90
<PAGE>
<TABLE>
<CAPTION>
Micro-Cap Growth Fund Small-Cap Growth Fund
---------------------------------------------- ----------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998 Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
---------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 4,984 $ 98,906 3,100 $ 69,180 3,014 $ 36,581 957 $ 13,396
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 115 2,225 181 4,130 157 1,691 81 1,166
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 339 6,383 910 19,223 206 2,229 360 4,781
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 4 83 19 396 5 52 1 7
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (4,495) (84,282) (1,382) (31,187) (800) (8,682) (408) (5,918)
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (171) (3,312) (104) (2,345) (35) (379) (12) (171)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions 776 $ 20,003 2,724 $ 59,397 2,547 $ 31,492 979 $ 13,261
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Growth Fund Target Fund
---------------------------------------------- ----------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998 Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
---------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 39 $ 1,212 0 $ 0 75 $ 1,265 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 207 6,217 0 0 327 5,508 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 39,459 1,197,934 25,678 717,015 87,501 1,337,208 80,862 1,289,984
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 9,157 246,482 10,658 256,426 4,745 64,479 20,941 284,165
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (9) (268) 0 0 (2) (36) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (10) (288) 0 0 (16) (275) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (40,642) (1,227,582) (33,879) (942,831) (99,140) (1,510,466) (98,339) (1,558,833)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions 8,201 $ 223,707 2,457 $ 30,610 (6,510) $ (102,317) 3,464 $ 15,316
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Core Equity Fund Mid-Cap Equity Fund
--------------------------------------------- ---------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998 Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 77 $ 1,782 60 $ 998 110 $ 1,457 142 $ 1,655
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 1,822 34,758 5,068 87,923 198 2,607 170 2,245
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 3 57 19 308 15 184 53 618
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 275 5,514 455 7,237 14 168 12 138
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (126) (2,915) (400) (6,755) (285) (4,344) (109) (1,428)
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (8,430) (180,866) (1,077) (18,798) (388) (5,740) (6) (80)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions (6,379) $(141,670) 4,125 $ 70,913 (336) $ (5,668) 262 $ 3,148
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
International Growth Fund Equity Income Fund
--------------------------------------------- ---------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998 Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 22 $ 355 504 $ 5,044 1,941 $ 28,202 1,001 $ 16,221
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0 495 7,079 253 4,124
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 2,630 38,810 2,755 44,411
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 0 2 0 0 1,311 18,538 1,266 19,487
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0 108 1,521 93 1,437
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 506 7,112 234 3,576
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (2) (31) 0 0 (3,994) (59,589) (1,511) (24,500)
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0 (447) (6,530) (148) (2,429)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 (2,146) (31,549) (492) (7,993)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 20 $ 326 504 $ 5,044 404 $ 3,594 3,451 $ 54,334
====================================================================================================================================
</TABLE>
91
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1999
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>
Value Fund Value 25 Fund
---------------------------------------------- -----------------------
Year Ended 06/30/1999 Year Ended 06/30/1998 Period From 07/10/1998
Shares Amount Shares Amount to 06/30/1999
Shares Amount
Receipts for shares sold ---------------------------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Class 1,320 $ 19,355 1,109 $ 17,292 45 $ 388
- -----------------------------------------------------------------------------------------------------------------
Administrative Class 1,038 14,684 674 10,641 0 0
- -----------------------------------------------------------------------------------------------------------------
Other Classes 4,533 65,101 4,014 62,175 460 3,941
- -----------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 822 11,141 604 8,878 0 1
- -----------------------------------------------------------------------------------------------------------------
Administrative Class 144 1,950 33 483 0 0
- -----------------------------------------------------------------------------------------------------------------
Other Classes 1,111 14,980 841 12,266 0 6
- -----------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (2,937) (43,290) (1,437) (22,371) (19) (149)
- -----------------------------------------------------------------------------------------------------------------
Administrative Class (325) (4,695) (46) (725) 0 0
- -----------------------------------------------------------------------------------------------------------------
Other Classes (5,849) (83,212) (2,636) (40,804) (241) (1,972)
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions (143) $ (3,986) 3,156 $ 47,835 245 $ 2,215
=================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Small-Cap Value Fund Enhanced Equity Fund
---------------------------------------------- ----------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1998 Year Ended 06/30/1999 Year Ended 06/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
---------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 2,479 $ 37,773 2,482 $ 44,619 725 $ 8,851 394 $ 4,869
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 1,502 22,238 347 6,309 1,282 15,340 760 9,937
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 12,114 183,088 17,288 307,809 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 149 2,202 101 1,770 429 4,790 1,579 17,291
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class 54 790 24 427 181 2,005 109 1,196
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 716 10,426 393 6,863 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (1,625) (24,130) (2,095) (38,130) (759) (9,355) (1,803) (24,666)
- ------------------------------------------------------------------------------------------------------------------------------------
Administrative Class (850) (12,454) (137) (2,525) (424) (5,174) (43) (517)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (10,906) (160,295) (2,005) (35,827) 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 3,633 $ 59,638 16,398 $ 291,315 1,434 $ 16,457 996 $ 8,110
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Structured Tax-Efficient
Emerging Structured Emerging Tax-Efficient
Market Fund Market Fund Equity Fund
---------------------- ----------------------- ------------------------
Year Ended 06/30/1999 Year Ended 06/30/1999 Period From 07/10/1998
Shares Amount Shares Amount to 06/30/1999
Shares Amount
---------------------- ----------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 290 $ 2,664 1,210 $ 12,518 0 $ 0
- ---------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0 307 3,320
- ---------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 2,619 26,786
- ---------------------------------------------------------------------------------------------------------------
Issued in Reorganization
Institutional Class 3,558 35,582 4,416 44,157 0 0
- ---------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 135 1,209 32 300 0 0
- ---------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (233) (2,261) (184) (1,678) 0 0
- ---------------------------------------------------------------------------------------------------------------
Administrative Class 0 0 0 0 (15) (158)
- ---------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 (490) (5,032)
- ---------------------------------------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions 3,750 $ 37,194 5,474 $ 55,297 2,421 $ 24,916
===============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Balanced Fund
------------------------------------------------
Year Ended 06/30/1999 Year Ended 06/30/1999
Shares Amount Shares Amount
----------------------- ----------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 401 $ 4,412 504 $ 5,975
- ----------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- ----------------------------------------------------------------------------------------
Other Classes 1,645 18,323 2,189 26,009
- ----------------------------------------------------------------------------------------
Issued in Reorganization
Institutional Class 0 0 0 0
- ----------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Institutional Class 573 6,005 567 6,512
- ----------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- ----------------------------------------------------------------------------------------
Other Classes 390 4,041 111 1,271
- ----------------------------------------------------------------------------------------
Cost of shares redeemed
Institutional Class (963) (10,716) (3,066) (36,139)
- ----------------------------------------------------------------------------------------
Administrative Class 0 0 0 0
- ----------------------------------------------------------------------------------------
Other Classes (1,082) (11,841) (275) (3,224)
- ----------------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions 964 $ 10,224 30 $ 404
========================================================================================
</TABLE>
92
<PAGE>
Report of Independent Accountants
To the Trustees and Institutional and Administrative Class 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, changes
in net assets and the financial highlights for the Renaissance Fund, Growth
Fund, Core Equity Fund, Target Fund, Mid-Cap Equity Fund, Opportunity Fund,
Innovation Fund, International Growth Fund, Capital Appreciation Fund, Mid-Cap
Growth Fund, Small-Cap Growth Fund, Micro-Cap Growth Fund, Equity Income Fund,
Value Fund, Value 25 Fund, Small-Cap Value, Enhanced Equity Fund, Tax-Efficient
Equity Fund, Structured Emerging Markets Fund, Tax-Efficient Structured Emerging
Markets Fund, International Fund, and Balanced Fund (hereafter referred to as
the "Funds") at June 30, 1999, the results of each of their operations, the
changes in each of their net assets and the financial highlights for the
Institutional and Administrative share classes 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, 1999 by correspondence with the custodians and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Kansas City, Missouri
August 13, 1999
93
<PAGE>
Federal Income Tax Information
(unaudited)
As required by the Internal Revenue Code regulations, shareholders must be
notified within 60 days of the Trust's fiscal year end (June 30, 1999) regarding
the status of the distributions made to the shareholders.
Dividend Received Deduction. For the benefit of corporate shareholders only, the
portion of dividends paid out of ordinary income earned during certain Funds'
fiscal years ended June 30, 1999 which qualify for the corporate dividend-
received deduction are as follows:
Renaissance Fund 8.11%
Growth Fund 18.69%
Core Equity Fund 33.48%
Target Fund 2.42%
Mid-Cap Equity Fund 2.00%
Capital Appreciation Fund 87.77%
Mid-Cap Growth Fund 100.00%
Equity Income Fund 62.42%
Value Fund 43.33%
Value 25 Fund 100.00%
Small-Cap Value Fund 65.93%
Enhanced Equity Fund 35.67%
Structured Emerging Markets Fund 0.23%
Tax-Efficient Structured Emerging Markets Fund 0.70%
Balanced Fund 27.39%
Capital Gain Distributions. Capital gains distributions paid for all classes of
shares during the fiscal year ended June 30, 1999, were in the amounts as
follows:
Per Share Per Share
Long-Term Short-Term
Capital Gains Capital Gains
- --------------------------------------------------------------------------------
Renaissance Fund 0.99112 1.34349
Growth Fund 3.11322 0.80518
Core Equity Fund 0.55124 0.17951
Target Fund 0.43510 0.54143
Mid-Cap Equity Fund 0.19603 0.45287
Opportunity Fund 4.62464 0
Innovation Fund 1.25670 0
International Growth Fund 0 1.03069
Capital Appreciation Fund 1.64323 0.00792
Mid-Cap Growth Fund 1.06725 0
Small-Cap Growth Fund 0.47487 0
Micro-Cap Growth Fund 0.62600 0
Equity Income Fund 1.39942 0.36456
Value Fund 1.35064 0.36527
Small-Cap Value Fund 0.24676 0.20297
Enhanced Equity Fund 1.28928 0.31706
Structured Emerging Markets Fund 0.26831 0.00671
International Fund 1.14909 0
Balanced Fund 1.21626 0.42571
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 2000,
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 1999.
94
<PAGE>
Foreign Tax Credit. The following Funds have elected to pass through the credit
for taxes paid in foreign countries The foreign income and foreign tax per share
outstanding on June 30, 1999 are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
International Structured Emerging Tax-Efficient Structured
Growth Fund Markets Fund Emerging Markets Fund
--------------------------------------------------------------------------------------------
Gross Foreign Foreign Gross Foreign Foreign Gross Foreign Foreign
Country Dividends Tax Dividends Tax Dividends Tax
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Argentina 0 0 0.01509 0 0.01393 0
Australia 0.00570 0.00047 0 0 0 0
Botswana 0 0 0.00967 0.00076 0.00782 0.00061
Brazil 0 0 0.01413 0.00161 0.01194 0.00110
Canada 0.00121 0.00003 0 0 0 0
Chile 0 0 0.01260 0.00537 0.01241 0.00472
China 0 0 0.00987 0.00021 0.00896 0.00017
Colombia 0 0 0.00806 0.00020 0.01074 0.00022
Croatia 0 0 0.00049 0 0.00045 0
Czech Republic 0 0 0.00555 0.00139 0.00451 0.00113
Egypt 0 0 0.01259 0 0.01308 0.00001
Finland 0.00218 0.00077 0 0 0 0
France 0.00968 0.00053 0 0 0 0
Germany 0.00311 0.00037 0 0 0 0
Ghana 0 0 0.00353 0.00025 0.00285 0.00029
Greece 0 0 0.01329 0 0.01287 0.00007
Hong Kong 0.01068 0 0.00179 0 0.00242 0
Hungary 0 0 0.00749 0.00158 0.00719 0.00154
India 0 0 0.00708 0.00002 0.00572 0
Indonesia 0 0 0.00212 0.00033 0.00188 0.00029
Ireland 0.00292 0.00062 0 0 0 0
Israel 0 0 0.00468 0.00117 0.00530 0.00136
Italy 0.00953 0.00160 0 0 0 0
Japan 0.00651 0.00107 0 0 0 0
Luxembourg 0 0 0.00015 0 0.00012 0
Malaysia 0 0 0.00489 0.00106 0.00442 0.00105
Mauritius Islands 0 0 0.00711 0 0.00577 0
Mexico 0.00118 0.00006 0.00764 0.00045 0.00702 0.00036
Morocco 0 0 0.00772 0.00066 0.00656 0.00061
Netherlands 0.03197 0.00274 0 0 0 0
Norway 0 0 0 0 0 0
Peru 0 0 0.00838 0 0.00728 0
Philippines 0 0 0.00402 0.00098 0.00353 0.00086
Poland 0 0 0.00477 0.00089 0.00410 0.00051
Portugal 0 0 0 0 0.00009 0.00002
Russia 0 0 0.00205 0.00021 0.00173 0.00039
Singapore 0.00106 0.00008 0 0 0 0
South Africa 0 0 0.01927 0.00085 0.01905 0.00065
South Korea 0 0 0.00661 0.00107 0.00602 0.00094
Switzerland 0.00811 0.00122 0 0 0 0
Taiwan 0 0 0.00011 0.00006 0.00018 0
Thailand 0 0 0.00199 0.00020 0.00170 0.00017
Turkey 0 0 0.00702 0 0.00847 0
United Kingdom 0.02175 0.00201 0 0 0 0
Venezuela 0 0 0.01384 0.00002 0.01010 0.00016
Zimbabwe 0 0 0.00516 0.00077 0.00558 0.00020
</TABLE>
The pass-through of foreign tax credit will affect only shareholders on the
dividend record date in December 1999. Shareholders will receive more detailed
information along with their Form 1099-DIV in January 2000.
<PAGE>
PIMCO Advisors Holdings L.P. is the nation's third largest publicly
traded investment management firm with assets under management in excess of $254
billion. PIMCO Advisors is recognized for providing consistent performance and
high-quality service to mutual fund and institutional clients worldwide.
Its investment firms are:
Pacific Investment Management Company/Newport Beach, California
Oppenheimer Capital/New York, New York
Cadence Capital Management/Boston, Massachusetts
NFJ Investment Group/Dallas, Texas
Parametric Portfolio Associates/Seattle, Washington
PIMCO Equity Advisors/New York, New York a division of PIMCO Advisors L.P.
Units of PIMCO Advisors Holdings L.P. trade on the New York Stock Exchange under
the ticker symbol "PA."
Trustees and Officers
William D. Cvengros,
Chairman and Trustee
Stephen J. Treadway,
President, Chief Executive Officer
and Trustee
E. Philip Cannon, Trustee
Donald P. Carter, Trustee
Gary A. Childress, Trustee
Richard L. Nelson, Trustee
Lyman W. Porter, Trustee
Alan Richards, Trustee
Dr. Joel Segall, Trustee
W. Bryant Stooks, Trustee
Gerald M. Thorne, Trustee
Newton B. Schott, Jr., Secretary
John P. Hardaway, Treasurer
Investment Advisor and Administrator
PIMCO Advisors L.P.
800 Newport Center Drive, Suite 600
Newport Beach, California 92660
<PAGE>
PIMCO Funds: Access to the highest standard
PIMCO Funds offers unique access to the investment expertise of PIMCO Advisors
L.P. PIMCO Advisors manages approximately $254 billion, including assets for 46
of the 100 largest U.S. corporations. The firm's institutional heritage is
reflected in the PIMCO Funds, each seeking the highest caliber performance in a
specific investment style.
Manager PIMCO Advisors L.P., 800 Newport Center Drive,
Newport Beach, CA 92660
Distributor PIMCO Funds Distributors LLC, 2187 Atlantic Street,
Stamford, CT 06902-6896
Custodian Investors Fiduciary Trust Company, 801 Pennsylvania,
Kansas City, MO 64105
Shareholder First Data Investor Services Group, Inc., P.O. Box 9688,
Servicing Agent and Providence, RI 02940-9688
Transfer Agent
Independent PricewaterhouseCoopers LLP, 1055 Broadway,
Accountant Kansas City, MO, 64105
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. PZ031.7/99
PIMCO
FUNDS
PIMCO Funds
Distributors LLC
2187 Atlantic Street
Stamford, CT 06902-6896
<PAGE>
This Update is published twice a year to provide PIMCO Funds shareholders with
general market commentary and fund information. It also includes the financial
report for the PIMCO Funds Multi-Manager Series.
June 30, 1999
Multi-Manager Series
Share Classes
A B C
Balanced
Capital Appreciation
Equity Income
Growth
Innovation
International
Mid-Cap Growth
Opportunity
Precious Metals
Renaissance
Small-Cap Value
Target
Tax-Efficient Equity
Value
Value 25
PIMCO Funds Shareholder Update
and Annual Report
[ARTWORK APPEARS HERE]
Thinking of hopping on the technology train? Turn to our tech sector overview,
page 4.
Page 2
Two PIMCO Funds Awarded Select Fund Status
Page 3 Market Review
Page 4 Todays Investor
The Risks and Rewards of Technology Investing
Page 6 Manager Spotlight
PIMCO Renaissance Funds John Schneider
Page 7 Fund Spotlight
Small-Cap Investing Comes Out of the Shadows
Page 8 In The News
Page 9 Service Update
New Web Site Home Page
Page 10 Overview: Comprehensive Fund Family
Page 11 PIMCO Funds Multi-Manager Series
Annual Report
P I M C O
FUNDS
<PAGE>
Two PIMCO Funds Awarded Select Fund Status
New Standard & Poor's rankings recognize outstanding fund management and
exceptional performance
Strong, consistent performance. That's what most investors are looking for in a
mutual fund, but how do you make sure a fund measures up? After all, you can't
simply go by the headlines--time has shown that today's hot funds are not
necessarily tomorrow's winners. What do you do?
Of course, your financial advisor can help. In addition, you can consult one of
the mutual fund ranking services. The newest of these is the Standard & Poor's
Select Fund list.
The Standard & Poor's mark of excellence
Standard & Poor's, one of the most respected names in financial research and
analysis, recently introduced its Select Fund rankings to identify the top
mutual funds in each investment style category. Its primary criteria for
selection are consistent, above-average performance and high-quality fund
management. The selections are reviewed every six months.
Fewer than 10% of all mutual funds achieve Select Fund status. And on this
exclusive list are two PIMCO Funds: PIMCO Small-Cap Value Fund and PIMCO Mid-Cap
Growth Fund.
PIMCO Small-Cap Value Fund
This Fund is one of only 19 funds honored as a Select Fund from a universe of
115 small-cap value funds. In selecting it, Standard & Poor's noted that the
Fund earns the designation "because of its highly disciplined investment process
and risk controls, experienced management team, and strong performance." (For
more information on PIMCO Small-Cap Value Fund, turn to page 23.)
PIMCO Mid-Cap Growth Fund
Mid-Cap Growth Fund is one of only ten funds given the Select Fund designation
out of 88 mid-cap growth funds. Standard & Poor's cited the Fund's "disciplined
investment process and risk controls, a focused team approach, and above-average
historical performance in the past five years versus its peer group." (For more
Fund information, turn to page 19.)
Recognizing the people behind the performance
Most mutual fund ranking services focus on quantitative, performance-based
analysis. What sets Standard & Poor's Select Funds apart is the emphasis it
places on the quality of a fund's management team. "Our evaluation methodology
goes beyond simply looking at the performance numbers. We want to know how that
performance was achieved," says Philip Edwards, managing director and head of
the Standard & Poor's Select Fund Service.
PIMCO Small-Cap Value and Mid-Cap Growth Funds, like all PIMCO Funds, boast
highly skilled management teams, held to the highest internal performance and
management standards. Perhaps most important is the style-specific expertise of
each PIMCO Fund manager.
To date, Standard & Poor's has ranked only four fund categories, including
Small-Cap Value and Mid-Cap Growth. Be prepared to see more PIMCO Funds on the
Select Fund list as more style categories are added.
How S&P Measures Excellence
Standard & Poor's uses this "disciplined, multi-step process" to choose Select
Funds:
1. Compare to similar funds S&P analyzes approximately 10,000 U.S. mutual funds,
sorting them into different style categories to ensure funds are judged
against the right peer group.
2. Identify consistent performers S&P looks at absolute and risk-adjusted annual
performance over a three-year period to isolate funds that are consistent
performers.
3. Evaluate management information S&P conducts in-person interviews with
company management and fund managers to assess the management team's
knowledge and experience, and the fund's style consistency, portfolio
construction and volatility.
4. Combine performance and management data S&P analyzes both performance data
and information on the quality of the fund's management. According to S&P,
"only a well-managed fund that can support its performance with a
well-defined, consistently implemented investment philosophy will earn
Standard & Poor's Select Fund status."
Past performance is no guarantee of future results.
2
<PAGE>
Market Review
Stock Market
A Broadened Stock Market Continues Its Ascent
The market corrects and then rises to new heights.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
S&P 500
Index
-----
<S> <C>
07/03/1998 1146
07/10/1998 1164
07/17/1998 1187
07/24/1998 1141
07/31/1998 1121
08/07/1998 1089
08/14/1998 1063
08/21/1998 1081
08/28/1998 1027
09/04/1998 974
09/11/1998 1010
09/18/1998 1020
09/25/1998 1045
10/02/1998 1003
10/09/1998 984
10/16/1998 1056
10/23/1998 1071
10/30/1998 1099
11/06/1998 1141
11/13/1998 1126
11/20/1998 1164
11/27/1998 1192
12/04/1998 1177
12/11/1998 1166
12/18/1998 1188
12/25/1998 1226
01/01/1999 1229
01/08/1999 1275
01/15/1999 1243
01/22/1999 1225
01/29/1999 1280
02/05/1999 1239
02/12/1999 1230
02/19/1999 1239
02/26/1999 1238
03/05/1999 1275
03/12/1999 1295
03/19/1999 1299
03/26/1999 1283
04/02/1999 1294
04/09/1999 1348
04/16/1999 1319
04/23/1999 1357
04/30/1999 1335
05/07/1999 1345
05/14/1999 1338
05/21/1999 1330
05/28/1999 1302
06/04/1999 1328
06/11/1999 1294
06/18/1999 1343
06/25/1999 1315
06/30/1999 1373
</TABLE>
Source:Bloomberg
This fiscal year certainly was an eventful one for stock investors. The third
quarter of 1998 saw the market correct as a result of concerns over an economic
downturn in Asia that appeared to be spreading. In the fourth quarter, the
market rose as these fears began to abate, and the first quarter of 1999
continued the upward trend as the market hit record highs. However, many
industry analysts expressed concern over the narrowness of the market, in which
the largest of the large-cap growth stocks were responsible for much of this
performance. Their concerns proved to be short-lived: in the second quarter of
1999, the market finally broadened, as smaller-capitalization issues as well as
lower valuation issues showed strength.
The technology sector, particularly the Internet, was an important driver of
performance in the last quarter of 1998 as well as the first quarter of 1999.
However, these issues hit a speed bump early in the second quarter of 1999 as
interest rates began to rise.
Higher valuation growth stocks also had the same inverse relationship with
interest rates. They turned in a strong performance in the last quarter of 1998
and the first quarter of 1999, benefiting from the Federal Reserve's interest
rate cuts. And, like technology stocks, they suffered in the second quarter as a
result of rising interest rates.
In contrast, cyclical and industrial issues saw lackluster performance in the
last quarter of 1998 and the first quarter of 1999. However, in the second
quarter of this year, they benefited not only from a rise in interest rates but
legitimate evidence of a global economic recovery, which resulted in increased
demand for basic materials.
The broadening of the market was welcomed by most analysts. It was largely
viewed as a healthy event, after a long period of domination by one segment of
the market. Looking ahead, we are cautiously optimistic that this broadening
will enable the market to continue its rise, and that more stocks will
participate in this ascent.
Bond Market
Bond Yields Move Higher
After falling to 4.7% late last year, bond yields have moved higher.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
30 - Year
U.S.Treasury
Yields
------
<S> <C>
07/03/1998 5.6 %
07/10/1998 5.6 %
07/17/1998 5.7 %
07/24/1998 5.7 %
07/31/1998 5.7 %
08/07/1998 5.6 %
08/14/1998 5.5 %
08/21/1998 5.4 %
08/28/1998 5.3 %
09/04/1998 5.3 %
09/11/1998 5.2 %
09/18/1998 5.1 %
09/25/1998 5.1 %
10/02/1998 4.8 %
10/09/1998 5.1 %
10/16/1998 5.0 %
10/23/1998 5.2 %
10/30/1998 5.2 %
11/06/1998 5.4 %
11/13/1998 5.3 %
11/20/1998 5.2 %
11/27/1998 5.2 %
12/04/1998 5.0 %
12/11/1998 5.0 %
12/18/1998 5.0 %
12/25/1998 5.2 %
01/01/1999 5.1 %
01/08/1999 5.3 %
01/15/1999 5.1 %
01/22/1999 5.1 %
01/29/1999 5.1 %
02/05/1999 5.4 %
02/12/1999 5.4 %
02/19/1999 5.4 %
02/26/1999 5.6 %
03/05/1999 5.6 %
03/12/1999 5.5 %
03/19/1999 5.6 %
03/26/1999 5.6 %
04/02/1999 5.6 %
04/09/1999 5.5 %
04/16/1999 5.6 %
04/23/1999 5.6 %
04/30/1999 5.7 %
05/07/1999 5.8 %
05/14/1999 5.9 %
05/21/1999 5.8 %
05/28/1999 5.8 %
06/04/1999 6.0 %
06/11/1999 6.2 %
06/18/1999 6.0 %
06/25/1999 6.2 %
06/30/1999 6.0 %
</TABLE>
Source: Bloomberg
In our last report to shareholders we suggested that the historic 18-year bull
market for bonds had come to an end. The bond market seemed to agree as Treasury
prices fell throughout most of the first half of this year.
Inflation fears have dominated the fixed income marketplace in 1999. OPEC's cuts
in oil production sent gasoline prices climbing, which negatively affected
inflation reports for the month of April. The economy, fueled by stock market
gains, grew faster than expected, adding to speculation that higher inflation
was just around the corner. In addition, foreign economies, particularly in
Asia, began to recover, as synchronized global central-bank easings appeared to
be having a positive impact.
As a result, the Federal Reserve moved to a tightening bias in May and then
raised the Fed funds rate by a quarter-point to 5.0% at the end of June. The
move capped a difficult period for the bond market as Treasury prices fell
steadily, with long-term yields rising over one percentage point, breaking above
6% for the first time since early 1998.
Looking ahead, it appears the economy has come to a crossroads. Deflationary
forces, including the glut of global capacity and strong productivity gains,
remain at work. However, reflationary forces, including central bank easings and
a tight U.S. labor market, are also in play. The Fed appears to share this view,
moving back to a neutral stance after its recent tightening, explaining that
productivity gains continued to offset the wage inflation pressures created by a
tight labor market.
We believe that these forces may well offset one another, creating an
environment where interest rates remain in a relatively narrow range of between
5% and 61/2%. The opposing forces will likely keep inflation subdued, between 2%
and 3%. For example, in periods where deflationary forces dominate, interest
rates could fall toward the lower end of the range. In this environment of lower
interest rate volatility, securities that provide incremental yield will become
more attractive to bond investors.
3
<PAGE>
Today's Investor
The Risks and Rewards of Technology Investing
[GRAPHIC APPEARS HERE]
Investing in technology stocks can be a bit like riding a roller coaster. The
steep climbs and sometimes dizzying dips are not for everyone. But as long as
you get on a sturdy vehicle, have an experienced operator, and are prepared to
stay the course, you'll probably find the ride quite satisfying. And the more
you know about this potentially volatile sector, the better equipped you'll be
to deal with its vagaries. So here's the lowdown on these high-flying stocks.
How would you define technology?
Technology is a broad term. In its most general sense, "technology" simply
refers to any application of science to solve a problem or fulfill a need. But
when we talk about technology stocks, we're really talking about high
technology, and even more specifically, about information technology (IT). And
IT covers pretty much everything to do with computers and communications.
What businesses make up the technology sector?
Analysts divide the technology sector into different categories, although they
may not agree on the same headings. The following is a useful breakdown of the
sector, ranging from the fastest-growing (Internet and networking companies) to
the most cyclical (contract manufacturers and components makers):
1. Internet--includes Internet service providers (ISPs) like AOL, Internet
guides like Yahoo! and online retailers like Amazon.com.
2. Networking--companies that make the gear connecting computers and forming the
Internet, such as Cisco Systems and 3Com.
3. Telecommunications equipment--MCI Worldcom, Motorola and Lucent are three of
the leaders in this field.
4. Software--Microsoft and Oracle are two of the best-known software
manufacturers.
5. Services--companies providing a range of electronic, information, data and
communications services including First Data and EDS.
6. Computers--Dell, Compaq and IBM are three of the biggest names in personal
computing.
7. Contract manufacturers--includes lesser-known companies like Solectron and
Jabil, which actually produce electronics products for brand-name companies.
8. Components--includes semiconductor manufacturers such as Intel and Texas
Instruments and disk drive makers such as Seagate and Quantum Corp.
Many technology companies, of course, don't fall neatly into these categories.
There are numerous companies that fall outside a strict definition of
technology, but use technology in innovative ways to advance their business.
Their stocks offer much of the same risk/reward potential as other, pure
technology stocks.
Are all technology stocks equally volatile?
Technology stocks, as a group, tend to be more volatile than other stocks. But
some, like Internet stocks, are more volatile than others. Take the case of
Yahoo!, the first online navigational guide to the Web and one of the "blue
chips" of Internet investing. Over the past year, it's stock has traded at a
high of $244 and a low of $29.50. Now, contrast this to the price fluctuation of
the shares of a computer company--Dell Computer--and a component manufacturer--
Intel (see chart below). While they too have experienced price fluctuations,
they look relatively stable compared to Yahoo! stock.
Some Technology Stocks Are More Volatile Than Others
This chart shows 52-week highs and lows for three kinds of technology stocks
(period ended 06/30/99).
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Some Technology Stocks Are More Volatile
Than Others
Low High
<S> <C> <C>
Yahoo $30 $244
Dell $20 $ 55
Intel $35 $ 72
</TABLE>
Source: Bloomberg
What's behind the volatility?
Many of today's most promising technology companies are young and fast growing.
Start-up companies abound. In many cases, the products or services these
companies offer are
Past performance is no guarantee of future results. This article does not
represent a recommendation of any particular security or investment product. It
is not indicative of performance of any PIMCO fund and the Funds do not
necessarily own the securities referenced. PIMCO Innovation Fund, a
technology-oriented mutual fund, is not limited to investing solely in the areas
covered in this article.
4
<PAGE>
equally new and untried. The competition to gain a place in the sun is fierce.
And it's not always clear which companies, or even which technologies, will
flourish and which will fall by the wayside.
But this uncertainty and the resulting price volatility haven't dampened
investor enthusiasm. The potential for these stocks to produce significant
long-term gains continues to attract investors.
Is a technology fund a safer way to invest?
Investing in a technology mutual fund is generally considered less risky than
investing in individual technology stocks. A fund offers instant diversifica-
tion, which helps reduce risk. And a diversified technology fund, rather than a
category-specific fund (like an Internet fund), can reduce risk even further.
Moreover, the professional investment management a mutual fund provides can be
particularly important in a highly specialized, quickly changing sector like
technology.
Technology funds, however, can be more volatile than typical mutual funds.
That's because they invest largely in growth stocks and they are sector
funds--both of which make them likely to experience greater price volatility
than more broad-based funds. But as the impressive returns for 1998's
top-performing technology funds show, the greater risks are accompanied by the
potential for greater rewards.
Is it too late to get into technology?
Definitely not. A recent Commerce Department study indicates that electronic
commerce and the information technology industry have generated at least
one-third of the nation's economic growth since 1995. And that momentum shows no
signs of stopping. Most analysts believe we are still in the early stages of the
current technological revolution, equating it to the second inning of a baseball
game. In other words, an investment in technology still looks like a pretty good
bet. The important thing is to invest intelligently.
Six Guidelines for new technology investors
Consider these six pointers before you make an investment:
1. Understand the risks as well as the rewards. Technology investing is not for
everyone, particularly not for the risk-averse investor. Its greater risk,
however, is accompanied by greater reward potential.
2. Keep diversified. Don't put all your eggs in one basket. Spread the risk
across several technology holdings. You can achieve instant diversification by
investing in a technology mutual fund.
3. Base your portfolio's technology allocation on your needs and risk profile,
not on unrealistic profit expectations. Even aggressive investors should invest
only a small percentage of their total portfolio in the sector. A technology
investment belongs within a well-balanced, diversified portfolio.
4. Choose an investment vehicle carefully. Of course, you can invest in
individual technology stocks. But you should also consider a technology fund or
a general stock fund with significant weightings in the tech sector. A mutual
fund will give you the benefit of added diversification and professional
management.
5. Invest for the long term. You must be prepared to ride out the volatility
most technology investments experience. Buy and hold. That's the best advice if
you want to reduce the risk and maximize the return potential of your technology
holding.
6. Consult your financial advisor.
He or she can help you choose the technology investment and allocation that will
best help you achieve your financial goals.
The Technology Revolution--Still Going Strong
Americans have been adopting new technologies at a rapid rate, and they show no
signs of stopping. This chart shows the number of actual and expected U.S.
households using new technologies.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
The Technology Revolution--Still Going Strong U.S. Households (millions)
PCs Cellular Phones Internet On-line Shopping
---- --------------- -------- ----------------
<S> <C> <C> <C> <C>
1994 33.9 15.1 5.8
1995 37.2 21.5 12.7 0.8
1996 39.5 27.7 21.7 2.4
1997 44.5 36.0 25.0 5.0
1998 48.7 42.4 33.3 10.1
1999 53.6 48.0 38.8 13.1
2000 57.3 51.6 44.4 17.8
2001 60.1 55.4 51.3 23.2
2002 61.8 58.1 56.0 30.5
2003 64.1 60.9 59.8 38.4
</TABLE>
Source: Forrester Research, Inc.
5
<PAGE>
Manager Spotlight
PIMCO Renaissance Fund
John Schneider
John Schneider is the portfolio manager of PIMCO Renaissance Fund. Previously
Senior Vice President and Principal at Schneider Capital Management, he has over
12 years of investment experience, with a focus on value equity management.
Prior to Schneider Capital Management, he was Director of Research and a Member
of the Operating Committee at Newbold's Asset Management. John took over
management of PIMCO Renaissance Fund on May 10, 1999. We had a chance to speak
with him recently.
Q: Could you explain your "value" investment style and how you are implementing
that strategy in managing the Renaissance Fund?
[PHOTO OF JOHN SCHNEIDER APPEARS HERE]
A: My value investment style is simple. I seek undervalued companies that show
signs of a turnaround catalyst. This investment style is nearly identical to the
philosophy under which PIMCO Renaissance Fund was being managed. Therefore, the
investment objective will remain the same. However, previously, Renaissance Fund
was more of a blend of value and growth stocks. Under my management, it is now
more of a `pure' value fund. For instance, the Fund has more of a focus on
cyclical stocks, including current holdings such as Smurfit-Stone and Union
Pacific Resources.
Q: How does the Renaissance Fund fit into today's market?
A: While this market is considered by many to be overvalued, I believe there are
some really terrific opportunities out there in the form of undervalued stocks.
My job is to ferret out these `diamonds in the rough.' Fortunately, the past
several months have seen a broadening of the market, which has caused an
increase in investor interest in these undervalued stocks.
Q: Are there any particular sectors you are focusing on?
A: Now that the global economy appears to be recovering, there is increased
demand for paper products from Asia, Europe and Latin America. After years of
pricing pressure, this increased demand is allowing paper companies to raise
prices and increase profits--so we find paper an attractive area for investment.
We are also investing in energy services, particularly North American natural
gas, for similar reasons. The oversupply of gas has disappeared and there is an
increase in demand for gas at the same time there has been a decrease in
drilling activity. As a result, there has been a sharp increase in prices.
Q: Are there any sectors in which you are investing that are not considered
traditional value sectors?
A: We are investing in technology companies, such as Micron Technology. That's
because the semiconductor industry has suffered in the last several years as a
result of decreased demand, which is partially due to the Asian economic crisis.
This, in turn, has resulted in a surplus of memory chips, which has caused the
industry to lose money.
However, competitors have left this industry and we see an increase in demand on
the horizon. This has prompted our interest in these undervalued stocks, since
they are showing signs of a turnaround. We also believe there are many
opportunities in the HMO industry. That's because a number of weaker players
have been forced to withdraw from the industry, reducing competition. And HMOs
are finally raising prices in excess of medical inflation, which is improving
profit margins.
Q: Now for the $64,000 question. Do you believe value stocks will continue their
recent out-performance of growth stocks?
A: Value stocks have under-performed growth stocks for an extended period of
time. In fact, value was recently as cheap as it has ever been relative to
growth, so I believe it makes sense that value stocks catch up with growth
stocks. Of course, I'm not saying there won't be periods in which value
underperforms growth, but I believe we're seeing the beginning of a market
broadening that should last a significant length of time.
Past performance is no guarantee of future results. The views of Mr. Schneider
are not indicative of the past or future performance of any PIMCO Fund. For more
details on the Renaissance Fund, see page 22.
6
<PAGE>
Fund Spotlight
PIMCO Small-Cap Value and Opportunity Funds
Small-Cap Investing Comes Out of the Shadows
Stocks of the largest, blue-chip companies have dominated the investment scene
of late, often to the near exclusion of other equities. You may even have heard
pundits say small-cap investing is dead. But, to paraphrase Mark Twain, reports
of its death are greatly exaggerated. Many experts now believe the markets are
broadening, making way for overlooked equities like small-cap stocks.
Small-Cap Stocks Outperform
Over the Long Term
Average annual total return
(12/31/25-12/31/98).
[BAR CHART APPEARS HERE]
Small-Caps 12.4%
Large-Caps 11.2%
Past performance is no guarantee of future results. Results for other periods
may vary. "Small-Caps" are represented by the Ibbotson Small Company Total
Return Index. "Large-Caps" are represented by the Ibbotson Large Company Total
Return Index. Both are unmanaged indices, and it is not possible to invest
directly in such an index. Results for indices do not reflect past or future
performance for any PIMCO Fund.
Small-cap stocks have historically outperformed larger-cap stocks over the long
term. But the higher potential returns are accompanied by greater price
volatility and less liquidity. Given the additional risks, you may want to
consider a small-cap mutual fund to benefit from professional risk management
and investment expertise. And PIMCO offers two compelling choices.
PIMCO Small-Cap Value Fund
This Fund can be an ideal small-cap value holding within a diversified
portfolio. As a value fund, it may prove a timely pick, since value stocks
perform well when inflation is rising, as some signs now indicate. And Standard
& Poor's recently awarded Select Fund status to the Fund (see page 2). There are
even more good reasons to choose the PIMCO Small-Cap Value Fund:
. Experienced managers who adhere to a strict value discipline and seek
fundamentally sound smaller-cap companies.
. Broad diversification across more than 50 industries to reduce the risks of
small-cap investing. At June 30, 1999, the Fund's three-year Morningstar risk
rating was 30% lower than that of the average small-cap fund.
. Dividends to add protection in uncertain times. The Fund managers believe the
ability to pay dividends is a sign of a company's financial stability.
. Strong performance, competitive with an average of mutual funds with the same
objective (as measured by the Lipper Small-Cap Fund Average). Over the last
three years, the Fund outpaced both the Lipper average and the Russell 2000
Index.
PIMCO Opportunity Fund
This small-cap growth fund gives investors access to a dynamic area of the stock
market. But like all small-cap funds, Opportunity Fund's reward potential comes
with increased risk. However, it seeks to reduce small-cap volatility by
increasing diversification.
Best considered a long-term holding, the Fund was singled out by Money magazine
as "one of the best funds for steady savers" (01/98). Consider these other
highlights:
. Skilled manager, Michael Gaffney, who started managing the Fund in March 1999,
has over 12 years of small-cap investment experience. His investment process
centers on in-depth fundamental research.
. Uncovering tomorrow's leaders is the focus of Mr. Gaffney's research:
"Small-cap companies likely to surprise the market with stronger than expected
earnings growth offer the best potential for stock price appreciation."
. Solid performance, beating an average of mutual funds with the same objective
(as measured by the Lipper Capital Appreciation Fund Average) over the 10-year
and since inception periods ended June 30, 1999. Since inception, the Fund has
outperformed small-cap stocks in general (as measured by the Russell 2000
Index).
. Long-term potential to offset short-term volatility. While its past record is
no guarantee of future performance, the Fund has repeatedly achieved positive
long-term results despite the small-cap markets inherent volatility.
To learn more about either of these Funds, call your financial advisor. Or call
us at 1-800-426-0107.
Past performance is no guarantee 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. Small-Cap Value and Opportunity
Funds invest primarily in small-cap stocks, which can entail special risks due
to less liquidity and greater price volatility. They can also invest in foreign
securities, which can entail special risks due to foreign economic and political
developments.
7
<PAGE>
In The News
Recent News on PIMCO Funds
PIMCO Funds and the portfolio managers were mentioned in numerous print and
television media during the second quarter of this year. The following are
highlights from a few of these commentaries:
. Growing Strong A May 3 Barron's article and a May 27 column in The Wall Street
Journal featured PIMCO as one of the top-selling fund complexes, both
year-to-date and for the month of April. PIMCO was the fourth largest fund
complex--based on year-to-date sales--as of April 30.
. Innovation Continues to be Noticed PIMCO Innovation Fund, and its manager
Dennis McKechnie, continued to attract the attention of the media during the
second quarter. Not only was the Fund the focus of feature articles in
Individual Investor (June 4) and The Orange County Register (April 4), its
manager, Dennis McKechnie, was quoted on the technology sector in numerous
pieces. McKechnie was also a guest on CNBC and was a featured speaker at the
Morningstar/L.A. Times Investment Conference on May 22.
. Don't Forget About Mid-Caps The PIMCO Mid-Cap Growth Fund was featured as one
of the best performing funds in the mid-cap sector in an article in the April
issue of On Wall Street. The author commented on the mid-cap marketplace,
stating, "The class offers some of the fizz of small-cap stocks without all of
their risk."
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, 1999.
- --------------------------------------------------------------------------------
PIMCO STOCK FUNDS Overall 3 Year 5 Year 10 Year
- --------------------------------------------------------------------------------
Renaissance **** 4 4 3
StocksPLUS ***** 5 5 -
Capital Appreciation **** 4 4 -
Growth **** 4 3 4
Innovation ***** 5 - -
- --------------------------------------------------------------------------------
PIMCO BOND FUNDS Overall 3 Year 5 Year 10 Year
- --------------------------------------------------------------------------------
Short-Term ***** 5 5 5
Low Duration ***** 5 5 5
Total Return ***** 5 5 5
High Yield ***** 5 5 -
Global Bond II **** 4 - -
Foreign Bond ***** 5 5 -
The chart above is based on June 30, 1999 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 3,043, 1,878 and 748 domestic
equity funds and 1,543, 1,102 and 371 taxable bond funds rated, respectively.
Morningstar proprietary ratings reflect historical risk-adjusted performance and
are subject to monthly changes. Therefore, past ratings are not a guarantee of
future results. Overall ratings are calculated from a fund's 3-, 5- and 10-year
(if applicable) average annual total returns in excess of 90-day Treasury bill
returns with appropriate fee adjustments and a risk factor that reflects fund
performance below 90-day T-bill returns. With the exception of Renaissance C,
Growth C and Innovation 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. Ratings for other share classes of Renaissance, Growth and Innovation
may vary. 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>
Service Update
New Web Site Home Page
The PIMCO Funds Web site has recently undergone several changes, expanding the
site's resources and making them more easily accessible to you. In an effort to
continually improve PIMCO Funds online (www.pimcofunds.com), we've refined the
original layout and added new features. With the complete redesign of the Home
page, you now have one-click access to some of the site's most valuable content.
[GRAPHIC APPEARS HERE]
Our redesigned Home page puts your favorite content--such as Daily Manager
Commentary and Daily Share Prices--just a click away.
New Resources
News is an addition to keep you informed about such things as PIMCO Funds
products and services, portfolio manager appearances on television and much
more.
Also new, Fund Spotlight highlights a specific PIMCO Fund that may deserve
consideration given current market conditions.
Added Accessibility
Daily Manager Commentary (DMC) remains one of the most popular sections of our
site. A link to the DMC now appears on the Home page, complete with a short
summary.
What's more, you can now jump directly to specific share classes when checking
Daily Share Prices from the Home page.
There is also a link to your direct account, My PIMCO Funds Account, where you
can check your current balance and recent transaction history. Your PIMCO Funds
Investor Service Representative can provide you with a temporary PIN over the
phone. Call 1-800-426-0107, Mon-Fri, 8:00 am-8:00 pm ET.
As before, there is still a link to My Portfolio, which can track your PIMCO
Funds portfolio along with your other investments.
And, of course, you still have access to Investment Insight for further manager
commentary, Fund Information to analyze fund statistics, and Resources to find
useful information about PIMCO's services.
A Word About Privacy
While pimcofunds.com has undergone many changes, your privacy has not been
compromised. For those of you already registered with PIMCO Funds online, you
may notice that your name now appears on the Home page. While the site
recognizes you upon each return visit after logging in, rest assured that no
personal information is accessible to those using your computer. Furthermore,
PIMCO Funds does not provide your personal information to other firms for their
marketing use.
If you have any comments or questions about the site, please call us at
1-800-426-0107. Or use the e-mail feature of the site to contact us.
[GRAPHIC APPEARS HERE]
View your account balance, check recent transactions, and see all your
distributions--all on the PIMCO Funds Web site.
9
<PAGE>
The PIMCO Funds Family
PIMCO Funds offers unique access to the investment expertise of PIMCO Advisors
L.P. PIMCO Advisors manages 254 billion, including assets for 46 of the 100
largest U.S. corporations.
The firm's institutional heritage is reflected in the PIMCO Funds, each seeking
the highest caliber performance in a specific investment style. To learn more
about any of the PIMCO Funds, please call us at 1-800-426-0107.
<TABLE>
<CAPTION>
Fund Name Objective Primary Portfolio Composition
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Growth Long-term growth of capital Stocks of larger-capitalized companies
Stock Funds
Target Capital appreciation Stocks of medium-capitalized companies
Opportunity Capital appreciation Stocks of smaller-capitalized companies
- ------------------------------------------------------------------------------------------------------------------------------------
Blend Capital Appreciation Growth of capital Stocks of larger-capitalized companies the manager
Stock Funds believes are reasonably priced
Mid-Cap Growth Growth of capital Stocks of medium-capitalized companies the manager
believes are reasonably priced
- ------------------------------------------------------------------------------------------------------------------------------------
Value Equity Income Current income and long-term growth Stocks of companies with below-average P/Es
Stock Funds and above-average dividends
Renaissance Long-term growth of capital and income Stocks with below-average valuations
Value Long-term growth of capital and income Stocks of companies with below-average P/Es
Value 25 Long-term growth of capital and income Stocks of medium-capitalized companies with
below-average P/Es
Small-Cap Value Growth of capital and income Stocks of smaller-capitalized companies with
below-average P/Es
- ------------------------------------------------------------------------------------------------------------------------------------
Enhanced Index Tax-Efficient Equity Maximum after-tax growth of capital Stocks of larger-capitalized companies
Stock Funds
StocksPLUS Total return exceeding the S&P 500 Index S&P 500 stock index futures backed by a portfolio of
short-term, fixed-income securities
- ------------------------------------------------------------------------------------------------------------------------------------
International International Capital appreciation Stocks of non-U.S. companies in developed and
Stock Funds emerging markets
- ------------------------------------------------------------------------------------------------------------------------------------
Sector Related Innovation Capital appreciation Stocks of technology-related companies
Stock Funds
Precious Metals Capital appreciation Stocks of precious metals-related companies
- ------------------------------------------------------------------------------------------------------------------------------------
Short Duration Money Market Maximum current income, consistent with Money market securities (less than or equal
Bond Funds preservation of capital and daily to 90 days)
liquidity
Short-Term Maximum current income, consistent with Money market securities and short-term bonds (up to
preservation of capital and daily 1 year duration)
liquidity
Low Duration Maximum total return Shorter-term, investment-grade bonds (1-3 year
duration)
- ------------------------------------------------------------------------------------------------------------------------------------
Intermediate Total Return Maximum total return Intermediate-term, investment-grade bonds
Duration (3-6 year duration)
Bond Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Long Duration Long-Term U.S. Maximum total return Long-term U.S. government bonds
Bond Funds Government (8+ year duration)
- ------------------------------------------------------------------------------------------------------------------------------------
International Global Bond II Maximum total return Investment-grade U.S. and foreign bonds (3-7 year
Bond Funds duration)
Foreign Bond Maximum total return Investment-grade foreign bonds (3-7 year duration)
Emerging Markets Bond Maximum total return Emerging market bonds (0-8 year duration)
- ------------------------------------------------------------------------------------------------------------------------------------
High Yield High Yield Maximum total return High-yield bonds (2-6 year duration)
Bond Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Exempt Municipal Bond High current income exempt from Investment-grade municipal bonds (3-10 year
Bond Funds federal taxes, preservation of capital duration)
- ------------------------------------------------------------------------------------------------------------------------------------
Inflation- Real Return Bond Maximum total return Inflation-adjusted government bonds
Indexed
Bond Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Convertible Convertible Bond Maximum total return Convertible bonds
Bond Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Stock and Strategic Balanced Maximum total return S&P 500 Index futures and short- and intermediate-
Bond Funds term investment grade bonds
90/10 Portfolio Long-term capital appreciation 90% in PIMCO Stock Funds and 10% in PIMCO Bond Funds
60/40 Portfolio Long-term capital appreciation and 60% in PIMCO Stock Funds and 40% in PIMCO Bond Funds
current income
30/70 Portfolio Current income, with long-term capital 30% in PIMCO Stock Funds and 70% in PIMCO Bond Funds
appreciation as a secondary objective
</TABLE>
For more information on the risks associated with these Funds, see page 27.
10
<PAGE>
Multi-Manager Series
PIMCO Funds Annual Report
Dear Fellow Shareholder:
The past year has been an eventful time, both in the geopolitical sphere and in
the financial markets. After flaring up in March, the Kosovo Crisis is now on
the road to resolution. It proved, in the end, to have surprisingly little
impact on the U.S. stock and bond markets.
Large-cap growth stocks continued to dominate the stock market through the 12
months, ending in April, when their hegemony began to falter, the market
broadened, and value stocks emerged from the sidelines. Value investing appeared
to be back. Then towards the end of June, the stock market teetered back in the
direction of growth stocks. No one can guarantee what will happen next, but all
of these events serve to underscore the importance of portfolio diversification.
Of course, there was also the much hyped advent of the "Dow 10,000." After
topping 10,000 for the first time in mid-March, the Dow Jones Industrial Average
waited until April to close above that mark. It then thundered past 11,000, only
to fall back and waver between the two markers for the past few months. To think
it was a mere three and a half years ago that the Dow Jones broke 5,000!
The past 12 months have been eventful at PIMCO Funds too. We are now one of the
country's fastest-growing fund families, with assets under management recently
surpassing $50 billion. And in January, PIMCO announced the formation of a new
investment division, PIMCO Equity Advisors, to focus on our expanding slate of
stock mutual funds. Based in New York City, the division is headed by Ken Corba,
a 14-year investment veteran. PIMCO Equity Advisors currently manages PIMCO
Renaissance, Growth, Target, Opportunity and Innovation Funds, with almost $6
billion in assets under management as of June 30, 1999.
As we move toward the new millennium, we will of course continue to work hard to
help you meet your financial objectives. As viable opportunities arise, we will
be expanding our fund family to offer you additional investment options managed
by PIMCO's investment professionals.
Inside this Annual Report, you will find detailed information on our Multi-
Manager Series of stock funds. As you will see, these Funds have continued to
report strong relative performance. I encourage you to review the information
and commentary carefully. And once again, I would like to thank you for the
trust you've placed in us through your investments. If you have any questions
regarding your investment, contact your financial advisor, or call us at
1-800-426-0107. Or visit our Web site at www.pimcofunds.com.
Sincerely,
/s/ Stephen Treadway
Stephen Treadway
President
July 30, 1999
A Word About the Year 2000
We at PIMCO are dedicated to making our computer systems fully operational
before, during, and after 2000. Similarly, our analysts and portfolio managers
take Year 2000 risks into account along with other investment considerations
when making investment decisions, such as choosing counterparties and evaluating
risks associated with portfolio securities. This evaluation often differs for
different issuers and depending upon the investment objectives, policies, and
restrictions applicable to a portfolio. The information available for different
issuers and counterparties varies substantially in accuracy and completeness. In
particular, little information exists about companies that are not registered
with the United States Securities and Exchange Commission and about foreign
issuers, counterparties, markets, and other institutions.
While we are dedicated to making the transition to Year 2000 a smooth one, we
cannot guarantee investment performance or that Year 2000 will not result in
losses. Investments in companies with real or perceived Year 2000 problems may
decline in value or fail on scheduled dividend, interest, or principal payments.
Any such failures may affect the fund's performance. 1
1 This is a Year 2000 Readiness Disclosure.
11
<PAGE>
PIMCO Funds Financial Information
We are pleased to present an in-depth review of the PIMCO Multi-Manager Series
Funds as of June 30, 1999. In order to help analyze, compare and contrast the
Funds, the report is broken down into a number of sections. Listed below is a
table of contents and descriptions of the various sections.
Pages 13-28 Fund Summaries
A summary of a Fund's performance record and portfolio composition, and a review
from the Fund's investment manager.
Pages 29-49 Schedule of Investments
The Schedule of Investments includes a listing of securities in the Fund's
portfolio as of June 30, 1999, including the number of shares or principal
amount and value as of that date.
Schedule of
Fund Name Fund Summary Investments
Balanced Fund Page 13 Page 29
Capital Appreciation Fund Page 14 Page 32
Equity Income Fund Page 15 Page 33
Growth Fund Page 16 Page 34
Innovation Fund Page 17 Page 35
International Fund Page 18 Page 36
Mid-Cap Growth Fund Page 19 Page 39
Opportunity Fund Page 20 Page 40
Precious Metals Fund Page 21 Page 42
Renaissance Fund Page 22 Page 43
Small-Cap Value Fund Page 23 Page 44
Target Fund Page 24 Page 45
Tax-Efficient Equity Fund Page 25 Page 46
Value Fund Page 26 Page 48
Value 25 Fund Page 27 Page 49
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 ratio and portfolio
turnover rate.
Pages 58-59 Statements 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 Statements 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 Statements of Changes in Net Assets
This statement 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 66-71 Notes to Financial Statements
A description of the significant accounting policies of the Funds, and more
detailed information about the schedules and tables that appear in the report.
12
<PAGE>
June 30, 1999
PIMCO Balanced Fund
OBJECTIVE
Total return consistent with prudent investment management
PORTFOLIO
Primarily common stocks, fixed income securities and money market instruments
FUND INCEPTION DATE
6/25/92
TOTAL NET ASSETS
$72.6 million
NUMBER OF SECURITIES IN THE PORTFOLIO
192 (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 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares S&P500/ Lipper
Leh. Agg. Balanced
Adjusted Adjusted Adjusted Hybrid Index Fund Avg.
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 7.9% 1.9% 7.0% 2.5% 6.1% 15.2% 10.0%
3 years 15.6% 13.4% 14.8% 14.0% 14.8% 20.3% 15.9%
5 years 15.8% 14.5% 15.0% 14.8% 15.0% 19.7% 16.2%
Inception 12.8% 11.8% 11.9% 11.9% 11.9% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO Lipper Balanced S&P 500/
Balanced A Balanced B Balanced C Index Leh. Agg.
Hybrid Index
<S> <C> <C> <C> <C> <C>
06/30/92 9,450 10,000 10,000 10,000 10,000
07/31/92 9,812 10,377 10,377 10,294 10,327
08/31/92 9,790 10,347 10,347 10,198 10,242
09/30/92 9,946 10,506 10,506 10,315 10,362
10/31/92 9,974 10,529 10,529 10,316 10,329
11/30/92 10,143 10,701 10,701 10,551 10,541
12/31/92 10,284 10,842 10,842 10,703 10,686
01/31/93 10,362 10,917 10,917 10,846 10,821
02/28/93 10,484 11,039 11,039 10,980 10,985
03/31/93 10,577 11,130 11,130 11,206 11,143
04/30/93 10,437 10,976 10,976 11,121 11,012
05/31/93 10,559 11,098 11,098 11,315 11,195
06/30/93 10,614 11,149 11,149 11,435 11,295
07/31/93 10,564 11,089 11,089 11,482 11,294
08/31/93 10,873 11,407 11,407 11,829 11,630
09/30/93 10,821 11,344 11,344 11,854 11,589
10/31/93 10,935 11,457 11,457 11,976 11,750
11/30/93 10,821 11,330 11,330 11,784 11,643
12/31/93 10,895 11,401 11,401 11,982 11,753
01/31/94 11,069 11,575 11,575 12,296 12,056
02/28/94 10,870 11,360 11,360 12,054 11,776
03/31/94 10,495 10,962 10,962 11,616 11,352
04/30/94 10,571 11,035 11,035 11,642 11,403
05/31/94 10,620 11,078 11,078 11,732 11,515
06/30/94 10,450 10,895 10,895 11,528 11,335
07/31/94 10,733 11,182 11,182 11,788 11,649
08/31/94 11,011 11,465 11,465 12,083 11,941
09/30/94 10,778 11,215 11,215 11,865 11,695
10/31/94 10,898 11,333 11,333 11,902 11,849
11/30/94 10,663 11,081 11,081 11,625 11,579
12/31/94 10,749 11,163 11,163 11,737 11,714
01/31/95 11,019 11,437 11,437 11,882 11,989
02/28/95 11,335 11,758 11,758 12,229 12,384
03/31/95 11,501 11,923 11,923 12,445 12,633
04/30/95 11,708 12,130 12,130 12,678 12,927
05/31/95 12,122 12,551 12,551 13,084 13,437
06/30/95 12,300 12,728 12,728 13,316 13,664
07/31/95 12,469 12,895 12,895 13,597 13,924
08/31/95 12,595 13,017 13,017 13,703 14,012
09/30/95 12,926 13,350 13,350 14,031 14,421
10/31/95 12,966 13,384 13,384 13,995 14,465
11/30/95 13,355 13,776 13,776 14,430 14,933
12/31/95 13,593 14,014 14,014 14,657 15,189
01/31/96 13,851 14,271 14,271 14,922 15,540
02/29/96 13,728 14,135 14,135 14,929 15,518
03/31/96 13,727 14,126 14,126 14,985 15,565
04/30/96 13,795 14,187 14,187 15,084 15,668
05/31/96 13,983 14,371 14,371 15,239 15,897
06/30/96 14,105 14,487 14,487 15,289 16,019
07/31/96 13,712 14,075 14,075 14,895 15,612
08/31/96 13,792 14,148 14,148 15,131 15,799
09/30/96 14,292 14,652 14,652 15,690 16,443
10/31/96 14,642 15,001 15,001 16,023 16,860
11/30/96 15,467 15,838 15,838 16,770 17,741
12/31/96 15,317 15,674 15,674 16,563 17,464
01/31/97 15,796 16,159 16,159 17,070 18,140
02/28/97 15,811 16,174 16,174 17,133 18,243
03/31/97 15,410 15,742 15,755 16,635 17,713
04/30/97 15,822 16,163 16,161 17,136 18,453
05/31/97 16,469 16,810 16,823 17,836 19,197
06/30/97 16,906 17,250 17,246 18,409 19,804
07/31/97 17,989 18,341 18,336 19,456 20,963
08/31/97 17,603 17,932 17,927 18,840 20,187
09/30/97 18,322 18,671 18,670 19,591 20,970
10/31/97 17,994 18,321 18,320 19,235 20,671
11/30/97 18,292 18,610 18,609 19,587 21,283
12/31/97 18,581 18,891 18,905 19,877 21,588
01/31/98 18,631 18,941 18,939 20,016 21,842
02/28/98 19,357 19,664 19,662 20,810 22,781
03/31/98 19,957 20,254 20,248 21,447 23,512
04/30/98 19,907 20,186 20,181 21,595 23,703
05/31/98 19,840 20,119 20,113 21,377 23,549
06/30/98 20,186 20,457 20,451 21,764 24,203
07/31/98 19,719 19,966 19,960 21,509 24,068
08/31/98 17,953 18,153 18,164 19,655 22,137
09/30/98 18,737 18,955 18,952 20,504 23,195
10/31/98 19,442 19,653 19,649 21,271 24,278
11/30/98 20,196 20,386 20,382 22,050 25,216
12/31/98 20,778 20,965 20,982 22,863 26,119
01/31/99 20,896 21,063 21,080 23,229 26,849
02/28/99 20,211 20,368 20,366 22,672 26,160
03/31/99 20,397 20,539 20,557 23,232 26,846
04/30/99 21,321 21,474 21,472 23,994 27,504
05/31/99 21,203 21,334 21,332 23,624 27,018
06/30/99 21,776 21,891 21,891 24,276 27,884
</TABLE>
*Past performance is not an indication of future results. The adjusted returns
above include the effect of applicable sales charges. Excluding the 6-month and
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. See page 28 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 5 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Government National 3.9%
Mortgage Association, 6.500%
- --------------------------------------------------------------------------------
Federal National 2.7%
Mortgage Association, 8.500%
- --------------------------------------------------------------------------------
Federal Home Loan 2.5%
Mortgage Corp., 6.500%
- --------------------------------------------------------------------------------
New England Educational 2.5%
Loan Marketing, 5.270%
- --------------------------------------------------------------------------------
Conagra, Inc. 5.298% 2.5%
- --------------------------------------------------------------------------------
Top Five Total 14.1%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stocks 49.6%
- --------------------------------------------------------------------------------
Mortgage-Backed Securities 21.9%
- --------------------------------------------------------------------------------
Short-Term Instruments 16.5%
- --------------------------------------------------------------------------------
Corporate Bonds & Notes 10.5%
- --------------------------------------------------------------------------------
Asset-Backed Securities 1.2%
- --------------------------------------------------------------------------------
U.S. Treasury Obligations 0.3%
- --------------------------------------------------------------------------------
Bond Analysis
- --------------------------------------------------------------------------------
Average Quality AA+
- --------------------------------------------------------------------------------
Duration 3.9 years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Balanced Fund posted returns of 7.9% for Class A shares, 7.0% for Class B
shares and 6.1% for Class C shares for the one-year period ended June 30, 1999.
At the end of this period, the Fund's assets were allocated approximately 50%
to stocks and 50% to bonds. This allocation should offer investors the broad
diversification needed in any type of market.
The telecom sector greatly contributed to the Fund's performance this year.
The sector benefited from increased demand from corporations for data
communications capabilities. One standout in this sector was GTE. GTE provides
inter-networking services ranging from dial-up Internet access for consumers to
Web-based applications for Fortune 500 companies. The company benefited from
increased revenues, new product development, and the sale of some of its
business units.
Bell Atlantic also turned in a strong performance this year. This
telecommunications company is still benefiting from economies of scale resulting
from its merger with NYNEX two years ago. The company experienced higher usage
of its network facilities as well as an increase in access lines in service. As
the demand for telecommunications capabilities continues to grow, the manager is
optimistic that this company will continue to see earnings growth.
The Fund maintained an above-benchmark weighting in mortgage-backed
securities, which has significantly contributed to performance over the past
year, but was negative for performance in the second quarter. However, this
position will be maintained as the manager's outlook for a range-bound interest
rate environment makes this sector a good way to enhance yield without adding
significant risk. The manager also plans to maintain the portfolio duration
slightly above the benchmark, as long-term interest rates approach the top of
the forecasted secular range of 5% to 6.5%.
Effective on or about September 24, 1999, PIMCO Balanced Fund will be merged
into PIMCO Strategic Balanced Fund. The Strategic Balanced Fund seeks maximum
total return, consistent with preservation of capital and prudent investment
management, by investing in the securities eligible for purchase by the PIMCO
StocksPLUS and Total Return Funds. Full descriptions of these two Funds and the
Strategic Balanced Fund can be found in the PIMCO Funds: Pacific Investment
Management Series prospectus. The allocation of assets between equity and fixed
income is determined by Pacific Investment Management Company.
See page 29 for financial details. 13
<PAGE>
June 30, 1999
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
FUND INCEPTION DATE
3/8/91
TOTAL NET ASSETS
$1.1 billion
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 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper Cap.
S&P 500 App. Fund
Adjusted Adjusted Adjusted Index Avg.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 10.1% 4.1% 9.4% 4.4% 8.3% 22.8% 20.0%
3 years 24.1% 21.8% 23.2% 22.6% 23.2% 29.1% 16.7%
5 years 24.0% 22.6% 23.1% 22.9% 23.1% 27.9% 19.3%
Inception 19.0% 18.2% 18.3% 18.3% 18.2% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P 500
Capital Capital Capital Index
Appreciation A Appreciation B Appreciation C
<S> <C> <C> <C> <C>
03/31/91 9,450 10,000 10,000 10,000
04/30/91 9,172 9,699 9,699 10,024
05/31/91 9,622 10,169 10,169 10,457
06/30/91 9,101 9,612 9,612 9,978
07/31/91 9,749 10,290 10,290 10,443
08/31/91 10,051 10,603 10,603 10,691
09/30/91 9,909 10,447 10,447 10,512
10/31/91 10,245 10,794 10,794 10,653
11/30/91 9,944 10,471 10,471 10,224
12/31/91 11,323 11,915 11,915 11,393
01/31/92 11,211 11,790 11,790 11,181
02/29/92 11,328 11,907 11,907 11,327
03/31/92 10,952 11,504 11,504 11,106
04/30/92 10,925 11,468 11,468 11,432
05/31/92 10,968 11,506 11,506 11,488
06/30/92 10,619 11,133 11,133 11,317
07/31/92 10,925 11,446 11,446 11,780
08/31/92 10,650 11,151 11,151 11,539
09/30/92 10,927 11,434 11,434 11,674
10/31/92 11,304 11,822 11,822 11,714
11/30/92 11,962 12,503 12,503 12,113
12/31/92 12,124 12,664 12,664 12,262
01/31/93 12,532 13,082 13,082 12,364
02/28/93 12,378 12,913 12,913 12,533
03/31/93 12,946 13,498 13,498 12,797
04/30/93 12,624 13,155 13,155 12,488
05/31/93 13,193 13,739 13,739 12,822
06/30/93 13,400 13,945 13,945 12,860
07/31/93 13,206 13,735 13,735 12,808
08/31/93 13,684 14,224 14,224 13,294
09/30/93 14,082 14,629 14,629 13,192
10/31/93 14,113 14,651 14,651 13,465
11/30/93 13,826 14,344 14,344 13,337
12/31/93 14,215 14,738 14,738 13,498
01/31/94 14,711 15,243 15,243 13,957
02/28/94 14,507 15,023 15,023 13,578
03/31/94 13,778 14,259 14,259 12,986
04/30/94 13,826 14,300 14,300 13,152
05/31/94 13,811 14,275 14,275 13,368
06/30/94 13,418 13,860 13,860 13,041
07/31/94 13,741 14,185 14,185 13,469
08/31/94 14,147 14,595 14,595 14,021
09/30/94 13,764 14,190 14,190 13,678
10/31/94 14,075 14,503 14,503 13,986
11/30/94 13,427 13,826 13,826 13,476
12/31/94 13,555 13,949 13,949 13,676
01/31/95 13,543 13,926 13,926 14,031
02/28/95 14,215 14,610 14,610 14,578
03/31/95 14,834 15,237 15,237 15,008
04/30/95 15,339 15,747 15,747 15,450
05/31/95 15,896 16,308 16,308 16,067
06/30/95 16,579 16,999 16,999 16,440
07/31/95 17,494 17,926 17,926 16,986
08/31/95 17,658 18,083 18,083 17,028
09/30/95 18,353 18,783 18,783 17,747
10/31/95 18,003 18,414 18,414 17,683
11/30/95 18,550 18,962 18,962 18,460
12/31/95 18,518 18,917 18,917 18,815
01/31/96 19,135 19,535 19,535 19,456
02/29/96 19,854 20,257 20,257 19,636
03/31/96 19,885 20,276 20,276 19,825
04/30/96 20,128 20,512 20,512 20,117
05/31/96 20,632 21,012 21,012 20,636
06/30/96 20,587 20,953 20,953 20,715
07/31/96 19,545 19,879 19,879 19,800
08/31/96 20,379 20,716 20,716 20,217
09/30/96 21,623 21,967 21,967 21,355
10/31/96 22,161 22,499 22,499 21,944
11/30/96 23,767 24,116 24,116 23,603
12/31/96 23,387 23,715 23,715 23,135
01/31/97 24,752 25,086 25,086 24,581
02/28/97 24,484 24,815 24,802 24,773
03/31/97 23,592 23,884 23,884 23,756
04/30/97 24,331 24,621 24,621 25,174
05/31/97 25,874 26,172 26,172 26,706
06/30/97 26,983 27,270 27,270 27,903
07/31/97 29,891 30,178 30,178 30,123
08/31/97 28,756 29,015 29,015 28,436
09/30/97 30,490 30,760 30,760 29,993
10/31/97 29,930 30,165 30,165 28,991
11/30/97 30,682 30,902 30,902 30,333
12/31/97 31,275 31,489 31,482 30,854
01/31/98 30,780 30,960 30,968 31,195
02/28/98 33,033 33,214 33,205 33,445
03/31/98 34,860 35,023 35,027 35,158
04/30/98 34,873 35,037 35,013 35,511
05/31/98 34,269 34,430 34,401 34,901
06/30/98 35,725 35,893 35,833 36,319
07/31/98 34,696 34,859 34,776 35,932
08/31/98 29,023 29,160 29,076 30,737
09/30/98 30,643 30,787 30,675 32,706
10/31/98 32,043 32,194 32,049 35,366
11/30/98 34,104 34,264 34,107 37,510
12/31/98 36,648 36,820 36,617 39,671
01/31/99 37,828 38,006 37,778 41,330
02/28/99 36,307 36,478 36,244 40,045
03/31/99 37,179 37,353 37,078 41,648
04/30/99 38,450 38,631 38,327 43,261
05/31/99 37,120 37,294 36,971 42,239
06/30/99 39,351 39,535 39,174 44,584
</TABLE>
*Past performance is not an indication of future results.The adjusted returns
above include the effect of applicable sales charges. Excluding the 6-month and
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. See page 28 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 1.9%
Telecommunications systems/software
- --------------------------------------------------------------------------------
Microsoft Corp. 1.9%
Computer software
- --------------------------------------------------------------------------------
Tyco International Limited 1.8%
Fire protection systems
- --------------------------------------------------------------------------------
Tellabs, Inc. 1.8%
Voice data communications equipment
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1.6%
Discount stores
- --------------------------------------------------------------------------------
Johnson Controls, Inc. 1.5%
Building controls: auto products
- --------------------------------------------------------------------------------
Texas Instruments, Inc. 1.5%
Semiconductors; electrical equipment
- --------------------------------------------------------------------------------
Honeywell, Inc. 1.5%
Computers/industrial control systems
- --------------------------------------------------------------------------------
International Business Machines Corp. 1.5%
Manufacturer of business machines
- --------------------------------------------------------------------------------
AlliedSignal, Inc. 1.5%
Aerospace, automotive fibers
- --------------------------------------------------------------------------------
Top Ten Total 16.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 21.2%
- --------------------------------------------------------------------------------
Technology 16.1%
- --------------------------------------------------------------------------------
Consumer Discretionary 15.9%
- --------------------------------------------------------------------------------
Capital Goods 10.0%
- --------------------------------------------------------------------------------
Health Care 7.4%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96.3%
- --------------------------------------------------------------------------------
Cash Equivalents 3.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Capital Appreciation Fund posted positive returns of 10.1% for Class A
shares, 9.4% for Class B shares, and 8.3% for Class C shares for the one-year
period ended June 30, 1999.
The telecom sector contributed significantly to the Fund's performance this
year, benefiting from an increased demand from corporations for data
communications capabilities. One standout in particular was Tellabs, which
designs, manufactures, markets, and services voice, data and video transport and
network access systems used worldwide by public telephone companies, long-
distance carriers, and wireless service products. The company has benefited from
the explosion in the telecommunications infrastructure business, as demand for
Internet access continues to grow. The company also benefited from its strong
acquisition strategy, which has enabled it to grow larger and more efficient.
Consumer cyclicals also contributed positively to the Fund's performance. A
strong domestic economy and tight labor market this year resulted in a high
level of consumer confidence. Companies such as Wal-Mart, Circuit City, The Gap,
Home Depot, Lowe's and TJX all benefited from this trend. In particular, The Gap
saw its stock price rise significantly during the year. The company continued
its expansion, currently operating over 2,000 stores selling casual apparel,
personal care and other accessories for all age groups. Its brands, which
include Gap, GapKids, babyGap, Banana Republic and Old Navy, all benefited from
strong branding. Same-store sales continued to grow, with the company realizing
strong growth in particular from its lower-end Old Navy division.
Tyco International, an international manufacturing conglomerate, also did
well for the Fund. The company benefited from a stronger global economy, which
created an increased demand for its products. It also continued to benefit from
its successful acquisition policy, which included purchases of ADT, AMP, Raychem
and Central Sprinkler.
One disappointment for the Fund this year was HealthSouth, a health
maintenance organization. Its lackluster performance was directly attributable
to the lack of pricing power in the HMO industry. The industry was plagued by an
inability to raise its fees high enough to meet anticipated price increases by
the medical profession. General uncertainty about profitability led the manager
to sell this holding.
PIMCO Capital Appreciation Fund was rewarded for its growth-at-a-price
investment philosophy in the second quarter of 1999, as interest rates rose and
investors shied away from the highest valuation growth stocks. In this market
environment, the manager is optimistic that the Fund's strong performance will
continue.
14 See page 32 for financial details.
<PAGE>
June 30, 1999
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
FUND INCEPTION DATE
3/8/91
TOTAL NET ASSETS
$202.0 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 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
S&P 500 Equity Inc.
Adjusted Adjusted Adjusted Index Fund Avg.
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 12.3% 6.1% 11.4% 6.5% 10.3% 22.8% 11.4%
3 years 20.1% 17.9% 19.2% 18.5% 19.2% 29.1% 19.5%
5 years 20.6% 19.2% 19.7% 19.5% 19.7% 27.9% 19.2%
Inception 16.5% 15.7% 15.7% 15.7% 15.6% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P 500
Equity Equity Equity Index
Income A Income B Income C
<S> <C> <C> <C> <C>
03/31/91 9,450 10,000 10,000 10,000
04/30/91 9,512 10,060 10,060 10,024
05/31/91 10,048 10,619 10,619 10,457
06/30/91 9,695 10,240 10,240 9,978
07/31/91 10,234 10,803 10,803 10,443
08/31/91 10,383 10,954 10,954 10,691
09/30/91 10,437 11,004 11,004 10,512
10/31/91 10,507 11,070 11,070 10,653
11/30/91 10,084 10,618 10,618 10,224
12/31/91 10,968 11,543 11,543 11,393
01/31/92 11,237 11,818 11,818 11,181
02/29/92 11,519 12,107 12,107 11,327
03/31/92 11,328 11,899 11,899 11,106
04/30/92 11,528 12,102 12,102 11,432
05/31/92 11,544 12,111 12,111 11,488
06/30/92 11,550 12,110 12,110 11,317
07/31/92 12,063 12,640 12,640 11,780
08/31/92 11,709 12,261 12,261 11,539
09/30/92 11,805 12,354 12,354 11,674
10/31/92 11,817 12,358 12,358 11,714
11/30/92 12,170 12,720 12,720 12,113
12/31/92 12,536 13,095 13,095 12,262
01/31/93 12,596 13,149 13,149 12,364
02/28/93 12,854 13,411 13,411 12,533
03/31/93 13,144 13,705 13,705 12,797
04/30/93 12,883 13,424 13,424 12,488
05/31/93 12,977 13,514 13,514 12,822
06/30/93 13,204 13,741 13,741 12,860
07/31/93 13,178 13,706 13,706 12,808
08/31/93 13,638 14,176 14,176 13,294
09/30/93 13,623 14,151 14,151 13,192
10/31/93 13,728 14,252 14,252 13,465
11/30/93 13,586 14,095 14,095 13,337
12/31/93 13,543 14,042 14,042 13,498
01/31/94 13,989 14,495 14,495 13,957
02/28/94 13,682 14,169 14,169 13,578
03/31/94 13,132 13,590 13,590 12,986
04/30/94 13,231 13,684 13,684 13,152
05/31/94 13,308 13,755 13,755 13,368
06/30/94 13,117 13,548 13,548 13,041
07/31/94 13,544 13,982 13,982 13,469
08/31/94 14,095 14,541 14,541 14,021
09/30/94 13,830 14,259 14,259 13,678
10/31/94 13,990 14,415 14,415 13,986
11/30/94 13,235 13,628 13,628 13,476
12/31/94 13,273 13,658 13,658 13,676
01/31/95 13,701 14,090 14,090 14,031
02/28/95 14,143 14,537 14,537 14,578
03/31/95 14,547 14,942 14,942 15,008
04/30/95 14,920 15,316 15,316 15,450
05/31/95 15,464 15,866 15,866 16,067
06/30/95 15,509 15,902 15,902 16,440
07/31/95 16,047 16,444 16,444 16,986
08/31/95 16,268 16,660 16,660 17,028
09/30/95 16,691 17,083 17,083 17,747
10/31/95 16,621 17,000 17,000 17,683
11/30/95 17,187 17,568 17,568 18,460
12/31/95 17,645 18,025 18,025 18,815
01/31/96 17,904 18,278 18,278 19,456
02/29/96 18,136 18,504 18,504 19,636
03/31/96 18,493 18,857 18,857 19,825
04/30/96 18,953 19,314 19,314 20,117
05/31/96 19,253 19,607 19,607 20,636
06/30/96 19,289 19,631 19,631 20,715
07/31/96 18,396 18,709 18,709 19,800
08/31/96 19,021 19,333 19,333 20,217
09/30/96 19,671 19,981 19,981 21,355
10/31/96 20,111 20,416 20,416 21,944
11/30/96 21,620 21,935 21,935 23,603
12/31/96 21,351 21,648 21,648 23,135
01/31/97 21,819 22,115 22,115 24,581
02/28/97 22,433 22,722 22,722 24,773
03/31/97 21,681 21,951 21,946 23,756
04/30/97 22,473 22,721 22,732 25,174
05/31/97 23,867 24,117 24,128 26,706
06/30/97 24,529 24,791 24,784 27,903
07/31/97 26,075 26,339 26,332 30,123
08/31/97 25,485 25,710 25,719 28,436
09/30/97 27,068 27,286 27,287 29,993
10/31/97 26,219 26,428 26,429 28,991
11/30/97 27,293 27,497 27,498 30,333
12/31/97 27,944 28,126 28,121 30,854
01/31/98 28,036 28,219 28,214 31,195
02/28/98 29,691 29,853 29,846 33,445
03/31/98 31,074 31,212 31,216 35,158
04/30/98 30,612 30,749 30,733 35,511
05/31/98 30,427 30,563 30,528 34,901
06/30/98 29,767 29,900 29,867 36,319
07/31/98 28,597 28,725 28,655 35,932
08/31/98 24,682 24,792 24,718 30,737
09/30/98 26,499 26,617 26,515 32,706
10/31/98 28,160 28,286 28,164 35,366
11/30/98 30,084 30,218 30,076 37,510
12/31/98 30,189 30,324 30,172 39,671
01/31/99 29,534 29,666 29,493 41,330
02/28/99 28,559 28,687 28,497 40,045
03/31/99 28,808 28,936 28,730 41,648
04/30/99 32,023 32,166 31,905 43,261
05/31/99 32,705 32,851 32,588 42,239
06/30/99 33,418 33,567 33,239 44,584
</TABLE>
*Past performance is not an indication of future results. The adjusted returns
above include the effect of applicable sales charges. Excluding the 6-month and
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. See page 28 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
USX-U.S. Steel Group, Inc. 4.1%
Integrated steel producer
- --------------------------------------------------------------------------------
Union Planters Corp. 4.0%
Commercial banking
- --------------------------------------------------------------------------------
Harris Corp. 3.9%
Govt. systems/communications
- --------------------------------------------------------------------------------
B.F. Goodrich Co. 2.2%
Aerospace/special chemicals
- --------------------------------------------------------------------------------
Whirlpool Corp. 2.2%
Major household appliances
- --------------------------------------------------------------------------------
Bell Atlantic Corp. 2.2%
Telephone services
- --------------------------------------------------------------------------------
Hubbell, Inc. 'B' 2.2%
Electric wiring devices
- --------------------------------------------------------------------------------
Springs Industries, Inc. 'A' 2.2%
Finished fabrics/home furnishing
- --------------------------------------------------------------------------------
GTE Corp. 2.2%
Largest independent telephone system
- --------------------------------------------------------------------------------
Repsol 2.1%
Integrated oil company
- --------------------------------------------------------------------------------
Top Ten Total 27.3%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 19.8%
- --------------------------------------------------------------------------------
Consumer Discretionary 15.7%
- --------------------------------------------------------------------------------
Utilities 11.5%
- --------------------------------------------------------------------------------
Energy 10.3%
- --------------------------------------------------------------------------------
Materials & Processing 9.9%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Equity Income Fund returned 12.3% for Class A shares, 11.4% for Class B
shares, and 10.3% for Class C shares for the one-year period ended June 30,
1999.
These results were in line with the Lipper Equity Income Fund Average, which
returned 11.4% for the same period.
For much of the year, the market was extremely narrow, with the largest of
the large-cap growth stocks completely dominating the market, which certainly
hurt the performance of the Fund. However, in the second quarter of 1999, the
market rotated away from these stocks and towards lower valuation issues. As a
result, PIMCO Equity Income Fund saw very strong performance in that quarter.
One of the best performing sectors for the Fund this period was technology.
The sector received attention from investors seeking stocks with the greatest
growth expectations. Technology also benefited from an improving global economy,
which caused increased demand for items like PCs and semiconductors.
Another sector that contributed to the Fund's performance was tele-
communications. The sector benefited from increased demand from corporations for
data communications capabilities. One standout in this sector was GTE. GTE
provides inter-networking services ranging from dial-up Internet access for
consumers to Web-based applications for Fortune 500 companies. The company
benefited from increased revenues, new product development, and the sale of some
of its business units.
Bell Atlantic also turned in a strong performance this year. The tele-
communications company is still benefiting from economies of scale resulting
from its merger with NYNEX two years ago. The company also experienced higher
usage of its network facilities and an increase in access lines in service. As
the demand for telecommunications capabilities widens, the manager is optimistic
that this company will continue to see strong earnings growth.
One disappointment for the Fund during this period was J.C. Penney. The
department store chain was plagued by disappointing earnings throughout the
year. In addition, the company's management was not able to offer a strategy for
the company's turnaround that was satisfactory to Wall Street. However, the
manager remains optimistic about the company because it owns the Eckerd Drug
chain, which offers strong earnings and growth potential. In addition, the
company's valuations are extremely low, which makes it relatively attractive to
investors.
A broadening of the market in the second quarter of 1999 has been beneficial
to the Fund's performance, and the manager believes that the Fund is poised to
continue its outperformance in this environment.
See page 33 for financial details. 15
<PAGE>
June 30, 1999
PIMCO Growth Fund
OBJECTIVE
Long-term growth of capital; income is incidental
PORTFOLIO
Primarily stocks of larger, well-established companies
FUND INCEPTION DATE
2/24/84
TOTAL NET ASSETS
$2.4 billion
NUMBER OF SECURITIES IN THE PORTFOLIO
41 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
Lipper
A Shares B Shares C Shares S&P 500 Growth
Adjusted Adjusted Adjusted Index Fund Avg.
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 18.7% 12.1% 17.7% 12.7% 16.8% 22.8% 18.9%
5 years 24.0% 22.7% 23.1% 22.9% 23.1% 27.9% 22.6%
10 years 17.8% 17.1% 17.2% 17.2% 16.9% 18.8% 16.2%
Inception 18.8% 18.4% 18.4% 18.4% 17.9% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P 500
Growth A Growth B Growth C Index
<S> <C> <C> <C> <C>
02/29/84 9,450 10,000 10,000 10,000
03/31/84 9,693 10,250 10,250 10,180
04/30/84 9,756 10,310 10,310 10,251
05/31/84 9,421 9,950 9,950 9,708
06/30/84 9,645 10,180 10,180 9,912
07/31/84 9,718 10,251 10,251 9,763
08/31/84 10,499 11,067 11,067 10,866
09/30/84 10,428 10,986 10,986 10,877
10/31/84 10,522 11,078 11,078 10,910
11/30/84 10,449 10,994 10,994 10,801
12/31/84 10,662 11,211 11,211 11,082
01/31/85 11,422 12,003 12,003 11,947
02/28/85 11,517 12,097 12,097 12,095
03/31/85 11,564 12,138 12,138 12,104
04/30/85 11,511 12,075 12,075 12,093
05/31/85 12,129 12,716 12,716 12,790
06/30/85 12,478 13,073 13,073 12,976
07/31/85 12,495 13,083 13,083 12,958
08/31/85 12,432 13,009 13,009 12,848
09/30/85 12,075 12,628 12,628 12,449
10/31/85 12,573 13,140 13,140 13,022
11/30/85 13,267 13,857 13,857 13,920
12/31/85 14,018 14,632 14,632 14,588
01/31/86 14,349 14,969 14,969 14,670
02/28/86 15,509 16,170 16,170 15,768
03/31/86 16,235 16,917 16,917 16,647
04/30/86 16,256 16,928 16,928 16,459
05/31/86 16,954 17,644 17,644 17,335
06/30/86 17,257 17,949 17,949 17,628
07/31/86 16,874 17,539 17,539 16,642
08/31/86 17,838 18,529 18,529 17,877
09/30/86 16,770 17,409 17,409 16,399
10/31/86 17,584 18,243 18,243 17,345
11/30/86 17,896 18,555 18,555 17,767
12/31/86 17,397 18,026 18,026 17,313
01/31/87 19,737 20,439 20,439 19,646
02/28/87 21,026 21,762 21,762 20,422
03/31/87 21,435 22,171 22,171 21,012
04/30/87 21,395 22,117 22,117 20,825
05/31/87 21,607 22,321 22,321 21,006
06/30/87 22,545 23,276 23,276 22,067
07/31/87 23,339 24,082 24,082 23,186
08/31/87 24,015 24,763 24,763 24,050
09/30/87 23,910 24,640 24,640 23,524
10/31/87 18,490 19,040 19,040 18,457
11/30/87 17,227 17,728 17,728 16,936
12/31/87 18,859 19,396 19,396 18,225
01/31/88 18,651 19,171 19,171 18,992
02/29/88 19,819 20,359 20,359 19,877
03/31/88 19,553 20,073 20,073 19,263
04/30/88 19,727 20,239 20,239 19,477
05/31/88 19,901 20,405 20,405 19,646
06/30/88 21,087 21,608 21,608 20,548
07/31/88 20,704 21,202 21,202 20,470
08/31/88 19,628 20,087 20,087 19,774
09/30/88 20,539 21,007 21,007 20,616
10/31/88 20,685 21,143 21,143 21,189
11/30/88 20,314 20,751 20,751 20,886
12/31/88 20,781 21,214 21,214 21,252
01/31/89 22,156 22,605 22,605 22,807
02/28/89 21,739 22,166 22,166 22,239
03/31/89 22,673 23,104 23,104 22,758
04/30/89 24,319 24,767 24,767 23,939
05/31/89 26,132 26,597 26,597 24,908
06/30/89 25,803 26,246 26,246 24,766
07/31/89 28,027 28,492 28,492 27,003
08/31/89 28,881 29,341 29,341 27,532
09/30/89 29,451 29,902 29,902 27,419
10/31/89 28,559 28,977 28,977 26,783
11/30/89 29,144 29,553 29,553 27,329
12/31/89 28,774 29,160 29,160 27,985
01/31/90 26,670 27,010 27,010 26,107
02/28/90 27,340 27,672 27,672 26,444
03/31/90 28,029 28,351 28,351 27,145
04/30/90 27,870 28,174 28,174 26,466
05/31/90 30,830 31,147 31,147 29,047
06/30/90 31,364 31,667 31,667 28,849
07/31/90 30,804 31,082 31,082 28,757
08/31/90 28,537 28,775 28,775 26,157
09/30/90 27,298 27,507 27,507 24,883
10/31/90 27,248 27,442 27,442 24,776
11/30/90 28,619 28,824 28,824 26,377
12/31/90 29,058 29,246 29,246 27,113
01/31/91 30,457 30,653 30,653 28,295
02/28/91 32,753 32,926 32,926 30,318
03/31/91 33,686 33,864 33,846 31,052
04/30/91 33,363 33,539 33,504 31,126
05/31/91 35,174 35,360 35,326 32,471
06/30/91 33,431 33,608 33,556 30,984
07/31/91 35,715 35,904 35,817 32,428
08/31/91 37,513 37,711 37,589 33,196
09/30/91 37,100 37,296 37,155 32,642
10/31/91 38,323 38,525 38,366 33,079
11/30/91 36,830 37,024 36,847 31,746
12/31/91 41,485 41,704 41,492 35,378
01/31/92 40,523 40,737 40,491 34,720
02/29/92 40,811 41,027 40,761 35,171
03/31/92 39,907 40,118 39,837 34,485
04/30/92 39,695 39,905 39,587 35,499
05/31/92 40,311 40,524 40,183 35,673
06/30/92 39,061 39,267 38,913 35,142
07/31/92 40,273 40,486 40,106 36,578
08/31/92 38,772 38,977 38,567 35,829
09/30/92 39,946 40,157 39,721 36,250
10/31/92 40,600 40,815 40,338 36,375
11/30/92 42,409 42,633 42,108 37,614
12/31/92 42,695 42,920 42,356 38,075
01/31/93 43,759 43,990 43,400 38,394
02/28/93 42,853 43,079 42,474 38,917
03/31/93 43,838 44,070 43,420 39,738
04/30/93 41,887 42,109 41,469 38,778
05/31/93 44,055 44,288 43,578 39,815
06/30/93 44,430 44,665 43,933 39,932
07/31/93 44,489 44,724 43,952 39,771
08/31/93 45,986 46,230 45,411 41,280
09/30/93 47,030 47,278 46,416 40,963
10/31/93 46,890 47,138 46,257 41,811
11/30/93 46,115 46,359 45,441 41,412
12/31/93 46,997 47,245 46,303 41,913
01/31/94 49,247 49,508 48,471 43,338
02/28/94 48,339 48,595 47,561 42,162
03/31/94 46,154 46,398 45,393 40,324
04/30/94 45,526 45,767 44,742 40,841
05/31/94 46,327 46,572 45,501 41,511
06/30/94 45,180 45,419 44,353 40,493
07/31/94 46,305 46,550 45,415 41,823
08/31/94 48,599 48,856 47,648 43,538
09/30/94 47,626 47,878 46,651 42,474
10/31/94 49,379 49,640 48,341 43,428
11/30/94 47,063 47,312 46,022 41,846
12/31/94 47,001 47,250 45,958 42,467
01/31/95 47,344 47,595 46,257 43,568
02/28/95 48,764 49,022 47,611 45,266
03/31/95 49,862 50,126 48,645 46,602
04/30/95 51,488 51,760 50,206 47,974
05/31/95 53,090 53,371 51,745 49,892
06/30/95 55,219 55,512 53,789 51,051
07/31/95 57,142 57,444 55,627 52,743
08/31/95 57,646 57,950 56,086 52,876
09/30/95 58,905 59,216 57,280 55,107
10/31/95 59,133 59,446 57,441 54,910
11/30/95 60,622 60,943 58,865 57,321
12/31/95 60,368 60,687 58,582 58,425
01/31/96 63,096 63,429 61,200 60,414
02/29/96 64,279 64,619 62,289 60,974
03/31/96 64,356 64,697 62,341 61,561
04/30/96 65,180 65,525 63,093 62,468
05/31/96 66,673 67,025 64,493 64,079
06/30/96 65,797 66,145 63,612 64,324
07/31/96 61,989 62,316 59,880 61,482
08/31/96 63,584 63,920 61,383 62,778
09/30/96 68,395 68,757 65,997 66,312
10/31/96 69,501 69,869 67,034 68,140
11/30/96 73,540 73,929 70,871 73,291
12/31/96 71,490 71,868 68,849 71,839
01/31/97 74,922 75,318 72,121 76,328
02/28/97 72,868 73,253 70,098 76,926
03/31/97 68,967 69,332 66,292 73,765
04/30/97 71,871 72,251 69,057 78,169
05/31/97 77,122 77,529 74,053 82,928
06/30/97 79,292 79,711 76,076 86,643
07/31/97 87,682 88,145 84,076 93,537
08/31/97 82,167 82,601 78,752 88,297
09/30/97 87,507 87,970 83,807 93,133
10/31/97 85,013 85,462 81,368 90,023
11/30/97 85,747 86,201 82,023 94,190
12/31/97 87,761 88,225 83,882 95,807
01/31/98 89,716 90,191 85,709 96,867
02/28/98 96,539 97,050 92,170 103,853
03/31/98 103,052 103,597 98,349 109,171
04/30/98 105,075 105,631 100,176 110,269
05/31/98 103,634 104,182 98,772 108,374
06/30/98 111,828 112,420 106,496 112,776
07/31/98 109,838 110,419 104,526 111,575
08/31/98 89,957 90,433 85,565 95,444
09/30/98 97,945 98,463 93,112 101,558
10/31/98 101,922 102,461 96,836 109,818
11/30/98 109,637 110,217 104,099 116,474
12/31/98 122,816 123,465 116,497 123,186
01/31/99 132,310 133,009 125,432 128,337
02/28/99 126,779 127,450 120,114 124,349
03/31/99 132,928 133,631 125,867 129,324
04/30/99 129,578 130,263 122,607 134,332
05/31/99 122,853 123,503 116,171 131,161
06/30/99 132,693 133,395 125,383 138,440
</TABLE>
*Past performance is not an indication of future results. 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 17.0% and 18.0%, respectively. See page 28 for Footnotes, which
include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 4.4%
Computer network products
- --------------------------------------------------------------------------------
Microsoft Corp. 3.7%
Computer software
- --------------------------------------------------------------------------------
Citigroup, Inc. 3.5%
Diversified financial services
- --------------------------------------------------------------------------------
Tyco International 3.5%
Fire protection systems, cable
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 3.4%
Telecommunications systems/software
- --------------------------------------------------------------------------------
EMC Corp. 3.4%
Computer storage products
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 3.4%
Discount Stores
- --------------------------------------------------------------------------------
Morgan Stanley, Dean Witter & Co. 3.4%
Financial services/products
- --------------------------------------------------------------------------------
Omnicom Group 3.3%
Major international advertising co
- --------------------------------------------------------------------------------
Nokia Corp. 3.2%
Telecommunication systems & equipment
- --------------------------------------------------------------------------------
Top Ten Total 35.2%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 29.4%
- --------------------------------------------------------------------------------
Financial & Business Services 22.9%
- --------------------------------------------------------------------------------
Capital Goods 14.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 14.1%
- --------------------------------------------------------------------------------
Communications 8.1%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96.6%
- --------------------------------------------------------------------------------
Cash Equivalents 3.4%
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Growth Fund's Class A shares
returned 18.7%, Class B shares returned 17.7%, and Class C shares returned
16.8%.
The strong performance that large-cap growth stocks experienced in the second
half of 1998 and the first quarter of 1999 slowed during the second quarter due
to rising interest rates which resulted from concerns over inflation. Investors
showed preference in the second quarter for lower valuation issues, particularly
cyclical stocks, which had been out of favor and were benefiting from an
improving global economy. Growth stocks did, however, finish the year on a
strong note as the interest rate environment and earnings outlook improved.
In particular, the technology sector was a strong performer for the Fund
during the year. The demand for technology products and services continued to be
robust, as companies realized it is a necessary means in gaining a competitive
advantage in today's global marketplace. Large-cap technology stocks did exhibit
interest rate sensitivity in the second quarter of 1999, but for most of the
year they flourished in the low interest rate environment. The Fund's standout
holding in the technology sector for the one-year period was America Online. The
company continued to benefit from more new subscriptions than expected as well
as an increase in advertising revenues. However, its valuation proved to be
highly sensitive to interest rate changes and it did not perform well in the
second quarter.
Another strong area for the Fund was the retail sector. The domestic economy
remained strong throughout the year, with low unemployment and low inflation,
which enabled consumer confidence and spending to remain at high levels. Many
large-cap retail companies, such as Wal-Mart and Home Depot, benefited from
strong brand recognition, earnings growth and an Internet presence.
The health care sector proved to be disappointing for the Fund this year.
Concerns about President Clinton's proposed changes to Medicare hurt these
stocks' performance. Also, many pharmaceutical companies came to the end of
strong product cycles this year, which results in a pause in activity before the
next cycle begins. In addition, a number of the higher valuation health care
companies, such as pharmaceutical giant Pfizer, were punished by the market in
the second quarter because of interest rate fears and declining earnings growth.
Looking ahead, the manager is optimistic that the Fund will resume its
outperformance, given the recent drop in interest rates as well as a strong
earnings outlook for the second half of 1999.
16 See page 34 for financial details.
<PAGE>
June 30, 1999
PIMCO Innovation Fund
OBJECTIVE
Capital appreciation; no consideration given to income
PORTFOLIO
Primarily technology-related stocks of companies of all sizes
FUND INCEPTION DATE
12/22/94
TOTAL NET ASSETS
$1.3 billion
NUMBER OF SECURITIES IN THE PORTFOLIO
43 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
Lipper
A Shares B Shares C Shares S&P 500 Sc. & Tech.
Adjusted Adjusted Adjusted Index Fund Avg.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 61.4% 52.5% 60.2% 55.2% 59.2% 22.8% 67.7%
3 years 36.3% 33.7% 35.3% 34.7% 35.2% 29.1% 30.5%
Inception 38.3% 36.5% 37.2% 37.1% 37.2% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P 500
Innovation A Innovation B Innovation C Index
<S> <C> <C> <C> <C>
12/31/94 9,450 10,000 10,000 10,000
01/31/95 9,374 9,910 9,910 10,259
02/28/95 9,971 10,541 10,541 10,659
03/31/95 10,274 10,852 10,852 10,974
04/30/95 10,719 11,313 11,313 11,297
05/31/95 10,974 11,573 11,573 11,748
06/30/95 12,186 12,846 12,846 12,021
07/31/95 13,323 14,038 14,038 12,420
08/31/95 13,635 14,359 14,349 12,451
09/30/95 13,957 14,689 14,679 12,977
10/31/95 13,787 14,499 14,499 12,930
11/30/95 14,165 14,890 14,890 13,498
12/31/95 13,733 14,433 14,422 13,758
01/31/96 13,549 14,228 14,228 14,226
02/29/96 14,208 14,915 14,915 14,358
03/31/96 14,092 14,782 14,782 14,496
04/30/96 15,594 16,341 16,341 14,710
05/31/96 16,864 17,664 17,664 15,089
06/30/96 16,176 16,925 16,925 15,147
07/31/96 13,879 14,525 14,515 14,478
08/31/96 14,722 15,387 15,387 14,783
09/30/96 16,728 17,479 17,479 15,615
10/31/96 16,612 17,336 17,336 16,046
11/30/96 17,610 18,372 18,372 17,258
12/31/96 16,974 17,699 17,699 16,917
01/31/97 17,908 18,656 18,656 17,974
02/28/97 15,884 16,533 16,534 18,114
03/31/97 14,842 15,441 15,441 17,370
04/30/97 15,077 15,680 15,680 18,407
05/31/97 16,974 17,636 17,636 19,528
06/30/97 17,132 17,792 17,782 20,403
07/31/97 19,667 20,415 20,404 22,026
08/31/97 19,196 19,915 19,905 20,792
09/30/97 20,621 21,372 21,372 21,931
10/31/97 19,294 19,988 19,988 21,198
11/30/97 19,205 19,884 19,884 22,180
12/31/97 18,507 19,144 19,133 22,560
01/31/98 19,238 19,886 19,886 22,810
02/28/98 21,600 22,312 22,301 24,455
03/31/98 22,415 23,143 23,143 25,707
04/30/98 24,034 24,793 24,794 25,966
05/31/98 22,508 23,209 23,199 25,520
06/30/98 25,372 26,145 26,134 26,556
07/31/98 25,519 26,279 26,267 26,273
08/31/98 20,420 21,018 21,017 22,475
09/30/98 24,204 24,895 24,884 23,915
10/31/98 25,114 25,814 25,814 25,860
11/30/98 27,937 28,695 28,682 27,427
12/31/98 33,208 34,084 34,080 29,008
01/31/99 39,176 40,199 40,184 30,221
02/28/99 34,871 35,753 35,752 29,281
03/31/99 37,821 38,759 38,744 30,453
04/30/99 37,352 38,248 38,233 31,632
05/31/99 36,433 37,284 37,269 30,885
06/30/99 40,947 41,681 41,865 32,600
</TABLE>
*Past performance is not an indication of future results. 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. See page 28 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 5.1%
Computer network products
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 4.7%
Telecommunications systems/software
- --------------------------------------------------------------------------------
Microsoft Corp. 4.1%
Computer software
- --------------------------------------------------------------------------------
America Online, Inc. 4.1%
Online computer services
- --------------------------------------------------------------------------------
Motorola, Inc. 3.8%
Semiconductors; comm. equipment
- --------------------------------------------------------------------------------
Siebel Systems, Inc. 3.4%
Marketing info. for software systems
- --------------------------------------------------------------------------------
Nokia Corp. 3.4%
Telecommunication systems & equipment
- --------------------------------------------------------------------------------
Tellabs, Inc. 3.4%
Voice data communications equipment
- --------------------------------------------------------------------------------
Sun Microsystems, Inc. 3.3%
Marketer of networked workstations
- --------------------------------------------------------------------------------
Xilinx, Inc. 3.2%
Supplier of semiconductors
- --------------------------------------------------------------------------------
Top Ten Total 38.5%
- --------------------------------------------------------------------------------
Top 4 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 70.4%
- --------------------------------------------------------------------------------
Communications 10.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 6.3%
- --------------------------------------------------------------------------------
Health Care 5.9%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 92.8%
- --------------------------------------------------------------------------------
Cash Equivalents 7.2%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Innovation Fund posted stellar returns for the one-year period ended June
30, 1999, with Class A shares returning 61.4%, Class B shares returning 60.2%
and Class C shares returning 59.2%. This handily outperformed the S&P 500 Index
return of 22.8% for the same period.
Telecom equipment stocks contributed significantly to the Fund's performance
this year. The sector benefited from the increased demand from companies for
data transmission capabilities, which resulted in increased spending by phone
companies. The sector also benefited from higher-than-expected cellular phone
subscriptions, driven by more competitive pricing plans and improved cellular
phone technology. For instance, Nokia, the Finnish cellular phone manufacturer,
saw its sales rise as a result of the increase in overall cellular phone
subscriptions. Motorola also benefited from this subscription increase and the
introduction of a more competitive digital phone product line.
America Online was a standout performer for the Fund this year. The company's
new subscriptions continued to exceed forecasts, which helped to boost its stock
price. The company also benefited from its position as the market leader among
Internet access providers, which enabled it to increase advertising revenue.
Despite a strong overall performance for the year, the company suffered in the
second quarter of 1999, as investors punished Internet stocks in the face of
fears over rising interest rates.
A disappointing sector for the Fund was PCs. The anticipated increase in Y2K
PC sales did not occur, and PC stocks saw lackluster results for much of the
year. In addition, pricing pressures in the industry have kept profit margins
down. As a result, the manager reduced the Fund's PC exposure, although he is
confident that this seasonal business will see improvement in the second half of
the year due to back-to-school and holiday PC buying. In particular, PC maker
Compaq negatively affected the Fund's performance. The company did not meet its
March earnings estimate and continued to have problems reducing its channel
inventory as more lean competitors, such as Dell, have mastered inventory
management.
The Fund ably weathered the volatility of the market this year and, looking
ahead, the manager is optimistic that it will continue its outperformance in the
coming year.
See page 35 for financial details. 17
<PAGE>
June 30, 1999
PIMCO International Fund
OBJECTIVE
Capital appreciation; income is incidental
PORTFOLIO
Primarily stocks of foreign (non-U.S.) companies
FUND INCEPTION DATE
8/25/86
TOTAL NET ASSETS
$149.1 million
NUMBER OF SECURITIES IN THE PORTFOLIO
273 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Blairlogie Capital Management (an independent sub-advisor not owned by PIMCO
Advisors L.P.)
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares MSCI Lipper
EAFE International
Adjusted Adjusted Adjusted Index Fund Avg.
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year -4.3% -9.6% -5.2% -9.4% -6.0% 7.9% 4.8%
5 years 4.9% 3.7% 4.1% 3.8% 4.1% 8.5% 8.9%
10 years 6.6% 6.0% 6.1% 6.1% 5.8% 6.9% 9.4%
Inception 7.3% 6.9% 6.9% 6.9% 6.5% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
PIMCO PIMCO PIMCO MSCI
International A International B International C EAFE Index
<S> <C> <C> <C> <C>
08/31/86 9,450 10,000 10,000 10,000
09/30/86 9,163 9,690 9,690 9,897
10/31/86 8,848 9,351 9,351 9,236
11/30/86 9,307 9,830 9,830 9,768
12/31/86 9,389 9,910 9,910 10,286
01/31/87 10,332 10,899 10,899 11,378
02/28/87 10,858 11,449 11,449 11,719
03/31/87 11,273 11,878 11,878 12,680
04/30/87 11,678 12,298 12,298 14,022
05/31/87 11,742 12,358 12,358 14,022
06/30/87 11,493 12,088 12,088 13,578
07/31/87 11,709 12,308 12,308 13,556
08/31/87 12,287 12,907 12,907 14,576
09/30/87 12,247 12,857 12,857 14,349
10/31/87 9,437 9,900 9,900 12,341
11/30/87 9,224 9,670 9,670 12,465
12/31/87 10,018 10,497 10,497 12,839
01/31/88 9,804 10,266 10,266 13,071
02/29/88 10,324 10,804 10,804 13,945
03/31/88 10,572 11,057 11,057 14,805
04/30/88 10,757 11,243 11,243 15,023
05/31/88 10,617 11,090 11,090 14,545
06/30/88 10,917 11,397 11,397 14,165
07/31/88 10,809 11,276 11,276 14,612
08/31/88 10,205 10,640 10,640 13,665
09/30/88 10,612 11,057 11,057 14,265
10/31/88 10,903 11,353 11,353 15,489
11/30/88 10,963 11,408 11,408 16,414
12/31/88 11,159 11,606 11,606 16,509
01/31/89 11,652 12,111 12,111 16,803
02/28/89 11,500 11,946 11,946 16,892
03/31/89 11,645 12,089 12,089 16,564
04/30/89 12,245 12,704 12,704 16,721
05/31/89 12,623 13,088 13,088 15,814
06/30/89 12,366 12,814 12,814 15,551
07/31/89 13,698 14,186 14,186 17,508
08/31/89 13,792 14,274 14,274 16,723
09/30/89 14,151 14,636 14,636 17,488
10/31/89 13,703 14,164 14,164 16,789
11/30/89 14,126 14,592 14,592 17,636
12/31/89 14,447 14,914 14,914 18,291
01/31/90 13,756 14,192 14,192 17,615
02/28/90 13,414 13,831 13,831 16,389
03/31/90 13,096 13,494 13,494 14,685
04/30/90 12,964 13,350 13,350 14,572
05/31/90 14,130 14,541 14,541 16,240
06/30/90 14,431 14,842 14,842 16,100
07/31/90 14,850 15,263 15,263 16,331
08/31/90 13,255 13,614 13,614 14,750
09/30/90 11,774 12,085 12,085 12,698
10/31/90 12,685 13,012 13,012 14,681
11/30/90 12,388 12,699 12,699 13,819
12/31/90 12,301 12,602 12,602 14,049
01/31/91 12,615 12,916 12,916 14,507
02/28/91 13,613 13,938 13,938 16,066
03/31/91 13,240 13,543 13,543 15,106
04/30/91 13,227 13,515 13,515 15,259
05/31/91 13,467 13,761 13,761 15,422
06/30/91 12,881 13,147 13,147 14,293
07/31/91 13,600 13,883 13,883 14,999
08/31/91 13,853 14,115 14,115 14,698
09/30/91 14,025 14,292 14,292 15,531
10/31/91 14,238 14,496 14,496 15,755
11/30/91 13,480 13,720 13,720 15,024
12/31/91 14,840 15,113 15,113 15,804
01/31/92 14,678 14,946 14,946 15,471
02/29/92 14,475 14,724 14,724 14,922
03/31/92 13,879 14,100 14,100 13,941
04/30/92 13,947 14,170 14,170 14,011
05/31/92 14,326 14,530 14,530 14,953
06/30/92 13,798 13,989 13,989 14,249
07/31/92 13,865 14,045 14,045 13,889
08/31/92 13,852 14,031 14,031 14,764
09/30/92 13,594 13,754 13,754 14,477
10/31/92 13,906 14,059 14,059 13,722
11/30/92 14,068 14,211 14,211 13,856
12/31/92 14,101 14,229 14,229 13,932
01/31/93 14,130 14,259 14,259 13,934
02/28/93 14,319 14,438 14,438 14,359
03/31/93 15,455 15,573 15,573 15,615
04/30/93 16,446 16,573 16,573 17,101
05/31/93 16,708 16,827 16,827 17,467
06/30/93 16,213 16,320 16,320 17,198
07/31/93 16,796 16,887 16,887 17,804
08/31/93 17,815 17,902 17,902 18,769
09/30/93 17,728 17,814 17,798 18,351
10/31/93 18,165 18,253 18,216 18,920
11/30/93 17,349 17,434 17,395 17,270
12/31/93 18,958 19,050 18,992 18,521
01/31/94 19,863 19,960 19,890 20,091
02/28/94 19,492 19,587 19,509 20,040
03/31/94 18,185 18,274 18,185 19,181
04/30/94 18,675 18,767 18,672 19,999
05/31/94 18,779 18,871 18,748 19,889
06/30/94 18,438 18,528 18,414 20,174
07/31/94 19,031 19,124 18,977 20,373
08/31/94 19,566 19,661 19,509 20,859
09/30/94 19,180 19,274 19,114 20,207
10/31/94 19,492 19,587 19,403 20,885
11/30/94 18,230 18,319 18,140 19,885
12/31/94 17,546 17,631 17,438 20,015
01/31/95 16,546 16,626 16,444 19,250
02/28/95 16,288 16,368 16,180 19,200
03/31/95 17,061 17,144 16,941 20,403
04/30/95 17,743 17,829 17,594 21,176
05/31/95 17,818 17,905 17,656 20,929
06/30/95 17,576 17,662 17,407 20,567
07/31/95 18,667 18,758 18,480 21,854
08/31/95 18,273 18,362 18,076 21,025
09/30/95 18,470 18,560 18,262 21,441
10/31/95 17,743 17,829 17,532 20,870
11/30/95 18,106 18,195 17,889 21,457
12/31/95 18,682 18,773 18,448 22,327
01/31/96 19,349 19,443 19,086 22,424
02/29/96 19,258 19,352 18,977 22,505
03/31/96 19,591 19,687 19,303 22,989
04/30/96 20,349 20,448 20,034 23,663
05/31/96 20,046 20,144 19,738 23,233
06/30/96 20,228 20,326 19,894 23,369
07/31/96 19,243 19,337 18,915 22,692
08/31/96 19,379 19,474 19,039 22,748
09/30/96 19,743 19,839 19,381 23,358
10/31/96 19,515 19,611 19,132 23,125
11/30/96 19,985 20,083 19,598 24,051
12/31/96 19,915 20,012 19,511 23,747
01/31/97 20,118 20,216 19,687 22,921
02/28/97 20,415 20,515 19,976 23,302
03/31/97 20,165 20,264 19,719 23,392
04/30/97 20,227 20,326 19,768 23,522
05/31/97 21,290 21,394 20,795 25,058
06/30/97 22,274 22,383 21,741 26,446
07/31/97 22,649 22,759 22,094 26,879
08/31/97 20,634 20,735 20,121 24,876
09/30/97 21,993 22,100 21,420 26,274
10/31/97 20,150 20,248 19,623 24,262
11/30/97 19,900 19,997 19,366 24,019
12/31/97 20,440 20,540 19,873 24,235
01/31/98 20,713 20,815 20,137 25,350
02/28/98 22,183 22,292 21,549 26,983
03/31/98 23,807 23,923 23,120 27,819
04/30/98 24,508 24,627 23,791 28,045
05/31/98 24,439 24,559 23,702 27,916
06/30/98 24,491 24,610 23,738 28,133
07/31/98 25,380 25,504 24,602 28,426
08/31/98 20,080 20,178 19,448 24,910
09/30/98 19,106 19,200 18,477 24,152
10/31/98 20,524 20,624 19,835 26,676
11/30/98 21,721 21,827 20,964 28,050
12/31/98 22,342 22,451 21,513 29,164
01/31/99 22,342 22,451 21,513 29,085
02/28/99 21,703 21,809 20,887 28,399
03/31/99 22,625 22,736 21,768 29,591
04/30/99 23,453 23,568 22,552 30,796
05/31/99 22,569 22,679 21,691 29,216
06/30/99 23,436 23,550 22,513 30,361
</TABLE>
*Past performance is not an indication of future results. 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 5.9% and 6.6% for both periods. See page 28 for Footnotes, which
include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top Holdings in % of Total
Selected Countries Investments
- --------------------------------------------------------------------------------
United Kingdom/WEBS Index Fund 4.3%
- --------------------------------------------------------------------------------
Sweden/MSCI Sweden Opal Series B 3.1%
- --------------------------------------------------------------------------------
Finland/Nokia OYJ 3.0%
- --------------------------------------------------------------------------------
France/France Telecom SA 1.6%
- --------------------------------------------------------------------------------
Netherlands/Royal Dutch 1.2%
Petroleum Co.
- --------------------------------------------------------------------------------
France/Total SA 1.2%
- --------------------------------------------------------------------------------
France/L'OREAL 1.0%
- --------------------------------------------------------------------------------
Switzerland/UBS AG 1.0%
- --------------------------------------------------------------------------------
France/Carrefour Supermarche 0.9%
- --------------------------------------------------------------------------------
Japan/Toyota Motor Corp. 0.9%
- --------------------------------------------------------------------------------
Top Ten Total 18.2%
- --------------------------------------------------------------------------------
Top 5 Countries % of Total Investments
- --------------------------------------------------------------------------------
France 15.0%
- --------------------------------------------------------------------------------
Japan 14.5%
- --------------------------------------------------------------------------------
Switzerland 7.3%
- --------------------------------------------------------------------------------
Germany 6.7%
- --------------------------------------------------------------------------------
Finland 4.7%
- --------------------------------------------------------------------------------
Regional Breakdown
- --------------------------------------------------------------------------------
Eastern Europe 52.1%
- --------------------------------------------------------------------------------
Asia 22.4%
- --------------------------------------------------------------------------------
Europe 10.9%
- --------------------------------------------------------------------------------
Latin America 7.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 92.4%
- --------------------------------------------------------------------------------
Cash Equivalents 7.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO International Fund returned
- -4.3% for its Class A shares, -5.2% for its Class B shares and -6.0% for its
Class C shares.
In the second half of 1998, European developed markets were strong performers
for the Fund. Concerns over a weak global economy prompted a "flight to safety"
among investors, causing them to move away from emerging markets and towards
international developed markets in countries with stable economies. In
particular, Finland and Ireland produced strong returns. However, in the first
half of 1999, signs of an improving global economy resulted in investors fleeing
developed markets in favor of emerging markets in order to capitalize on the
recovery.
One emerging market standout for the Fund this year was Korea Telecom. The
company benefited from the economic resurgence in Asia, which resulted in an
increased demand by corporations for telecommunications capabilities. This
company is one of the primary players in the Korean phone industry and, as the
economy continues to improve, the manager is optimistic that it will continue
its outperformance.
Another strong performer for the Fund this year was Cemex, the Mexican cement
maker. The company benefited from the strong United States economy, which
boosted the Mexican economy and resulted in increased demand for basic materials
such as cement.
AstraZeneca, a British pharmaceuticals company, contributed to the Fund's
performance this year. The company is engaged in the research, development,
manufacture and marketing of pharmaceuticals, agricultural and specialty
chemicals products, and the supply of healthcare services. The company benefited
from a strong product pipeline as well as consolidation in the pharmaceuticals
industry, which caused its stock price to rise on rumors of a takeover.
One disappointment for the Fund this year was British consumer products giant
Unilever. Second only to Procter & Gamble in terms of size, the company suffered
from many of the same problems facing P&G. Despite implementing cost-cutting
measures, including layoffs, investors punished its stock for not showing
results quickly enough. However, the manager remains confident that the
company's strong fundamentals and earnings growth will be rewarded by investors
in the future.
The Fund's performance can be attributed to its heavy weighting in Europe,
which did not show strong performance for much of the year. However, the manager
remains cautious about overexposure to Asia and believes that European markets
offer strong fundamentals and reasonable valuations and are well-poised for
outperformance in the coming year.
18 See page 36 for financial details.
<PAGE>
June 30, 1999
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
FUND INCEPTION DATE
8/26/91
TOTAL NET ASSETS
$1 billion
NUMBER OF SECURITIES IN THE PORTFOLIO
99 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Cadence Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
S&P Mid Russell Mid- Mid-Cap
Adjusted Adjusted Adjusted Cap Index Cap index Fund Avg.
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year -0.1% -5.6% -0.9% -5.6% -1.8% 17.2% 11.3% 13.4%
3 years 17.8% 15.6% 16.9% 16.2% 16.9% 22.5% 19.6% 16.6%
5 years 20.1% 18.7% 19.2% 19.0% 19.2% 22.3% 20.9% 19.7%
Inception 16.4% 15.6% 15.6% 15.6% 15.6% -- -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO
Mid-Cap Mid-Cap Mid-Cap S&P Mid-Cap Russell Mid-Cap
Growth A Growth B Growth C Index Index
<S> <C> <C> <C> <C> <C>
08/31/91 9,450 10,000 10,000 10,000 10,000
09/30/91 9,400 9,940 9,940 9,967 9,942
10/31/91 9,741 10,295 10,295 10,358 10,145
11/30/91 9,463 9,995 9,995 10,009 9,726
12/31/91 10,694 11,288 11,288 11,192 10,816
01/31/92 10,702 11,290 11,290 11,390 11,019
02/29/92 10,803 11,390 11,390 11,571 11,272
03/31/92 10,477 11,038 11,038 11,135 10,984
04/30/92 10,404 10,955 10,955 11,002 11,070
05/31/92 10,410 10,954 10,954 11,107 11,142
06/30/92 10,131 10,654 10,654 10,789 10,961
07/31/92 10,406 10,936 10,936 11,325 11,419
08/31/92 10,098 10,606 10,606 11,054 11,156
09/30/92 10,428 10,946 10,946 11,209 11,388
10/31/92 10,765 11,293 11,293 11,477 11,666
11/30/92 11,410 11,962 11,962 12,119 12,254
12/31/92 11,629 12,184 12,184 12,525 12,583
01/31/93 12,056 12,624 12,624 12,682 12,835
02/28/93 11,680 12,223 12,223 12,504 12,849
03/31/93 12,153 12,710 12,710 12,936 13,267
04/30/93 11,816 12,350 12,350 12,598 12,916
05/31/93 12,318 12,867 12,867 13,172 13,326
06/30/93 12,695 13,253 13,253 13,238 13,476
07/31/93 12,535 13,077 13,077 13,212 13,541
08/31/93 13,151 13,712 13,712 13,758 14,143
09/30/93 13,500 14,067 14,067 13,903 14,198
10/31/93 13,359 13,911 13,911 13,949 14,209
11/30/93 12,981 13,510 13,510 13,640 13,880
12/31/93 13,410 13,947 13,947 14,273 14,383
01/31/94 13,683 14,222 14,222 14,605 14,779
02/28/94 13,660 14,190 14,190 14,398 14,578
03/31/94 13,157 13,659 13,659 13,731 13,957
04/30/94 13,201 13,695 13,695 13,833 14,053
05/31/94 12,957 13,434 13,434 13,702 14,072
06/30/94 12,522 12,974 12,974 13,230 13,656
07/31/94 12,801 13,255 13,255 13,678 14,124
08/31/94 13,467 13,936 13,936 14,395 14,794
09/30/94 13,118 13,567 13,567 14,126 14,432
10/31/94 13,378 13,827 13,827 14,281 14,543
11/30/94 12,742 13,161 13,161 13,636 13,901
12/31/94 13,041 13,461 13,461 13,762 14,082
01/31/95 12,912 13,320 13,320 13,905 14,371
02/28/95 13,693 14,118 14,118 14,634 15,115
03/31/95 14,129 14,558 14,558 14,888 15,547
04/30/95 14,443 14,873 14,873 15,187 15,782
05/31/95 14,936 15,372 15,372 15,554 16,300
06/30/95 15,812 16,264 16,264 16,187 16,848
07/31/95 17,299 17,782 17,782 17,031 17,666
08/31/95 17,427 17,903 17,903 17,346 17,937
09/30/95 17,670 18,142 18,142 17,767 18,342
10/31/95 17,393 17,846 17,846 17,310 17,932
11/30/95 17,723 18,173 18,173 18,066 18,824
12/31/95 17,834 18,275 18,275 18,021 18,933
01/31/96 18,181 18,619 18,619 18,282 19,332
02/29/96 18,616 19,054 19,054 18,903 19,786
03/31/96 18,844 19,274 19,274 19,130 20,073
04/30/96 19,231 19,659 19,659 19,714 20,641
05/31/96 19,550 19,972 19,972 19,981 20,953
06/30/96 19,146 19,547 19,547 19,681 20,638
07/31/96 18,224 18,593 18,593 18,350 19,361
08/31/96 19,212 19,589 19,589 19,408 20,283
09/30/96 20,554 20,945 20,945 20,254 21,285
10/31/96 20,685 21,065 21,065 20,313 21,455
11/30/96 21,937 22,327 22,327 21,457 22,762
12/31/96 21,914 22,289 22,289 21,481 22,530
01/31/97 22,809 23,183 23,196 22,287 23,373
02/28/97 22,416 22,783 22,783 22,104 23,338
03/31/97 21,776 22,108 22,107 21,162 22,346
04/30/97 22,231 22,558 22,558 21,710 22,902
05/31/97 23,756 24,097 24,097 23,609 24,573
06/30/97 24,901 25,235 25,248 24,272 25,377
07/31/97 27,201 27,563 27,562 26,675 27,494
08/31/97 27,164 27,500 27,500 26,643 27,194
09/30/97 29,059 29,402 29,402 28,175 28,747
10/31/97 28,444 28,752 28,751 26,949 27,628
11/30/97 28,629 28,927 28,938 27,348 28,286
12/31/97 29,283 29,577 29,576 28,409 29,067
01/31/98 28,761 29,021 29,020 27,870 28,520
02/28/98 30,443 30,703 30,702 30,177 30,750
03/31/98 31,369 31,617 31,616 31,538 32,208
04/30/98 31,812 32,041 32,054 32,115 32,289
05/31/98 30,716 30,929 30,928 30,670 31,291
06/30/98 31,303 31,485 31,484 30,863 31,724
07/31/98 30,389 30,560 30,559 29,666 30,211
08/31/98 24,965 25,089 25,089 24,145 25,377
09/30/98 26,765 26,898 26,878 26,398 27,019
10/31/98 27,496 27,633 27,592 28,758 28,862
11/30/98 29,008 29,152 29,091 30,193 30,227
12/31/98 31,468 31,625 31,552 33,840 31,998
01/31/99 30,111 30,262 30,160 32,524 31,944
02/28/99 28,467 28,609 28,505 30,819 30,880
03/31/99 28,604 28,747 28,630 31,682 31,847
04/30/99 30,071 30,221 30,076 34,179 34,200
05/31/99 30,002 30,152 29,980 34,329 34,101
06/30/99 31,262 31,418 31,233 36,163 35,305
</TABLE>
*Past performance is not an indication of future results. The adjusted returns
above include the effect of applicable sales charges. Excluding the 6-month and
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. See page 28 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Best Buy Co., Inc. 1.4%
Electronics supply store
- --------------------------------------------------------------------------------
Waters Corp. 1.4%
Liquid Chromatography
- --------------------------------------------------------------------------------
Premark International, Inc. 1.4%
Commercial food equipment products
- --------------------------------------------------------------------------------
Hertz Corp. 'A' 1.4%
Auto/construction equip. rental service
- --------------------------------------------------------------------------------
General Dynamics Corp. 1.4%
Aerospace/defense equip
- --------------------------------------------------------------------------------
VERITAS Software Corp. 1.4%
Storage mgmt. software
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 1.4%
Multi-user application server systems
- --------------------------------------------------------------------------------
Food Lion, Inc. 'A' 1.4%
Food supermarket chain
- --------------------------------------------------------------------------------
Bed, Bath & Beyond, Inc. 1.3%
Domestic/home products superstores
- --------------------------------------------------------------------------------
Southdown, Inc. 1.3%
Cement/concrete/environmental services
- --------------------------------------------------------------------------------
Top Ten Total 13.8%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 21.9%
- --------------------------------------------------------------------------------
Financial & Business Services 20.9%
- --------------------------------------------------------------------------------
Technology 17.1%
- --------------------------------------------------------------------------------
Capital Goods 7.2%
- --------------------------------------------------------------------------------
Health Care 6.4%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96.4%
- --------------------------------------------------------------------------------
Cash Equivalents 3.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Mid-Cap Growth Fund returned -0.1% for Class A shares, -0.9% for Class B
shares and -1.8% for Class C shares for the one-year period ended June 30, 1999.
It is important to note that, for the three-month period ended June 30, 1999,
the Fund returned 9.3% for its Class A shares, 9.0% for its Class B shares, and
9.1% for its Class C shares.
The Fund's lackluster performance for this one-year period can be attributed
to the fact that, for much of the year, the market was extremely narrow and
dominated by the largest of the large-cap growth stocks. As a result, mid-cap
growth-at-a-reasonable-price stocks were overlooked by investors. However, in
the second quarter of 1999, the market rotated away from these large-cap high
valuation issues and towards smaller-capitalization and lower valuation issues,
which resulted in strong performance by the Fund in the second quarter.
The technology sector positively impacted the Fund this year. This sector
benefited from investor enthusiasm for stocks with the greatest growth
potential. Fund holding Citrix Systems, a computer company, benefited from
corporations' increased demand for networking capabilities. The company saw a
rise in sales of its software, which links computers to networks and provides
systems solutions for different networks. In addition, Fund holding Comdisco saw
a large uptick in its stock price as a result of the sale of one of its units to
IBM.
Another strong sector for the Fund was consumer cyclicals. A growing domestic
economy, tight labor market and low inflation combined to fuel investor
confidence, which resulted in an increase in consumer spending. Harley Davidson
benefited from this increase as demand for its high-end motorcycles skyrocketed.
Other beneficiaries of the strong economy included holdings Abercrombie &
Fitch and Tommy Hilfiger. The growing clout and spending power of the American
teenager contributed to their sales growth. And demographics also helped, as
there are more young people to purchase their goods. Both companies also
benefited from strong branding and high earnings-per-share growth.
One disappointment for the Fund this year was Jones Apparel. The women's
apparel and shoe maker suffered from execution problems related to its line of
shoes. It also lost market share in the past year by missing fashion trends. The
manager removed this holding from the Fund.
Despite disappointing performance for the one-year period, the Fund showed
strong performance in the second quarter of 1999, as the market broadened and
medium-capitalization and lower valuation stocks became more attractive to
investors. The manager is optimistic that, as this market environment continues,
the Fund's strong performance will continue as well.
See page 39 for financial details. 19
<PAGE>
June 30, 1999
PIMCO Opportunity Fund
OBJECTIVE
Capital appreciation; no consideration given to income
PORTFOLIO
Primarily stocks of small-capitalization companies
FUND INCEPTION DATE
2/24/84
TOTAL NET ASSETS
$433.1 million
NUMBER OF SECURITIES IN THE PORTFOLIO
104 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
Russell Cap. App.
Adjusted Adjusted Adjusted 2000 Index Fund Avg.
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 4.0% -1.7% 3.2% -1.0% 2.4% 1.5% 20.0%
5 years 15.8% 14.5% 15.0% 14.7% 14.9% 15.4% 19.3%
10 years 17.9% 17.2% 17.3% 17.3% 17.0% 12.4% 13.6%
Inception 17.5% 17.1% 17.1% 17.1% 16.7% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Russell
PIMCO PIMCO PIMCO 2000
Opportunity A Opportunity B Opportunity C Index
<S> <C> <C> <C> <C>
02/29/84 9,450 10,000 10,000 10,000
03/31/84 9,087 9,610 9,610 10,059
04/30/84 9,246 9,771 9,771 10,004
05/31/84 8,981 9,486 9,486 9,485
06/30/84 9,275 9,791 9,790 9,757
07/31/84 9,046 9,542 9,542 9,281
08/31/84 10,520 11,091 11,091 10,373
09/30/84 10,136 10,679 10,680 10,293
10/31/84 10,034 10,564 10,564 10,104
11/30/84 9,642 10,144 10,145 9,835
12/31/84 10,143 10,665 10,666 9,995
01/31/85 11,884 12,489 12,490 11,320
02/28/85 12,135 12,745 12,746 11,624
03/31/85 11,570 12,143 12,145 11,386
04/30/85 11,361 11,916 11,918 11,245
05/31/85 11,829 12,399 12,401 11,658
06/30/85 12,100 12,675 12,677 11,790
07/31/85 12,380 12,960 12,963 12,120
08/31/85 12,030 12,586 12,588 12,004
09/30/85 11,350 11,866 11,869 11,278
10/31/85 11,700 12,224 12,227 11,706
11/30/85 12,565 13,120 13,123 12,549
12/31/85 13,269 13,847 13,850 13,101
01/31/86 13,338 13,911 13,914 13,308
02/28/86 14,194 14,795 14,799 14,264
03/31/86 14,850 15,470 15,474 14,956
04/30/86 15,325 15,954 15,959 15,177
05/31/86 16,068 16,718 16,723 15,701
06/30/86 16,322 16,971 16,976 15,682
07/31/86 14,515 15,082 15,086 14,215
08/31/86 14,646 15,209 15,213 14,668
09/30/86 13,405 13,910 13,914 13,763
10/31/86 13,840 14,352 14,357 14,309
11/30/86 14,096 14,609 14,613 14,260
12/31/86 13,970 14,469 14,473 13,848
01/31/87 15,566 16,113 16,118 15,450
02/28/87 17,050 17,640 17,645 16,750
03/31/87 17,726 18,328 18,333 17,200
04/30/87 17,286 17,862 17,867 16,703
05/31/87 17,105 17,664 17,669 16,650
06/30/87 17,398 17,956 17,960 17,076
07/31/87 18,053 18,620 18,625 17,607
08/31/87 19,037 19,622 19,628 18,125
09/30/87 18,935 19,506 19,511 17,791
10/31/87 14,011 14,423 14,427 12,344
11/30/87 13,170 13,549 13,552 11,682
12/31/87 14,975 15,397 15,400 12,621
01/31/88 14,883 15,292 15,295 13,169
02/29/88 16,044 16,476 16,480 14,354
03/31/88 16,682 17,120 17,125 15,028
04/30/88 17,160 17,599 17,605 15,368
05/31/88 16,513 16,925 16,930 14,951
06/30/88 18,103 18,545 18,549 16,018
07/31/88 17,207 17,616 17,620 15,865
08/31/88 16,734 17,121 17,125 15,459
09/30/88 17,360 17,751 17,755 15,867
10/31/88 16,932 17,302 17,305 15,691
11/30/88 16,634 16,987 16,990 15,168
12/31/88 17,202 17,556 17,559 15,762
01/31/89 18,183 18,546 18,549 16,465
02/28/89 17,973 18,322 18,324 16,586
03/31/89 18,705 19,056 19,059 16,977
04/30/89 20,026 20,390 20,394 17,717
05/31/89 21,453 21,830 21,833 18,479
06/30/89 20,729 21,081 21,083 18,058
07/31/89 22,379 22,747 22,748 18,760
08/31/89 23,101 23,465 23,468 19,217
09/30/89 23,307 23,660 23,663 19,277
10/31/89 21,949 22,267 22,268 18,134
11/30/89 22,406 22,716 22,718 18,250
12/31/89 22,641 22,941 22,942 18,323
01/31/90 20,588 20,847 20,848 16,722
02/28/90 21,251 21,505 21,506 17,241
03/31/90 22,133 22,385 22,385 17,918
04/30/90 21,662 21,895 21,895 17,332
05/31/90 23,681 23,922 23,922 18,560
06/30/90 24,181 24,413 24,412 18,609
07/31/90 23,979 24,193 24,192 17,793
08/31/90 21,164 21,338 21,337 15,413
09/30/90 20,004 20,156 20,155 14,043
10/31/90 19,330 19,463 19,462 13,185
11/30/90 20,835 20,967 20,966 14,191
12/31/90 21,150 21,259 21,257 14,748
01/31/91 23,175 23,278 23,277 16,077
02/28/91 24,750 24,845 24,844 17,880
03/31/91 27,260 27,364 27,351 19,134
04/30/91 26,637 26,738 26,724 19,085
05/31/91 29,302 29,414 29,405 19,994
06/30/91 26,515 26,617 26,585 18,838
07/31/91 28,800 28,910 28,866 19,497
08/31/91 30,392 30,508 30,450 20,216
09/30/91 31,067 31,186 31,112 20,374
10/31/91 32,850 32,976 32,871 20,912
11/30/91 30,652 30,769 30,660 19,944
12/31/91 35,710 35,847 35,732 21,540
01/31/92 38,434 38,581 38,415 23,287
02/29/92 39,805 39,957 39,757 23,967
03/31/92 38,453 38,600 38,396 23,156
04/30/92 36,338 36,477 36,249 22,343
05/31/92 36,681 36,822 36,575 22,640
06/30/92 35,824 35,961 35,693 21,576
07/31/92 37,252 37,395 37,074 22,326
08/31/92 35,748 35,885 35,559 21,695
09/30/92 37,786 37,931 37,571 22,195
10/31/92 39,843 39,995 39,584 22,895
11/30/92 43,157 43,322 42,842 24,648
12/31/92 46,271 46,448 45,900 25,506
01/31/93 49,141 49,329 48,711 26,369
02/28/93 46,541 46,719 46,133 25,761
03/31/93 49,912 50,102 49,429 26,596
04/30/93 48,236 48,421 47,743 25,865
05/31/93 52,472 52,673 51,930 27,009
06/30/93 55,245 55,456 54,624 27,177
07/31/93 57,227 57,446 56,542 27,552
08/31/93 61,097 61,331 60,342 28,742
09/30/93 64,371 64,617 63,520 29,553
10/31/93 63,966 64,210 63,094 30,314
11/30/93 60,653 60,885 59,799 29,327
12/31/93 63,452 63,695 62,499 30,329
01/31/94 65,907 66,159 64,890 31,279
02/28/94 64,327 64,573 63,296 31,165
03/31/94 59,376 59,604 58,366 29,524
04/30/94 59,419 59,646 58,387 29,699
05/31/94 56,319 56,534 55,302 29,365
06/30/94 51,429 51,626 50,456 28,374
07/31/94 54,571 54,779 53,518 28,841
08/31/94 58,835 59,060 57,651 30,447
09/30/94 60,063 60,293 58,826 30,344
10/31/94 63,205 63,447 61,867 30,221
11/30/94 59,813 60,042 58,511 29,000
12/31/94 60,895 61,128 59,538 29,776
01/31/95 58,942 59,168 57,566 29,400
02/28/95 62,206 62,444 60,729 30,624
03/31/95 65,383 65,633 63,805 31,149
04/30/95 67,272 67,530 65,604 31,841
05/31/95 68,624 68,887 66,860 32,388
06/30/95 75,042 75,329 73,077 34,069
07/31/95 82,125 82,439 79,945 36,031
08/31/95 81,223 81,534 79,012 36,777
09/30/95 83,885 84,206 81,548 37,433
10/31/95 81,182 81,492 78,860 35,759
11/30/95 84,917 85,241 82,436 37,262
12/31/95 86,817 87,149 84,261 38,245
01/31/96 82,750 83,067 80,227 38,203
02/29/96 86,630 86,962 83,965 39,394
03/31/96 90,138 90,483 87,323 40,196
04/30/96 99,173 99,552 95,989 42,345
05/31/96 105,868 106,273 102,407 44,014
06/30/96 100,021 100,403 96,693 42,207
07/31/96 87,822 88,158 84,859 38,520
08/31/96 92,339 92,692 89,164 40,757
09/30/96 99,274 99,654 95,797 42,350
10/31/96 93,137 93,494 89,814 41,697
11/30/96 93,776 94,135 90,357 43,415
12/31/96 97,593 97,966 93,990 44,553
01/31/97 94,018 94,378 90,472 45,443
02/28/97 84,524 84,847 81,311 44,341
03/31/97 77,712 78,010 74,685 42,249
04/30/97 76,017 76,308 73,006 42,366
05/31/97 87,239 87,573 83,753 47,080
06/30/97 90,477 90,823 86,796 49,098
07/31/97 93,591 93,949 89,744 51,382
08/31/97 97,383 97,755 93,294 52,559
09/30/97 104,598 104,998 100,173 56,406
10/31/97 96,674 97,043 92,502 53,930
11/30/97 93,068 93,424 89,015 53,579
12/31/97 93,658 94,016 89,526 54,517
01/31/98 92,078 92,431 87,929 53,656
02/28/98 101,581 101,970 96,970 57,626
03/31/98 105,199 105,601 100,336 60,000
04/30/98 104,706 105,107 99,825 60,332
05/31/98 98,524 98,901 93,876 57,080
06/30/98 103,029 103,424 98,091 57,200
07/31/98 94,179 94,540 89,626 52,567
08/31/98 70,964 71,236 67,497 42,358
09/30/98 76,584 76,877 72,796 45,675
10/31/98 79,908 80,214 75,890 47,539
11/30/98 86,453 86,783 82,075 50,030
12/31/98 95,522 95,887 90,676 53,126
01/31/99 100,087 100,470 94,983 53,833
02/28/99 88,447 88,786 83,851 49,472
03/31/99 94,524 94,885 89,545 50,244
04/30/99 100,923 101,309 95,526 54,746
05/31/99 99,530 99,911 94,189 55,545
06/30/99 107,114 107,524 101,215 58,056
</TABLE>
*Past performance is not an indication of future results. 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 and B shares
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 17.1% and 16.7%, respectively. See page 28 for Footnotes, which
include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
WinStar Communications, Inc. 2.5%
Telecommunications/info. services
- --------------------------------------------------------------------------------
SFX Entertainment, Inc. 'A' 2.0%
Producer of live entertainment events
- --------------------------------------------------------------------------------
Premier Parks, Inc. 1.9%
Theme parks
- --------------------------------------------------------------------------------
B.J.'s Wholesale Club, Inc. 1.6%
Wholesale cash & carry merchandise
- --------------------------------------------------------------------------------
True North Communications 1.5%
International advertising agency
- --------------------------------------------------------------------------------
Sotheby's Holdings 'A' 1.5%
Auction house/art dealer
- --------------------------------------------------------------------------------
Advanced Energy Industries 1.4%
Semiconductors/film production equip
- --------------------------------------------------------------------------------
Pinnacle Holdings, Inc. 1.4%
Real estate investment trust
- --------------------------------------------------------------------------------
Furniture Brands International, Inc. 1.4%
Residential furniture
- --------------------------------------------------------------------------------
Visual Networks, Inc. 1.3%
Networking products
- --------------------------------------------------------------------------------
Top Ten Total 16.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 30.5%
- --------------------------------------------------------------------------------
Consumer Discretionary 15.2%
- --------------------------------------------------------------------------------
Communications 11.1%
- --------------------------------------------------------------------------------
Health Care 10.2%
- --------------------------------------------------------------------------------
Consumer Services 8.7%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 95.5%
- --------------------------------------------------------------------------------
Cash Equivalents 4.5%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Opportunity Fund posted
returns of 4.0% for Class A shares, 3.2% for Class B shares and 2.4% for Class C
shares, far outperforming the Russell 2000 Index return of 1.5% for the same
period.
Through much of this period, the market was dominated by large-cap growth
stocks, which did not bode well for the small-cap sector. However, in the second
quarter of 1999, the market rotated away from large-cap growth issues in favor
of smaller-capitalization and lower valuation issues, benefiting Opportunity
Fund's performance.
The telecom sector performed well for the Fund this year. Increased demand by
corporations for data communications capabilities, coupled with a dramatic
increase in the number of cellular phone users, boosted this sector. One telecom
standout was Winstar Communications, an emerging telecommunications company with
an important market niche. Winstar offers a creative, economical solution to the
`bandwidth bottleneck' facing small and mid-sized companies, by providing cheap,
high-speed wireless bandwidth. The company benefited from a strong market
position, a result of its purchase of many of the radio licenses necessary to
provide wireless bypass services to fiber optic hubs. Winstar also saw strong
sales growth this year, and appears on track to maintain this momentum.
Another standout this year was Pinnacle Holdings, a major provider of tower
space for wireless communications. The company benefited from its rapid tower
consolidation strategy, which has resulted in significant gains in cash flow.
One disappointment for the Fund this year was Alaska Airlines. It suffered
from pricing pressure and a decrease in traffic for much of the year. In the
first half of 1999 it was also hurt by a boost in the price of fuel, resulting
from increased demand brought on by an improving global economy. Its shrinking
profit margin prompted the manager to remove it from the Fund.
Looking ahead, the manager is optimistic that the Fund will continue its
outperformance, especially given the increased investor interest in
smaller-capitalization stocks, the tame inflationary environment and the strong
earnings outlook for many growth stocks.
20 See page 40 for financial details.
<PAGE>
June 30, 1999
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
FUND INCEPTION DATE
10/10/88
TOTAL NET ASSETS
$23.2 million
NUMBER OF SECURITIES IN THE PORTFOLIO
51 (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 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Phil. Gold Lipper
& Silver Gold Oriented
Adjusted Adjusted Adjusted Index Fund Avg.
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year -6.1% -11.2% -6.9% -11.4% -7.6% -6.7% -5.2%
5 years -15.9% -16.8% -16.6% -17.0% -16.6% -10.3% -12.1%
10 years -5.6% -6.1% -6.1% -6.1% -6.3% -3.2% -4.2%
Inception -6.0% -6.5% -6.4% -6.4% -6.7% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO Phil.
Precious Precious Precious Gold & Silver
Metals A Metals B Metals C Index
<S> <C> <C> <C> <C>
10/31/88 9,450 10,000 10,000 10,000
11/30/88 9,475 10,021 10,021 10,126
12/31/88 9,210 9,733 9,733 9,507
01/31/89 9,674 10,218 10,218 9,869
02/28/89 9,562 10,094 10,094 11,007
03/31/89 9,490 10,012 10,012 10,341
04/30/89 9,096 9,589 9,589 9,719
05/31/89 8,574 9,033 9,033 9,467
06/30/89 8,922 9,394 9,394 10,101
07/31/89 9,240 9,723 9,723 10,428
08/31/89 9,667 10,166 10,166 11,159
09/30/89 9,663 10,156 10,156 11,342
10/31/89 9,650 10,135 10,135 11,524
11/30/89 10,881 11,423 11,423 13,042
12/31/89 10,780 11,309 11,309 13,104
01/31/90 11,013 11,546 11,546 14,235
02/28/90 10,381 10,877 10,877 13,191
03/31/90 9,778 10,238 10,238 12,315
04/30/90 8,751 9,157 9,157 10,869
05/31/90 9,141 9,558 9,558 11,732
06/30/90 8,496 8,879 8,879 11,085
07/31/90 9,241 9,651 9,651 11,905
08/31/90 9,237 9,641 9,641 11,806
09/30/90 9,282 9,682 9,682 11,838
10/31/90 7,797 8,127 8,127 9,810
11/30/90 7,584 7,900 7,900 9,314
12/31/90 8,143 8,477 8,477 10,603
01/31/91 7,119 7,406 7,406 8,755
02/28/91 7,743 8,044 8,044 9,397
03/31/91 7,674 7,962 7,962 9,210
04/30/91 7,535 7,807 7,807 8,804
05/31/91 7,644 7,921 7,921 8,995
06/30/91 8,129 8,425 8,425 9,637
07/31/91 8,099 8,384 8,384 9,610
08/31/91 7,357 7,612 7,612 8,294
09/30/91 7,436 7,684 7,684 8,613
10/31/91 7,872 8,127 8,127 9,058
11/30/91 7,882 8,147 8,147 9,193
12/31/91 7,783 8,024 8,024 8,828
01/31/92 7,911 8,158 8,158 9,127
02/29/92 7,792 8,034 8,034 8,894
03/31/92 7,297 7,509 7,509 7,872
04/30/92 6,812 7,014 7,014 7,641
05/31/92 7,228 7,437 7,437 8,197
06/30/92 7,594 7,807 7,807 8,580
07/31/92 7,911 8,127 8,127 9,029
08/31/92 7,585 7,787 7,787 8,618
09/30/92 7,466 7,663 7,663 8,790
10/31/92 7,179 7,365 7,365 8,262
11/30/92 6,584 6,747 6,747 7,191
12/31/92 6,862 7,035 7,035 7,791
01/31/93 6,674 6,839 6,839 7,816
02/28/93 7,238 7,406 7,406 8,302
03/31/93 8,337 8,518 8,518 9,486
04/30/93 9,436 9,641 9,641 10,797
05/31/93 11,179 11,423 11,423 12,141
06/30/93 11,347 11,588 11,588 12,723
07/31/93 12,634 12,896 12,896 14,084
08/31/93 11,357 11,577 11,577 12,879
09/30/93 10,218 10,413 10,413 11,376
10/31/93 11,654 11,866 11,866 13,489
11/30/93 11,436 11,639 11,639 12,971
12/31/93 13,100 13,328 13,328 14,413
01/31/94 13,199 13,421 13,421 14,406
02/28/94 12,605 12,813 12,813 14,029
03/31/94 12,625 12,813 12,813 14,609
04/30/94 11,803 11,969 11,969 12,503
05/31/94 12,199 12,371 12,371 13,147
06/30/94 11,951 12,113 12,113 12,593
07/31/94 12,139 12,298 12,298 12,210
08/31/94 12,852 13,009 13,009 12,950
09/30/94 14,001 14,163 14,163 14,448
10/31/94 13,080 13,226 13,226 12,829
11/30/94 11,545 11,670 11,670 11,222
12/31/94 11,921 12,041 12,041 11,946
01/31/95 10,149 10,238 10,238 10,640
02/28/95 10,515 10,599 10,599 11,345
03/31/95 11,585 11,670 11,670 13,327
04/30/95 11,644 11,722 11,722 12,776
05/31/95 11,496 11,577 11,577 13,112
06/30/95 11,466 11,536 11,526 13,133
07/31/95 11,743 11,804 11,794 12,970
08/31/95 12,050 12,113 12,103 13,403
09/30/95 12,209 12,257 12,257 13,571
10/31/95 10,743 10,784 10,774 11,711
11/30/95 11,407 11,450 11,444 13,233
12/31/95 11,506 11,550 11,536 13,158
01/31/96 13,892 13,945 13,926 15,412
02/29/96 14,100 14,154 14,122 15,741
03/31/96 13,843 13,896 13,854 15,716
04/30/96 14,159 14,214 14,163 15,671
05/31/96 14,803 14,860 14,801 16,269
06/30/96 12,664 12,713 12,648 13,523
07/31/96 12,407 12,455 12,391 13,587
08/31/96 13,031 13,081 13,009 13,609
09/30/96 12,001 12,047 11,969 12,585
10/31/96 12,050 12,097 12,020 12,631
11/30/96 11,555 11,600 11,516 13,133
12/31/96 11,237 11,280 11,195 12,757
01/31/97 10,524 10,564 10,473 12,041
02/28/97 11,951 11,997 11,844 13,381
03/31/97 10,554 10,594 10,452 11,377
04/30/97 9,609 9,646 9,500 10,256
05/31/97 9,961 9,999 9,866 11,398
06/30/97 8,875 8,909 8,820 10,446
07/31/97 8,373 8,405 8,328 10,699
08/31/97 8,383 8,415 8,328 10,803
09/30/97 8,855 8,889 8,789 11,965
10/31/97 7,347 7,376 7,292 9,606
11/30/97 5,659 5,681 5,618 7,738
12/31/97 5,890 5,913 5,817 8,106
01/31/98 6,443 6,467 6,340 8,192
02/28/98 6,091 6,114 5,985 8,244
03/31/98 6,403 6,427 6,278 8,924
04/30/98 7,046 7,073 6,916 9,608
05/31/98 6,041 6,064 5,943 8,163
06/30/98 5,357 5,378 5,231 7,837
07/31/98 5,156 5,176 5,043 6,875
08/31/98 4,171 4,187 4,080 5,342
09/30/98 5,931 5,953 5,785 8,194
10/31/98 5,951 5,974 5,806 8,238
11/30/98 5,679 5,701 5,535 7,753
12/31/98 5,454 5,475 5,310 7,099
01/31/99 5,342 5,362 5,202 6,912
02/28/99 5,188 5,208 5,040 6,617
03/31/99 5,260 5,280 5,116 6,530
04/30/99 5,876 5,899 5,708 8,022
05/31/99 4,921 4,940 4,771 6,651
06/30/99 5,034 5,053 4,879 7,313
</TABLE>
*Past performance is not an indication of future results. 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 10-year and since inception periods would have been lower,
namely -6.2% and -6.6%. See page 28 for Footnotes, which include additional
details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Stocks % of Total Investments
- --------------------------------------------------------------------------------
Meridian Gold, Inc. 4.5%
- --------------------------------------------------------------------------------
Placer Dome, Inc. 4.3%
- --------------------------------------------------------------------------------
Anglo American PLC 3.9%
- --------------------------------------------------------------------------------
Anglo American Gold 3.8%
Investment Co. Limited
- --------------------------------------------------------------------------------
Western Areas Gold 2.1%
Mining Co. Limited
- --------------------------------------------------------------------------------
Randfontein Estates Gold 1.9%
Mining Co.
- --------------------------------------------------------------------------------
Gold Fields Limited SP- ADR 1.9%
- --------------------------------------------------------------------------------
Newcrest Mining Limited 1.0%
- --------------------------------------------------------------------------------
Durban Roodeport Deep Limited 0.9%
- --------------------------------------------------------------------------------
Consolidated African Mines Limited 0.9%
- --------------------------------------------------------------------------------
Top Ten Total 25.2%
- --------------------------------------------------------------------------------
Regions % of Total Investments
- --------------------------------------------------------------------------------
South Africa 28.7%
- --------------------------------------------------------------------------------
Canada 26.3%
- --------------------------------------------------------------------------------
United States 14.9%
- --------------------------------------------------------------------------------
Australia 8.1%
- --------------------------------------------------------------------------------
United Kingdom 1.8%
- --------------------------------------------------------------------------------
Ghana 0.8%
- --------------------------------------------------------------------------------
Investment Breakdown
- --------------------------------------------------------------------------------
Common Stock 80.6%
- --------------------------------------------------------------------------------
Cash Equivalents 19.4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Precious Metals Fund returned
- -6.1% for Class A shares, -6.9% for Class B shares and -7.6% for Class C shares.
The Fund turned in a strong performance in the third quarter of 1998, when
the U.S. stock market sank because of jitters over the Russian default as well
as the Asian and Long-Term Capital Management crises, which resulted in a flight
to gold as a `safe haven.' However, a strong domestic economy coupled with signs
of a global economic recovery quickly reversed this flight to safety, causing
the price of gold to sink. A variety of recent events resulted in a further drop
in the price of gold: talk that the International Monetary Fund would sell gold
to relieve the debt of developing countries, the passing of a referendum in
Switzerland that could lead to the sale of some of its gold, and the British
government's announcement that it would auction off more than half the country's
gold reserves.
Meridian Gold was a strong performer for the Fund this year. The company
benefited from the discovery that its El Penon mine in Chile was larger and
richer than expected, and should therefore significantly increase the company's
gold production. Also, the company entered into an agreement with Barrick Gold
to conduct exploration of property it owns in Nevada, which appears promising.
Harmony Gold Mining, a South African mining company, also contributed
positively to the Fund's performance this year. The company benefited from its
business strategy of purchasing losing mining operations and turning them into
substantial profit makers.
One disappointment for the Fund this year was Homestake Mining. Despite
promising mines and solid fundamentals, the company, like many other gold mining
companies, was hurt by the severe drop in the price of gold.
The Fund's performance this year can be attributed to the fact that gold is
out of favor with investors. While it proved to be popular during the economic
crises of last year, signs of a global economic recovery have given investors
enough confidence to eschew gold. Looking ahead, however, the manager is
optimistic that the price of gold will stabilize and that, in the face of rising
inflation, investors will return to gold.
See page 42 for financial details. 21
<PAGE>
June 30, 1999
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
FUND INCEPTION DATE
4/18/88
TOTAL NET ASSETS
$659.8 million
NUMBER OF SECURITIES IN THE PORTFOLIO
82 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Russell Lipper
1000 Value Equity Inc. S&P 500
Adjusted Adjusted Adjusted Index Fund Avg. Index
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year 9.9% 3.9% 8.9% 4.2% 8.2% 16.4% 11.4% 22.8%
5 years 22.8% 21.5% 21.9% 21.7% 21.9% 24.6% 19.2% 27.9%
10 years 14.9% 14.3% 14.3% 14.3% 14.1% 17.1% 13.8% 18.8%
Inception 14.8% 14.2% 14.3% 14.3% 13.9% -- -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P 500 Russell 1000
Renaissance A Renaissance B Renaissance C Index Value
<S> <C> <C> <C> <C> <C>
04/30/88 9,450 10,000 10,000 10,001 10,000
05/31/88 9,460 10,000 10,000 10,088 10,145
06/30/88 9,671 10,220 10,220 10,551 10,625
07/31/88 9,652 10,190 10,190 10,511 10,628
08/31/88 9,516 10,038 10,038 10,154 10,419
09/30/88 9,652 10,180 10,180 10,586 10,758
10/31/88 9,770 10,291 10,291 10,880 11,002
11/30/88 9,711 10,230 10,230 10,725 10,868
12/31/88 10,030 10,561 10,561 10,913 11,000
01/31/89 10,340 10,872 10,872 11,711 11,754
02/28/89 10,280 10,810 10,810 11,420 11,568
03/31/89 10,380 10,904 10,904 11,686 11,822
04/30/89 10,653 11,187 11,187 12,292 12,307
05/31/89 10,956 11,501 11,501 12,790 12,797
06/30/89 11,036 11,574 11,574 12,717 12,748
07/31/89 11,251 11,797 11,797 13,866 13,608
08/31/89 11,599 12,148 12,148 14,137 13,945
09/30/89 11,465 11,998 11,998 14,079 13,812
10/31/89 11,258 11,772 11,772 13,753 13,319
11/30/89 11,237 11,751 11,751 14,033 13,472
12/31/89 11,240 11,741 11,741 14,370 13,770
01/31/90 10,690 11,160 11,160 13,406 12,912
02/28/90 10,690 11,160 11,160 13,579 13,238
03/31/90 10,967 11,435 11,435 13,939 13,373
04/30/90 10,638 11,082 11,082 13,590 12,852
05/31/90 11,296 11,765 11,765 14,915 13,919
06/30/90 11,249 11,705 11,705 14,814 13,603
07/31/90 10,947 11,383 11,383 14,766 13,484
08/31/90 10,199 10,596 10,596 13,431 12,298
09/30/90 9,478 9,837 9,837 12,777 11,703
10/31/90 9,093 9,427 9,427 12,722 11,543
11/30/90 9,396 9,741 9,741 13,544 12,343
12/31/90 9,575 9,926 9,926 13,922 12,657
01/31/91 9,883 10,232 10,232 14,529 13,227
02/28/91 10,485 10,844 10,844 15,568 14,106
03/31/91 10,729 11,096 11,096 15,945 14,315
04/30/91 10,848 11,207 11,207 15,983 14,421
05/31/91 11,408 11,787 11,787 16,674 14,959
06/30/91 11,013 11,365 11,365 15,910 14,329
07/31/91 11,422 11,776 11,776 16,651 14,929
08/31/91 11,891 12,249 12,249 17,046 15,201
09/30/91 12,075 12,439 12,439 16,761 15,089
10/31/91 12,331 12,690 12,690 16,986 15,339
11/30/91 11,941 12,288 12,288 16,301 14,552
12/31/91 12,864 13,226 13,226 18,166 15,771
01/31/92 13,086 13,454 13,454 17,828 15,796
02/29/92 13,358 13,709 13,709 18,060 16,183
03/31/92 13,098 13,435 13,435 17,708 15,948
04/30/92 13,111 13,448 13,448 18,228 16,635
05/31/92 13,248 13,576 13,576 18,318 16,718
06/30/92 13,097 13,415 13,415 18,045 16,614
07/31/92 13,410 13,723 13,723 18,782 17,255
08/31/92 13,235 13,531 13,531 18,398 16,728
09/30/92 13,369 13,665 13,665 18,614 16,959
10/31/92 13,331 13,626 13,626 18,678 16,975
11/30/92 13,685 13,975 13,975 19,314 17,532
12/31/92 13,979 14,254 14,254 19,551 17,949
01/31/93 14,183 14,463 14,463 19,715 18,471
02/28/93 14,056 14,332 14,332 19,983 19,121
03/31/93 14,606 14,874 14,874 20,405 19,685
04/30/93 14,490 14,743 14,743 19,912 19,432
05/31/93 14,837 15,084 15,084 20,445 19,823
06/30/93 15,134 15,380 15,380 20,504 20,260
07/31/93 15,471 15,722 15,722 20,422 20,487
08/31/93 16,480 16,723 16,723 21,197 21,226
09/30/93 16,753 16,994 16,994 21,034 21,260
10/31/93 16,987 17,232 17,232 21,469 21,246
11/30/93 16,571 16,783 16,783 21,265 20,807
12/31/93 17,069 17,281 17,281 21,522 21,202
01/31/94 17,563 17,768 17,768 22,254 22,005
02/28/94 17,376 17,565 17,565 21,650 21,252
03/31/94 16,422 16,593 16,593 20,706 20,462
04/30/94 16,314 16,470 16,470 20,971 20,854
05/31/94 16,234 16,389 16,389 21,315 21,094
06/30/94 15,856 16,000 16,000 20,793 20,589
07/31/94 16,248 16,382 16,382 21,476 21,230
08/31/94 17,032 17,148 17,148 22,356 21,839
09/30/94 16,993 17,114 17,114 21,810 21,115
10/31/94 16,952 17,059 17,059 22,300 21,409
11/30/94 16,258 16,346 16,346 21,488 20,544
12/31/94 16,326 16,408 16,408 21,806 20,781
01/31/95 16,367 16,436 16,436 22,372 21,420
02/28/95 16,738 16,795 16,795 23,244 22,267
03/31/95 17,191 17,244 17,244 23,929 22,756
04/30/95 17,494 17,549 17,549 24,634 23,475
05/31/95 17,550 17,604 17,577 25,619 24,463
06/30/95 17,991 18,048 18,014 26,214 24,794
07/31/95 18,880 18,939 18,892 27,083 25,658
08/31/95 19,102 19,162 19,101 27,151 26,020
09/30/95 19,727 19,789 19,707 28,297 26,961
10/31/95 19,769 19,831 19,749 28,196 26,693
11/30/95 20,732 20,796 20,686 29,434 28,045
12/31/95 20,993 21,058 20,938 30,001 28,750
01/31/96 21,705 21,773 21,635 31,022 29,646
02/29/96 22,002 22,071 21,917 31,309 29,870
03/31/96 22,180 22,249 22,078 31,611 30,378
04/30/96 22,537 22,608 22,435 32,077 30,494
05/31/96 23,073 23,146 22,940 32,904 30,876
06/30/96 23,134 23,206 22,988 33,029 30,901
07/31/96 22,132 22,201 21,990 31,570 29,733
08/31/96 23,014 23,086 22,839 32,236 30,584
09/30/96 24,140 24,215 23,947 34,050 31,799
10/31/96 24,966 25,044 24,753 34,989 33,029
11/30/96 26,241 26,323 26,006 37,634 35,424
12/31/96 26,312 26,394 26,046 36,889 34,972
01/31/97 27,263 27,348 26,972 39,193 36,667
02/28/97 27,125 27,210 26,818 39,501 37,206
03/31/97 26,438 26,521 26,126 37,878 35,868
04/30/97 27,547 27,633 27,208 40,139 37,374
05/31/97 29,245 29,336 28,872 42,583 39,464
06/30/97 30,785 30,881 30,380 44,490 41,157
07/31/97 33,528 33,633 33,042 48,030 44,253
08/31/97 32,712 32,815 32,218 45,340 42,678
09/30/97 35,095 35,205 34,550 47,823 45,255
10/31/97 33,477 33,582 32,936 46,226 43,993
11/30/97 34,800 34,908 34,207 48,366 45,937
12/31/97 35,764 35,876 35,135 49,196 47,278
01/31/98 35,785 35,897 35,135 49,740 46,612
02/28/98 38,509 38,629 37,781 53,327 49,749
03/31/98 39,966 40,091 39,218 56,058 52,793
04/30/98 40,852 40,980 40,051 56,622 53,147
05/31/98 40,008 40,133 39,197 55,649 52,360
06/30/98 40,325 40,451 39,489 57,909 53,031
07/31/98 39,502 39,625 38,636 57,293 52,098
08/31/98 32,490 32,592 31,762 49,009 44,346
09/30/98 33,631 33,736 32,868 52,149 46,891
10/31/98 35,087 35,197 34,265 56,391 50,525
11/30/98 37,305 37,421 36,410 59,808 52,880
12/31/98 39,879 40,003 38,904 63,255 54,678
01/31/99 42,411 42,543 41,335 65,900 55,115
02/28/99 40,341 40,467 39,289 63,852 54,338
03/31/99 42,144 42,276 41,022 66,406 55,463
04/30/99 44,285 44,424 43,089 68,978 60,643
05/31/99 42,970 43,104 41,766 67,350 59,976
06/30/99 44,332 44,471 43,090 71,088 61,715
</TABLE>
*Past performance is not an indication of future results. 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 14.1% and 14.0%, respectively. See page 28 for Footnotes, which
include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Aetna, Inc. 4.6%
Multiline insurance business
- --------------------------------------------------------------------------------
Micron Technology, Inc. 3.5%
Microcomputer parts
- --------------------------------------------------------------------------------
Conseco, Inc. 3.0%
Life insurance co.
- --------------------------------------------------------------------------------
Arrow Electronics, Inc. 2.9%
Distributor of electronic components
- --------------------------------------------------------------------------------
Asia Pulp & Paper Co. 2.9%
Pulp & paper products
- --------------------------------------------------------------------------------
Valero Energy Corp. 2.8%
Oil and gas refining/marketing
- --------------------------------------------------------------------------------
Smurfit-Stone Container Corp. 2.6%
Paperboard & packaged products
- --------------------------------------------------------------------------------
Nabors Industries, Inc. 2.5%
Contract drilling & services
- --------------------------------------------------------------------------------
Fleet Financial Group, Inc. 2.4%
Commercial banking
- --------------------------------------------------------------------------------
MediaOne Group, Inc. 2.3%
Cable/telecommunications service
- --------------------------------------------------------------------------------
Top Ten Total 29.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 17.8%
- --------------------------------------------------------------------------------
Technology 16.2%
- --------------------------------------------------------------------------------
Energy 14.7%
- --------------------------------------------------------------------------------
Materials & Processing 14.5%
- --------------------------------------------------------------------------------
Health Care 10.3%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 97.0%
- --------------------------------------------------------------------------------
Cash Equivalients 3.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Renaissance Fund returned
9.9% for Class A shares, 8.9% for Class B shares and 8.2% for Class C shares.
The telecom sector contributed greatly to the Fund's performance this year.
For instance, Motorola saw its stock price improve after introducing a new
product line of advanced digital technology cellular phones. The company is
regaining the market share it lost in the last several years as it continues to
offer more competitive products. Another of the Fund's telecom holdings,
MediaOne, was driven higher based on news that AT&T would be purchasing the
cable service and telecommunications provider.
Technology also turned in solid performance for the Fund this year. An
improving global economy resulted in greater demand for semiconductors, PCs and
other `cyclical technology' products. For instance, Micron Technology, a maker
of semiconductors, performed well as orders began to increase, and investor
sentiment regarding semiconductors became positive because of the brightening
global economic outlook. Another tech stock that contributed to the Fund's
performance was IBM, driven by increased revenues from its service business. IBM
has effected a corporate turnaround by moving away from dependence on its PC and
mainframe businesses and focusing on other opportunities, including consulting
and the formation of strategic alliances with a number of other companies.
Another standout stock for the Fund this year was Anheuser-Busch. The beer
producer and distributor benefited from a surge in domestic beer sales volume,
as well as increased profit margins, as much of the pricing pressure on beer has
eased. The company continues to benefit from strong brand recognition.
One disappointment for the Fund this year was Mirage Resorts. Mirage Resorts
owns and operates casino-based entertainment resorts in Las Vegas and Laughlin,
Nevada. The company suffered from the increasingly competitive nature of the
casino industry, with new and more elaborate casinos being built every quarter.
It also reported earnings disappointments this year that resulted from decreased
traffic to its casinos.
Looking ahead, the manager believes the Fund is well-positioned to benefit
from the recent market broadening as well as the improving global economy, both
of which significantly helped its performance in the second quarter.
22 See page 43 for financial details.
<PAGE>
June 30, 1999
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
FUND INCEPTION DATE
10/1/91
TOTAL NET ASSETS
$397.6 million
NUMBER OF SECURITIES IN THE PORTFOLIO
102 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
Russell Small-Cap
Adjusted Adjusted Adjusted 2000 Index Fund Avg.
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year -5.5% -10.7% -6.2% -10.8% -7.1% 1.5% 1.9%
3 years 13.4% 11.3% 12.5% 11.8% 12.6% 11.2% 10.5%
5 years 15.3% 14.0% 14.5% 14.2% 14.5% 15.4% 16.5%
Inception 14.0% 13.2% 13.2% 13.2% 13.1% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO Russell
Small-Cap Small-Cap Small-Cap 2000
Value A Value B Value C Index
<S> <C> <C> <C> <C>
09/30/91 9,450 10,000 10,000 10,000
10/31/91 9,556 10,106 10,106 10,264
11/30/91 9,335 9,866 9,866 9,789
12/31/91 10,022 10,586 10,586 10,573
01/31/92 10,701 11,297 11,297 11,430
02/29/92 11,060 11,669 11,669 11,764
03/31/92 10,961 11,557 11,557 11,366
04/30/92 10,734 11,310 11,310 10,967
05/31/92 10,740 11,309 11,309 11,113
06/30/92 10,393 10,937 10,937 10,590
07/31/92 10,706 11,259 11,259 10,958
08/31/92 10,540 11,077 11,077 10,649
09/30/92 10,641 11,177 11,177 10,894
10/31/92 10,832 11,370 11,370 11,238
11/30/92 11,598 12,167 12,167 12,098
12/31/92 11,852 12,427 12,427 12,519
01/31/93 12,374 12,965 12,965 12,943
02/28/93 12,310 12,892 12,892 12,644
03/31/93 12,623 13,211 13,211 13,054
04/30/93 12,287 12,851 12,851 12,696
05/31/93 12,492 13,057 13,057 13,257
06/30/93 12,518 13,076 13,076 13,339
07/31/93 12,557 13,109 13,109 13,524
08/31/93 12,972 13,533 13,533 14,108
09/30/93 13,087 13,645 13,645 14,506
10/31/93 13,332 13,892 13,892 14,879
11/30/93 13,089 13,630 13,630 14,394
12/31/93 13,439 13,986 13,986 14,886
01/31/94 13,938 14,496 14,496 15,353
02/28/94 13,913 14,462 14,462 15,297
03/31/94 13,287 13,802 13,802 14,491
04/30/94 13,328 13,836 13,836 14,577
05/31/94 13,006 13,493 13,493 14,413
06/30/94 12,769 13,239 13,239 13,927
07/31/94 12,964 13,433 13,433 14,156
08/31/94 13,481 13,959 13,959 14,944
09/30/94 13,147 13,605 13,605 14,894
10/31/94 12,898 13,339 13,339 14,834
11/30/94 12,595 13,017 13,017 14,234
12/31/94 12,892 13,316 13,316 14,615
01/31/95 12,958 13,376 13,376 14,431
02/28/95 13,534 13,963 13,963 15,031
03/31/95 13,611 14,033 14,033 15,289
04/30/95 13,924 14,347 14,347 15,629
05/31/95 14,258 14,682 14,682 15,897
06/30/95 14,708 15,136 15,136 16,722
07/31/95 15,434 15,874 15,874 17,685
08/31/95 15,733 16,172 16,172 18,051
09/30/95 16,033 16,469 16,469 18,374
10/31/95 15,401 15,810 15,810 17,552
11/30/95 16,030 16,446 16,446 18,289
12/31/95 16,112 16,520 16,520 18,772
01/31/96 16,032 16,427 16,427 18,751
02/29/96 16,376 16,770 16,770 19,336
03/31/96 16,871 17,265 17,265 19,729
04/30/96 17,441 17,838 17,838 20,784
05/31/96 17,999 18,397 18,397 21,603
06/30/96 17,872 18,256 18,256 20,716
07/31/96 16,884 17,235 17,235 18,907
08/31/96 17,683 18,040 18,040 20,005
09/30/96 18,218 18,575 18,575 20,787
10/31/96 18,564 18,916 18,916 20,466
11/30/96 19,790 20,153 20,153 21,309
12/31/96 20,498 20,861 20,861 21,868
01/31/97 21,166 21,533 21,533 22,305
02/28/97 21,240 21,594 21,594 21,764
03/31/97 20,435 20,759 20,759 20,737
04/30/97 20,629 20,956 20,956 20,795
05/31/97 22,404 22,732 22,732 23,108
06/30/97 23,493 23,840 23,840 24,099
07/31/97 24,701 25,039 25,039 25,220
08/31/97 25,342 25,676 25,676 25,798
09/30/97 27,207 27,558 27,543 27,686
10/31/97 26,745 27,057 27,057 26,471
11/30/97 27,043 27,345 27,345 26,298
12/31/97 27,563 27,845 27,851 26,759
01/31/98 27,093 27,367 27,357 26,336
02/28/98 28,786 29,055 29,044 28,285
03/31/98 29,899 30,169 30,158 29,450
04/30/98 29,805 30,042 30,047 29,613
05/31/98 28,441 28,657 28,646 28,017
06/30/98 27,563 27,749 27,755 28,076
07/31/98 25,540 25,713 25,701 25,802
08/31/98 21,778 21,907 21,897 20,791
09/30/98 22,405 22,527 22,517 22,419
10/31/98 23,283 23,410 23,377 23,333
11/30/98 24,098 24,230 24,172 24,556
12/31/98 24,951 25,087 25,008 26,076
01/31/99 23,953 24,084 24,006 26,423
02/28/99 22,727 22,851 22,772 24,283
03/31/99 22,399 22,522 22,426 24,662
04/30/99 24,312 24,445 24,318 26,871
05/31/99 25,129 25,266 25,126 27,264
06/30/99 26,044 26,186 26,030 28,496
</TABLE>
*Past performance is not an indication of future results. The adjusted returns
above include the effect of applicable sales charges. Excluding the 6-month and
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 28 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Pilgrim's Pride Corp. 1.4%
Chicken products
- --------------------------------------------------------------------------------
Burlington Coat Factory 1.3%
Off-price apparel stores
- --------------------------------------------------------------------------------
GenCorp, Inc. 1.1%
Aerospace, auto, polymer products
- --------------------------------------------------------------------------------
Westinghouse Air Brake Co. 1.1%
Train air brakes
- --------------------------------------------------------------------------------
MDC Holdings, Inc. 1.1%
Home building/mortgage banking
- --------------------------------------------------------------------------------
World Fuel Services Corp. 1.1%
Aviation fueling services, oil recycling
- --------------------------------------------------------------------------------
Enesco Group, Inc. 1.1%
Producer of household products
- --------------------------------------------------------------------------------
C&D Technologies, Inc. 1.1%
Battery power systems
- --------------------------------------------------------------------------------
Kaman Corp. 1.0%
Aerospace/defense equip
- --------------------------------------------------------------------------------
Kelly Services, Inc. 'A' 1.0%
Temporary help services
- --------------------------------------------------------------------------------
Top Ten Total 11.3%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 26.0%
- --------------------------------------------------------------------------------
Consumer Discretionary 12.3%
- --------------------------------------------------------------------------------
Capital Goods 11.3%
- --------------------------------------------------------------------------------
Utilities 9.1%
- --------------------------------------------------------------------------------
Building 6.7%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 94.4%
- --------------------------------------------------------------------------------
Cash Equivalents 5.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Small-Cap Value Fund returned
- -5.5% for its Class A shares, -6.2% for its Class B and -7.1% for its Class C
shares. It is important to note that, for the three months ended June 30, 1999,
the Fund returned 16.3% for its Class A shares, 16.0% for its Class B shares and
16.1% for its Class C shares.
For much of the year, smaller-capitalization and lower valuation stocks
suffered as a result of an extremely narrow market dominated by large-cap growth
stocks. However, in the second quarter of 1999, the market rotated away from
these large-capitalization and higher-valuation stocks in favor of
lower-valuation and smaller-capitalization issues. As a result, the Fund saw
strong performance in that quarter.
The technology sector positively impacted the Fund this year. The sector in
general benefited from investor interest in stocks with the greatest growth
potential, as well as an improving global economy, which resulted in increased
demand for many technological products. Fund holding Dallas Semiconductor, a
maker of semiconductor chips, benefited from a strong product line and increased
sales due to the improved global economic outlook.
The materials and processing sector, which saw strong performance in the
second quarter, aided the Fund's performance for the year. Investors were
attracted to the low valuations and positive fundamentals offered by this
sector. One standout was Westinghouse Air Brake, a manufacturer of value-added
equipment for locomotives, railway freight cars and passenger transit vehicles.
The company benefited from increased demand for its products, receiving two
large transit contracts during the second quarter. It also announced in early
June that it would merge with MotivePower Industries in order to create a
premier rail equipment supply company, boosting the company's stock price.
One disappointment for the Fund this year was Chiquita Brands, an
international marketer, producer and distributor of bananas and other fresh and
processed food products. It was hurt by import barriers erected in Europe, which
resulted in decreased demand for its products. Chiquita also suffered for much
of the year from weak banana pricing.
Despite its underperformance for the year, PIMCO Small-Cap Value Fund saw
strong performance in the second quarter of 1999 as a result of the market's
broadening. The manager is optimistic that, going forward, PIMCO Small-Cap Value
Fund is poised to outperform in this broader market.
See page 44 for financial details. 23
<PAGE>
June 30, 1999
PIMCO Target Fund
OBJECTIVE
Capital appreciation; no consideration given to income
PORTFOLIO
Primarily common stocks of companies with medium-sized capitalizations
FUND INCEPTION DATE
12/17/92
TOTAL NET ASSETS
$1.2 billion
NUMBER OF SECURITIES IN THE PORTFOLIO
59 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares S&P Lipper
Mid-Cap Mid-Cap
Adjusted Adjusted Adjusted Index Fund Avg.
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 15.7% 9.3% 14.9% 9.9% 13.9% 17.2% 13.4%
3 years 17.7% 15.5% 16.9% 16.1% 16.8% 22.5% 16.6%
5 years 21.8% 20.4% 20.9% 20.7% 20.9% 22.3% 19.7%
Inception 19.5% 18.5% 18.6% 18.6% 18.6% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P
Target A Target B Target C Mid-Cap
<S> <C> <C> <C> <C>
12/31/92 9,450 10,000 10,000 10,000
01/31/93 9,572 10,119 10,119 10,125
02/28/93 9,515 10,049 10,049 9,983
03/31/93 9,983 10,544 10,544 10,328
04/30/93 9,749 10,287 10,287 10,058
05/31/93 10,375 10,950 10,950 10,516
06/30/93 10,674 11,256 11,256 10,569
07/31/93 10,964 11,543 11,543 10,548
08/31/93 11,759 12,374 12,374 10,984
09/30/93 11,890 12,512 12,512 11,100
10/31/93 11,983 12,591 12,591 11,136
11/30/93 11,403 11,978 11,978 10,890
12/31/93 11,860 12,452 12,452 11,396
01/31/94 12,162 12,762 12,762 11,661
02/28/94 11,945 12,522 12,522 11,495
03/31/94 11,568 12,123 12,123 10,963
04/30/94 11,842 12,402 12,402 11,044
05/31/94 11,606 12,142 12,142 10,940
06/30/94 11,181 11,693 11,693 10,563
07/31/94 11,870 12,412 12,412 10,921
08/31/94 12,540 13,101 13,101 11,493
09/30/94 12,389 12,931 12,931 11,278
10/31/94 12,634 13,181 13,181 11,401
11/30/94 12,181 12,702 12,702 10,887
12/31/94 12,318 12,837 12,837 10,987
01/31/95 12,080 12,584 12,584 11,101
02/28/95 12,777 13,292 13,292 11,684
03/31/95 13,226 13,758 13,758 11,887
04/30/95 13,379 13,909 13,909 12,125
05/31/95 13,341 13,859 13,859 12,418
06/30/95 14,354 14,901 14,901 12,923
07/31/95 15,291 15,872 15,872 13,598
08/31/95 15,252 15,811 15,811 13,849
09/30/95 15,673 16,246 16,236 14,185
10/31/95 15,893 16,459 16,459 13,820
11/30/95 16,065 16,621 16,621 14,423
12/31/95 16,167 16,728 16,728 14,387
01/31/96 16,007 16,547 16,547 14,596
02/29/96 16,540 17,090 17,090 15,092
03/31/96 17,020 17,566 17,566 15,273
04/30/96 17,789 18,359 18,347 15,740
05/31/96 18,706 19,299 19,287 15,952
06/30/96 18,354 18,914 18,914 15,713
07/31/96 16,295 16,785 16,784 14,650
08/31/96 17,117 17,611 17,611 15,495
09/30/96 18,258 18,778 18,778 16,171
10/31/96 18,280 18,789 18,778 16,218
11/30/96 19,016 19,525 19,525 17,131
12/31/96 18,853 19,350 19,350 17,150
01/31/97 19,457 19,955 19,955 17,794
02/28/97 18,624 19,093 19,093 17,648
03/31/97 17,936 18,385 18,372 16,895
04/30/97 18,141 18,578 18,565 17,333
05/31/97 19,650 20,109 20,109 18,849
06/30/97 20,302 20,765 20,753 19,378
07/31/97 21,702 22,181 22,181 21,297
08/31/97 22,172 22,644 22,631 21,271
09/30/97 23,416 23,905 23,892 22,495
10/31/97 22,136 22,580 22,579 21,516
11/30/97 22,100 22,528 22,528 21,834
12/31/97 21,941 22,338 22,338 22,682
01/31/98 21,450 21,842 21,825 22,251
02/28/98 23,270 23,673 23,673 24,093
03/31/98 24,521 24,923 24,923 25,180
04/30/98 25,328 25,745 25,744 25,640
05/31/98 24,204 24,581 24,580 24,487
06/30/98 25,882 26,258 26,258 24,641
07/31/98 24,995 25,350 25,349 23,685
08/31/98 20,546 20,814 20,814 19,277
09/30/98 22,477 22,784 22,767 21,076
10/31/98 22,587 22,852 22,853 22,960
11/30/98 23,949 24,221 24,222 24,106
12/31/98 27,237 27,537 27,538 27,017
01/31/99 27,643 27,941 27,943 25,966
02/28/99 26,106 26,363 26,344 24,606
03/31/99 27,610 27,868 27,867 25,295
04/30/99 28,405 28,640 28,639 27,288
05/31/99 27,610 27,832 27,814 27,408
06/30/99 29,943 30,181 30,165 28,872
</TABLE>
*Past performance is not an indication of future results. 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. See page 28 for Footnotes,
which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
VISX, Inc. 3.1%
Vision correction systems
- --------------------------------------------------------------------------------
Comverse Technology, Inc. 3.0%
Developer & marketer of computer systems
- --------------------------------------------------------------------------------
Sanmina Corp. 2.6%
Electronic circuit boards
- --------------------------------------------------------------------------------
Abercrombie & Fitch Co. 'A' 2.5%
Retail casual apparel
- --------------------------------------------------------------------------------
Kansas City Southern Industries, Inc. 2.5%
Railroad financial services; mutual funds
- --------------------------------------------------------------------------------
Immunex Corp. 2.5%
Immunological bio products
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 2.5%
Multi-user application server systems
- --------------------------------------------------------------------------------
Allergan, Inc. 2.4%
Opthalmic/dermatological products
- --------------------------------------------------------------------------------
Gemstar International Group Limited 2.4%
TV/Video recording products
- --------------------------------------------------------------------------------
Tiffany & Co. 2.3%
Retail gift items
- --------------------------------------------------------------------------------
Top Ten Total 25.8%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 26.6%
- --------------------------------------------------------------------------------
Consumer Discretionary 22.8%
- --------------------------------------------------------------------------------
Health Care 19.4%
- --------------------------------------------------------------------------------
Financial & Business Services 9.3%
- --------------------------------------------------------------------------------
Communications 8.0%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 94.9%
- --------------------------------------------------------------------------------
Cash Equivalents 5.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Target Fund posted strong returns for the one-year period ended June 30,
1999, returning 15.7% for Class A shares, 14.9% for Class B shares, and 13.9%
for Class C shares. These numbers outperformed the average return of funds with
the same objective (as measured by the Lipper Mid-Cap Fund Average), which
returned 13.4% for the same period.
The sector that most positively contributed to the Fund's performance was
technology. Technology stocks in general benefited from increased investor
interest as well as earnings growth that continues to outpace the growth of the
market. In particular, the broadening of the market in the second quarter
benefited mid-cap technology stocks, many of which offered investors lower
valuations and greater growth potential than their large-cap counterparts at a
time when rising interest rates caused concern about higher valuation issues.
Biotechnology also contributed to the Fund's performance this year. For
instance, Immunex, a company that develops, markets, and manufactures innovative
therapeutic products for the treatment of cancer and infectious diseases, was a
strong contributor to the Fund's performance. One of its new products, Enbrel,
widely considered the most effective drug on the market for the treatment of
rheumatoid arthritis, recently received FDA approval. Sales of the drug have
been remarkable, and this high demand is expected to continue, giving it the
potential to reach one billion dollars in sales. The company also benefited from
continued demand for another of its drugs, Leukine, a white blood cell
stimulant, as well as the prospects of a strong product pipeline.
Another sector that benefited the Fund's returns was health care. VISX, the
leading manufacturer and developer of laser eye surgery equipment, turned in a
robust performance this year. Its market share in the fast-growing laser eye
surgery industry is a phenomenal 80%. The company, which saw its stock price
rise after a judge threw out a lawsuit against it by the Federal Trade
Commission, experienced high sales growth and high profitability this year, and
appears on track to continue this growth.
One disappointment for the Fund this period was Providian Financial, a credit
card company. Like many other financial services stocks, it was hurt by rising
interest rates in the second quarter. Providian in particular was also hurt by a
pending consumer advocate group lawsuit alleging unfair practices.
Looking ahead, the manager is optimistic that the Fund will continue to
perform well, given that both the earnings growth outlook and the long-term
outlook for interest rates, two of the most important drivers of stock prices,
appear favorable.
24 See page 45 for financial details.
<PAGE>
June 30, 1999
PIMCO Tax-Efficient Equity Fund
OBJECTIVE
Maximum after-tax growth of capital
PORTFOLIO
Broadly diversified portfolio of at least 250 common stocks of companies with
larger market capitalizations
FUND INCEPTION DATE
7/10/98
TOTAL NET ASSETS
$28 million
NUMBER OF SECURITIES IN THE PORTFOLIO
244 (not including short-term
instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Parametric Portfolio Associates
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
Lipper
A Shares B Shares C Shares S&P 500 Gr. & Income
Adjusted Adjusted Adjusted Index Fund Avg.
- --------------------------------------------------------------------------------
Inception 15.9% 9.6% 15.1% 10.1% 14.1% -- --
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P 500
Tax-Efficient Tax-Efficient Tax-Efficient Index
Equity A Equity B Equity C
<S> <C> <C> <C> <C>
07/31/98 9,450 10,000 10,000 10,000
08/31/98 8,093 8,554 8,563 8,554
09/30/98 8,506 8,991 9,001 9,102
10/31/98 9,302 9,824 9,834 9,843
11/30/98 9,784 10,313 10,334 10,439
12/31/98 10,356 10,916 10,928 11,041
01/31/99 10,691 11,270 11,282 11,502
02/28/99 10,337 10,884 10,896 11,145
03/31/99 10,711 11,270 11,282 11,591
04/30/99 11,094 11,665 11,678 12,040
05/31/99 10,769 11,322 11,334 11,755
06/30/99 11,398 11,478 11,891 12,408
</TABLE>
*Past performance is not an indication of future results. The funds A,B and C
shares commenced operations on 7/10/98. Since the fund is less than 1-year old,
the reported returns are cumulative. See page 28 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Microsoft Corp. 4.7%
Computer software
- --------------------------------------------------------------------------------
General Electric Co. 3.0%
Consumer/Indus. products broadcasting
- --------------------------------------------------------------------------------
Intel Corp. 2.3%
Semiconductors memory circuits
- --------------------------------------------------------------------------------
International Business Machines Corp. 2.2%
Business machines
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 1.9%
Computer network products
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1.9%
Discount stores
- --------------------------------------------------------------------------------
AT&T Corp. 1.8%
Telecommunications services
- --------------------------------------------------------------------------------
Exxon Corp. 1.7%
Leading oil co
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 1.6%
Telecommunications systems/software
- --------------------------------------------------------------------------------
Merck & Co., Inc. 1.6%
Ethical drugs/spec. chemicals
- --------------------------------------------------------------------------------
Top Ten Total 22.7%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 20.3%
- --------------------------------------------------------------------------------
Financial & Business Services 16.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 12.3%
- --------------------------------------------------------------------------------
Health Care 10.9%
- --------------------------------------------------------------------------------
Communications 8.2%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 98.9%
- --------------------------------------------------------------------------------
Cash Equivalents 1.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the period since inception through June 30, 1999, PIMCO Tax-Efficient Equity
Fund returned 15.9% for Class A shares, 15.1% for Class B share and 14.1% for
Class C shares.
PIMCO Tax-Efficient Equity Fund was started on July 10, 1998. The Fund is an
actively managed stock fund seeking low tax exposure without compromising return
potential. Its manager uses an innovative investment process featuring
quantitative stock selection and active tax management.
The technology sector performed well for the Fund this year. Increased demand
for technology, coupled with investor enthusiasm for stocks with the greatest
expectations for earnings growth, helped to boost the prices of many tech
stocks. For instance, Microsoft proved to be an outstanding holding for the Fund
this year. The software company benefited from its market dominance and strong
earnings growth. It also received a boost from investor enthusiasm over its new
product pipeline, which includes updated versions of Microsoft Office and
Microsoft Windows. Cisco Systems was another standout for the Fund this year.
The company continued to successfully position itself as the industry leader
within the Internet networking sector.
Another technology standout was IBM, which has been successful in imple-
menting its turnaround strategy. The company has changed its focus from the
PC and mainframe business to consulting and other higher profit margin
businesses. Its stock received a large boost in May when the company unveiled
its plans for expanding into the Internet business, which investors greeted with
much enthusiasm.
The health care sector made a solid contribution to the Fund's performance
this year. In particular, high-growth companies such as Amgen, Pfizer and Merck
all performed well for much of the year, until interest rate concerns caused
their stock prices to drop in the second quarter of 1999.
One disappointment for the Fund this year was Coca-Cola. The beverage
producer and bottler suffered for much of the year from its exposure to the
weakened global economy, from which it derives much of its sales.
Looking ahead, the manager intends to continue with its disciplined,
long-term, approach to stock selection based on fundamental valuations and the
principles of portfolio diversification and risk control. The manager is
optimistic that, with interest rates in check and earnings growth on the rise,
the Fund will continue its strong performance.
See page 46 for financial details. 25
<PAGE>
June 30, 1999
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
FUND INCEPTION DATE
12/30/91
TOTAL NET ASSETS
$231.6 million
NUMBER OF SECURITIES IN THE PORTFOLIO
41 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper Gr.
S&P 500 & Income
Adjusted Adjusted Adjusted Index Fund Avg.
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 11.9% 5.8% 11.1% 6.2% 10.1% 22.8% 14.5%
3 years 18.7% 16.5% 17.9% 17.1% 17.9% 29.1% 21.6%
5 years 20.8% 19.4% 19.9% 19.7% 19.9% 27.9% 21.7%
Inception 16.6% 15.8% 15.8% 15.8% 15.8% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P 500
Value A Value B Value C Index
<S> <C> <C> <C> <C>
12/31/91 9,450 10,000 10,000 10,000
01/31/92 9,720 10,279 10,279 9,814
02/29/92 10,046 10,618 10,618 9,942
03/31/92 9,817 10,369 10,369 9,748
04/30/92 9,858 10,406 10,406 10,034
05/31/92 9,770 10,306 10,306 10,083
06/30/92 9,558 10,077 10,077 9,933
07/31/92 9,894 10,425 10,425 10,339
08/31/92 9,605 10,114 10,114 10,128
09/30/92 9,735 10,244 10,244 10,247
10/31/92 9,794 10,300 10,300 10,282
11/30/92 10,317 10,843 10,843 10,632
12/31/92 10,650 11,186 11,186 10,762
01/31/93 10,871 11,411 11,411 10,852
02/28/93 10,985 11,524 11,524 11,000
03/31/93 11,324 11,873 11,873 11,232
04/30/93 11,123 11,655 11,655 10,961
05/31/93 11,277 11,808 11,808 11,254
06/30/93 11,352 11,879 11,879 11,287
07/31/93 11,294 11,811 11,811 11,242
08/31/93 11,904 12,442 12,442 11,668
09/30/93 11,930 12,461 12,461 11,579
10/31/93 12,340 12,881 12,881 11,818
11/30/93 12,211 12,739 12,739 11,706
12/31/93 12,348 12,874 12,874 11,847
01/31/94 12,916 13,458 13,458 12,250
02/28/94 12,703 13,228 13,228 11,918
03/31/94 12,017 12,505 12,505 11,398
04/30/94 11,867 12,342 12,342 11,544
05/31/94 11,863 12,330 12,330 11,734
06/30/94 11,587 12,035 12,035 11,446
07/31/94 12,067 12,526 12,526 11,822
08/31/94 12,572 13,042 13,042 12,307
09/30/94 12,187 12,634 12,634 12,006
10/31/94 12,312 12,757 12,757 12,275
11/30/94 11,690 12,104 12,104 11,828
12/31/94 11,798 12,208 12,208 12,004
01/31/95 12,115 12,528 12,528 12,315
02/28/95 12,653 13,078 13,078 12,795
03/31/95 12,998 13,426 13,426 13,173
04/30/95 13,346 13,776 13,776 13,560
05/31/95 13,850 14,288 14,288 14,102
06/30/95 14,087 14,524 14,524 14,430
07/31/95 14,704 15,150 15,150 14,909
08/31/95 14,881 15,324 15,324 14,946
09/30/95 15,290 15,735 15,735 15,577
10/31/95 15,330 15,766 15,766 15,521
11/30/95 15,985 16,430 16,430 16,202
12/31/95 16,325 16,769 16,769 16,515
01/31/96 16,787 17,233 17,233 17,077
02/29/96 17,150 17,595 17,595 17,235
03/31/96 17,285 17,722 17,722 17,401
04/30/96 17,507 17,939 17,939 17,657
05/31/96 17,856 18,286 18,286 18,113
06/30/96 17,773 18,190 18,189 18,182
07/31/96 16,811 17,194 17,194 17,379
08/31/96 17,461 17,848 17,847 17,745
09/30/96 17,934 18,320 18,320 18,744
10/31/96 18,186 18,565 18,565 19,261
11/30/96 19,741 20,141 20,141 20,717
12/31/96 19,568 19,952 19,952 20,306
01/31/97 20,226 20,618 20,618 21,575
02/28/97 20,571 20,955 20,955 21,744
03/31/97 19,841 20,200 20,199 20,851
04/30/97 20,609 20,966 20,965 22,095
05/31/97 21,829 22,192 22,191 23,441
06/30/97 22,367 22,731 22,732 24,491
07/31/97 23,848 24,221 24,222 26,439
08/31/97 23,349 23,684 23,685 24,958
09/30/97 24,735 25,083 25,083 26,325
10/31/97 23,493 23,806 23,807 25,446
11/30/97 24,068 24,375 24,376 26,624
12/31/97 24,598 24,902 24,887 27,081
01/31/98 24,700 24,970 24,973 27,381
02/28/98 26,154 26,444 26,430 29,355
03/31/98 27,196 27,490 27,475 30,859
04/30/98 26,670 26,924 26,927 31,169
05/31/98 26,552 26,787 26,790 30,633
06/30/98 26,584 26,818 26,820 31,878
07/31/98 25,462 25,668 25,669 31,538
08/31/98 21,808 21,961 21,963 26,978
09/30/98 23,056 23,215 23,215 28,707
10/31/98 25,087 25,244 25,243 31,041
11/30/98 26,520 26,671 26,670 32,923
12/31/98 27,000 27,129 27,128 34,820
01/31/99 26,344 26,470 26,448 36,276
02/28/99 25,340 25,462 25,437 35,149
03/31/99 25,274 25,395 25,341 36,555
04/30/99 27,928 28,062 27,986 37,971
05/31/99 28,682 28,820 28,725 37,074
06/30/99 29,754 29,898 29,776 39,132
</TABLE>
*Past performance is not an indication of future results. The adjusted returns
above include the effect of applicable sales charges. Excluding the 6-month and
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. See page 28 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Bell Atlantic Corp. 4.2%
Telephone service
- --------------------------------------------------------------------------------
GTE Corp. 4.0%
Independent telephone service
- --------------------------------------------------------------------------------
Thomas & Betts Corp. 3.9%
Electric conductors components
- --------------------------------------------------------------------------------
Mobil Corp. 3.9%
Int'l oil/gas exploration & development
- --------------------------------------------------------------------------------
SUPERVALU, Inc. 3.8%
Large food wholesaler
- --------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 3.7%
Public service electric & gas
- --------------------------------------------------------------------------------
Kimberly-Clark Corp. 3.7%
Consumer products/newsprint
- --------------------------------------------------------------------------------
Mallinckrodt, Inc. 3.7%
Healthcare products/spec. chemicals
- --------------------------------------------------------------------------------
NICOR, Inc. 3.6%
Utility holding/natural gas
- --------------------------------------------------------------------------------
DTE Energy Co. 3.5%
Electric & steam utility
- --------------------------------------------------------------------------------
Top Ten Total 38.0%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 13.7%
- --------------------------------------------------------------------------------
Consumer Staples 13.5%
- --------------------------------------------------------------------------------
Utilities 10.9%
- --------------------------------------------------------------------------------
Energy 9.6%
- --------------------------------------------------------------------------------
Communications 8.2%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 95.0%
- --------------------------------------------------------------------------------
Cash Equivalents 5.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Value Fund returned 11.9% for
Class A shares, 11.1% for Class B shares and 10.1% for Class C shares.
Lower valuation issues were out of favor for most of this one-year period, as
the largest of the large-cap growth stocks dominated the market. However, in the
second quarter of 1999, the market rotated toward lower valuation and smaller-
capitalization stocks. This shift came about as a result of the improving global
economy, which caused an increased demand for capital goods, as well as rising
interest rates, which caused investors to shy away from higher valuation growth
stocks. As a result, PIMCO Value Fund saw strong performance in the last quarter
of this one-year period, despite less impressive performance in the first three
quarters.
The technology sector performed well for the Fund this year. As the global
economy began to improve, demand increased for semiconductors, PCs and other
technology. Apple Computer, for instance, was a standout performer this year.
The PC maker experienced better-than-expected sales of its iMac computer, its
latest product offering, which was enthusiastically received by consumers. The
company has continued its successful comeback with more innovative product
offerings and has gained significant market share.
Another sector that contributed to the Fund's performance was tele-
communications. The sector benefited from increased demand from corporations
for data communications capabilities. One standout in this sector was GTE. GTE
provides inter-networking services ranging from dial-up Internet access for
consumers to Web-based applications for Fortune 500 companies. The company
benefited from increased revenues, new product development, and the sale of some
of its business units.
Basic materials, while a strong performer for the Fund in the second quarter
of 1999, performed poorly for the one-year period. Companies such as John Deere
and U.S. Steel suffered under extreme pricing pressures, which greatly narrowed
their profit margins. However, this sector was a strong contributor to the
Fund's performance in the second quarter, as the global economy improved, demand
for basic materials increased, and pricing pressures eased.
While the Fund's performance was hurt by the narrowness of the market for
most of the past year, the Fund turned in a strong performance in the second
quarter, as lower valuation and cyclical stocks finally outperformed growth
stocks. Looking ahead, we believe the Fund is poised to continue this
performance in the current market environment.
26 See page 48 for financial details.
<PAGE>
June 30, 1999
PIMCO Value 25 Fund
OBJECTIVE
Long-term growth of capital and income
PORTFOLIO
Approximately 25 common stocks of companies with medium market capitalizations
and that have below-average price-to-earnings ratios relative to their industry
groups
FUND INCEPTION DATE
7/10/98
TOTAL NET ASSETS
$2.2 million
NUMBER OF SECURITIES IN THE PORTFOLIO
25 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 6/30/99
<TABLE>
<CAPTION>
A Shares B Shares C Shares Lipper
S&P 500 Mid-Cap
Adjusted Adjusted Adjusted Index Fund Avg.
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception -9.9% -14.8% -10.5% -14.9% -11.4% -- --
</TABLE>
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO PIMCO PIMCO S&P 500
Value 25 A Value 25 B Value 25 C Index
<S> <C> <C> <C> <C>
07/31/98 9,450 10,000 10,000 10,000
08/31/98 7,771 8,212 8,212 8,139
09/30/98 7,822 8,266 8,266 8,898
10/31/98 8,426 8,894 8,894 9,694
11/30/98 8,589 9,068 9,068 10,178
12/31/98 8,735 9,210 9,218 11,407
01/31/99 8,251 8,688 8,698 10,963
02/28/99 7,973 8,394 8,393 10,389
03/31/99 8,065 8,482 8,491 10,680
04/30/99 8,992 9,460 9,468 11,521
05/31/99 9,188 9,656 9,663 11,572
06/30/99 9,229 9,218 9,600 12,190
</TABLE>
*Past performance is not an indication of future results. The funds A,B and C
shares commenced operations on 7/10/98. Since the fund is less than 1-year old,
the reported returns are cumulative. See page 28 for Footnotes, which include
additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
American National Insurance Co. 5.6%
Life insurance
- --------------------------------------------------------------------------------
Cordant Technologies, Inc. 5.4%
Aerospace propulsion systems
- --------------------------------------------------------------------------------
Golden West Financial Corp. 5.0%
Savings and loan
- --------------------------------------------------------------------------------
Cooper Tire & Rubber Co. 4.6%
Auto/truck tires, rubber products
- --------------------------------------------------------------------------------
Clayton Homes, Inc. 4.5%
Produce/finance manufactured homes
- --------------------------------------------------------------------------------
Warnaco Group, Inc. 'A' 4.3%
Womens intimate apparel
- --------------------------------------------------------------------------------
Lafarge Corp. 3.9%
Major cement producer
- --------------------------------------------------------------------------------
USX-U.S. Steel Group, Inc. 3.8%
Integrated steel producer
- --------------------------------------------------------------------------------
Manpower, Inc. 3.8%
World wide employment service
- --------------------------------------------------------------------------------
Meritor Automotive, Inc. 3.8%
International air express/freight
- --------------------------------------------------------------------------------
Top Ten Total 44.7%
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 19.6%
- --------------------------------------------------------------------------------
Financial & Business Services 17.6%
- --------------------------------------------------------------------------------
Capital Goods 13.3%
- --------------------------------------------------------------------------------
Building 12.1%
- --------------------------------------------------------------------------------
Materials & Processing 7.6%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 94.7%
- --------------------------------------------------------------------------------
Cash Equivalents 5.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the period since inception through June 30, 1999, the PIMCO Value 25 Fund
posted returns of -9.9% for Class A shares, -10.5% for Class B shares and -11.4%
for Class C shares. It is important to note that, for the three-month period
ended June 30, 1999, the Fund returned 14.4% for its Class A and Class B shares,
and 14.2% for its Class C shares.
PIMCO Value 25 Fund was started on July 10, 1998. The Fund's objective is to
seek long-term growth of capital and income through investment in approximately
25 mid-cap value stocks. The Fund manager maintains this concentrated portfolio
in order to maximize these holdings' potential returns.
For much of the year, smaller-capitalization and lower valuation stocks
suffered as a result of an extremely narrow market dominated by large-cap growth
stocks. However, in the second quarter of 1999, the market rotated away from
these large-cap, higher valuation stocks in favor of lower valuation and
smaller-capitalization issues. As a result, the Fund saw strong performance in
that quarter.
The financial and business services sector made a significant contribution to
the Fund's performance this year. A strong economy, tight labor market and
consumer confidence boosted home buying. For much of the year, a benign interest
rate environment also increased demand for homes and mortgages. One beneficiary
of this trend was Golden West Financial, a savings and loan holding company. The
tight labor market also resulted in fewer defaults and higher credit quality,
which also benefited the company.
Another standout for the Fund this year was Airborne Freight, a company that
provides door-to-door express delivery of small packages and documents through-
out the U.S. as well as foreign countries. Airborne Freight benefited from an
increase in revenue this year, which reflected an increase in its higher profit
margin segment of lower-weight overnight shipments.
One disappointment for the Fund this year was Old Republic International, a
holding company engaged in the underwriting and managing of property, liability,
life, disability, title, and mortgage guaranty insurance. The company suffered
from a rise in interest rates, which caused a drop-off in demand for title and
mortgage guaranty insurance. The company was also hurt by higher underwriting
and acquisition costs.
Looking ahead, the manager is optimistic that the Fund's strong performance
in the second quarter of 1999 will continue, given the current broadening of the
market and strong global economy.
See page 49 for financial details. 27
<PAGE>
June 30, 1999
- --------------------------------------------------------------------------------
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 perform-
ance, 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, 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 1000 and 2000 are indices of stocks of companies with
medium- and 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 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 total-return
performance averages of those funds that are tracked by Lipper, with the
investment objective noted. They do not take sales charges into account.
For additional details on the PIMCO taxable 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.
28
<PAGE>
Schedule of Investments
Balanced Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 54.9%
- --------------------------------------------------------------------------------
Aerospace 0.6%
Northrop Grumman Corp. 6,600 $ 438
Building 0.6%
Centex Corp. 5,600 210
Lafarge Corp. 5,700 202
----------
412
Capital Goods 4.1%
Deere & Co. 11,500 455
Dana Corp. 9,500 438
Tyco International Limited 4,100 388
Johnson Controls, Inc. 4,800 333
Honeywell, Inc. 2,700 313
AlliedSignal, Inc. 4,800 302
United Technologies Corp. 3,900 280
Textron, Inc. 3,000 247
General Electric Co. 2,000 226
----------
2,982
Communications 4.0%
GTE Corp. 17,300 1,310
Bell Atlantic Corp. 15,300 1,000
SBC Communications, Inc. 4,200 244
ALLTEL Corp. 3,400 243
Qualcomm, Inc. (b) 900 129
----------
2,926
Consumer Discretionary 9.0%
Thomas & Betts Corp. 20,500 969
UST, Inc. 28,800 842
Tupperware Corp. 20,400 520
Whirlpool Corp. 6,900 511
American Greetings Corp. 'A' 11,400 342
Wal-Mart Stores, Inc. 7,000 338
TJX Cos., Inc. 8,600 286
Lowe's Cos., Inc. 5,000 283
Home Depot, Inc. 4,300 277
Tandy Corp. 5,100 249
Gap, Inc. 4,900 247
Harley-Davidson, Inc. 4,400 239
CVS Corp. 4,700 239
Circuit City Stores 2,400 223
Cintas Corp. 3,300 222
Dayton Hudson Corp. 3,200 208
Ford Motor Co. 3,400 192
Mohawk Industries, Inc. (b) 6,100 185
General Motors Corp. 2,500 165
----------
6,537
Consumer Services 2.3%
Central Newspapers, Inc. 'A' 12,700 478
McGraw-Hill Companies, Inc. 4,700 254
CBS Corp. 5,700 248
New York Times Co. 6,600 243
Waste Management, Inc. 4,200 226
Gannett, Inc. 3,100 221
----------
1,670
Consumer Staples 3.4%
Kimberly-Clark Corp. 15,300 872
Anheuser Busch Cos., Inc. 9,400 667
SUPERVALU, Inc. 18,500 475
Kroger Co. (b) 8,600 240
Safeway, Inc. (b) 4,500 223
----------
2,477
Energy 4.7%
Mobil Corp. 8,900 881
Repsol SA SP - ADR 23,000 467
Kerr McGee Corp. 9,300 467
Ultramar Diamond Shamrock Corp. 20,700 452
Royal Dutch Petroleum Co. 4,100 247
Atlantic Richfield Co. 2,900 242
Peco Energy Co. 5,200 218
Unicom Corp. 5,600 216
Energy East Corp. 7,800 203
----------
3,393
Environmental Services 0.6%
Browning Ferris Industries, Inc. 10,400 447
Financial & Business Services 8.1%
Republic New York Corp. 7,100 484
Union Planters Corp. 10,400 465
PNC Bank Corp. 8,000 461
Omnicom Group 3,600 288
Chase Manhattan Corp. 2,800 243
Bank of New York 6,500 238
Citigroup, Inc. 4,700 223
Fleet Financial Group, Inc. 5,000 222
Associates First Capital Corp. 'A' 4,996 221
Bank of America Corp. 3,013 221
Wells Fargo & Co. 5,100 218
Capital One Financial Corp. 3,900 217
Hartford Financial Services Group, Inc. 3,700 216
Bank One Corp. 3,600 214
American Express Co. 1,600 208
Marsh & Mclennan Cos 2,700 204
Southtrust Corp. 5,300 203
Equity Residential Properties Trust 4,500 203
Alliance Capital Management LP 6,200 200
Comerica, Inc. 3,200 190
Federal Home Loan Mortgage Corp. 3,200 186
Federal National Mortgage Association 2,700 185
Countrywide Credit Industries, Inc. 4,100 175
Morgan Stanley, Dean Witter, Discover and Co. 1,200 123
Lehman Brothers Holdings, Inc. 1,200 75
----------
5,883
Health Care 4.4%
Mallinckrodt, Inc. 25,900 942
American Home Products Corp. 8,800 506
Boston Scientific Corp. (b) 5,900 259
Bristol-Myers Squibb Co. 3,300 232
Warner-Lambert Co. 3,100 215
CIGNA Corp. 2,400 214
United Healthcare Corp. 3,300 207
Wellpoint Health Networks, Inc. (b) 2,400 204
Mylan Laboratories, Inc. 5,400 143
Biogen, Inc. (b) 2,000 129
Schering-Plough Corp. 2,300 122
----------
3,173
Materials & Processing 2.4%
Westvaco Corp. 15,200 441
USG Corp. (b) 7,600 426
USX-U.S. Steel Group, Inc. 15,300 413
Weyerhaeuser Co. 3,600 248
Georgia-Pacific Corp. 4,500 213
----------
1,741
Technology 6.2%
Harris Corp. 13,000 509
Apple Computer, Inc. 10,900 505
Lucent Technologies, Inc. 6,385 431
Microsoft Corp. (b) 4,500 406
Tellabs, Inc. (b) 6,000 405
Texas Instruments, Inc. 2,100 305
International Business Machines Corp. 2,300 297
Cisco Systems, Inc. (b) 4,150 268
BMC Software, Inc. (b) 4,800 259
Uniphase Corp. (b) 1,500 249
Motorola, Inc. 2,600 246
Altera Corp. (b) 6,400 236
Compuware Corp. (b) 6,400 204
Computer Associates International, Inc. 3,400 187
----------
4,507
Transportation 0.2%
Southwest Airlines Co. 6,000 187
Utilities 4.3%
NICOR, Inc. 24,400 929
Public Service Enterprise Group, Inc. 22,400 916
DTE Energy Co. 21,000 840
See accompanying notes 29
<PAGE>
Schedule of Investments (Cont.)
Balanced Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
Ameritech Corp. 3,400 $ 250
Consolidated Edison, Inc. 4,100 186
----------
3,121
----------
Total Common Stocks 39,894
(Cost $34,086) ==========
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 11.6%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Banking & Finance 5.5%
Ford Motor Credit Corp.
5.838% due 10/15/2002 (d) $ 1,000 998
General Motors Acceptance Corp.
5.788% due 08/15/2003 (d) 1,000 994
New England Educational Loan Marketing
5.270% due 06/11/2001 (d) 2,000 2,001
----------
3,993
Industrials 6.1% AMR Corp.
10.000% due 02/01/2001 400 419
9.430% due 05/10/2001 1,000 1,044
Conagra, Inc.
5.298% due 06/12/2000 (d) 2,000 1,999
U.S. West Capital Funding
5.546% due 06/15/2000 (d) 1,000 1,000
----------
4,462
----------
Total Corporate Bonds & Notes 8,455
(Cost $8,405) ==========
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES 0.4%
- --------------------------------------------------------------------------------
Student Loan Marketing Assn.
5.080% due 04/25/2004 (d) 257 257
----------
Total U.S. Government Agencies 257
(Cost $257) ==========
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 24.3%
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations 2.8%
Federal Home Loan Mortgage Corp.
10.150% due 04/15/2006 11 11
Federal National Mortgage Association
6.740% due 08/25/2007 145 146
9.500% due 06/25/2018 264 282
First Plus Home Loan Trust
6.060% due 09/10/2011 1,000 1,002
GMAC Commercial Mortgage Securities, Inc.
6.150% due 11/15/2007 287 280
Independent National Mortgage Corp.
7.540% due 11/25/2024 (d) 216 217
7.600% due 11/25/2024 (d) 119 120
----------
2,058
Federal Home Loan Mortgage Corporation 4.6%
6.000% due 07/14/2028 1,000 940
6.500% due 07/14/2026 2,100 2,027
8.500% due 03/01/2023 320 337
----------
3,304
Federal Housing Administration 3.2%
6.000% due 03/20/2028 1,921 1,789
7.000% due 07/01/2014 (d) 549 509
----------
2,298
Federal National Mortgage Association 4.5%
5.500% due 07/14/2029 1,000 912
6.842% due 12/01/2023 (d) 170 175
8.500% due 07/01/2002-07/01/2025 (e) 2,065 2,155
----------
3,242
Government National Mortgage Association 8.4%
6.000% due 07/22/2029 1,000 935
6.500% due 01/15/2024-07/21/2028 (e) 3,216 3,096
6.620% due 08/20/2024 (d) 468 472
6.875% due 04/20/2023 (d) 922 941
7.500% due 05/15/2017 6 6
8.000% due 09/15/2006-11/15/2026 (e) 283 291
9.500% due 09/15/2009-10/15/2009 (e) 98 105
10.750% due 09/15/2000-10/15/2000 (e) 38 40
16.000% due 10/15/2011-04/15/2012 (e) 170 204
----------
6,090
Other Mortgage-Backed Securities 0.8%
Home Savings of America
5.530% due 05/25/2027 (d) 630 619
----------
Total Mortgage-Backed Securities 17,611
(Cost $17,798) ==========
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 1.4%
- --------------------------------------------------------------------------------
MBNA Master Credit Card Trust
5.121% due 01/15/2002 1,000 1,001
----------
Total Asset-Backed Securities 1,001
(Cost $998) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 18.2%
- --------------------------------------------------------------------------------
Commercial Paper 15.1%
BellSouth Telecommunications, Inc.
5.230% due 07/07/1999 1,000 999
Coca-Cola Co.
4.760% due 07/30/1999 100 100
Emerson Electric Co.
5.000% due 07/09/1999 500 498
Federal Home Loan Mortgage Corp.
5.020% due 07/16/1999 5,000 4,990
4.910% due 07/22/1999 100 100
Ford Motor Credit Co.
4.780% due 07/26/1999 100 100
Kellogg Co.
4.950% due 07/16/1999 1,000 998
Motorola, Inc.
5.080% due 08/03/1999 900 896
National Rural Utilities Cooperative
4.780% due 07/23/1999 600 598
Procter & Gamble Co.
4.830% due 07/06/1999 400 400
Shell Oil Co.
5.190% due 07/09/1999 300 300
U.S. West Communications
5.960% due 03/24/2000 1,000 958
----------
10,937
==========
Repurchase Agreement 2.9%
State Street Bank
3.500% due 07/01/1999 2,144 2,144
(Dated 06/30/1999. Collateralized by U.S. ----------
Treasury Note 6.875% 05/15/2006 valued at
$415,984, U.S. Treasury Note 6.875% 05/15/2006
valued at $321,203 and U.S. Treasury Note 8.500%
11/15/2000 valued at $1,462,352. Repurchase
proceeds are $2,144,208.)
U.S. Treasury Bills (c) 0.2%
4.543% due 09/16/1999 165 164
Total Short-Term Instruments
(Cost $13,242) 13,245
==========
Total Investments (a) 110.8% $ 80,463
(Cost $74,786)
Written Options (f) (0.0%) (7)
(Premiums $9)
Other Assets and Liabilities (Net) (10.8%) (7,814)
----------
Net Assets 100.0% $ 72,642
==========
30 See accompanying notes
<PAGE>
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$74,867 was as follows:
Aggregate gross unrealized appreciation for all
tax cost. $ 6,618
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (1,022)
----------
Unrealized appreciation-net $ 5,596
==========
(b) Non-income producing security
(c) Securities with an aggregate market value of
$2,143 have been segregated with the custodian
to cover margin requirements for the following
open futures contracts at June 30, 1999:
Unrealized
# of Appreciation /
Type Contracts (Depreciation)
- --------------------------------------------------------------------------------
Eurodollar March Futures (03/2000) 6 $ (14)
Eurodollar March Futures (03/2001) 1 (1)
Eurodollar June Futures (06/2001) 1 (1)
Eurodollar September Futures (09/2001) 3 (5)
Eurodollar December Futures (12/1999) 6 (12)
U.S. Treasury 5 Year Note (09/1999) 3 3
U.S. Treasury 10 Year Note (09/1999) 16 12
U.S. Treasury 30 Year Bond (09/1999) 35 26
----------
$ 8
==========
(d) Variable rate security. The rate listed is as of June 30, 1999.
(e) Securities are grouped by coupon or range of coupons and represent a range
of maturities.
(f) Premiums received on written options:
# of
Type Contracts Premium Value
- --------------------------------------------------------------------------------
Call - CBOT U.S. Treasury Bond September Futures
Strike @ 124.00 Exp. 08/21/1999 1 $ 0 $ 0
Put - CBOT U.S. Treasury Bond September Futures
Strike @ 112.00 Exp. 08/21/1999 1 1 0
Call - CBOT U.S. Treasury Bond September Futures
Strike @ 126.00 Exp. 08/21/1999 8 1 0
Put - CBOT U.S. Treasury Bond September Futures
Strike @ 114.00 Exp. 08/21/1999 9 7 7
---------------------------
$ 9 $ 7
===========================
See accompanying notes 31
<PAGE>
Schedule of Investments
Capital Appreciation Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 101.0%
- --------------------------------------------------------------------------------
Building 2.0%
Centex Corp. 305,800 $ 11,487
Lafarge Corp. 289,450 10,257
-----------
21,744
Capital Goods 10.4%
Tyco International Limited 224,800 21,300
Johnson Controls, Inc. 256,000 17,744
Honeywell, Inc. 147,700 17,115
AlliedSignal, Inc. 268,600 16,922
United Technologies Corp. 210,600 15,097
Textron, Inc. 170,900 14,067
General Electric Co. 113,000 12,769
General Dynamics Corp. 4,000 274
-----------
115,288
Communications 4.5%
GTE Corp. 204,000 15,453
SBC Communications, Inc. 227,600 13,201
ALLTEL Corp. 182,400 13,042
Qualcomm, Inc. (b) 53,300 7,649
-----------
49,345
Consumer Discretionary 16.6%
Wal-Mart Stores, Inc. 383,700 18,514
TJX Cos., Inc. 487,600 16,243
Home Depot, Inc. 233,900 15,072
Lowe's Cos., Inc. 256,600 14,546
Gap, Inc. 270,300 13,616
Harley-Davidson, Inc. 245,900 13,371
Tandy Corp. 269,900 13,191
CVS Corp. 251,500 12,764
Cintas Corp. 184,000 12,362
Circuit City Stores 132,500 12,322
Dayton Hudson Corp. 174,900 11,368
Ford Motor Co. 190,400 10,746
Mohawk Industries, Inc. (b) 335,800 10,200
General Motors Corp. 135,800 8,963
B.J.'s Wholesale Club, Inc. (b) 10,000 301
Delphi Automotive Systems (b) 1 0
Mattel, Inc. 1 0
-----------
183,579
Consumer Services 6.0%
Gannett, Inc. 200,000 14,275
New York Times Co. 385,800 14,202
McGraw-Hill Companies, Inc. 248,500 13,403
Waste Management, Inc. 241,900 13,002
CBS Corp. 256,500 11,142
-----------
66,024
Consumer Staples 3.5%
Anheuser Busch Cos., Inc. 188,200 13,350
Kroger Co. (b) 475,600 13,287
Safeway, Inc. (b) 234,500 11,608
-----------
38,245
Energy 5.6%
Royal Dutch Petroleum Co. 224,800 13,544
Atlantic Richfield Co. 161,100 13,462
Unicom Corp. 311,600 12,016
Peco Energy Co. 285,700 11,964
Energy East Corp. 411,400 10,696
-----------
61,682
Financial & Business Services 22.2%
Omnicom Group 198,000 15,840
Chase Manhattan Corp. 160,500 13,903
Bank of New York 370,800 13,604
Hartford Financial Services Group, Inc. 213,000 12,421
Fleet Financial Group, Inc. 273,100 12,119
Citigroup, Inc. 252,250 11,982
Bank of America Corp. 162,915 11,944
Associates First Capital Corp. 'A' 267,374 11,848
American Express Co. 88,900 11,568
Wells Fargo & Co. 270,100 11,547
Bank One Corp. 193,100 11,501
Capital One Financial Corp. 205,400 11,438
Alliance Capital Management LP 344,400 11,128
Marsh & Mclennan Cos 147,300 11,121
Federal National Mortgage Association 157,800 10,790
Equity Residential Properties Trust 239,400 10,788
Southtrust Corp. 280,650 10,770
Federal Home Loan Mortgage Corp. 183,200 10,626
Comerica, Inc. 176,400 10,485
Countrywide Credit Industries, Inc. 230,000 9,832
Morgan Stanley, Dean Witter, Discover and Co. 58,300 5,976
Lehman Brothers Holdings, Inc. 60,100 3,741
-----------
244,972
Health Care 7.7%
Boston Scientific Corp. (b) 313,200 13,761
Bristol-Myers Squibb Co. 178,000 12,538
CIGNA Corp. 136,700 12,166
Warner-Lambert Co. 171,500 11,898
United Healthcare Corp. 177,000 11,085
Wellpoint Health Networks, Inc. (b) 125,500 10,652
Biogen, Inc. (b) 107,000 6,881
Schering-Plough Corp. 122,600 6,498
-----------
85,479
Materials & Processing 2.4%
Weyerhaeuser Co. 197,700 13,592
Georgia-Pacific Corp. 270,600 12,820
-----------
26,412
Technology 16.9%
Lucent Technologies, Inc. 333,910 22,518
Microsoft Corp. (b) 238,600 21,519
Tellabs, Inc. (b) 310,000 20,944
Texas Instruments, Inc. 118,100 17,125
International Business Machines Corp. 131,000 16,932
Cisco Systems, Inc. (b) 230,200 14,848
BMC Software, Inc. (b) 258,500 13,959
Motorola, Inc. 142,800 13,530
Uniphase Corp. (b) 81,000 13,446
Altera Corp. (b) 308,700 11,364
Compuware Corp. (b) 341,200 10,854
Computer Associates International, Inc. 177,100 9,740
-----------
186,779
Transportation 1.0%
Southwest Airlines Co. 338,000 10,520
Utilities 2.2%
Ameritech Corp. 181,400 13,333
Consolidated Edison, Inc. 237,700 10,756
-----------
24,089
-----------
Total Common Stocks 1,114,158
(Cost $891,804) ===========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 3.9%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 3.9%
State Street Bank
3.500% due 07/01/1999 $ 42,629 42,629
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $43,483,170. Repurchase
proceeds are $42,633,144.)
-----------
Total Short-Term Instruments 42,629
(Cost $42,629) ===========
Total Investments (a) 104.9% $1,156,787
(Cost $934,433)
Other Assets and Liabilities (Net) (4.9%) (53,161)
-----------
Net Assets 100.0% $1,103,626
===========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$934,542 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 232,473
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (10,228)
-----------
Unrealized appreciation-net $ 222,245
===========
(b) Non-income producing security.
32 See accompanying notes
<PAGE>
Schedule of Investments
Equity Income Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 98.7%
- --------------------------------------------------------------------------------
Aerospace 2.2%
BFGoodrich Co. 105,000 $ 4,462
Capital Goods 8.0%
Hubbell, Inc. 'B' 96,000 4,356
GATX Corp. 109,000 4,149
Deere & Co. 102,600 4,066
Dana Corp. 79,900 3,680
-----------
16,251
Communications 6.3%
Bell Atlantic Corp. 66,932 4,376
GTE Corp. 56,800 4,303
U.S. West, Inc. 69,000 4,054
-----------
12,733
Consumer Discretionary 15.5%
Whirlpool Corp. 59,200 4,381
Springs Industries, Inc. 'A' 99,000 4,319
Armstrong World Industries 72,000 4,162
Ford Motor Co. 71,400 4,030
Penny J.C., Inc. 81,000 3,934
Eastman Kodak Co. 56,000 3,794
UST, Inc. 129,400 3,785
American Greetings Corp. 'A' 98,000 2,952
-----------
31,357
Consumer Staples 7.9%
SUPERVALU, Inc. 164,600 4,228
RJ Reynolds Tobacco Holdings, Inc. 126,600 3,988
Anheuser Busch Cos., Inc. 56,000 3,972
Kimberly-Clark Corp. 65,500 3,733
-----------
15,921
Energy 10.1%
Repsol SA SP - ADR 208,500 4,235
USX Marathon Group 129,000 4,201
Kerr McGee Corp. 81,000 4,065
Mobil Corp. 41,000 4,059
Ultramar Diamond Shamrock Corp. 180,500 3,937
-----------
20,497
Environmental Services 2.0%
Browning Ferris Industries, Inc. 94,000 4,042
Financial & Business Services 19.6%
Union Planters Corp. 180,000 8,044
Edwards (A.G.), Inc. 128,000 4,128
Morgan, J.P. & Co., Inc. 29,100 4,088
Deluxe Corp. 105,000 4,088
KeyCorp 123,000 3,951
Republic New York Corp. 57,900 3,948
HRPT Properties Trust 252,600 3,868
PNC Bank Corp. 65,000 3,746
Ohio Casualty Corp. 102,400 3,699
-----------
39,560
Health Care 2.0%
Mallinckrodt, Inc. 109,700 3,990
Materials & Processing 9.8%
USX-U.S. Steel Group, Inc. 299,400 8,084
Georgia-Pacific Corp. (Timber Group) 156,700 3,957
Tenneco, Inc. 164,000 3,916
Westvaco Corp. 134,000 3,886
-----------
19,843
Technology 3.9%
Harris Corp. 199,400 7,814
Utilities 11.4%
NICOR, Inc. 105,000 3,997
Constellation Energy Group, Inc. 133,000 3,940
Peoples Energy Corp. 103,000 3,882
Public Service Enterprise Group, Inc. 94,500 3,863
DTE Energy Co. 95,000 3,800
Central & South West Corp. 148,800 3,478
-----------
22,960
-----------
Total Common Stocks 199,430
(Cost $180,043) ===========
Value
(000s)
Total Investments (a) 98.7% $ 199,430
(Cost $180,043)
Other Assets and Liabilities (Net) 1.3% 2,575
-----------
Net Assets 100.0% $ 202,005
===========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$180,175 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 27,086
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (7,831)
-----------
Unrealized appreciation-net $ 19,255
===========
See accompanying notes 33
<PAGE>
Schedule of Investments
Growth Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 96.6%
- --------------------------------------------------------------------------------
Capital Goods 14.2%
Tyco International Limited 900,000 $ 85,275
General Electric Co. 650,000 73,450
Illinois Tool Works, Inc. 800,000 65,600
AlliedSignal, Inc. 1,000,000 63,000
United Technologies Corp. 800,000 57,350
-----------
344,675
Communications 8.1%
Nokia Corp. SP- ADR 850,000 77,828
MCI WorldCom, Inc. (b) 900,000 77,624
AT&T Corp. 500,000 27,906
AT&T Corp. - Liberty Media Group 'A' (b) 350,000 12,862
-----------
196,220
Consumer Discretionary 14.1%
Wal-Mart Stores, Inc. 1,700,000 82,025
Home Depot, Inc. 1,200,000 77,324
Kohls Corp. (b) 800,000 61,750
Staples, Inc. (b) 1,500,000 46,406
Costco Cos., Inc. (b) 400,000 32,024
Clear Channel Communications (b) 350,000 24,128
Time Warner, Inc. 250,000 18,375
-----------
342,032
Energy 1.3%
Enron Corp. 400,000 32,700
Financial & Business Services 22.9%
Citigroup, Inc. 1,800,000 85,500
Morgan Stanley, Dean Witter, Discover and Co. 800,000 82,000
Omnicom Group 1,000,000 80,000
Capital One Financial Corp. 1,200,000 66,824
American Express Co. 500,000 65,062
American International Group, Inc. 550,000 64,383
Federal National Mortgage Association 750,000 51,281
Paychex, Inc. 1,200,000 38,250
Charles Schwab Corp. 225,000 24,722
-----------
558,022
Health Care 6.6%
United Healthcare Corp. 750,000 46,969
Guidant Corp. 800,000 41,150
Schering-Plough Corp. 725,000 38,424
Bristol-Myers Squibb Co. 500,000 35,219
-----------
161,762
Technology 29.4%
Cisco Systems, Inc. (b) 1,650,000 106,424
Microsoft Corp. (b) 1,000,000 90,187
Lucent Technologies, Inc. 1,237,500 83,454
EMC Corp. (b) 1,500,000 82,500
Motorola, Inc. 800,000 75,800
Tellabs, Inc. (b) 1,000,000 67,562
America Online, Inc. (b) 600,000 66,300
International Business Machines Corp. 500,000 64,641
Solectron Corp. (b) 800,000 53,350
Thermo Electron Corp. (b) 1,200,000 24,074
-----------
714,292
-----------
Total Common Stocks 2,349,703
(Cost $1,776,172) ===========
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 0.0%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Banking & Finance 0.0%
Cabbell Financial Grantor Trust
7.188% due 12/31/2002 $ 535 455
-----------
Total Corporate Bonds & Notes 455
(Cost $531) ===========
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 3.4%
- --------------------------------------------------------------------------------
Repurchase Agreement 3.4%
State Street Bank
3.500% due 07/01/1999 $ 81,983 $ 81,983
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 4.875% 03/31/2001
valued at $51,000,770 and U.S. Treasury
Note 6.500% 05/31/2001 valued
at $32,625,577. Repurchase proceeds
are $81,990,970.)
-----------
Total Short-Term Instruments 81,983
(Cost $81,983) ===========
Total Investments (a) 100.0% $2,432,141
(Cost $1,858,686)
Other Assets and Liabilities (Net) 0.0% 909
-----------
Net Assets 100.0% $2,433,050
-----------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$1,859,678 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 585,598
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (13,135)
-----------
Unrealized appreciation-net $ 572,463
===========
(b) Non-income producing security.
34 See accompanying notes
<PAGE>
Schedule of Investments
Innovation Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 95.0%
- --------------------------------------------------------------------------------
Communications 10.5%
Nokia Corp. SP- ADR 480,000 $ 43,950
MCI WorldCom, Inc. (b) 470,000 40,537
General Instrument Corp. (b) 880,000 37,400
Qwest Communications International, Inc. (b) 310,000 10,249
-----------
132,136
Consumer Discretionary 6.4%
Corning, Inc. 480,000 33,660
Gemstar International Group Limited (b) 428,000 27,927
Time Warner, Inc. 270,000 19,845
-----------
81,432
Health Care 6.1%
United Healthcare Corp. 305,000 19,101
IDEC Pharmaceuticals Corp. (b) 247,500 19,073
Medtronic, Inc. 203,190 15,823
Minimed, Inc. (b) 155,000 11,925
Bausch & Lomb, Inc. 140,000 10,710
-----------
76,632
Technology 72.0%
Cisco Systems, Inc. (b) 1,030,000 66,435
Lucent Technologies, Inc. 895,000 60,357
Microsoft Corp. (b) 590,000 53,211
America Online, Inc. (b) 479,600 52,996
Motorola, Inc. 514,900 48,787
Siebel Systems, Inc. (b) 670,000 44,471
Tellabs, Inc. (b) 645,000 43,578
Sun Microsystems, Inc. (b) 630,000 43,391
Xilinx, Inc. (b) 715,000 40,934
Yahoo, Inc. (b) 219,500 37,809
Broadcom Corp. (b) 260,000 37,586
Dell Computer Corp. (b) 1,005,000 37,185
Oracle Corp. (b) 810,000 30,071
Maxim Integrated Products, Inc. (b) 430,000 28,595
Jabil Circuit, Inc. (b) 590,000 26,624
Inktomi Corp. (b) 193,000 25,199
International Business Machines Corp. 190,000 24,558
Uniphase Corp. (b) 140,000 23,240
Covad Communications Group, Inc. (b) 395,000 21,058
Texas Instruments, Inc. 120,000 17,400
Teradyne, Inc. (b) 260,000 18,655
Veritas Software Corp. (b) 185,000 17,563
Vitesse Semiconductor Co. (b) 250,000 16,859
Altera Corp. (b) 440,000 16,198
Electronics for Imaging, Inc. (b) 270,000 13,871
LSI Logic Corp. (b) 291,500 13,445
EMC Corp. (b) 220,000 12,100
I2 Technologies, Inc. (b) 270,000 11,610
Adaptec, Inc. (b) 300,000 10,594
Atmel Corp. (b) 350,000 9,166
ASM Lithography Holding NV (b) 129,000 7,659
-----------
911,205
-----------
Total Common Stocks 1,201,405
(Cost $794,237) ===========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 7.4%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 7.4%
State Street Bank
3.500% due 07/01/1999 $ 93,312 93,312
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.625% 06/30/2001
valued at $44,181,524 and U.S. Treasury
Note 7.875% 08/15/2001 valued at
$51,001,879. Repurchase proceeds
are $93,321,072.)
-----------
Total Short-Term Instruments 93,312
(Cost $93,312) ===========
Value
(000s)
Total Investments (a) 102.4% $1,294,717
(Cost $887,549)
Other Assets and Liabilities (Net) (2.4%) (29,814)
-----------
Net Assets 100.0% $1,264,903
===========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$898,378 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 405,714
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (9,375)
-----------
Unrealized appreciation-net $ 396,339
===========
(b) Non-income producing security.
See accompanying notes 35
<PAGE>
Schedule of Investments
International Fund
June 30, 1999
Value
Shares (000s)
COMMON STOCKS 87.7%
Brazil 0.0%
Companhia Vale do Rio Doce - Bonus Shares 27,368 $ 0
Chile 2.7%
Compania de Telecomunicaciones
de Chile SA SP - ADR 36,955 915
Banco Santander Chile SP - ADR 41,850 649
Enersis SA SP - ADR 24,122 552
Empresa Nacional de Electricidad SA SP - ADR 39,367 477
Gener SA SP - ADR 20,933 372
Compania Cervecerias Unidas SA SP - ADR 11,400 326
Sociedad Quimica y Minera de Chile SA SP - ADR 9,200 325
Masisa SA SP - ADR 21,000 221
Madeco SA SP - ADR 20,742 210
Quimica Y Minera de Chile 531 19
-----------
4,066
Finland 4.4%
Nokia OYJ 49,012 4,296
Sonera Group OYJ (b) 16,500 361
Sanoma-WSOY OYJ 'B' (b) 6,120 351
UPM-Kymmene Corp. 12,026 345
Hartwall OY AB 16,200 240
Viking Line AB 5,750 229
Kemira OYJ 33,100 200
Rautaruukki OY 25,525 154
Okobank 14,164 124
Yit-Yhtyma OY 13,344 124
Metsa Serla 'B' 13,570 115
Fortum Corp. 15,500 75
Rauma Group OY 630 7
-----------
6,621
France 14.2%
France Telecom SA 30,871 2,331
Total SA 13,030 1,680
Banque National de Paris 19,880 1,656
Elf Aquitaine SA 9,812 1,439
AXA-UAP 11,300 1,378
L'OREAL 2,030 1,372
Carrefour Supermarche 9,130 1,341
Alcatel Alsthom 9,130 1,285
Vivendi (Ex-Generale Des Eaux) 14,858 1,204
Hermes International 8,545 854
Lafarge SA 8,901 846
Groupe GTM 7,600 815
Castorama Dubois 3,200 759
Pinault-Printemps Redout 4,350 746
Renault SA 14,900 648
Groupe Danone 2,360 608
Compagnie de Saint Gobain 3,750 597
Cie Generale D'Optique Essilor International SA 1,850 578
Sodexho Alliance SA 3,050 525
Societe BIC SA 9,440 498
VIVENDI Warrants (b) 2,750 7
Schneider SA 1 0
-----------
21,167
Germany 6.4%
DaimlerChrysler AG 13,999 1,222
Deutsche Telekom AG 24,000 1,008
Mannesmann AG 6,100 912
Bayer AG 18,400 765
Allianz AG 2,517 703
Siemens AG 8,243 636
VEBA AG 7,810 461
BASF AG 9,900 435
Deutsche Bank 7,122 434
Volkswagen AG 6,590 425
Dresdner Bank AG 9,820 382
Bayerische Vereinsbank AG 6,000 382
SAP AG-Vorzug 870 346
Muenchener Rueckversicherungs-Gesellschaft AG 1,590 299
Muenchener Rueckversicher (b) 1,590 297
Viag AG 620 288
RWE AG 5,960 276
Metro AG 3,900 248
Deutsche Telekom AG - Rights (b) 11,000 0
-----------
9,519
Hungary 1.6%
Magyar Tavkozlesi Rt. 215,400 1,164
MOL Magyar Olaj-es Gazipari Rt. 25,000 602
OTP Bank Rt. 8,010 334
Gedeon Richter Rt. 4,745 206
Danubius Hotel and Spa Rt. 2,890 52
Pick Szeged Rt. 1,090 31
-----------
2,389
Indonesia 1.4%
PT Telekomunikasi Indonesia 1,361,880 787
PT Indah Kiat Pulp & Paper Corp. 795,000 367
PT Indofood Sukses Makmur 239,000 324
PT Gudang Garam 95,000 257
PT Semen Gresik 85,000 185
PT Astra International, Inc. 298,000 136
PT Tambang Timah 74,000 64
-----------
2,120
Ireland 1.9%
Allied Irish Banks PLC 80,200 1,055
CRH PLC 35,600 631
Kerry Group PLC 33,800 401
Irish Life & Permanent PLC 34,441 364
Jefferson Smurfit Group PLC 101,200 237
Bank of Ireland 9,400 158
-----------
2,846
Israel 1.4%
ECI Telecommunications Limited 10,100 335
Teva Pharmaceutical Industries Limited 6,520 310
Bank Hapoalim Limited 118,000 303
Koor Industries Limited 2,040 235
Bezek Israeli Telecommunication Corp. Limited 45,500 183
Blue Square Chain Investments and Properties
Limited (b) 10,800 177
Makhteshim-Agan Industries Limited (b) 66,400 149
Israel Chemicals Limited 98,200 120
Formula Systems Limited (b) 3,600 109
Bank Leumi Le-Israel 56,500 107
Elite Industries Limited 2,260 106
-----------
2,134
Italy 3.2%
ENI SpA 144,600 863
Telecom Italia Mobile SpA 90,600 541
Banca Commerciale Italiana 67,000 489
Telecom Italia SpA 45,565 473
Assicuazioni Generali 12,280 425
Fiat SpA 114,300 362
Istituto Bancario San Paolo di Torino 20,757 282
Banca Popolare di Milano 34,700 268
Italcementi SpA 53,000 266
Cartiere Burgo SpA 33,200 213
Benetton Group SpA 107,900 212
Montedison SpA 121,844 141
Istituto Nazionale delle Assicurazioni 56,500 131
Italgas 22,200 93
-----------
4,759
Japan 13.8%
Nippon Telegraph & Telephone 144 1,678
Toyota Motor Corp. 41,000 1,298
Fanuc 22,200 1,193
Bank of Tokyo-Mitsubishi Limited 83,000 1,182
Kirin Brewery Co. Limited 96,000 1,151
Hitachi Limited 115,000 1,079
Sumitomo Electric Industries 84,000 955
Fujisawa Pharmaceutical 58,000 945
Sharp Corp. 67,000 792
Murata Manufacturing Co. 12,000 790
Tokio Marine & Fire Insurance Co. 71,000 772
Sekisui Chemical Co. Limited 125,000 725
Fuji Photo Film 19,000 719
Mitsubishi Heavy Industries Limited 174,000 706
Matsushita Electric Industrial Co. Limited 36,000 699
36 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
Bridgestone Corp. 21,000 $ 635
NEC Corp. 51,000 634
Sankyo Co. Limited 24,000 605
Tokyo Electric Power 28,300 598
Asahi Chemical Industry Co. Limited 101,000 560
Shiseido Co. Limited 35,000 525
Canon, Inc. 18,000 518
Aoyama Trading Co. Limited 15,500 489
Nippon Light Metal Co. 312,000 467
Mitsui O.S.K. Lines Limited 185,000 398
Sega Enterprises 30,000 397
----------
20,510
Mexico 2.6%
Telefonos de Mexico SP - ADR 12,070 975
Grupo Modelo SA de CV 'C' 137,600 392
Cifra SA de CV 'V' 180,593 347
Grupo Mexico SA 'B' 64,800 276
Grupo Televisa SA SP - GDR (b) 5,900 264
Cemex SA de CV 'CPO' 52,839 260
Grupo Financiero Banamex Accival 'L' (b) 105,181 254
Grupo Carso SA de CV 'A1' (b) 40,350 187
Formento Economico Mexicano SP - ADR 4,440 177
Kimberly-Clark de Mexico SA de CV 'A' 39,350 161
Grupo Industrial Bimbo SA de CV 'A' 71,836 160
Alfa SA de CV 'A' 30,150 125
Empresas La Moderna SA de CV (b) 15,400 87
Desc SA de CV 'B' 37,600 41
Industrias Penoles SA 'CP' (b) 12,100 35
Controladora Comercial Mexicana SA de CV 27,000 28
TV Azteca SA de CV SP - ADR 4,100 21
Desc SA de CV 'C' 7,835 9
Transport Maritima SP - ADR 750 4
Grupo Industrial Bimbo Rights (b) 1,704 0
----------
3,803
Netherlands 4.1%
Royal Dutch Petroleum Co. 29,670 1,737
ING Groep NV 14,585 789
Unilever NV 10,554 711
Fortis NL 15,660 483
Koninklijke Philips Electronics NV 3,901 385
ABN-AMRO Holdings 16,700 362
Koninklijke KPN NV 7,290 342
Verernigde Nederlandse Uitgeversbedrijven
verenigd Bezit 7,880 315
Elsevier NV 17,630 204
TNT Post Groep NV (b) 7,290 174
Akzo Noble NV 3,980 167
Koninklijke Ahold NV 4,700 162
Heineken NV 3,100 159
Aegon NV 2,100 152
----------
6,142
Norway 1.7%
Norsk Hydro ASA 19,070 719
Orkla ASA 'B' 20,800 282
Storebrand ASA 37,700 254
Christiania Bank Og Kreditkasse 66,100 237
Petroleum Geo-Services (b) 14,500 218
Den Norske Bank ASA 61,060 201
Merkantildata ASA 17,900 173
Norske Skogindustrier ASA 5,600 169
Tomra Systems ASA 3,200 120
Tandberg Television ASA (b) 8,500 87
Hafslund ASA 'B' 20,200 84
Unitor ASA 4,000 35
----------
2,579
Peru 1.4%
Telefonica del Peru SA 'B' 776,500 1,167
Credicorp Limited 30,600 337
Cerveceria Backus & Johnston SA 'T' 530,552 186
Compania de Minas Buenaventura SA 'A' 22,480 171
Cementos Lima SA 52,121 64
Luz del Sur Servicios SA 'B' 83,400 54
Compania de Minas Buenaventura SA 'B' 4,700 36
Banco Wiese SP - ADR 18,700 22
----------
2,037
Poland 1.8%
Telekomunikacja Polska 125,500 895
Elektrim Spolka Akcyjna SA 23,380 330
Bank Handlowy W. Warszawie 23,070 320
Bank Rozwoju Eksportu SA 7,480 235
Wielkopolski Bank Kredytowy SA 30,790 180
Bank Slaski SA W Katowicach 3,620 177
Big Bank Gdanski SA 76,100 169
Softbank SA 3,260 113
Stomil Olsztyn SA 14,500 81
Debica SA 4,930 60
Bank Przemyslowo-Handlow SA 1,150 59
----------
2,619
Portugal 3.7%
EDP-Electricidade de Portugal SA 88,600 1,595
Portugal Telecom SA 30,690 1,248
Banco Comercial Portugues SA 'R' 23,818 617
Jeronimo Martins - SGPS SA 14,500 479
BPI-SGPS SA 18,400 386
Sonae Investimentos-Sociedade Gestora de
Participacoes Sociais SA 10,280 349
Banco Espirito Santo e Comercial de Lisboa SA 14,245 331
Cimpor-Cimentos de Portugal SGPS SA 10,495 270
Brisa-Auto Estradas de Portugal SA 5,340 220
Portugal Telecom SA Rights (b) 38,190 0
----------
5,495
Singapore 1.1%
Singapore Press Holdings 15,400 262
Development Bank of Singapore Limited 21,000 257
Overseas Chinese Banking 30,000 250
Singapore Airlines Limited 18,000 171
City Developments Limited 24,000 154
Singapore Telecommunications 84,000 144
United Overseas Bank Limited 18,900 132
Singapore Tech Engineering Limited 84,000 95
Overseas Union Bank 17,270 83
Keppel Corp. Limited 22,000 75
----------
1,623
South Korea 0.5%
Samsung Electronics 2,100 230
Samsung Electro-Mechanics 5,200 180
Samsung Heavy Industries 22,000 120
Korea Telecom 1,510 100
SK Corp. Rights (b) 2,074 27
Samsung Electronics Rights (b) 456 22
Samsung Electro-Mechanics Rights (b) 1,031 17
Samsung Heavy Industries Rights (b) 7,290 8
----------
704
Sweden 2.9%
MSCI Sweden Opal Series B (b) 18,000 4,328
Switzerland 6.9%
Roche Holding AG 226 2,322
Novartis AG 1,564 2,283
UBS AG (b) 4,570 1,364
Nestle SA 670 1,207
Credit Suisse Group 6,585 1,140
New ABB Limited (b) 6,225 586
Swisscom AG 1,520 572
Zurich Allied AG 545 310
Schindler Holding AG 164 253
Holderbank Financiere Glarus AG 194 229
Clariant AG (b) 153 63
Holderbank Financiere Glarus AG (b) 194 3
Ciba Specialty Chemicals AG 4 0
----------
10,332
Taiwan 3.1%
Taiwan Fund, Inc. 56,300 1,168
Asustek Computer, Inc. (b) 42,000 605
Evergreen Marine Corp. 29,000 537
Winbond Electronics Corp. (b) 41,420 462
China Steel Corp. SP - GDR 29,900 457
Asia Cement Corp. SP - GDR 34,000 337
Advanced Semiconductor Engineering SP - GDR (b) 13,000 286
Standards Foods Taiwan Limited (b) 32,000 250
See accompanying notes 37
<PAGE>
Schedule of Investments (Cont.)
International Fund
June 30, 1999
- --------------------------------------------------------------------------------
Nan Ya Plastics Corp. 161,000 $ 193
Formosa Chem & Fibre Corp. (b) 144,000 167
Far Eastern Department Stores 100,000 91
----------
4,553
Turkey 2.9%
Turkiye Is Bankasi 'C' 60,625,400 1,077
Migros Turk TAS 409,400 509
Turkiye Garanti Bankasi AS 64,732,200 483
Yapi ve Kredi Bankasi AS 32,671,060 472
Eregli Demir Ve Celik Fabrikalari TAS 20,991,000 293
Arcelik AS 6,292,500 224
Yapi ve Kredi Bankasi AS Rights (b) 25,131,590 182
Aygaz AS 1,888,000 168
Haci Omer Sabanci Holding AS 7,242,000 161
Ege Biracilik ve Malt Sanayii AS 2,020,000 151
Vestel Elektronik Sanayi 1,291,000 141
Adana Cimento Sanayii 'A' 8,110,570 129
Brisa Bridgestone Sabanci Lastik San. ve Tic AS 4,265,000 98
Netas Northern Electric Telekomunikasyon AS 4,227,600 89
Cukurova Elektrik AS 134,000 86
Akbank TAS 4,187,330 62
Akbank TAS (b) 2,093,660 31
Akbank TAS Rights (b) 4,187,330 26
Adana Cimento Sanayii Turk Anonim Sirketi (b) 901,010 12
----------
4,394
United Kingdom 4.0%
WEBS Index Fund 280,000 6,020
----------
Total Common Stocks 130,760
(Cost $115,756) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 7.2%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Time Deposits 7.2%
State Street Bank
4.500% due 07/01/1999 $ 10,750 10,750
----------
Total Short-Term Instruments 10,750
(Cost $10,750) ==========
Total Investments (a) 94.9% $ 141,510
(Cost $126,506)
Other Assets and Liabilities (Net) 5.1% 7,577
----------
Net Assets 100.0% $ 149,087
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$126,619 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 21,688
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (6,797)
----------
Unrealized appreciation-net $ 14,891
==========
(b) Non-income producing security.
(c) Foreign forward currency contracts outstanding at
June 30, 1999.
Principal
Amount
Covered by Expiration Unrealized
Type Contract Month Appreciation
- --------------------------------------------------------------------------------
Buy EC 88 07/1999 $ 0
Buy JY 247,269 07/1999 0
----------
$ 0
==========
(d) Principal amount denoted in indicated currency:
EC - European Currency Unit
JY - Japanese Yen
(e) Assets with an aggregate market value of
$228,556 have been segregat ed with the
custodian to cover margin requirements for the
following open futures contracts at June 30,
1999:
# of Unrealized
Type Contracts (Depreciation)
- --------------------------------------------------------------------------------
FTSE 100 Index Futures (09/1999) 48 $ (87)
38 See accompanying notes
<PAGE>
Schedule of Investments
Mid-Cap Growth Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 97.8%
- --------------------------------------------------------------------------------
Aerospace 0.0%
Howmet International, Inc. (b) 25,000 $ 430
Building 2.0%
Lennar Corp. 443,300 10,639
Pulte Corp. 410,400 9,465
----------
20,104
Capital Goods 7.3%
Waters Corp. (b) 276,800 14,705
General Dynamics Corp. 204,900 14,035
Lear Corp. (b) 265,100 13,189
Tower Automotive, Inc. (b) 427,700 10,880
Rockwell International Corp. 176,200 10,704
Federal-Mogul Corp. 188,900 9,823
----------
73,336
Communications 1.5%
CenturyTel, Inc. 280,350 11,144
Superior Telecom, Inc. 154,678 3,867
----------
15,011
Consumer Discretionary 22.3%
Best Buy Co., Inc. (b) 219,400 14,810
Premark International, Inc. 375,300 14,074
Hertz Corp. 'A' (b) 226,600 14,049
Bed, Bath & Beyond, Inc. (b) 358,200 13,791
Abercrombie & Fitch Co. 'A' (b) 273,600 13,133
Intimate Brands, Inc. 261,240 12,376
Family Dollar Stores, Inc. 513,400 12,322
Dial Corp. 306,800 11,409
Galileo International, Inc. (b) 212,900 11,377
Outback Steakhouse, Inc. (b) 286,000 11,243
Snyder Communications, Inc. 327,900 10,739
B.J.'s Wholesale Club, Inc. (b) 345,300 10,381
Dollar Tree Stores, Inc. 226,000 9,944
Hasbro, Inc. 346,950 9,693
Shaw Industries, Inc. 578,200 9,540
Tommy Hilfiger Corp. (b) 128,800 9,467
Maytag Corp. 132,500 9,233
Mandalay Resort Group (b) 434,700 9,183
Westpoint Stevens, Inc. (b) 297,200 8,860
Furniture Brands International, Inc. (b) 306,100 8,533
Mattel, Inc. 1 0
----------
224,157
Consumer Services 3.2%
ACNielsen Corp. (b) 374,200 11,319
Reader's Digest Assn., Inc. 'A' 278,200 11,058
Darden Restaurants, Inc. 454,700 9,918
----------
32,295
Consumer Staples 5.4%
Food Lion, Inc. 'A' 1,169,700 13,890
SUPERVALU, Inc. 450,700 11,577
Kroger Co. (b) 391,400 10,935
Flowers Industries, Inc. 439,450 9,531
McCormick & Co. 276,100 8,714
----------
54,647
Energy 0.9%
Kerr McGee Corp. 95,800 4,808
Occidental Petroleum Corp. 169,400 3,578
Dynegy, Inc. 29,400 599
----------
8,985
Financial & Business Services 21.2%
Liberty Property Trust 507,200 12,617
Duke Realty Investments 531,400 11,990
Protective Life Corp. 331,200 10,930
Allmerica Financial Corp. 171,300 10,417
Deluxe Corp. 265,500 10,338
Apartment Investment & Management Co. 'A' (b) 235,800 10,080
Zions Bancorporation 157,400 9,995
Bank United Corp. 'A' 245,300 9,858
Travelers Property Casualty 'A' 249,600 9,766
Huntington Bancshares 278,100 9,734
Valassis Communications, Inc. (b) 261,450 9,576
Dime Bancorp, Inc. 474,000 9,539
Ambac Financial Group, Inc. 164,400 9,391
First Tennessee National Corp. 240,900 9,229
Mutual Risk Management Limited 274,962 9,177
BB&T Corp. 248,400 9,113
Finova Group, Inc. 170,100 8,952
CCB Financial Corp. 167,400 8,851
Providian Financial Corp. 94,350 8,822
Equity Residential Properties Trust 193,100 8,701
Meristar Hospitality Corp. 363,500 8,156
Peoples Heritage Financial Group 307,600 5,787
Bear Stearns Co., Inc. 53,800 2,515
----------
213,534
Health Care 6.4%
Medimmune, Inc. 187,300 12,690
Allergan, Inc. 109,100 12,110
Trigon Healthcare, Inc. (b) 315,100 11,462
C.R. Bard, Inc. 198,200 9,476
VISX, Inc. (b) 99,400 7,871
Bausch & Lomb, Inc. 100,100 7,658
Pacificare Health Systems 'B' (b) 53,300 3,834
----------
65,101
Materials & Processing 4.7%
Southdown, Inc. 210,300 13,512
Boise Cascade Corp. 241,800 10,367
Temple-Inland, Inc. 143,500 9,794
Willamette Industries 205,100 9,447
Martin Marietta Materials, Inc. 73,800 4,354
----------
47,474
Technology 17.4%
Veritas Software Corp. (b) 147,800 14,032
Citrix Systems, Inc. (b) 246,800 13,944
Vitesse Semiconductor Co. (b) 195,800 13,204
Comverse Technology, Inc. (b) 172,950 13,058
Lexmark International Group, Inc. 'A' (b) 197,200 13,028
Unisys Corp. (b) 321,300 12,511
Symbol Technologies, Inc. 333,300 12,290
NCR Corp. (b) 242,600 11,842
Legato Systems, Inc. (b) 200,800 11,596
PMC - Sierra, Inc. (b) 192,600 11,351
Adobe Systems, Inc. 137,100 11,264
The Reynolds & Reynolds Co. 475,000 11,073
Xilinx, Inc. (b) 186,600 10,683
CSG Systems International, Inc. 384,600 10,072
Adaptec, Inc. (b) 143,700 5,074
----------
175,022
Utilities 5.5%
Florida Progress Corp. 263,900 10,902
DQE, Inc. 232,200 9,317
BEC Energy 223,900 9,236
NiSource, Inc. 353,700 9,130
Minnesota Power, Inc. 447,700 8,898
IPALCO Enterprises, Inc. 388,300 8,227
----------
55,710
----------
Total Common Stocks 985,806
(Cost $839,053) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 3.6%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 3.6%
State Street Bank
3.500% due 07/01/1999 $ 36,648 36,648
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $37,381,579. Repurchase
proceeds are $36,651,563.)
-----------
Total Short-Term Instruments 36,648
(Cost $36,648) ===========
Total Investments (a) 101.4% $1,022,454
(Cost $875,701)
Other Assets and Liabilities (Net) (1.4%) (14,329)
-----------
Net Assets 100.0% $1,008,125
===========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$875,778 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 166,941
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (20,265)
-----------
Unrealized appreciation-net $ 146,676
===========
(b) Non-income producing security.
See accompanying notes 39
<PAGE>
Schedule of Investments
Opportunity Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.9%
- --------------------------------------------------------------------------------
Capital Goods 1.8%
Tower Automotive, Inc. (b) 203,500 $ 5,177
SLI, Inc. (b) 91,300 2,465
----------
7,642
Communications 11.0%
WinStar Communications, Inc. (b) 219,900 10,720
True North Communications 215,000 6,450
Pinnacle Holdings, Inc. (b) 246,000 6,027
ICG Communications, Inc. (b) 246,500 5,269
Orckit Communications Limited (b) 169,400 4,193
Young Broadcasting Corp. (b) 97,250 4,139
Millicom International Cellular SA (b) 130,100 4,098
Citadel Communications Corp. (b) 106,600 3,858
Powertel, Inc. (b) 95,500 2,853
----------
47,607
Consumer Discretionary 15.1%
Premier Parks, Inc. 222,100 8,162
B.J.'s Wholesale Club, Inc. (b) 225,000 6,764
Furniture Brands International, Inc. (b) 214,300 5,974
Zale Corp. (b) 130,500 5,220
Bally Total Fitness Holdings (b) 180,000 5,108
Williams-Sonoma, Inc. (b) 142,600 4,964
The Men's Wearhouse, Inc. (b) 184,250 4,698
K-Swiss, Inc. 'A' 93,000 4,325
Cinar Corp. 'B' (b) 176,500 4,324
Pacific Sunwear of California (b) 172,650 4,208
Station Casinos, Inc. (b) 202,400 4,124
School Specialty, Inc. (b) 208,300 3,346
Saucony, Inc. 'B' (b) 103,200 2,335
Hanover Direct, Inc. (b) 726,500 2,043
----------
65,595
Consumer Services 8.6%
SFX Entertainment, Inc. 'A' (b) 135,700 8,685
Sotheby's Holdings 'A' 166,300 6,340
Iron Mountain, Inc. (b) 140,300 4,016
United Rental, Inc. (b) 135,000 3,983
Avis Rent A Car, Inc. (b) 132,375 3,855
The Cheesecake Factory (b) 106,900 3,260
Anesta Corp. (b) 137,600 2,812
Sylvan Learning Systems, Inc. (b) 100,000 2,719
Parexel International Corp. (b) 71,800 956
Cornell Corrections, Inc. (b) 44,500 731
----------
37,357
Consumer Staples 3.2%
Jones Pharma, Inc. 130,000 5,119
Wild Oats Markets, Inc. (b) 144,000 4,370
Performance Food Group Co. (b) 156,100 4,244
----------
13,733
Energy 5.7%
Newfield Exploration Co. (b) 159,200 4,527
Ocean Energy, Inc. (b) 436,000 4,197
Global Industries Limited (b) 311,800 3,995
Rowan Cos., Inc. (b) 205,200 3,783
Basin Exploration, Inc. (b) 169,250 3,396
Key Energy Group, Inc. (b) 710,200 2,530
Superior Energy Services (b) 462,700 2,357
----------
24,785
Environmental Services 1.0%
IT Group, Inc. (b) 275,300 4,422
Financial & Business Services 5.0%
Meristar Hospitality Corp. 248,300 5,571
Hambrecht & Quist, Inc. (b) 129,200 4,797
Allied Capital Corp. Funds 170,300 4,087
Annuity and Life Re 156,800 3,518
Healthcare Financial Partners (b) 56,100 1,921
E-Loan, Inc. (b) 42,100 1,623
Internet Capital Group, Inc. Rights (b) 5,730 0
----------
21,517
Health Care 10.1%
MID Atlantic Medical Services (b) 522,400 5,159
TLC The Laser Center (b) 96,700 4,642
ResCare, Inc. (b) 202,000 4,595
Renal Care Group, Inc. (b) 165,800 4,290
Medicis Pharmaceutical 'A' (b) 150,900 3,829
Magellan Health Services (b) 349,200 3,492
Minimed, Inc. (b) 42,300 3,254
Beverly Enterprises, Inc. (b) 379,200 3,057
Hanger Orthopedic Group, Inc. (b) 210,300 2,984
Enzon, Inc. (b) 138,350 2,862
Matria Healthcare, Inc. (b) 336,400 2,439
LifePoint Hospitals, Inc. (b) 138,800 1,865
Province Healthcare Co. (b) 65,000 1,267
----------
43,735
Materials & Processing 2.3%
Gaylord Container Corp. 'A' (b) 470,200 3,732
Boise Cascade Corp. 80,100 3,434
Bethlehem Steel Corp. (b) 350,200 2,692
----------
9,858
Technology 30.3%
Advanced Energy Industries (b) 150,000 6,084
Visual Networks, Inc. (b) 181,300 5,802
Apex PC Solutions, Inc. (b) 275,000 5,638
Infocure Corp. (b) 101,800 5,389
Peregrine Systems, Inc. (b) 209,200 5,374
IMRglobal Corp. (b) 269,400 5,186
Aeroflex, Inc. (b) 262,550 5,185
Sykes Enterprises, Inc. (b) 154,300 5,150
About.com, Inc. (b) 95,000 4,928
TranSwitch Corp. (b) 99,500 4,714
Sterling Software, Inc. (b) 171,700 4,582
Verio, Inc. (b) 65,400 4,545
Concentric Network Corp. (b) 112,500 4,472
L-3 Communications Holdings, Inc. (b) 91,100 4,401
Global Imaging Systems, Inc. (b) 230,000 4,198
GST Telecommunications, Inc. (b) 317,400 4,186
CBT Group PLC SP - ADR (b) 241,000 3,977
International Network Services (b) 98,150 3,963
MMC Networks, Inc. (b) 88,000 3,938
Flextronics International Limited (b) 69,800 3,874
Safeguard Scientifics, Inc. (b) 57,300 3,553
Complete Business Solutions (b) 191,350 3,432
Beyond.com Corp. (b) 117,900 3,382
New Era of Networks, Inc. (b) 76,000 3,339
International Telecommunication Data Systems, Inc. (b) 187,600 3,002
Dendrite International, Inc. (b) 82,900 2,995
Concur Technologies, Inc. (b) 100,800 2,835
Micromuse, Inc. (b) 55,400 2,763
nFront, Inc. (b) 181,550 2,757
Multex.com, Inc. (b) 104,700 2,735
Software.Com, Inc. (b) 90,200 2,092
Mediconsult.com, Inc. (b) 157,700 1,646
BindView Development Corp. (b) 39,950 949
Ask Jeeves, Inc. (b) 2,150 30
Interactive Rights 2,865 0
----------
131,096
Transportation 0.8%
Atlantic Coast Airlines Holdings (b) 177,200 3,367
----------
Total Common Stocks 410,714
(Cost $354,021) ==========
40 See accompanying notes
<PAGE>
Value
Shares (000s)
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 4.5%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 4.5%
State Street Bank
3.500% due 07/01/1999 $ 19,428 $ 19,428
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.500% 08/31/2001
valued at $19,816,616. Repurchase
proceeds are $19,429,889.)
------------
Total Short-Term Instruments 19,428
(Cost $19,428) ============
Total Investments (a) 99.4% $ 430,142
(Cost $373,449)
Other Assets and Liabilities (Net) 0.6% 2,920
------------
Net Assets 100.0% $ 433,062
============
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$374,671 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 66,453
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (10,982)
------------
Unrealized appreciation-net $ 55,471
============
(b) Non-income producing security.
See accompanying notes 41
<PAGE>
Schedule of Investments
Precious Metals Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 62.4%
- --------------------------------------------------------------------------------
Australia 6.3%
Delta Gold NL 170,000 $ 242
Sons of Gwalia Limited 'A' 90,000 237
Acacia Resources Limited (b) 200,000 231
Normandy Mining Limited 300,000 200
Newcrest Mining Limited 84,000 188
Ranger Minerals NL (b) 104,000 162
Lihir Gold Limited (b) 200,000 151
Emperor Mines Limited (b) 190,000 48
----------
1,459
Canada 20.4%
Meridian Gold, Inc. (b) 175,000 814
Barrick Gold Corp. 40,000 774
Placer Dome, Inc. 65,000 768
Agnico-Eagle Mines Limited 85,000 526
Euro-Nevada Mining Corp. 35,000 418
Franco-Nevada Mining Corp. Limited 23,000 358
Namibian Minerals Corp. (b) 80,000 277
IAMGOLD (b) 93,000 189
Richmont Mines, Inc. (b) 95,000 184
Goldcorp, Inc. 'A' 30,000 148
Battle Mountain Canada Limited 50,000 119
Moydow Mines International, Inc. (b) 85,000 81
Cambior, Inc. 25,000 81
----------
4,737
Ghana 0.6%
Ashanti Goldfields Co. Limited SP - GDR 20,000 139
South Africa 22.2%
Anglo American PLC (b) 15,000 701
Anglo American Gold Investment Co. Limited 15,708 677
Harmony Gold Mining Co. Limited (b) 120,000 565
ASA Limited 30,000 499
Driefontein Consolidated Limited 128,263 440
Western Areas Gold Mining Co. Limited 120,000 378
Randfontein Estates Gold Mining Co.
Witwatersrand Limited 200,000 345
Gold Fields Limited SP - ADR 101,494 344
St. Helens Gold Mine SP - ADR 75,000 197
Durban Roodeport Deep Limited (b) 90,039 158
Consolidated African Mines Limited 1,000,000 157
Anglo American Gold Investment Co. Limited
SP - ADR 7,000 149
Avgold Limited (b) 250,000 136
Randgold & Exploration Co. Limited (b) 110,000 131
West Rand Consolidated Mines Limited (b) 50,000 81
Northam Platinum 100,000 80
Durban Roodepoort Deep Limited SP - ADR (b) 41,961 72
Kalahari Goldridge Mining Co. Limited (b) 64,500 22
Durban Roodepoort Deep Options 83,922 19
Durban Roodepoort Deep Options 'B' (b) 20,980 8
Randfontein Estates Gold Options (b) 7,800 3
----------
5,162
United Kingdom 1.3%
Rangold Resources Limited (b) 78,900 315
United States 11.6%
Newmont Mining Corp. 38,000 754
Homestake Mining Co. 90,000 737
Goldcorp, Inc. 'A' 95,000 475
Stillwater Mining Co. (b) 10,000 327
Royal Gold, Inc. (b) 46,000 210
Battle Mountain Gold Co. 50,000 122
Glamis Gold Limited 35,000 63
----------
2,688
----------
Total Common Stocks 14,500
(Cost $18,282) ==========
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 15.1%
- --------------------------------------------------------------------------------
Commercial Paper 7.8%
American Express
5.500% due 07/01/1999 $ 900 $ 900
General Electric Co.
5.000% due 07/01/1999 900 900
----------
1,800
Repurchase Agreements 7.3%
State Street Bank
3.500% due 07/01/1999 1,701 1,701
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 01/31/2001
valued at $1,737,047. Repurchase
proceeds are $1,701,165.)
----------
Total Short-Term Instruments 3,501
(Cost $3,501) ==========
Total Investments (a) 77.5% $ 18,001
(Cost $21,783)
Other Assets and Liabilities (Net) 22.5% 5,237
----------
Net Assets 100.0% $ 23,238
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$23,017 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 828
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (5,844)
----------
Unrealized depreciation-net $ (5,016)
==========
(b) Non-income producing security.
42 See accompanying notes
<PAGE>
Schedule of Investments
Renaissance Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 95.8%
- --------------------------------------------------------------------------------
Aerospace 1.3%
Lockheed Martin Corp. 235,000 $ 8,754
Capital Goods 2.3%
New Holland NV 508,000 8,700
Valmet Corp. OYJ 484,000 5,488
Harnischfeger Industries, Inc. 373,300 747
----------
14,935
Communications 4.6%
MediaOne Group, Inc. (b) 204,000 15,173
ICO Global Communications (b) 1,268,178 7,649
Comsat Corp. 233,900 7,602
----------
30,424
Consumer Discretionary 7.0%
Hitachi Limited 1,417,000 13,295
Ikon Office Solutions, Inc. 600,000 9,000
K Mart Corp. (b) 450,000 7,397
International Game Technology 300,000 5,550
Rite Aid Corp. 225,000 5,541
Exide Corp. 213,000 3,142
Ford Motor Co. 27,600 1,558
Mirage Resorts, Inc. (b) 40,200 673
----------
46,156
Consumer Staples 4.2%
Tate & Lyle PLC 1,338,000 8,404
Dole Food Co. 211,000 6,198
Philip Morris Cos., Inc. 145,000 5,827
Corn Products International, Inc. 180,000 5,479
Suiza Foods Corp. (b) 50,000 2,094
----------
28,002
Energy 14.5%
Valero Energy Corp. 850,900 18,241
Nabors Industries, Inc. (b) 666,600 16,290
Union Pacific Resources Group 778,400 12,698
Atlantic Richfield Co. 129,500 10,821
Rowan Cos., Inc. (b) 475,000 8,758
Kerr McGee Corp. 148,000 7,428
Tosco Corp. 257,500 6,679
R&B Falcon Corp. (b) 648,000 6,075
Gulf Canada Resources Limited 1,116,600 4,676
Ocean Energy, Inc. (b) 400,000 3,850
----------
95,516
Environmental Services 0.5%
Browning Ferris Industries, Inc. 77,700 3,341
Financial & Business Services 17.6%
Aetna, Inc. 332,600 29,747
Conseco, Inc. 645,000 19,632
Fleet Financial Group, Inc. 354,400 15,726
Chase Manhattan Corp. 128,200 11,105
Fremont General Corp. 567,000 10,702
Everest Reinsurance Holdings, Inc. 208,200 6,793
Pacific Century Financial Corp. 303,500 6,543
Cdn Hotel Income Trust (b) 981,500 6,332
Federal National Mortgage Association 50,500 3,453
Loews Corp. 40,000 3,165
Catellus Development Corp. (b) 171,700 2,661
----------
115,859
Health Care 10.2%
Foundation Health Systems, Inc. 'A' (b) 1,007,000 15,105
CIGNA Corp. 150,600 13,403
Tenet Healthcare Corp. (b) 701,500 13,022
Beverly Enterprises, Inc. (b) 1,166,900 9,408
Pacificare Health Systems 'B' (b) 90,000 6,474
ICN Pharmaceuticals, Inc. 141,400 4,551
Oxford Health Plans, Inc. (b) 213,400 3,321
Omnicare, Inc. 100,000 1,262
Pacificare Health Systems, Inc. 'B' 10,000 719
----------
67,265
Materials & Processing 14.4%
Asia Pulp & Paper Co. Limited SP-ADR 1,965,800 18,921
Smurfit-Stone Container Corp. (b) 832,000 17,108
Ucar International, Inc. (b) 526,000 13,282
Gaylord Container Corp. 'A' (b) 1,128,000 8,954
Hercules, Inc. 199,000 7,823
Rayonier, Inc. 142,400 7,093
Cabot Corp. 220,000 5,321
Norsk Hydro AS SP - ADR 122,800 4,697
Arch Chemicals, Inc. 166,600 4,050
Mercer International, Inc. 557,500 3,345
LTV Corp. 273,000 1,826
Reynolds Metals Co. 20,000 1,180
Longview Fibre Co. 68,000 1,063
----------
94,663
Technology 16.0%
Micron Technology, Inc. (b) 569,000 22,938
Arrow Electronics, Inc. 996,000 18,924
Teradyne, Inc. (b) 169,200 12,140
NEC Corp. 902,000 11,222
Vishay Intertechnology, Inc. (b) 418,125 8,781
Seagate Technology, Inc. (b) 322,200 8,256
Koninklijke Philips Electronics NV SP - ADR 65,688 6,625
Kulicke & Soffa Industries (b) 191,100 5,124
Thermo Electron Corp. (b) 202,000 4,053
Hutchinson Technology (b) 90,000 2,498
Motorola, Inc. 22,100 2,094
Xerox Corp. 27,100 1,601
Amkor Technology, Inc. (b) 127,000 1,302
----------
105,558
Transportation 0.2%
Burlington Northern Santa Fe Corp. 50,000 1,550
Utilities 3.0%
Midamerican Energy Holdings Co. 209,000 7,237
Niagara Mohawk Holdings, Inc. 317,800 5,105
Citizens Utilities Co. 'B' 416,100 4,629
Western Resources, Inc. 100,000 2,662
----------
19,633
----------
Total Common Stocks 631,656
(Cost $608,643) ==========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 2.9%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 2.9%
State Street Bank
3.500% due 07/01/1999 $ 19,345 19,345
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $19,734,286. Repurchase
proceeds are $19,346,881.)
----------
Total Short-Term Instruments 19,345
(Cost $19,345) ==========
Total Investments (a) 98.7% $ 651,001
(Cost $627,988)
Other Assets and Liabilities (Net) 1.3% 8,824
----------
Net Assets 100.0% $ 659,825
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$628,733 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 48,351
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (26,083)
----------
Unrealized appreciation-net $ 22,268
==========
(b) Non-income producing security.
See accompanying notes 43
<PAGE>
Schedule of Investments
Small-Cap Value Fund
June 30, 1999
Value
Shares (000s)
- ------------------------------------------------------------------------------
COMMON STOCKS 94.2%
- ------------------------------------------------------------------------------
Aerospace 2.7%
Kaman Corp. 259,000 $ 4,063
Newport News Shipbuilding, Inc. 127,000 3,747
Cordant Technologies, Inc. 70,000 3,163
---------
10,973
Building 6.7%
MDC Holdings, Inc. 202,900 4,362
Hughes Supply, Inc. 129,000 3,830
Lennar Corp. 159,000 3,816
Lone Star Industries, Inc. 100,000 3,756
Hussmann International, Inc. 224,000 3,710
Fleetwood Enterprises, Inc. 140,000 3,701
Butler Manufacturing Co. 118,000 3,297
---------
26,472
Capital Goods 11.3%
GenCorp, Inc. 178,000 4,495
Westinghouse Air Brake Co. 173,000 4,487
C&D Technologies, Inc. 138,000 4,226
Precision Castparts Corp. 93,000 3,953
Intermet Corp. 259,000 3,917
Meritor Automotive, Inc. 144,000 3,672
Standard Products 143,000 3,664
Barnes Group, Inc. 163,000 3,545
Gleason Corp. 198,000 3,329
Borg-Warner Automotive, Inc. 60,000 3,300
Tecumseh Products Co. 'A' 53,000 3,210
MTS Systems Corp. 261,700 3,189
---------
44,987
Consumer Discretionary 12.3%
Burlington Coat Factory Warehouse Corp. 259,000 5,002
Enesco Group, Inc. 183,000 4,232
Harman International Industries, Inc. 88,000 3,872
Brown Shoe Co., Inc. 177,000 3,850
Lancaster Colony Corp. 111,500 3,847
Haverty Furniture Cos., Inc. 109,000 3,842
Russ Berrie & Co., Inc. 153,000 3,787
Kimball International 'B' 210,000 3,544
Banta Corp. 166,000 3,486
Jostens, Inc. 165,000 3,475
Guilford Mills, Inc. 315,000 3,268
Sturm Ruger & Co., Inc. 305,000 3,260
Ennis Business Forms 380,000 3,254
---------
48,719
Consumer Services 3.5%
Norrell Corp. 190,000 3,574
Chemed Corp. 107,000 3,558
Lubys Cafeterias, Inc. 226,000 3,390
Sbarro, Inc. 125,000 3,383
---------
13,905
Consumer Staples 5.8%
Pilgrim's Pride Corp. 189,300 5,678
Michael Foods, Inc. 168,000 3,948
Universal Corp. 137,000 3,896
Chiquita Brands International 395,000 3,555
Universal Foods 155,000 3,274
Nash Finch Co. 278,000 2,806
---------
23,157
Energy 3.0%
World Fuel Services Corp. 288,000 4,248
Mitchell Energy & Development Corp. 'B' 219,000 4,024
Santa Fe Snyder Corp. (b) 477,650 3,642
---------
11,914
Financial & Business Services 25.9%
Orion Capital Corp. 110,000 3,947
Kelly Services, Inc. 'A' 127,000 4,080
PXRE Corp. 214,000 3,879
Raymond James Financial, Inc. 161,000 3,854
Dain Rauscher Corp. 71,000 3,843
TriNet Corp. Realty Trust, Inc. 138,000 3,821
AmerUs Life Holdings, Inc. 'A' 139,000 3,753
UST Corp. 123,000 3,721
Glimcher Realty Trust 228,000 3,705
American Health Properties, Inc. 184,000 3,703
United Dominion Realty Trust 315,000 3,701
Shurgard Storage Centers, Inc. 134,000 3,635
McGrath Rentcorp 179,200 3,584
National Golf Properties, Inc. 146,300 3,557
Flagstar Bancorp, Inc. 140,000 3,535
Merrill Corp. 242,000 3,509
Washington Federal, Inc. 155,100 3,480
Franchise Finance Corp. of America 158,000 3,476
Arthur J. Gallagher & Co. 70,000 3,465
Presidential Life Corp. 176,000 3,454
Rollins Truck Leasing Co. 308,500 3,432
Selective Insurance Group 177,000 3,374
Hudson United Bancorp 109,000 3,338
Esg Re Limited 221,800 3,327
Commercial Federal Corp. 143,000 3,316
Innkeepers USA Trust 328,000 3,280
BankAtlantic Bancorp, Inc. 'A' 450,000 3,262
New Plan Excel Realty Trust 174,000 3,132
Cabot Industrial Trust 133,200 2,830
---------
102,993
Health Care 2.8%
Arrow International, Inc. 157,000 4,062
Owens & Minor, Inc. 333,000 3,663
Invacare Corp. 129,000 3,249
---------
10,974
Materials & Processing 6.5%
Wausau-Mosinee Paper Corp. 224,000 4,032
Caraustar Industries, Inc. 159,000 3,925
Ethyl Corp. 653,000 3,918
Universal Forest Products, Inc. 180,000 3,870
Commercial Metals Co. 135,000 3,848
Lincoln Electric Holdings, Inc. 160,400 3,288
Cleveland-Cliffs, Inc. 95,000 3,076
---------
25,957
Technology 1.9%
Dallas Semiconductor Corp. 78,000 3,939
Autodesk, Inc. 125,000 3,695
---------
7,634
Transportation 2.7%
USFreightways Corp. 84,000 3,890
Airborne Freight Corp. 132,000 3,655
Sea Containers Limited 'A' 98,000 3,289
---------
10,834
Utilities 9.1%
Eastern Enterprises 100,000 3,975
Washington Gas Light Co. 149,000 3,874
Public Service Co. of New Mexico 190,000 3,776
CMP Group, Inc. 142,000 3,719
United Illuminating Co. 86,200 3,658
National Fuel Gas Co. 74,000 3,589
Commonwealth Energy System 83,000 3,486
Avista Corp. 206,800 3,360
Energen Corp. 180,000 3,353
Rochester Gas & Electric Corp. 124,000 3,294
---------
36,084
---------
Total Common Stocks 374,603
(Cost $382,918) =========
- ------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 5.6%
- ------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 5.6%
State Street Bank
3.500% due 07/01/1999 $ 22,119 22,119
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $22,563,432. Repurchase
proceeds are $22,121,150.)
---------
Total Short-Term Instruments 22,119
(Cost $22,119) =========
Total Investments (a) 99.8% $ 396,722
(Cost $405,037)
Other Assets and Liabilities (Net) 0.2% 921
---------
Net Assets 100.0% $ 397,643
=========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$405,824 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 26,505
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (35,607)
-----------
Unrealized depreciation-net $ (9,102)
===========
(b) Non-income producing security.
44 See accompanying notes
<PAGE>
Schedule of Investments
Target Fund
June 30, 1999
Value
Shares (000s)
- ------------------------------------------------------------------------------
COMMON STOCKS 93.3%
- ------------------------------------------------------------------------------
Capital Goods 2.0%
Weatherford International, Inc. (b) 350,000 $ 12,819
Molex, Inc. 300,000 11,100
---------
23,919
Communications 7.8%
WinStar Communications, Inc. (b) 475,000 23,156
General Instrument Corp. (b) 400,000 17,000
Echostar Communications Corp. (b) 100,000 15,344
At Home Corp. (b) 250,000 13,484
Nextlink Communications 'A' 150,000 11,156
Adelphia Communications (b) 175,000 11,134
---------
91,274
Consumer Discretionary 22.5%
Abercrombie & Fitch Co. 'A' (b) 600,000 28,800
Gemstar International Group Limited (b) 425,000 27,731
Tiffany & Co. 275,000 26,538
Lowe's Cos., Inc. 450,000 25,509
Bed, Bath & Beyond, Inc. (b) 650,000 25,025
Clear Channel Communications (b) 350,000 24,128
Best Buy Co., Inc. (b) 350,000 23,625
Harley-Davidson, Inc. 400,000 21,750
Kohls Corp. (b) 250,000 19,297
Staples, Inc. (b) 600,000 18,563
Cintas Corp. 200,000 13,438
Dial Corp. 200,000 7,438
---------
261,842
Consumer Services 2.6%
Royal Caribbean Cruises Limited 400,000 17,500
SFX Entertainment, Inc. 'A' (b) 200,000 12,800
---------
30,300
Energy 1.5%
Montana Power Co. 250,000 17,625
Financial & Business Services 9.2%
Young & Rubicam, Inc. 500,000 22,719
AFLAC, Inc. 350,000 16,756
Knight/Trimark Group, Inc. 'A' (b) 250,000 15,078
Providian Financial Corp. 150,000 14,025
Charles Schwab Corp. 125,000 13,734
Marshall & Ilsley Corp. 200,000 12,875
Paychex, Inc. 375,000 11,953
---------
107,140
Health Care 19.0%
VISX, Inc. (b) 450,000 35,634
Immunex Corp. (b) 225,000 28,673
Allergan, Inc. 250,000 27,750
Biogen, Inc. (b) 400,000 25,725
Minimed, Inc. (b) 300,000 23,081
TLC The Laser Center (b) 350,000 16,800
Biomet, Inc. 400,000 15,900
Medimmune, Inc. 200,000 13,550
QLT Phototherapeutics, Inc. (b) 225,000 12,375
Express Scripts, Inc. 'A' (b) 200,000 12,038
Renal Care Group, Inc. (b) 400,000 10,350
---------
221,876
Technology 26.2%
Comverse Technology, Inc. (b) 450,000 33,976
Sanmina Corp. (b) 400,000 30,350
Citrix Systems, Inc. (b) 500,000 28,250
Jabil Circuit, Inc. (b) 500,000 22,563
RF Micro Devices, Inc. (b) 300,000 22,387
Linear Technology Corp. 300,000 20,175
Maxim Integrated Products, Inc. (b) 300,000 19,950
Altera Corp. (b) 500,000 18,406
Inktomi Corp. (b) 125,000 16,320
Rambus, Inc. 175,000 16,133
Exodus Communications, Inc. (b) 125,000 14,992
PMC - Sierra, Inc. (b) 240,000 14,145
Network Appliance, Inc. (b) 250,000 13,969
Novell, Inc. (b) 500,000 13,250
Apple Computer, Inc. 250,000 11,578
Psinet, Inc. (b) 200,000 8,750
American Satellite Network, Inc. Warrants (b) 53,250 0
---------
305,194
Transportation 2.5%
Kansas City Southern Industries, Inc. 450,000 28,716
---------
Total Common Stocks 1,087,886
(Cost $855,608) =========
- ------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 5.0%
- ------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 5.0%
State Street Bank
3.500% due 07/01/1999 $ 58,136 58,136
(Dated 06/30/1999. Collateralized by
U.S. Treasury Bond 7.250% 05/15/2016
valued at $51,004,170 and U.S. Treasury
Note 6.875% 05/15/2006 valued
at $8,303,891. Repurchase proceeds
are $58,141,652.)
---------
Total Short-Term Instruments 58,136
(Cost $58,136) =========
Total Investments (a) 98.3% $1,146,022
(Cost $913,744)
Other Assets and Liabilities (Net) 1.7% 20,219
---------
Net Assets 100.0% $1,166,241
=========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$915,807 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 239,453
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (9,238)
---------
Unrealized appreciation-net $ 230,215
=========
(b) Non-income producing security.
See accompanying notes 45
<PAGE>
Schedule of Investments
Tax-Efficient Equity Fund
June 30, 1999
Value
Shares (000s)
- -------------------------------------------------------------------------------
COMMON STOCKS 99.6%
- -------------------------------------------------------------------------------
Aerospace 0.4%
Boeing Co. 1,800 $ 80
Raytheon Co. 'B' 600 42
----------
122
Building 0.4%
Crane Co. 1,700 53
Centex Corp. 1,100 41
Kaufman & Broad Home Corp. 900 22
----------
116
Capital Goods 8.2%
General Electric Co. 7,400 836
AlliedSignal, Inc. 2,600 164
Tyco International Limited 1,500 142
United Technologies Corp. 1,800 129
Honeywell, Inc. 1,000 116
McDermott International, Inc. 4,000 113
Dana Corp. 2,200 101
Ingersoll-Rand Co. 1,200 78
Johnson Controls, Inc. 1,000 69
Caterpillar, Inc. 1,100 66
Paccar, Inc. 1,200 64
Avery Dennison Corp. 1,000 60
Navistar International Corp. (b) 1,200 60
Textron, Inc. 700 58
General Dynamics Corp. 800 55
Briggs & Stratton Corp. 900 52
Nacco Industries, Inc. 'A' 600 44
PPG Industries, Inc. 500 30
Engelhard Corp. 1,300 29
Parker Hannifin Corp. 500 23
Minnesota Mining & Manufacturing Co. 100 9
Dover Corp. 100 4
----------
2,302
Communications 8.3%
AT&T Corp. 9,150 511
MCI WorldCom, Inc. (b) 4,900 423
SBC Communications, Inc. 5,600 325
Bell Atlantic Corp. 4,300 281
Bell South Corp. 5,100 239
GTE Corp. 2,400 182
Nortel Networks Corp. 1,100 95
U.S. West, Inc. 1,500 88
Vodafone Group PLC SP-ADR 400 79
ALLTEL Corp. 1,000 72
CenturyTel, Inc. 500 20
----------
2,315
Consumer Discretionary 12.3%
Wal-Mart Stores, Inc. 11,000 535
Procter & Gamble Co. 3,200 286
Home Depot, Inc. 3,500 225
Gap, Inc. 4,275 215
Time Warner, Inc. 2,400 176
Ford Motor Co. 2,900 163
General Motors Corp. 1,700 112
Avon Products, Inc. 2,000 111
TJX Cos., Inc. 3,000 100
Federated Department Stores, Inc. (b) 1,700 90
VF Corp. 2,000 86
Eastman Kodak Co. 1,200 81
Pitney Bowes, Inc. 1,200 77
Walgreen Co. 2,600 76
Cendant Corp. (b) 3,700 76
Dayton Hudson Corp. 1,100 72
Sears Roebuck & Co. 1,600 71
Alberto-Culver Co. 2,500 67
Brunswick Corp. 2,300 64
Masco Corp. 2,200 64
Lowe's Cos., Inc. 1,100 62
Liz Claiborne, Inc. 1,700 62
Harrah's Entertainment, Inc. (b) 2,300 51
Emerson Electric Co. 800 50
Maytag Corp. 700 49
Costco Cos., Inc. (b) 600 48
UST, Inc. 1,600 47
American Greetings Corp. 'A' 1,500 45
MAY Department Stores Co. 1,100 45
Armstrong World Industries 700 40
Corning, Inc. 500 35
Hasbro, Inc. 1,200 34
Colgate-Palmolive Co. 300 30
Dollar General Corp. 906 26
Cooper Tire & Rubber Co. 1,000 24
Consolidated Stores Corp. (b) 700 19
Newell Rubbermaid, Inc. 400 19
Wm. Wrigley Jr. Co. 100 9
Goodyear Tire & Rubber Co. 100 6
----------
3,448
Consumer Services 3.9%
McDonald's Corp. 3,600 149
King World Productions, Inc. 3,600 125
Viacom, Inc. 'B' (b) 2,800 123
Gannett, Inc. 1,600 114
Waste Management, Inc. 2,100 113
Interpublic Group of Companies, Inc. 1,300 113
Carnival Corp. 'A' 2,200 107
Times Mirror Co. 'A' 1,300 77
Knight-Ridder, Inc. 1,300 71
Tribune Co. 500 44
McGraw-Hill Companies, Inc. 800 43
New York Times Co. 600 22
----------
1,101
Consumer Staples 5.9%
Coca-Cola Co. 6,400 400
Philip Morris Cos., Inc. 4,600 185
General Mills, Inc. 1,700 137
Anheuser Busch Cos., Inc. 1,900 135
Kimberly-Clark Corp. 2,000 114
SUPERVALU, Inc. 3,900 100
Safeway, Inc. (b) 1,800 89
Brown-Forman Corp. 1,200 78
Clorox Co. 700 75
H.J. Heinz Co. 1,300 65
Albertson's, Inc. 1,200 62
Bestfoods 1,200 59
Sysco Corp. 1,600 48
Sara Lee Corp. 1,700 39
Adolph Coors Co. 'B' 700 35
Pepsico, Inc. 300 12
Kellogg Co. 200 7
----------
1,640
Energy 5.6%
Exxon Corp. 6,200 478
Mobil Corp. 2,700 267
Chevron Corp. 1,900 181
Royal Dutch Petroleum Co. 2,500 151
Rowan Cos., Inc. (b) 4,800 89
Sunoco, Inc. 2,300 69
Phillips Petroleum Co. 1,200 60
Texaco, Inc. 900 56
Atlantic Richfield Co. 600 50
AES Corp. (b) 700 41
Ashland, Inc. 1,000 40
Peco Energy Co. 800 34
Southern Co. 1,000 27
Enron Corp. 300 25
----------
1,568
Financial & Business Services 16.4%
Citigroup, Inc. 9,200 437
American International Group, Inc. 2,513 294
Bank of America Corp. 3,639 267
Bank One Corp. 3,824 228
Chase Manhattan Corp. 2,500 216
Morgan Stanley, Dean Witter, Discover and Co. 2,000 205
Federal National Mortgage Association 2,300 157
First Union Corp. 2,800 131
Charles Schwab Corp. 1,150 126
Allstate Corp. 3,000 108
MBNA Corp. 3,500 107
Bank of New York 2,900 106
American Express Co. 800 104
Wells Fargo & Co. 2,400 103
Sun Trust Banks, Inc. 1,400 97
Conseco, Inc. 3,100 94
MGIC Investment Corp. 1,800 88
Mellon Bank Corp. 2,400 87
46 See accompanying notes
<PAGE>
Value
Shares (000s)
- -------------------------------------------------------------------------------
Omnicom Group 1,000 $ 80
Automatic Data Processing, Inc. 1,800 79
Countrywide Credit Industries, Inc. 1,800 77
State Street Corp. 900 77
SLM Holding Corp. 1,400 64
Washington Mutual, Inc. 1,800 64
Lehman Brothers Holdings, Inc. 1,000 62
Regions Financial Corp. 1,600 62
National City Corp. 900 59
Northern Trust Corp. 600 58
Federal Home Loan Mortgage Corp. 1,000 58
Progressive Corp. 400 58
Fleet Financial Group, Inc. 1,300 58
Lincoln National Corp. 1,000 52
Aon Corp. 1,200 50
Bear Stearns Co., Inc. 1,025 48
Hartford Financial Services Group, Inc. 800 47
Equifax, Inc. 1,300 46
Marsh & Mclennan Cos 600 45
Torchmark Corp. 1,300 44
Associates First Capital Corp. 'A' 1,000 44
BankBoston Corp. 800 41
PNC Bank Corp. 700 40
Golden West Financial Corp. 400 39
Deluxe Corp. 1,000 39
MBIA, Inc. 600 39
Unum Corp. 700 38
Capital One Financial Corp. 600 33
KeyCorp 900 29
Franklin Resources, Inc. 700 28
BB&T Corp. 600 22
Provident Cos., Inc. 'B' 400 16
Republic New York Corp. 200 14
--------
4,565
Health Care 11.0%
Merck & Co., Inc. 6,000 444
Bristol-Myers Squibb Co. 5,600 394
Johnson & Johnson 3,400 333
Pfizer, Inc. 2,900 318
Schering-Plough Corp. 4,800 254
Abbott Laboratories 4,600 209
Amgen, Inc. (b) 3,000 182
Warner-Lambert Co. 2,400 167
American Home Products Corp. 2,100 121
Medtronic, Inc. 1,400 109
Eli Lilly & Co. 1,500 107
HEALTHSOUTH Corp. (b) 5,500 82
Cardinal Health, Inc. 900 58
Guidant Corp. 1,100 57
Biomet, Inc. 1,300 52
Watson Pharmaceuticals, Inc. (b) 1,100 39
United Healthcare Corp. 600 38
St. Jude Medical Inc. 1,000 36
Becton Dickinson & Co. 1,100 33
CIGNA Corp. 300 27
--------
3,060
Materials & Processing 2.9%
Rohm & Haas Co. 4,100 176
E.I. Du Pont de Nemours, Inc. 2,300 157
Alcoa, Inc. 1,400 87
Owens-Illinois, Inc. (b) 2,000 65
Allegheny Teledyne, Inc. 2,800 63
Fort James Corp. 1,600 61
Air Products & Chemicals 1,100 44
Praxair, Inc. 900 44
Tenneco, Inc. 1,500 36
Hercules, Inc. 700 28
FMC Corp. (b) 400 27
Nucor Corp. 400 19
--------
807
Technology 20.4%
Microsoft Corp. (b) 14,800 1,335
Intel Corp. 11,000 655
International Business Machines Corp. 4,700 607
Cisco Systems, Inc. (b) 8,400 542
Lucent Technologies, Inc. 6,800 459
Hewlett Packard Co. 3,300 332
Dell Computer Corp. (b) 6,800 251
America Online, Inc. (b) 2,200 243
Oracle Corp. (b) 6,000 223
Sun Microsystems, Inc. (b) 2,600 179
Tellabs, Inc. (b) 2,400 162
EMC Corp. (b) 2,400 132
Compuware Corp. (b) 3,000 95
Applied Materials, Inc. (b) 1,200 89
BMC Software, Inc. (b) 1,500 81
Gateway, Inc. (b) 1,100 65
Xerox Corp. 1,000 59
Solectron Corp. (b) 800 53
Computer Sciences Corp. 700 48
Ceridian Corp. (b) 1,200 39
Unisys Corp. (b) 700 27
EG&G, Inc. 600 21
IMS Health, Inc. 400 13
--------
5,710
Transportation 1.0%
Delta Air Lines, Inc. 1,500 86
Burlington Northern Santa Fe Corp. 2,400 74
Southwest Airlines Co. 1,800 56
AMR Corp. (b) 500 34
Kansas City Southern Industries, Inc. 500 32
--------
282
Utilities 2.9%
Ameritech Corp. 3,500 257
Central & South West Corp. 3,500 82
Columbia Gas Systems, Inc. 1,300 81
Coastal Corp. 2,000 80
Duke Energy Corp. 1,200 65
GPU, Inc. 1,200 51
DTE Energy Co. 1,200 48
Edison International 1,500 40
Consolidated Edison, Inc. 700 32
Public Service Enterprise Group, Inc. 600 25
Constellation Energy Group, Inc. 400 12
Sempra Energy 500 11
Peoples Energy Corp. 200 8
--------
792
--------
Total Common Stocks 27,828
(Cost $24,538) ========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 1.1%
- -------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 1.1%
State Street Bank
3.500% due 07/01/1999 $ 318 318
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.375% 03/31/2001
valued at $328,672. Repurchase
proceeds are $318,031.)
--------
Total Short-Term Instruments 318
(Cost $318) ========
Total Investments (a) 100.7% $ 28,146
(Cost $24,856)
Other Assets and Liabilities (Net) (0.7%) (195)
--------
Net Assets 100.0% $ 27,951
========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$24,882 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 3,640
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (376)
--------
Unrealized appreciation-net $ 3,264
========
(b) Non-income producing security.
See accompanying notes 47
<PAGE>
Schedule of Investments
Value Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.0%
- --------------------------------------------------------------------------------
Aerospace 1.9%
Northrop Grumman Corp. 66,000 $ 4,376
Capital Goods 3.9%
Dana Corp. 102,700 4,731
Deere & Co. 108,000 4,280
---------
9,011
Communications 8.1%
Bell Atlantic Corp. 146,000 9,545
GTE Corp. 122,000 9,242
---------
18,787
Consumer Discretionary 13.5%
Thomas & Betts Corp. 191,000 9,025
UST, Inc. 272,400 7,968
Whirlpool Corp. 64,000 4,736
Tupperware Corp. 183,000 4,667
American Greetings Corp. 'A' 128,000 3,856
Brunswick Corp. 40,400 1,125
---------
31,377
Consumer Services 3.8%
King World Productions, Inc. 129,000 4,491
Central Newspapers, Inc. 'A' 115,000 4,327
---------
8,818
Consumer Staples 13.3%
SUPERVALU, Inc. 342,000 8,785
Kimberly-Clark Corp. 150,000 8,550
Whitman Corp. 261,000 4,698
IBP, Inc. 193,000 4,584
Anheuser Busch Cos., Inc. 60,000 4,256
---------
30,873
Energy 9.5%
Mobil Corp. 90,000 8,910
Kerr McGee Corp. 88,000 4,416
Repsol SA SP - ADR 216,000 4,388
Ultramar Diamond Shamrock Corp. 194,000 4,232
---------
21,946
Environmental Services 1.9%
Browning Ferris Industries, Inc. 103,000 4,429
Financial & Business Services 7.7%
Union Planters Corp. 103,000 4,603
PNC Bank Corp. 78,000 4,495
Republic New York Corp. 65,000 4,432
Loews Corp. 55,500 4,391
---------
17,921
Health Care 7.5%
Mallinckrodt, Inc. 235,000 8,547
American Home Products Corp. 81,000 4,658
CIGNA Corp. 30,700 2,732
Mylan Laboratories, Inc. 58,200 1,542
---------
17,479
Materials & Processing 6.2%
USG Corp. 80,000 4,480
USX-U.S. Steel Group, Inc. 160,000 4,320
Westvaco Corp. 144,000 4,176
IMC Global, Inc. 76,700 1,333
---------
14,309
Technology 5.9%
Harris Corp. 117,000 4,585
Sterling Software, Inc. (b) 169,000 4,510
Apple Computer, Inc. 96,000 4,446
---------
13,541
Utilities 10.8%
Public Service Enterprise Group, Inc. 210,000 8,584
NICOR, Inc. 219,700 8,362
DTE Energy Co. 200,000 8,000
---------
24,946
---------
Total Common Stocks 217,813
(Cost $198,964) =========
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 5.0%
- --------------------------------------------------------------------------------
Repurchase Agreement 5.0%
State Street Bank
3.500% due 07/01/1999 $ 11,554 $ 11,554
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.375% 09/30/2001
valued at $11,790,033. Repurchase
proceeds are $11,555,123.)
--------
Total Short-Term Instruments 11,554
(Cost $11,554) ========
Total Investments (a) 99.0% $229,367
(Cost $210,518)
Other Assets and Liabilities (Net) 1.0% 2,271
--------
Net Assets 100.0% $231,638
========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$211,558 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 25,023
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (7,214)
--------
Unrealized appreciation-net $ 17,809
========
(b) Non-income producing security.
48 See accompanying notes
<PAGE>
Schedule of Investments
Value 25 Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 109.9%
- --------------------------------------------------------------------------------
Aerospace 6.2%
Cordant Technologies, Inc. 3,000 $ 137
Building 14.0%
Clayton Homes, Inc. 10,000 114
Lafarge Corp. 2,800 99
York International Corp. 2,200 94
---------
307
Capital Goods 15.5%
Meritor Automotive, Inc. 3,800 97
GATX Corp. 2,400 91
Snap-On, Inc. 2,400 87
Paccar, Inc. 1,200 64
---------
339
Consumer Discretionary 22.8%
Cooper Tire & Rubber Co. 5,000 118
Warnaco Group, Inc. 'A' 4,100 110
U.S. Industries, Inc. 5,600 95
Armstrong World Industries 1,600 93
UST, Inc. 2,800 82
---------
498
Consumer Services 4.4%
Manpower, Inc. 4,300 97
Consumer Staples 2.9%
IBP, Inc. 2,700 64
Energy 3.0%
Ultramar Diamond Shamrock Corp. 3,000 65
Financial & Business Services 20.5%
American National Insurance Co. 2,000 143
Golden West Financial Corp. 1,300 127
Crescent Real Estate Equities Co. 3,800 90
Old Republic International Corp. 5,100 88
---------
448
Materials & Processing 8.8%
USX-U.S. Steel Group, Inc. 3,600 97
IMC Global, Inc. 5,500 96
---------
193
Transportation 8.7%
Airborne Freight Corp. 3,500 97
Ryder System, Inc. 3,600 93
---------
190
Utilities 3.1%
Constellation Energy Group, Inc. 2,300 68
---------
Total Common Stocks 2,406
(Cost $2,357) =========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 6.2%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 6.2%
State Street Bank
3.500% due 07/01/1999 $ 135 135
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.500% 05/31/2002
valued at $138,166. Repurchase
proceeds are $135,013.)
---------
Total Short-Term Instruments 135
(Cost $135) =========
Total Investments (a) 116.1% $ 2,541
(Cost $2,492)
Other Assets and Liabilities (Net) (16.1%) (352)
---------
Net Assets 100.0% $ 2,189
---------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized
appreciation (depreciation) of investments based
on cost for federal income tax purposes of
$2,504 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 97
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (60)
---------
Unrealized appreciation-net $ 37
=========
(b) Non-income producing security.
See accompanying notes 49
<PAGE>
Financial Highlights - A, B and C Classes
<TABLE>
<CAPTION>
Net Asset Net Realized / Dividends Dividends in
Value Unrealized Gain Total Income from Net Excess of Net
Selected Per Share Data for Beginning Net Investment (Loss) on from Investment Investment Investment
the Year or Period Ended: of Period Income (Loss) Investments Operations Income Income
------------------------------------------------------------------------------------------------
Balanced Fund
Class A
<S> <C> <C> <C> <C> <C> <C>
06/30/1999 $ 12.11 $ 0.27 (a) $ 0.53 (a) $ 0.80 $ (0.25) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 11.40 0.29 (a) 1.81 (a) 2.10 (0.30) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 10.77 0.21 0.58 0.79 (0.16) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 12.07 0.18 (a) 0.52 (a) 0.70 (0.17) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 11.39 0.20 (a) 1.82 (a) 2.02 (0.25) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 10.77 0.19 0.58 0.77 (0.15) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 12.07 0.18 (a) 0.53 (a) 0.71 (0.18) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 11.39 0.20 (a) 1.82 (a) 2.02 (0.25) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 10.77 0.18 0.58 0.76 (0.14) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund
Class A
06/30/1999 $ 26.01 $ 0.06 (a) $ 2.33 (a) $ 2.39 $ (0.10) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 21.16 0.07 (a) 6.55 (a) 6.62 (0.09) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 19.31 0.09 1.76 1.85 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 25.75 (0.13) (a) 2.32 (a) 2.19 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 21.10 (0.11) (a) 6.51 (a) 6.40 (0.07) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 19.31 0.01 1.78 1.79 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 25.78 (0.13) (a) 2.31 (a) 2.18 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 21.10 (0.12) (a) 6.53 (a) 6.41 (0.05) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 19.31 0.02 1.77 1.79 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Income Fund
Class A
06/30/1999 $ 16.04 $ 0.39 (a) $ 1.29 (a) $ 1.68 $ (0.38) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 15.39 0.39 (a) 2.73 (a) 3.12 (0.38) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 13.94 0.15 1.48 1.63 (0.18) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 15.99 0.28 (a) 1.27 (a) 1.55 (0.28) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 15.37 0.26 (a) 2.73 (a) 2.99 (0.28) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 13.94 0.11 1.48 1.59 (0.16) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 16.01 0.27 (a) 1.27 (a) 1.54 (0.27) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 15.37 0.26 (a) 2.74 (a) 3.00 (0.27) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 13.94 0.11 1.48 1.59 (0.16) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Fund
Class A
06/30/1999 $ 32.62 $ $ (0.14) (a) $ 5.56 (a) $ 5.42 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 27.03 (0.08) (a) 9.99 (a) 9.91 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 26.58 0.69 3.27 3.96 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 25.73 0.06 3.72 3.78 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 22.01 0.12 4.79 4.91 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 30.34 (0.35) (a) 5.08 (a) 4.73 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 25.59 (0.28) (a) 9.35 (a) 9.07 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 25.46 0.35 3.29 3.64 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 24.94 (0.07) 3.52 3.45 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
05/23/1995-09/30/1995 22.63 (0.03) 2.34 2.31 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 30.33 (0.35) (a) 5.09 (a) 4.74 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 25.58 (0.28) (a) 9.35 (a) 9.07 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 25.46 0.45 3.18 3.63 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 24.94 (0.12) 3.57 3.45 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 21.52 (0.04) 4.65 4.61 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
*Annualized
(a) Per share amounts based on average number of shares outstanding during the period.
50 See accompanying notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Distributions Distributions
from Net in Excess of
Realized Net Realized Total Net Asset Value Net Assets End
Capital Gains Capital Gains Distributions End of Period Total Return of Period (000s)
-------------------------------------------------------------------------------------------------
Balanced Fund
Class A
<S> <C> <C> <C> <C> <C> <C> <C>
06/30/1999 $ (1.64) $ 0.00 $ (1.89) $ 11.02 7.88% $ 9,719
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.09) 0.00 (1.39) 12.11 19.40 9,586
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 (0.16) 11.40 7.42 366
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (1.64) 0.00 (1.81) 10.96 7.01 12,304
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.09) 0.00 (1.34) 12.07 18.59 8,977
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 (0.15) 11.39 7.15 1,124
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (1.64) 0.00 (1.82) 10.96 7.04 12,989
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.09) 0.00 (1.34) 12.07 18.59 8,469
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 (0.14) 11.39 7.12 921
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund
Class A
06/30/1999 $ (1.65) $ 0.00 $ (1.75) $ 26.65 10.14% $ 91,296
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.68) 0.00 (1.77) 26.01 32.39 72,803
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 0.00 21.16 9.58 6,534
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (1.65) 0.00 (1.65) 26.29 9.39 55,094
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.68) 0.00 (1.75) 25.75 31.39 40,901
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 0.00 21.10 9.27 3,022
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (1.65) 0.00 (1.65) 26.31 9.34 81,097
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.68) 0.00 (1.73) 25.78 31.40 71,481
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 0.00 21.10 9.27 13,093
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Income Fund
Class A
06/30/1999 $ (1.76) $ 0.00 $ (2.14) $ 15.58 12.26% $ 17,342
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (2.09) 0.00 (2.47) 16.04 21.35 12,954
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 (0.18) 15.39 11.77 1,756
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (1.76) 0.00 (2.04) 15.50 11.35 21,732
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (2.09) 0.00 (2.37) 15.99 20.47 15,178
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 (0.16) 15.37 11.45 2,561
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (1.76) 0.00 (2.03) 15.52 11.28 26,016
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (2.09) 0.00 (2.36) 16.01 20.51 23,122
- ------------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 (0.16) 15.37 11.42 6,624
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Fund
Class A
06/30/1999 $ (3.92) $ 0.00 $ (3.92) $ 34.12 18.65% $ 227,638
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (4.32) 0.00 (4.32) 32.62 41.03 180,119
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (3.51) 0.00 (3.51) 27.03 15.93 147,276
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (2.93) 0.00 (2.93) 26.58 16.11 151,103
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 (1.19) 0.00 (1.19) 25.73 23.70 134,819
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (3.92) 0.00 (3.92) 31.15 17.72 133,850
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (4.32) 0.00 (4.32) 30.34 39.97 80,719
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (3.51) 0.00 (3.51) 25.59 15.32 55,626
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (2.93) 0.00 (2.93) 25.46 15.22 37,256
- ------------------------------------------------------------------------------------------------------------------------------------
05/23/1995-09/30/1995 0.00 0.00 0.00 24.94 10.20 7,671
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (3.92) 0.00 (3.92) 31.15 17.76 2,064,450
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (4.32) 0.00 (4.32) 30.33 39.99 1,853,002
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (3.51) 0.00 (3.51) 25.58 15.27 1,514,432
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (2.93) 0.00 (2.93) 25.46 15.22 1,450,216
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 (1.19) 0.00 (1.19) 24.94 22.80 1,290,152
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses Income (Loss)
to Average to Average Portfolio
Net Assets Net Assets Turnover Rate
--------------------------------------------
Balanced Fund
Class A
<S> <C> <C> <C> <C>
06/30/1999 1.13% 2.42% 221%
- ----------------------------------------------------------------------------------
06/30/1998 1.12 2.47 186
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.15* 3.01* 199
- ----------------------------------------------------------------------------------
Class B
06/30/1999 1.88 1.66 221
- ----------------------------------------------------------------------------------
06/30/1998 1.86 1.71 186
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.90* 2.28* 199
- ----------------------------------------------------------------------------------
Class C
06/30/1999 1.88 1.66 221
- ----------------------------------------------------------------------------------
06/30/1998 1.86 1.71 186
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.90* 2.26* 199
- ----------------------------------------------------------------------------------
Capital Appreciation Fund
Class A
06/30/1999 1.10% 0.24% 120%
- ----------------------------------------------------------------------------------
06/30/1998 1.10 0.27 75
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.11* 0.59* 87
- ----------------------------------------------------------------------------------
Class B
06/30/1999 1.85 (0.52) 120
- ----------------------------------------------------------------------------------
06/30/1998 1.85 (0.47) 75
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.85* (0.26)* 87
- ----------------------------------------------------------------------------------
Class C
06/30/1999 1.85 (0.52) 120
- ----------------------------------------------------------------------------------
06/30/1998 1.85 (0.49) 75
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.86* (0.23)* 87
- ----------------------------------------------------------------------------------
Equity Income Fund
Class A
06/30/1999 1.10% 2.64% 76%
- ----------------------------------------------------------------------------------
06/30/1998 1.11 2.39 45
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.13* 2.85* 45
- ----------------------------------------------------------------------------------
Class B
06/30/1999 1.85 1.89 76
- ----------------------------------------------------------------------------------
06/30/1998 1.85 1.63 45
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.87* 2.11* 45
- ----------------------------------------------------------------------------------
Class C
06/30/1999 1.85 1.86 76
- ----------------------------------------------------------------------------------
06/30/1998 1.85 1.60 45
- ----------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.87* 2.15* 45
- ----------------------------------------------------------------------------------
Growth Fund
Class A
06/30/1999 1.16% (0.44)% 131%
- ----------------------------------------------------------------------------------
06/30/1998 1.16 (0.27) 123
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.11* 0.13* 94
- ----------------------------------------------------------------------------------
09/30/1996 1.11 0.24 104
- ----------------------------------------------------------------------------------
09/30/1995 1.10 0.50 111
- ----------------------------------------------------------------------------------
Class B
06/30/1999 1.90 (1.19) 131
- ----------------------------------------------------------------------------------
06/30/1998 1.91 (1.02) 123
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.86* (0.62)* 94
- ----------------------------------------------------------------------------------
09/30/1996 1.86 (0.51) 104
- ----------------------------------------------------------------------------------
05/23/1995-09/30/1995 1.90* (0.40)* 111
- ----------------------------------------------------------------------------------
Class C
06/30/1999 1.90 (1.18) 131
- ----------------------------------------------------------------------------------
06/30/1998 1.91 (1.02) 123
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.86* (0.61)* 94
- ----------------------------------------------------------------------------------
09/30/1996 1.86 (0.51) 104
- ----------------------------------------------------------------------------------
09/30/1995 1.90 (0.20) 111
- ----------------------------------------------------------------------------------
</TABLE>
See accompanying notes 51
<PAGE>
Financial Highlights - A, B and C Classes (Cont.)
<TABLE>
<CAPTION>
Net Asset Net Realized / Dividends Dividends in
Value Unrealized Gain Total Income from Net Excess of Net
Selected Per Share Data for Beginning Net Investment (Loss) on from Investment Investment Investment
the Year or Period Ended: of Period Income (Loss) Investments Operations Income Income
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Innovation Fund
Class A
06/30/1999 $ 24.28 $ (0.28) (a) $ 14.72 (a) $ 14.44 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 17.43 (0.19) (a) 8.21 (a) 8.02 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 17.26 0.07 0.36 0.43 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 14.74 (0.07) 2.94 2.87 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
12/22/1994-09/30/1995 10.00 (0.06) 4.80 4.74 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 23.60 (0.49) (a) 14.24 (a) 13.75 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 17.10 (0.33) (a) 8.00 (a) 7.67 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 17.04 (0.03) 0.35 0.32 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 14.66 (0.11) 2.84 2.73 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
05/22/1995-09/30/1995 11.81 (0.08) 2.93 2.85 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 23.59 (0.48) (a) 14.23 (a) 13.75 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 17.09 (0.33) (a) 8.00 (a) 7.67 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 17.04 (0.02) 0.33 0.31 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 14.65 (0.15) 2.89 2.74 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
12/22/1994-09/30/1995 10.00 (0.13) 4.78 4.65 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
International Fund
Class A
06/30/1999 $ 14.33 $ 0.01 (a) $ (0.74) (a) $ (0.73) $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 14.26 0.06 (a) 1.13 (a) 1.19 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 13.03 0.29 1.33 1.62 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 12.19 0.07 0.77 0.84 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 12.92 0.07 (0.56) (0.49) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 13.46 (0.08) (a) (0.72) (a) (0.80) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 13.56 (0.05) (a) 1.07 (a) 1.02 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 12.48 0.16 1.31 1.47 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 11.75 0.00 (a) 0.73 (a) 0.73 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
05/22/1995-09/30/1995 11.30 0.00 0.45 0.45 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 13.45 (0.09) (a) (0.71) (a) (0.80) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 13.55 (0.06) (a) 1.08 (a) 1.02 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 12.47 0.18 1.29 1.47 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 11.75 (0.05) 0.77 0.72 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 12.56 (0.02) (0.55) (0.57) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund
Class A
06/30/1999 $ 24.00 $ 0.03 (a) $ (0.13) (a) $ (0.10) $ (0.01) $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 20.24 0.02 (a) 5.11 (a) 5.13 (0.04) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 18.14 (0.04) 2.14 2.10 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 23.77 (0.13) (a) (0.14) (a) (0.27) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 20.17 (0.16) (a) 5.09 (a) 4.93 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 18.14 (0.11) 2.14 2.03 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 23.77 (0.13) (a) (0.13) (a) (0.26) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 20.18 (0.16) (a) 5.08 (a) 4.92 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 18.14 (0.10) 2.14 2.04 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
*Annualized
(a) Per share amounts based on average number of shares outstanding during the period.
(b) Ratio of expenses to average net assets excluding interest expense is 1.45%.
(c) Ratio of expenses to average net assets excluding interest expense is 2.20%.
(d) Ratio of expenses to average net assets excluding interest expense is 2.20%.
</TABLE>
52 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Distributions Distributions
from Net in Excess of
Realized Net Realized Total Net Asset Value Net Assets End
Capital Gains Capital Gains Distributions End of Period Total Return of Period (000s)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Innovation Fund
Class A
06/30/1999 $ (1.26) $ 0.00 $ (1.26) $ 37.46 61.36% $ 313,946
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.99) (0.18) (1.17) 24.28 48.10 85,800
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (0.26) 0.00 (0.26) 17.43 2.41 56,215
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (0.35) 0.00 (0.35) 17.26 19.86 50,067
- ------------------------------------------------------------------------------------------------------------------------------------
12/22/1994-09/30/1995 0.00 0.00 0.00 14.74 47.40 28,239
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (1.26) 0.00 (1.26) 36.09 60.17 351,876
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.99) (0.18) (1.17) 23.60 46.95 81,130
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (0.26) 0.00 (0.26) 17.10 1.79 51,472
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (0.35) 0.00 (0.35) 17.04 18.99 33,778
- ------------------------------------------------------------------------------------------------------------------------------------
05/22/1995-09/30/1995 0.00 0.00 0.00 14.66 24.10 6,509
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (1.26) 0.00 (1.26) 36.08 60.20 580,251
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.99) (0.18) (1.17) 23.59 46.97 219,258
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (0.26) 0.00 (0.26) 17.09 1.73 162,889
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (0.35) 0.00 (0.35) 17.04 19.08 137,752
- ------------------------------------------------------------------------------------------------------------------------------------
12/22/1994-09/30/1995 0.00 0.00 0.00 14.65 46.50 63,952
- ------------------------------------------------------------------------------------------------------------------------------------
International Fund
Class A
06/30/1999 $ (1.15) $ 0.00 $ (1.15) $ 12.45 (4.31)% $ 18,865
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.82) (0.30) (1.12) 14.33 9.95 12,510
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (0.39) 0.00 (0.39) 14.26 12.82 18,287
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 0.00 0.00 0.00 13.03 6.89 20,056
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 (0.24) 0.00 (0.24) 12.19 (3.70) 17,951
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (1.15) 0.00 (1.15) 11.51 (5.15) 9,478
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.82) (0.30) (1.12) 13.46 9.17 8,956
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (0.39) 0.00 (0.39) 13.56 12.17 8,676
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 0.00 0.00 0.00 12.48 6.21 5,893
- ------------------------------------------------------------------------------------------------------------------------------------
05/22/1995-09/30/1995 0.00 0.00 0.00 11.75 4.00 503
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (1.15) 0.00 (1.15) 11.50 (5.15) 101,320
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.82) (0.30) (1.12) 13.45 9.18 132,986
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (0.39) 0.00 (0.39) 13.55 12.18 168,446
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 0.00 0.00 0.00 12.47 6.13 203,544
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 (0.24) 0.00 (0.24) 11.75 (4.50) 215,349
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund
Class A
06/30/1999 $ (1.07) $ 0.00 $ (1.08) $ 22.82 (0.13)% $ 124,680
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.33) 0.00 (1.37) 24.00 25.71 57,164
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 0.00 0.00 0.00 20.24 11.58 12,184
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (1.07) 0.00 (1.07) 22.43 (0.86) 84,698
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.33) 0.00 (1.33) 23.77 24.76 84,535
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 0.00 0.00 0.00 20.17 11.19 28,259
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (1.07) 0.00 (1.07) 22.44 (0.82) 112,507
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.33) 0.00 (1.33) 23.77 24.70 140,438
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 0.00 0.00 0.00 20.18 11.25 53,686
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses Income (Loss)
to Average to Average Portfolio
Net Assets Net Assets Turnover Rate
--------------------------------------------
<S> <C> <C> <C>
Innovation Fund
Class A
06/30/1999 1.30% (0.90)% 119%
- ----------------------------------------------------------------------------------
06/30/1998 1.31 (0.94) 100
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.28* (0.68)* 80
- ----------------------------------------------------------------------------------
09/30/1996 1.31 (0.61) 123
- ----------------------------------------------------------------------------------
12/22/1994-09/30/1995 1.40* (0.60)* 86
- ----------------------------------------------------------------------------------
Class B
06/30/1999 2.05 (1.64) 119
- ----------------------------------------------------------------------------------
06/30/1998 2.06 (1.69) 100
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 2.03* (1.43)* 80
- ----------------------------------------------------------------------------------
09/30/1996 2.06 (1.36) 123
- ----------------------------------------------------------------------------------
05/22/1995-09/30/1995 2.30* (1.70)* 86
- ----------------------------------------------------------------------------------
Class C
06/30/1999 2.05 (1.65) 119
- ----------------------------------------------------------------------------------
06/30/1998 2.06 (1.69) 100
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 2.03* (1.43)* 80
- ----------------------------------------------------------------------------------
09/30/1996 2.06 (1.36) 123
- ----------------------------------------------------------------------------------
12/22/1994-09/30/1995 2.20* (1.40)* 86
- ----------------------------------------------------------------------------------
International Fund
Class A
06/30/1999 1.55% (b) 0.05% 55%
- ----------------------------------------------------------------------------------
06/30/1998 1.48 0.41 60
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.51* 0.58* 59
- ----------------------------------------------------------------------------------
09/30/1996 1.41 0.49 110
- ----------------------------------------------------------------------------------
09/30/1995 1.50 0.60 170
- ----------------------------------------------------------------------------------
Class B
06/30/1999 2.29 (c) (0.67) 55
- ----------------------------------------------------------------------------------
06/30/1998 2.22 (0.37) 60
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 2.26* 0.18* 59
- ----------------------------------------------------------------------------------
09/30/1996 2.16 (0.26) 110
- ----------------------------------------------------------------------------------
05/22/1995-09/30/1995 2.30* (0.10)* 170
- ----------------------------------------------------------------------------------
Class C
06/30/1999 2.30 (d) (0.75) 55
- ----------------------------------------------------------------------------------
06/30/1998 2.22 (0.43) 60
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 2.25* (0.25)* 59
- ----------------------------------------------------------------------------------
09/30/1996 2.16 (0.26) 110
- ----------------------------------------------------------------------------------
09/30/1995 2.20 (0.20) 170
- ----------------------------------------------------------------------------------
Mid-Cap Growth Fund
Class A
06/30/1999 1.10% 0.15% 85%
- ----------------------------------------------------------------------------------
06/30/1998 1.11 0.07 66
- ----------------------------------------------------------------------------------
01/13/1997-06/30/1997 1.11* 0.17* 82
- ----------------------------------------------------------------------------------
Class B
06/30/1999 1.85 (0.62) 85
- ----------------------------------------------------------------------------------
06/30/1998 1.86 (0.68) 66
- ----------------------------------------------------------------------------------
01/13/1997-06/30/1997 1.85* (0.58)* 82
- ----------------------------------------------------------------------------------
Class C
06/30/1999 1.85 (0.63) 85
- ----------------------------------------------------------------------------------
06/30/1998 1.86 (0.68) 66
- ----------------------------------------------------------------------------------
01/13/1997-06/30/1997 1.86* (0.58)* 82
- ----------------------------------------------------------------------------------
</TABLE>
See accompanying notes 53
<PAGE>
Financial Highlights - A, B and C Classes (Cont.)
<TABLE>
<CAPTION>
Net Asset Net Realized / Dividends Dividends in
Value Unrealized Gain Total Income from Net Excess of Net
Selected Per Share Data for Beginning Net Investment (Loss) on from Investment Investment Investment
the Year or Period Ended: of Period Income (Loss) Investments Operations Income Income
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Opportunity Fund
Class A
06/30/1999 $ 31.33 $ (0.21) (a) $ 0.46 (a) $ 0.25 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 29.35 (0.27) (a) 4.19 (a) 3.92 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 37.36 0.00 (3.10) (3.10) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 39.08 (0.11) 6.12 6.01 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 28.87 (0.11) 11.19 11.08 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
03/31/1999-06/30/1999 21.40 (0.09) (a) 2.89 (a) 2.80 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 28.86 (0.37) (a) 0.32 (a) (0.05) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 27.38 (0.46) (a) 3.88 (a) 3.42 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 35.38 (0.04) (3.05) (3.09) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 37.64 (0.35) 5.82 5.47 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 28.04 (0.34) 10.81 10.47 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Precious Metals Fund
Class A
06/30/1999 $ 5.33 $ 0.13 (a) $ (0.45) (a) $ (0.32) $ (0.09) $ (0.02)
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 8.83 0.04 (a) (3.54) (a) (3.50) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 12.12 0.17 (3.29) (3.12) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 12.33 0.03 (0.24) (0.21) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 14.14 0.07 (1.88) (1.81) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 5.01 0.08 (a) (0.42) (a) (0.34) (0.09) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 8.42 (0.01) (a) (3.40) (a) (3.41) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 11.62 0.00 (3.03) (3.03) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 11.90 (0.03) (0.25) (0.28) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/15/1995-09/30/1995 11.61 (0.01) 0.30 0.29 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 5.00 0.10 (a) (0.43) (a) (0.33) (0.11) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 8.43 0.00 (a) (3.43) (a) (3.43) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 11.62 (0.03) (2.99) (3.02) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 11.90 (0.07) (0.21) (0.28) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 13.75 (0.02) (1.83) (1.85) 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Renaissance Fund
Class A
06/30/1999 $ 19.10 $ (0.01) (a) $ 1.45 (a) $ 1.44 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 17.73 0.07 (a) 4.91 (a) 4.98 (0.08) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 16.08 0.12 (a) 3.90 (a) 4.02 (0.12) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 14.14 0.23 2.79 3.02 (0.23) (0.07)
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 12.50 0.36 1.61 1.97 (0.33) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 19.06 (0.13) (a) 1.39 (a) 1.26 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 17.77 (0.07) (a) 4.91 (a) 4.84 (0.02) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 16.12 0.03 (a) 3.92 (a) 3.95 (0.05) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 14.13 0.09 2.83 2.92 (0.11) (0.04)
- ------------------------------------------------------------------------------------------------------------------------------------
05/22/1995-09/30/1995 12.55 0.11 1.55 1.66 (0.08) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 18.96 (0.13) (a) 1.41 (a) 1.28 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 17.69 (0.07) (a) 4.88 (a) 4.81 (0.01) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 16.05 0.03 (a) 3.90 (a) 3.93 (0.04) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 14.09 0.12 2.78 2.90 (0.13) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 12.47 0.27 1.59 1.86 (0.24) 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
*Annualized
(a) Per share amounts based on average number of shares outstanding during the period.
(b) Ratio of expenses to average net assets excluding interest expense is 1.26%.
(c) Ratio of expenses to average net assets excluding interest expense is 2.06%.
(d) Ratio of expenses to average net assets excluding interest expense is 2.06%.
(e) Ratio of expenses to average net assets excluding interest expense is 1.25%.
(f) Ratio of expenses to average net assets excluding interest expense is 2.05%.
(g) Ratio of expenses to average net assets excluding interest expense is 2.05%.
</TABLE>
54 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Distributions Distributions
from Net in Excess of
Realized Net Realized Total Net Asset Value Net Assets End
Capital Gains Capital Gains Distributions End of Period Total Return of Period (000s)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Opportunity Fund
Class A
06/30/1999 $ (4.62) $ 0.00 $ (4.62) $ 26.96 3.98% $ 121,507
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.94) 0.00 (1.94) 31.33 13.87 200,935
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (4.91) 0.00 (4.91) 29.35 (8.87) 213,484
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (7.73) 0.00 (7.73) 37.36 18.35 134,859
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 (0.87) 0.00 (0.87) 39.08 39.70 120,830
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
03/31/1999-06/30/1999 0.00 0.00 0.00 24.20 13.08 251
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (4.62) 0.00 (4.62) 24.19 3.20 308,877
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.94) 0.00 (1.94) 28.86 13.01 500,011
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (4.91) 0.00 (4.91) 27.38 (9.40) 629,446
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (7.73) 0.00 (7.73) 35.38 17.47 800,250
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 (0.87) 0.00 (0.87) 37.64 38.60 715,191
- ------------------------------------------------------------------------------------------------------------------------------------
Precious Metals Fund
Class A
06/30/1999 $ 0.00 $ 0.00 $ (0.11) $ 4.90 (6.06)% $ 7,826
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 0.00 0.00 0.00 5.33 (39.64) 4,709
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 0.00 (0.17) (0.17) 8.83 (26.05) 4,016
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 0.00 0.00 0.00 12.12 (1.70) 6,245
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 0.00 0.00 0.00 12.33 (12.80) 7,670
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 0.00 0.00 (0.12) 4.55 (6.89) 3,921
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 0.00 0.00 0.00 5.01 (40.50) 3,889
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 0.00 (0.17) (0.17) 8.42 (26.40) 4,248
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 0.00 0.00 0.00 11.62 (2.35) 2,218
- ------------------------------------------------------------------------------------------------------------------------------------
06/15/1995-09/30/1995 0.00 0.00 0.00 11.90 2.50 251
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 0.00 0.00 (0.14) 4.53 (6.73) 11,491
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 0.00 0.00 0.00 5.00 (40.69) 16,943
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 0.00 (0.17) (0.17) 8.43 (26.31) 25,113
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 0.00 0.00 0.00 11.62 (2.35) 37,609
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 0.00 0.00 0.00 11.90 (13.50) 42,341
- ------------------------------------------------------------------------------------------------------------------------------------
Renaissance Fund
Class A
06/30/1999 $ (2.33) $ 0.00 $ (2.33) $ 18.21 9.94% $ 90,445
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (3.53) 0.00 (3.61) 19.10 30.98 85,562
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (2.25) 0.00 (2.37) 17.73 27.53 33,606
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (0.78) 0.00 (1.08) 16.08 22.37 20,631
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 0.00 0.00 (0.33) 14.14 16.10 12,933
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (2.33) 0.00 (2.33) 17.99 8.94 126,576
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (3.53) 0.00 (3.55) 19.06 29.99 100,688
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (2.25) 0.00 (2.30) 17.77 26.88 37,253
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (0.78) 0.00 (0.93) 16.12 21.54 15,693
- ------------------------------------------------------------------------------------------------------------------------------------
05/22/1995-09/30/1995 0.00 0.00 (0.08) 14.13 13.30 1,760
- ------------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (2.33) 0.00 (2.33) 17.91 9.12 442,049
- ------------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (3.53) 0.00 (3.54) 18.96 29.98 469,797
- ------------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (2.25) 0.00 (2.29) 17.69 26.86 313,226
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (0.78) 0.00 (0.94) 16.05 21.52 230,058
- ------------------------------------------------------------------------------------------------------------------------------------
09/30/1995 0.00 0.00 (0.24) 14.09 15.20 174,316
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses Income (Loss)
to Average to Average Portfolio
Net Assets Net Assets Turnover Rate
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Opportunity Fund
Class A
06/30/1999 1.31% (0.86)% 175%
- ----------------------------------------------------------------------------------
06/30/1998 1.31 (0.88) 86
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.25* (0.12)* 69
- ----------------------------------------------------------------------------------
09/30/1996 1.13 (0.32) 91
- ----------------------------------------------------------------------------------
09/30/1995 1.20 (0.40) 102
- ----------------------------------------------------------------------------------
Class B
03/31/1999-06/30/1999 2.03* (1.65)* 175
- ----------------------------------------------------------------------------------
Class C
06/30/1999 2.06 (1.62) 175
- ----------------------------------------------------------------------------------
06/30/1998 2.06 (1.63) 86
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.97* (0.95)* 69
- ----------------------------------------------------------------------------------
09/30/1996 1.88 (1.07) 91
- ----------------------------------------------------------------------------------
09/30/1995 1.90 (1.10) 102
- ----------------------------------------------------------------------------------
Precious Metals Fund
Class A
06/30/1999 1.46% (e) 2.40% 62%
- ----------------------------------------------------------------------------------
06/30/1998 1.31 (b) 0.70 56
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.37* 0.33* 46
- ----------------------------------------------------------------------------------
09/30/1996 1.32 0.19 35
- ----------------------------------------------------------------------------------
09/30/1995 1.40 0.60 9
- ----------------------------------------------------------------------------------
Class B
06/30/1999 2.21 (f) 1.63 62
- ----------------------------------------------------------------------------------
06/30/1998 2.11 (c) (0.07) 56
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 2.13* (0.33)* 46
- ----------------------------------------------------------------------------------
09/30/1996 2.07 (0.56) 35
- ----------------------------------------------------------------------------------
06/15/1995-09/30/1995 2.20* (0.20)* 9
- ----------------------------------------------------------------------------------
Class C
06/30/1999 2.20 (g) 1.92 62
- ----------------------------------------------------------------------------------
06/30/1998 2.11 (d) (0.07) 56
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 2.15* (0.41)* 46
- ----------------------------------------------------------------------------------
09/30/1996 2.07 (0.56) 35
- ----------------------------------------------------------------------------------
09/30/1995 2.20 (0.20) 9
- ----------------------------------------------------------------------------------
Renaissance Fund
Class A
06/30/1999 1.26% (0.04)% 221%
- ----------------------------------------------------------------------------------
06/30/1998 1.26 0.35 192
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.23* 0.95* 131
- ----------------------------------------------------------------------------------
09/30/1996 1.25 1.60 203
- ----------------------------------------------------------------------------------
09/30/1995 1.30 2.90 177
- ----------------------------------------------------------------------------------
Class B
06/30/1999 2.00 (0.78) 221
- ----------------------------------------------------------------------------------
06/30/1998 2.01 (0.39) 192
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.97* 0.20* 131
- ----------------------------------------------------------------------------------
09/30/1996 2.00 0.85 203
- ----------------------------------------------------------------------------------
05/22/1995-09/30/1995 2.10* 2.20* 177
- ----------------------------------------------------------------------------------
Class C
06/30/1999 2.00 (0.79) 221
- ----------------------------------------------------------------------------------
06/30/1998 2.01 (0.37) 192
- ----------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.97* 0.21* 131
- ----------------------------------------------------------------------------------
09/30/1996 2.00 0.85 203
- ----------------------------------------------------------------------------------
09/30/1995 2.10 2.10 177
- ----------------------------------------------------------------------------------
</TABLE>
See accompanying notes 55
<PAGE>
Financial Highlights - A, B and C Classes (Cont.)
<TABLE>
<CAPTION>
Net Asset Net Realized / Dividends Dividends in
Value Unrealized Gain Total Income from Net Excess of Net
Selected Per Share Data for Beginning Net Investment (Loss) on from Investment Investment Investment
the Year or Period Ended: of Period Income (Loss) Investments Operations Income Income
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small-Cap Value Fund
Class A
06/30/1999 $ 17.58 $ 0.26 (a) $ (1.29) (a) $ (1.03) $ (0.17) $ 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 15.75 0.23 (a) 2.49 (a) 2.72 (0.13) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 14.02 0.10 1.63 1.73 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 17.43 0.14 (a) (1.27) (a) (1.13) (0.06) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 15.71 0.09 (a) 2.48 (a) 2.57 (0.09) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 14.02 0.08 1.61 1.69 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 17.44 0.14 (a) (1.27) (a) (1.13) (0.04) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 15.71 0.09 (a) 2.49 (a) 2.58 (0.09) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 14.02 0.08 1.61 1.69 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Target Fund
Class A
06/30/1999 $ 16.35 $ (0.09) (a) $ 2.44 (a) $ 2.35 $ 0.00 $ 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 16.82 (0.08) (a) 4.06 (a) 3.98 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 17.11 (0.04) (a) 1.82 (a) 1.78 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1996 16.40 (0.05) 2.54 2.49 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1995 13.13 (0.02) 3.45 3.43 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 15.34 (0.19) (a) 2.27 (a) 2.08 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 16.14 (0.19) (a) 3.84 (a) 3.65 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 16.58 (0.12) (a) 1.75 (a) 1.63 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1996 16.06 (0.09) 2.39 2.30 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
05/22/1995-09/30/1995 13.93 (0.05) 2.18 2.13 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 15.34 (0.19) (a) 2.26 (a) 2.07 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 16.13 (0.19) (a) 3.85 (a) 3.66 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 16.58 (0.12) (a) 1.74 (a) 1.62 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1996 16.05 (0.16) 2.47 2.31 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1995 12.95 (0.12) 3.38 3.26 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Tax-Efficient Equity Fund
Class A
07/10/1998-06/30/1999 $ 10.00 $ 0.03 (a) $ 1.56 (a) $ 1.59 $ 0.00 $ 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
07/10/1998-06/30/1999 10.00 (0.05) (a) 1.56 (a) 1.51 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
07/10/1998-06/30/1999 10.00 (0.05) (a) 1.56 (a) 1.51 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Value Fund
Class A
06/30/1999 $ 15.64 $ 0.24 (a) $ 1.35 (a) $ 1.59 $ (0.22) $0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 14.80 0.19 (a) 2.46 (a) 2.65 (0.18) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 13.17 0.47 1.26 1.73 (0.10) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 15.63 0.12 (a) 1.35 (a) 1.47 (0.12) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 14.80 0.07 (a) 2.46 (a) 2.53 (0.07) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 13.16 0.44 1.26 1.70 (0.06) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 15.63 0.12 (a) 1.35 (a) 1.47 (0.12) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 14.80 0.07 (a) 2.46 (a) 2.53 (0.07) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 13.15 0.43 1.28 1.71 (0.06) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Value 25 Fund
Class A
07/10/1998-06/30/1999 $ 10.00 $ 0.13 (a) $ (1.12) (a) $ (0.99) $ (0.05) $ 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
07/10/1998-06/30/1999 10.00 0.07 (a) (1.12) (a) (1.05) (0.03) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
07/10/1998-06/30/1999 10.00 0.07 (a) (1.12) (a) (1.05) (0.02) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
*Annualized
(a) Per share amounts based on average number of shares outstanding during the period.
(b) Ratio of expenses to average net assets excluding interest expense is 1.90%.
(c) Ratio of expenses to average net assets excluding interest expense is 1.90%.
</TABLE>
56 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Distributions Distributions
from Net in Excess of
Realized Net Realized Total Net Asset Value Net Assets End
Capital Gains Capital Gains Distributions End of Period Total Return of Period (000s)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small-Cap Value Fund
Class A
06/30/1999 $ 0.00 $ (0.45) $ (0.62) $ 15.93 (5.50)% $ 107,569
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.76) 0.00 (0.89) 17.58 17.33 75,070
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 0.00 15.75 12.34 6,563
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 0.00 (0.45) (0.51) 15.79 (6.22) 96,994
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.76) 0.00 (0.85) 17.43 16.40 110,833
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 0.00 15.71 12.05 11,077
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 0.00 (0.45) (0.49) 15.82 (6.21) 112,926
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (0.76) 0.00 (0.85) 17.44 16.42 130,466
- -----------------------------------------------------------------------------------------------------------------------------------
01/20/1997-06/30/1997 0.00 0.00 0.00 15.71 12.05 20,637
- -----------------------------------------------------------------------------------------------------------------------------------
Target Fund
Class A
06/30/1999 (0.98) $ 0.00 $ (0.98) $ 17.72 15.69% $ 170,277
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (4.45) 0.00 (4.45) 16.35 27.49 157,277
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (2.07) 0.00 (2.07) 16.82 11.19 150,689
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (1.78) 0.00 (1.78) 17.11 16.50 156,027
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1995 (0.16) 0.00 (0.16) 16.40 26.50 121,915
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (0.98) 0.00 (0.98) 16.44 14.93 78,659
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (4.45) 0.00 (4.45) 15.34 26.45 76,194
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (2.07) 0.00 (2.07) 16.14 10.58 67,531
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (1.78) 0.00 (1.78) 16.58 15.58 49,851
- -----------------------------------------------------------------------------------------------------------------------------------
05/22/1995-09/30/1995 0.00 0.00 0.00 16.06 15.30 7,554
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (0.98) 0.00 (0.98) 16.43 14.86 910,494
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (4.45) 0.00 (4.45) 15.34 26.53 952,728
- -----------------------------------------------------------------------------------------------------------------------------------
10/01/1996-06/30/1997 (2.07) 0.00 (2.07) 16.13 10.52 969,317
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1996 (1.78) 0.00 (1.78) 16.58 15.66 974,948
- -----------------------------------------------------------------------------------------------------------------------------------
09/30/1995 (0.16) 0.00 (0.16) 16.05 25.60 780,355
- -----------------------------------------------------------------------------------------------------------------------------------
Tax-Efficient Equity Fund
Class A
07/10/1998-06/30/1999 $ 0.00 $ 0.00 $ 0.00 $ 11.59 15.90% $ 6,579
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
07/10/1998-06/30/1999 0.00 0.00 0.00 11.51 15.10 6,370
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
07/10/1998-06/30/1999 0.00 0.00 0.00 11.51 15.10 10,742
- -----------------------------------------------------------------------------------------------------------------------------------
Value Fund
Class A
06/30/1999 $ (1.72) $ 0.00 $ (1.94) $ 15.29 11.93% $ 22,267
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.63) 0.00 (1.81) 15.64 18.86 21,742
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 0.00 0.00 (0.10) 14.80 13.19 15,648
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
06/30/1999 (1.72) 0.00 (1.84) 15.26 11.05 36,314
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.63) 0.00 (1.70) 15.63 17.98 35,716
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 0.00 0.00 (0.06) 14.80 12.93 25,433
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
06/30/1999 (1.72) 0.00 (1.84) 15.26 11.04 80,594
- -----------------------------------------------------------------------------------------------------------------------------------
06/30/1998 (1.63) 0.00 (1.70) 15.63 17.98 88,235
- -----------------------------------------------------------------------------------------------------------------------------------
01/13/1997-06/30/1997 0.00 0.00 (0.06) 14.80 13.02 64,110
- -----------------------------------------------------------------------------------------------------------------------------------
Value 25 Fund
Class A
07/10/1998-06/30/1999 $ 0.00 $ 0.00 $ (0.05) $ 8.96 (9.85)% $ 287
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
07/10/1998-06/30/1999 0.00 0.00 (0.03) 8.92 (10.47) 840
- -----------------------------------------------------------------------------------------------------------------------------------
Class C
07/10/1998-06/30/1999 0.00 0.00 (0.02) 8.93 (10.50) 833
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses Income (Loss)
to Average to Average Portfolio
Net Assets Net Assets Turnover Rate
---------------------------------------------
<S> <C> <C> <C>
Small-Cap Value Fund
Class A
06/30/1999 1.25% 1.74% 60%
- ------------------------------------------------------------------------------------
06/30/1998 1.25 1.27 41
- ------------------------------------------------------------------------------------
01/20/1997-06/30/1997 1.30* 1.94* 48
- ------------------------------------------------------------------------------------
Class B
06/30/1999 2.00 0.95 60
- ------------------------------------------------------------------------------------
06/30/1998 2.00 0.53 41
- ------------------------------------------------------------------------------------
01/20/1997-06/30/1997 2.04* 1.23* 48
- ------------------------------------------------------------------------------------
Class C
06/30/1999 2.00 0.95 60
- ------------------------------------------------------------------------------------
06/30/1998 2.00 0.52 41
- ------------------------------------------------------------------------------------
01/20/1997-06/30/1997 2.05* 1.13* 48
- ------------------------------------------------------------------------------------
Target Fund
Class A
06/30/1999 1.21% (0.57)% 229%
- ------------------------------------------------------------------------------------
06/30/1998 1.22 (0.49) 226
- ------------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.20* (0.31)* 145
- ------------------------------------------------------------------------------------
09/30/1996 1.18 (0.34) 141
- ------------------------------------------------------------------------------------
09/30/1995 1.20 (0.10) 128
- ------------------------------------------------------------------------------------
Class B
06/30/1999 1.95 (1.31) 229
- ------------------------------------------------------------------------------------
06/30/1998 1.96 (1.24) 226
- ------------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.94* (1.05)* 145
- ------------------------------------------------------------------------------------
09/30/1996 1.93 (1.09) 141
- ------------------------------------------------------------------------------------
05/22/1995-09/30/1995 2.00* (0.90)* 128
- ------------------------------------------------------------------------------------
Class C
06/30/1999 1.95 (1.31) 229
- ------------------------------------------------------------------------------------
06/30/1998 1.96 (1.24) 226
- ------------------------------------------------------------------------------------
10/01/1996-06/30/1997 1.94* (1.06)* 145
- ------------------------------------------------------------------------------------
09/30/1996 1.93 (1.09) 141
- ------------------------------------------------------------------------------------
09/30/1995 2.00 (0.90) 128
- ------------------------------------------------------------------------------------
Tax-Efficient Equity Fund
Class A
07/10/1998-06/30/1999 1.11%* 0.25%* 13%
- ------------------------------------------------------------------------------------
Class B
07/10/1998-06/30/1999 1.85* (0.50)* 13
- ------------------------------------------------------------------------------------
Class C
07/10/1998-06/30/1999 1.84* (0.52)* 13
- ------------------------------------------------------------------------------------
Value Fund
Class A
06/30/1999 1.11% 1.68% 101%
- ------------------------------------------------------------------------------------
06/30/1998 1.11 1.19 77
- ------------------------------------------------------------------------------------
01/13/1997-06/30/1997 1.11* 1.71* 71
- ------------------------------------------------------------------------------------
Class B
06/30/1999 1.85 0.85 101
- ------------------------------------------------------------------------------------
06/30/1998 1.86 0.45 77
- ------------------------------------------------------------------------------------
01/13/1997-06/30/1997 1.86* 0.96* 71
- ------------------------------------------------------------------------------------
Class C
06/30/1999 1.85 0.83 101
- ------------------------------------------------------------------------------------
06/30/1998 1.86 0.45 77
- ------------------------------------------------------------------------------------
01/13/1997-06/30/1997 1.86* 0.97* 71
- ------------------------------------------------------------------------------------
Value 25 Fund
Class A
07/10/1998-06/30/1999 1.23% (d)* 1.60%* 182%
- ------------------------------------------------------------------------------------
Class B
07/10/1998-06/30/1999 1.99 (b)* 0.88* 182
- ------------------------------------------------------------------------------------
Class C
07/10/1998-06/30/1999 1.99 (c)* 0.89* 182
- ------------------------------------------------------------------------------------
</TABLE>
(d) Ratio of expense to average net assets excluding interest expense is 1.15%.
See accompanying notes 57
<PAGE>
Statements of Assets and Liabilities
June 30, 1999
<TABLE>
<CAPTION>
Capital Equity
Balanced Appreciation Income Innovation
Amounts in thousands, except per share amounts Fund Fund Fund Growth Fund Fund
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value $ 80,463 $ 1,156,787 $ 199,430 $ 2,432,141 $ 1,294,717
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and foreign currency 0 0 0 623 1,420
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for investments and foreign currency sold 432 5,177 8,862 18,944 58,078
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 165 2,353 373 4,074 7,026
- -----------------------------------------------------------------------------------------------------------------------------------
Variation margin receivable 53 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 218 1,193 573 813 102
- -----------------------------------------------------------------------------------------------------------------------------------
81,331 1,165,510 209,238 2,456,595 1,361,343
===================================================================================================================================
Liabilities:
Payable for investments and foreign currency purchased $ 8,445 $ 40,234 $ 4,285 $ 15,517 $ 92,960
- -----------------------------------------------------------------------------------------------------------------------------------
Written options outstanding 7 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 73 15,807 260 4,610 1,752
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued investment advisory fee 26 405 75 933 606
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued administration fee 19 253 50 746 373
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued distribution fee 15 81 29 1,273 516
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued servicing fee 7 89 16 466 233
- -----------------------------------------------------------------------------------------------------------------------------------
Variation margin payable 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Due to custodial bank 97 5,015 2,518 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
8,689 61,884 7,233 23,545 96,440
===================================================================================================================================
Net Assets $ 72,642 $ 1,103,626 $ 202,005 $ 2,433,050 $ 1,264,903
===================================================================================================================================
Net Assets Consist of:
Paid in capital $ 63,012 $ 756,091 $ 157,826 $ 1,484,604 $ 799,215
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income 6 1,527 4,946 1 0
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) 3,937 123,654 19,846 374,990 58,521
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) 5,687 222,354 19,387 573,455 407,167
- -----------------------------------------------------------------------------------------------------------------------------------
$ 72,642 $ 1,103,626 $ 202,005 $ 2,433,050 $ 1,264,903
===================================================================================================================================
Net Assets:
Class A $ 9,719 $ 91,296 $ 17,342 $ 227,638 $ 313,946
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 12,304 55,094 21,732 133,850 351,876
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 12,989 81,099 26,016 2,064,450 580,251
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 37,630 876,137 136,915 7,112 18,830
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Class A 882 3,425 1,113 6,671 8,382
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 1,123 2,096 1,402 4,297 9,750
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 1,185 3,082 1,676 66,282 16,082
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price* Per Share
(Net Assets Per Share Outstanding)
Class A $ 11.02 $ 26.65 $ 15.58 $ 34.12 $ 37.46
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 10.96 26.29 15.50 31.15 36.09
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 10.96 26.31 15.52 31.15 36.08
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 74,786 $ 934,433 $ 180,043 $ 1,858,686 $ 887,549
===================================================================================================================================
Cost of Foreign Currency Held $ 0 $ 0 $ 0 $ 0 $ 0
===================================================================================================================================
</TABLE>
*With respect to the Retail Classes, the redemption price varies by the length
of time the shares are held.
58 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
International Mid-Cap Opportunity Precious Renaissance
Fund Growth Fund Fund Metals Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value $ 141,510 $ 1,022,454 $ 430,142 $ 18,001 $ 651,001
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and foreign currency 5,913 140 234 728 6,508
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for investments and foreign currency sold 6,397 4,923 22,024 337 22,149
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 436 4,079 330 4,352 854
- -----------------------------------------------------------------------------------------------------------------------------------
Variation margin receivable 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 648 958 55 38 658
- -----------------------------------------------------------------------------------------------------------------------------------
154,904 1,032,554 452,785 23,456 681,170
===================================================================================================================================
Liabilities:
Payable for investments and foreign currency purchased $ 4,583 $ 14,879 $ 17,895 $ 151 $ 17,499
- -----------------------------------------------------------------------------------------------------------------------------------
Written options outstanding 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 993 8,744 1,207 43 2,828
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued investment advisory fee 63 363 219 8 322
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued administration fee 72 240 135 6 215
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued distribution fee 67 119 183 7 347
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued servicing fee 28 84 84 3 134
- -----------------------------------------------------------------------------------------------------------------------------------
Variation margin payable 11 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Due to custodial bank 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
5,817 24,429 19,723 218 21,345
===================================================================================================================================
Net Assets $ 149,087 $ 1,008,125 $ 433,062 $ 23,238 $ 659,825
===================================================================================================================================
Net Assets Consist of:
Paid in capital $ 121,576 $ 859,420 $ 290,503 $ 42,090 $ 542,158
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income (1,499) 1,312 12,827 (95) 41,268
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) 14,242 640 73,039 (14,988) 53,387
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) 14,768 146,753 56,693 (3,769) 23,012
- -----------------------------------------------------------------------------------------------------------------------------------
$ 149,087 $ 1,008,125 $ 433,062 $ 23,238 $ 659,825
===================================================================================================================================
Net Assets:
Class A $ 18,865 $ 124,680 $ 121,507 $ 7,826 $ 90,445
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 9,478 84,698 251 3,921 126,576
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 101,320 112,507 308,877 11,491 442,049
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 19,424 686,240 2,427 0 755
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Class A 1,516 5,463 4,507 1,598 4,966
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 824 3,775 11 862 7,035
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 8,811 5,014 12,765 2,538 24,680
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price* Per Share
(Net Assets Per Share Outstanding)
Class A $ 12.45 $ 22.82 $ 26.96 $ 4.90 $ 18.21
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 11.51 22.43 24.20 4.55 17.99
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 11.50 22.44 24.19 4.53 17.91
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 126,506 $ 875,701 $ 373,449 $ 21,783 $ 627,988
===================================================================================================================================
Cost of Foreign Currency Held $ 5,998 $ 0 $ 0 $ 576 $ 0
===================================================================================================================================
<CAPTION>
Small-Cap Tax-Efficient
Value Fund Target Fund Equity Fund Value Fund Value 25 Fund
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at value $ 396,722 $ 1,146,022 $ 28,146 $ 229,367 $ 2,541
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and foreign currency 1,054 565 0 9 0
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for investments and foreign currency sold 760 43,271 0 4,806 625
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 1,508 5,397 249 342 39
- -----------------------------------------------------------------------------------------------------------------------------------
Variation margin receivable 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 1,006 110 20 672 2
- -----------------------------------------------------------------------------------------------------------------------------------
401,050 1,195,365 28,415 235,196 3,207
===================================================================================================================================
Liabilities:
Payable for investments and foreign currency purchased $ 1,297 $ 24,462 $ 197 $ 3,062 $ 736
- -----------------------------------------------------------------------------------------------------------------------------------
Written options outstanding 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 1,605 3,023 155 233 257
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued investment advisory fee 192 488 10 91 1
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued administration fee 118 355 8 68 1
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued distribution fee 127 574 10 71 1
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued servicing fee 68 222 5 33 0
- -----------------------------------------------------------------------------------------------------------------------------------
Variation margin payable 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Due to custodial bank 0 0 79 0 22
- -----------------------------------------------------------------------------------------------------------------------------------
3,407 29,124 464 3,558 1,018
===================================================================================================================================
Net Assets $ 397,643 $ 1,166,241 $ 27,951 $ 231,638 $ 2,189
===================================================================================================================================
Net Assets Consist of:
Paid in capital $ 414,727 $ 822,586 $ 24,894 $ 189,075 $ 2,215
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income 3,303 67,742 (5) 10,727 10
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) (12,072) 43,636 (228) 12,987 (84)
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) (8,315) 232,277 3,290 18,849 48
- -----------------------------------------------------------------------------------------------------------------------------------
$ 397,643 $ 1,166,241 $ 27,951 $ 231,638 $ 2,189
===================================================================================================================================
Net Assets:
Class A $ 107,569 $ 170,277 $ 6,579 $ 22,267 $ 287
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 96,994 78,659 6,370 36,314 840
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 112,926 910,494 10,742 80,594 833
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 80,154 6,811 4,260 92,463 229
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Class A 6,753 9,608 567 1,456 32
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 6,142 4,786 554 2,379 94
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 7,141 55,406 933 5,279 93
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price* Per Share
(Net Assets Per Share Outstanding)
Class A $ 15.93 $ 17.72 $ 11.59 $ 15.29 $ 8.96
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 15.79 16.44 11.51 15.26 8.92
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 15.82 16.43 11.51 15.26 8.93
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 405,037 $ 913,744 $ 24,856 $ 210,518 $ 2,492
===================================================================================================================================
Cost of Foreign Currency Held $ 0 $ 0 $ 0 $ 0 $ 0
===================================================================================================================================
</TABLE>
See accompanying notes 59
<PAGE>
Statements of Operations
For the period ended June 30, 1999
<TABLE>
<CAPTION>
Capital
Appreciation Equity Income Innovation
Amounts in thousands Balanced Fund Fund Fund Growth Fund Fund
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 829 $ 13,332 $ 7,107 $ 12,164 $ 523
- ------------------------------------------------------------------------------------------------------------------------------------
Interest 1,626 1,771 278 3,340 2,234
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income 2,455 15,103 7,385 15,504 2,757
====================================================================================================================================
Expenses:
Investment advisory fees 311 5,058 893 10,729 4,454
- ------------------------------------------------------------------------------------------------------------------------------------
Administration fees 220 3,130 580 8,581 2,740
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class B 82 363 131 747 1,281
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class C 83 561 173 13,944 2,580
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class A 24 224 37 465 407
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class B 27 121 44 249 427
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class C 28 187 58 4,648 860
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees - Other Classes 0 516 29 0 19
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 5 86 15 165 44
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense 17 2 1 24 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 797 10,248 1,961 39,552 12,813
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 1,658 4,855 5,424 (24,048) (10,056)
====================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 4,055 127,483 28,130 412,268 85,853
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on futures and written options contracts 427 0 0 1,267 (3,778)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on foreign currency transactions 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (716) (27,333) (8,864) (30,494) 250,480
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on futures and written options contracts (97) 0 0 0 324
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on translation of assets and liabilities denominated in foreign
currencies 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) 3,669 100,150 19,266 383,041 332,879
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Assets Resulting from Operations $ 5,327 $ 105,005 $ 24,690 $ 358,993 $ 322,823
====================================================================================================================================
</TABLE>
*For the period July 10, 1998 to June 30, 1999.
60 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
International Mid-Cap Opportunity Precious Renaissance
Fund Growth Fund Fund Metals Fund Fund
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 2,071 $ 8,522 $ 672 $ 720 $ 6,743
- ------------------------------------------------------------------------------------------------------------------------------------
Interest 155 2,371 1,496 137 923
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income 2,226 10,893 2,168 857 7,666
====================================================================================================================================
Expenses:
Investment advisory fees 754 3,927 3,171 126 3,771
- ------------------------------------------------------------------------------------------------------------------------------------
Administration fees 878 2,642 1,951 94 2,514
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class B 64 625 0 30 850
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class C 812 919 2,641 100 3,216
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class A 29 252 338 9 214
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class B 21 209 0 10 284
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class C 271 306 880 33 1,072
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees - Other Classes 17 236 0 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 11 64 41 2 49
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense 130 0 17 37 7
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 2,987 9,180 9,039 441 11,978
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (761) 1,713 (6,871) 416 (4,312)
====================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 18,157 867 91,858 (5,908) 101,571
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on futures and written options contracts 85 0 1,089 0 (642)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on foreign currency transactions (2,202) 0 0 0 (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (16,468) 7,029 (86,017) 6,412 (42,439)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on futures and written options contracts (87) 0 0 0 (77)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on translation of assets and liabilities denominated in foreign
currencies (108) 0 0 13 (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) (623) 7,896 6,930 517 58,410
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Assets Resulting from Operations $ (1,384) $ 9,609 $ 59 $ 933 $ 54,098
====================================================================================================================================
<CAPTION>
Tax-
Small-Cap Efficient Value 25
Value Fund Target Fund Equity Fund* Value Fund Fund
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 10,292 $ 3,734 $ 157 $ 6,038 $ 39
- ------------------------------------------------------------------------------------------------------------------------------------
Interest 707 3,131 14 250 4
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income 10,999 6,865 171 6,288 43
====================================================================================================================================
Expenses:
Investment advisory fees 2,215 5,838 57 1,044 8
- ------------------------------------------------------------------------------------------------------------------------------------
Administration fees 1,373 4,244 49 778 6
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class B 738 528 21 250 3
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution fees - Class C 835 6,383 38 585 4
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class A 226 348 8 51 1
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class B 246 176 7 83 1
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class C 279 2,128 13 195 1
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees - Other Classes 41 2 4 39 0
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 28 82 1 18 0
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense 0 16 0 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 5,981 19,745 198 3,043 25
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 5,018 (12,880) (27) 3,245 18
====================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments (11,944) 123,732 (228) 29,420 (84)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on futures and written options contracts 0 1,262 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on foreign currency transactions 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (15,379) 38,444 3,290 (6,992) 48
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on futures and written options contracts 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on translation of assets and liabilities denominated in foreign
currencies 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) (27,323) 163,438 3,062 22,428 (36)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Assets Resulting from Operations $ (22,305) $ 150,558 $ 3,035 $ 25,673 $ (18)
====================================================================================================================================
See accompanying notes 61
</TABLE>
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Amounts in thousands Balanced Fund Capital Appreciation Fund
------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ 1,658 $ 1,822 $ 4,855 $ 4,296
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 4,482 11,033 127,483 89,980
- -----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (813) (1,046) (27,333) 125,025
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 5,327 11,809 105,005 219,301
=======================================================================================================================
Distributions to Shareholders:
From net investment income
Class A (212) (130) (397) (56)
- -----------------------------------------------------------------------------------------------------------------------
Class B (180) (100) 0 (40)
- -----------------------------------------------------------------------------------------------------------------------
Class C (187) (98) 0 (81)
- -----------------------------------------------------------------------------------------------------------------------
Other Classes (994) (1,462) (5,209) (3,653)
- -----------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class A (1,439) (495) (6,025) (881)
- -----------------------------------------------------------------------------------------------------------------------
Class B (1,545) (247) (3,186) (754)
- -----------------------------------------------------------------------------------------------------------------------
Class C (1,545) (285) (5,032) (2,428)
- -----------------------------------------------------------------------------------------------------------------------
Other Classes (5,061) (5,071) (56,464) (46,281)
- -----------------------------------------------------------------------------------------------------------------------
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 (11,163) (7,888) (76,313) (54,174)
=======================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 5,467 10,035 43,847 66,636
- -----------------------------------------------------------------------------------------------------------------------
Class B 5,866 8,086 21,095 35,779
- -----------------------------------------------------------------------------------------------------------------------
Class C 6,990 7,888 33,638 62,600
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 4,412 5,975 592,800 395,404
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 926 602 5,855 887
- -----------------------------------------------------------------------------------------------------------------------
Class B 1,506 302 3,012 737
- -----------------------------------------------------------------------------------------------------------------------
Class C 1,609 367 4,830 2,440
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 6,005 6,512 49,228 39,039
- -----------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (5,360) (1,454) (34,758) (8,606)
- -----------------------------------------------------------------------------------------------------------------------
Class B (3,179) (827) (11,806) (1,820)
- -----------------------------------------------------------------------------------------------------------------------
Class C (3,302) (943) (31,014) (13,721)
- --------------------------------------------------- ------------------------------- --------------------------------
Other Classes (10,716) (36,139) (725,336) (182,910)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions 10,224 404 (48,609) 396,465
- -----------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 4,388 4,325 (19,917) 561,592
=======================================================================================================================
Net Assets:
Beginning of period 68,254 63,929 1,123,543 561,951
- -----------------------------------------------------------------------------------------------------------------------
End of period * $ 72,642 $ 68,254 $ 1,103,626 $ 1,123,543
- -----------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 6 $ 2,578 $ 1,527 $ 2,964
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Amounts in thousands Equity Income Fund
---------------------------------
Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998
Operations:
<S> <C> <C>
Net investment income (loss) $ 5,424 $ 4,503
- ------------------------------------------------------------------------------------------
Net realized gain (loss) 28,130 23,527
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (8,864) 4,261
- ------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 24,690 32,291
- ------------------------------------------------------------------------------------------
Distributions to Shareholders:
From net investment income
Class A (395) (214)
- ------------------------------------------------------------------------------------------
Class B (354) (152)
- ------------------------------------------------------------------------------------------
Class C (440) (244)
- ------------------------------------------------------------------------------------------
Other Classes (4,130) (3,825)
- ------------------------------------------------------------------------------------------
From net realized capital gains
Class A (1,680) (1,062)
- ------------------------------------------------------------------------------------------
Class B (1,999) (745)
- ------------------------------------------------------------------------------------------
Class C (2,668) (1,348)
- ------------------------------------------------------------------------------------------
Other Classes (16,320) (17,552)
- ------------------------------------------------------------------------------------------
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 (27,986) (25,142)
==========================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 8,352 13,092
- ------------------------------------------------------------------------------------------
Class B 9,636 12,684
- ------------------------------------------------------------------------------------------
Class C 20,733 18,527
- ------------------------------------------------------------------------------------------
Other Classes 35,370 20,453
- ------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 1,967 1,244
- ------------------------------------------------------------------------------------------
Class B 2,148 825
- ------------------------------------------------------------------------------------------
Class C 2,982 1,506
- ------------------------------------------------------------------------------------------
Other Classes 20,074 20,925
- ------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (5,776) (3,164)
- ------------------------------------------------------------------------------------------
Class B (5,140) (961)
- ------------------------------------------------------------------------------------------
Class C (20,521) (3,868)
- ------------------------------------------------------------------------------------------
Other Classes (66,231) (26,929)
- ------------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions 3,594 54,334
- ------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 298 61,483
==========================================================================================
Net Assets:
Beginning of period 201,707 140,224
- ------------------------------------------------------------------------------------------
End of period * $ 202,005 $ 201,707
- ------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 4,946 $ 4,754
- ------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
62
<PAGE>
<TABLE>
<CAPTION>
Amounts in thousands Growth Fund Innovation Fund
------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ (24,048) $ (17,931) $ (10,056) $ (4,786)
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 413,535 344,619 82,075 18,138
- -----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (30,494) 312,858 250,804 109,570
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 358,993 639,546 322,823 122,922
=======================================================================================================================
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 (21,401) (22,078) (4,919) (2,994)
- -----------------------------------------------------------------------------------------------------------------------
Class B (11,617) (9,680) (5,496) (3,093)
- -----------------------------------------------------------------------------------------------------------------------
Class C (230,472) (241,892) (12,996) (9,130)
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 (143) 0
- -----------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A 0 0 0 (528)
- -----------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 (546)
- -----------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 (1,611)
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
Total Distributions (263,490) (273,650) (23,554) (17,902)
=======================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 592,678 330,680 670,706 353,943
- -----------------------------------------------------------------------------------------------------------------------
Class B 68,949 16,100 222,514 18,925
- -----------------------------------------------------------------------------------------------------------------------
Class C 536,307 370,235 386,283 89,214
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 7,429 0 31,776 124
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 20,136 20,743 4,539 3,237
- -----------------------------------------------------------------------------------------------------------------------
Class B 10,649 8,981 5,125 3,439
- -----------------------------------------------------------------------------------------------------------------------
Class C 215,697 226,702 12,329 10,261
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 142 0
- -----------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (577,520) (355,128) (517,708) (351,255)
- -----------------------------------------------------------------------------------------------------------------------
Class B (31,680) (12,901) (31,174) (13,734)
- -----------------------------------------------------------------------------------------------------------------------
Class C (618,382) (574,802) (188,880) (103,423)
- -----------------------------------------------------------------------------------------------------------------------
Other Classes (556) 0 (16,345) 0
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions 223,707 30,610 579,307 10,731
- -----------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 319,210 396,506 878,576 115,751
=======================================================================================================================
Net Assets:
Beginning of period 2,113,840 1,717,334 386,327 270,576
- -----------------------------------------------------------------------------------------------------------------------
End of period * $ 2,433,050 $ 2,113,840 $ 1,264,903 $ 386,327
- -----------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 1 $ 54,147 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Amounts in thousands International Fund Mid-Cap Growth Fund
---------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ (761) $ (580) $ 1,713 $ 841
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 16,040 8,506 867 58,714
- -----------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (16,663) 7,290 7,029 57,682
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations (1,384) 15,216 9,609 117,237
- -----------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
From net investment income
Class A 0 0 (33) (41)
- -----------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
Class C 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 (390) (1,454)
- -----------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class A (772) (1,244) (4,870) (1,205)
- -----------------------------------------------------------------------------------------------------------------------
Class B (789) (719) (4,178) (2,602)
- -----------------------------------------------------------------------------------------------------------------------
Class C (10,255) (11,750) (6,249) (4,570)
- -----------------------------------------------------------------------------------------------------------------------
Other Classes (196) 0 (25,986) (21,860)
- -----------------------------------------------------------------------------------------------------------------------
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 (12,012) (13,713) (41,706) (31,732)
========================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 387,777 283,880 138,060 104,053
- -----------------------------------------------------------------------------------------------------------------------
Class B 36,095 7,431 27,453 54,506
- -----------------------------------------------------------------------------------------------------------------------
Class C 312,239 268,540 33,931 90,916
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 21,694 0 745,822 351,303
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 724 1,179 4,388 1,158
- -----------------------------------------------------------------------------------------------------------------------
Class B 714 643 3,823 2,327
- -----------------------------------------------------------------------------------------------------------------------
Class C 9,591 10,909 5,858 4,187
- -----------------------------------------------------------------------------------------------------------------------
Other Classes 196 0 24,449 22,766
- -----------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (384,482) (292,362) (73,016) (64,062)
- -----------------------------------------------------------------------------------------------------------------------
Class B (35,264) (7,860) (25,970) (7,281)
- -----------------------------------------------------------------------------------------------------------------------
Class C (337,461) (314,820) (58,559) (21,124)
- -----------------------------------------------------------------------------------------------------------------------
Other Classes (3,792) 0 (579,895) (217,945)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions 8,031 (42,460) 246,344 320,804
- -----------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (5,365) (40,957) 214,247 406,309
========================================================================================================================
Net Assets:
Beginning of period 154,452 195,409 793,878 387,569
- -----------------------------------------------------------------------------------------------------------------------
End of period * $ 149,087 $ 154,452 $ 1,008,125 $ 793,878
- -----------------------------------------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ (1,499) $ (338) $ 1,312 $ 52
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Amounts in thousands Opportunity Fund
------------------------------------
Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998
Operations:
<S> <C> <C>
Net investment income (loss) $ (6,871) $ (11,377)
- ----------------------------------------------------------------------------------------
Net realized gain (loss) 92,947 134,358
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (86,017) (16,839)
- ----------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 59 106,142
- ----------------------------------------------------------------------------------------
Distributions to Shareholders:
From net investment income
Class A 0 0
- ----------------------------------------------------------------------------------------
Class B 0 0
- ----------------------------------------------------------------------------------------
Class C 0 0
- ----------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------
From net realized capital gains
Class A (21,702) (13,050)
- ----------------------------------------------------------------------------------------
Class B 0 0
- ----------------------------------------------------------------------------------------
Class C (66,672) (40,210)
- ----------------------------------------------------------------------------------------
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 (88,374) (53,260)
========================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 1,327,819 595,236
- ----------------------------------------------------------------------------------------
Class B 599 0
- ----------------------------------------------------------------------------------------
Class C 394,360 548,593
- ----------------------------------------------------------------------------------------
Other Classes 2,418 0
- ----------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 19,986 12,054
- ----------------------------------------------------------------------------------------
Class B 0 0
- ----------------------------------------------------------------------------------------
Class C 61,578 36,779
- ----------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (1,413,716) (639,360)
- ----------------------------------------------------------------------------------------
Class B (534) 0
- ----------------------------------------------------------------------------------------
Class C (571,940) (748,168)
- ----------------------------------------------------------------------------------------
Other Classes (139) 0
- ----------------------------------------------------------------------------------------
Net increase (decrease) resulting
from Fund share transactions (179,569) (194,866)
- ----------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (267,884) (141,984)
=========================================================================================
Net Assets:
Beginning of period 700,946 842,930
- ----------------------------------------------------------------------------------------
End of period * $ 433,062 $ 700,946
- ----------------------------------------------------------------------------------------
*Including net undistributed
(overdistributed) investment income of: $ 12,827 $ 0
- ----------------------------------------------------------------------------------------
See accompanying notes 63
</TABLE>
<PAGE>
Statements of Changes in Net Assets (Cont.)
<TABLE>
<CAPTION>
Amounts in thousands Precious Metals Fund
-----------------------------
Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998
Operations:
<S> <C> <C>
Net investment income (loss) $ 416 $ 22
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) (5,908) (8,090)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 6,425 (3,094)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 933 (11,162)
====================================================================================================
Distributions to Shareholders:
From net investment income
Class A (37) 0
- ----------------------------------------------------------------------------------------------------
Class B (75) 0
- ----------------------------------------------------------------------------------------------------
Class C (288) 0
- ----------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------
In excess of net investment income
Class A (10) 0
- ----------------------------------------------------------------------------------------------------
Class B (20) 0
- ----------------------------------------------------------------------------------------------------
Class C (78) 0
- ----------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------
From net realized capital gains
Class A 0 0
- ----------------------------------------------------------------------------------------------------
Class B 0 0
- ----------------------------------------------------------------------------------------------------
Class C 0 0
- ----------------------------------------------------------------------------------------------------
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 (508) 0
====================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 172,538 371,343
- ----------------------------------------------------------------------------------------------------
Class B 4,487 8,049
- ----------------------------------------------------------------------------------------------------
Class C 158,888 124,855
- ----------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 46 0
- ----------------------------------------------------------------------------------------------------
Class B 95 0
- ----------------------------------------------------------------------------------------------------
Class C 363 0
- ----------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (170,496) (370,208)
- ----------------------------------------------------------------------------------------------------
Class B (4,167) (6,475)
- ----------------------------------------------------------------------------------------------------
Class C (164,482) (124,238)
- ----------------------------------------------------------------------------------------------------
Other Classes 0 0
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions (2,728) 3,326
- ----------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (2,303) (7,836)
====================================================================================================
Net Assets:
Beginning of period 25,541 33,377
- ----------------------------------------------------------------------------------------------------
End of period* $ 23,238 $ 25,541
- ----------------------------------------------------------------------------------------------------
*Including net undistributed (overdistributed) investment income of: $ (95) $ (16)
- ----------------------------------------------------------------------------------------------------
</TABLE>
64 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Amounts in thousands Renaissance Fund
------------------------------
Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998
Operations:
<S> <C> <C>
Net investment income (loss) $ (4,312) $ (1,489)
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) 100,928 123,570
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (42,518) 4,045
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 54,098 126,126
======================================================================================================
Distributions to Shareholders:
From net investment income
Class A 0 (170)
- ------------------------------------------------------------------------------------------------------
Class B 0 (42)
- ------------------------------------------------------------------------------------------------------
Class C 0 (213)
- ------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ------------------------------------------------------------------------------------------------------
In excess of net investment income
Class A 0 0
- ------------------------------------------------------------------------------------------------------
Class B 0 0
- ------------------------------------------------------------------------------------------------------
Class C 0 0
- ------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ------------------------------------------------------------------------------------------------------
From net realized capital gains
Class A (10,816) (7,515)
------------------------------------------------------------------------------------------------------
Class B (14,778) (8,922)
- ------------------------------------------------------------------------------------------------------
Class C (55,218) (64,285)
- ------------------------------------------------------------------------------------------------------
Other Classes (49) 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 (80,861) (81,147)
=======================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 158,557 203,937
- ------------------------------------------------------------------------------------------------------
Class B 45,572 57,972
- ------------------------------------------------------------------------------------------------------
Class C 101,621 202,638
- ------------------------------------------------------------------------------------------------------
Other Classes 1,189 887
- ------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 9,525 7,011
- ------------------------------------------------------------------------------------------------------
Class B 13,419 8,021
- ------------------------------------------------------------------------------------------------------
Class C 51,677 59,208
- ------------------------------------------------------------------------------------------------------
Other Classes 38 0
- ------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (161,529) (164,942)
- ------------------------------------------------------------------------------------------------------
Class B (29,608) (7,786)
- ------------------------------------------------------------------------------------------------------
Class C (159,492) (138,986)
- ------------------------------------------------------------------------------------------------------
Other Classes (1,405) 0
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions 29,564 227,960
- ------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 2,801 272,939
======================================================================================================
Net Assets:
Beginning of period 657,024 384,085
- ------------------------------------------------------------------------------------------------------
End of period * $ 659,825 $ 657,024
- ------------------------------------------------------------------------------------------------------
*Including net undistributed (overdistributed) investment income of: $ 41,268 $ 46,534
- ------------------------------------------------------------------------------------------------------
<CAPTION>
Amounts in thousands Small-Cap Value Fund Target Fund
-----------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ 5,018 $ 2,083 $ (12,880) $ (13,703)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (11,944) 15,567 124,994 242,973
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (15,379) (3,548) 38,444 56,862
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations (22,305) 14,102 150,558 286,132
====================================================================================================================================
Distributions to Shareholders:
From net investment income
Class A (1,065) (226) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (416) (310) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (329) (410) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (1,043) (394) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of 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 0 (1,098) (7,963) (35,690)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 (2,248) (4,561) (18,642)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 (2,979) (55,675) (248,454)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 (2,032) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class A (2,675) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (3,114) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (3,425) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (2,175) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (14,242) (9,697) (68,199) (302,786)
====================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 89,486 78,581 1,155,256 1,137,516
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 36,302 105,195 17,814 9,446
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 57,300 124,033 164,138 143,022
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 60,011 50,928 6,773 0
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 3,546 1,246 7,489 32,770
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 3,299 2,393 4,207 17,256
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 3,581 3,224 52,783 234,139
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 2,992 2,197 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (53,980) (10,783) (1,168,422) (1,171,453)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (41,495) (6,886) (24,745) (16,188)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (64,820) (18,158) (317,299) (371,192)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (36,584) (40,655) (311) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions 59,638 291,315 (102,317) 15,316
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 23,091 295,720 (19,958) (1,338)
====================================================================================================================================
Net Assets:
Beginning of period 374,552 78,832 1,186,199 1,187,537
- ------------------------------------------------------------------------------------------------------------------------------------
End of period * $ 397,643 $ 374,552 $ 1,166,241 $ 1,186,199
- ------------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed (overdistributed) investment income of: $ 3,303 $ 6,285 $ 67,742 $ 37,813
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Tax-Efficient
Amounts in thousands Equity Fund Value Fund Value 25 Fund
-------------------------------------------------------------
Period from Period from
July 10, 1998 Year Ended Year Ended July 10, 1998
Increase (Decrease) in Net Assets from: to June 30, 1999 June 30, 1999 June 30, 1998 June 30, 1999
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ (27) $ 3,245 $ 2,032 $ 18
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (228) 29,420 29,304 (84)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 3,290 (6,992) 3,088 48
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 3,035 25,673 34,424 (18)
====================================================================================================================================
Distributions to Shareholders:
From net investment income
Class A 0 (297) (221) (4)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 (285) (145) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 (644) (357) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 (1,851) (1,292) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of 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 0 (2,116) (1,819) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 (3,839) (3,062) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 (9,026) (7,703) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 (11,350) (8,105) 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 0 (29,408) (22,704) (8)
====================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class A 7,152 40,949 19,311 1,532
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 7,039 6,401 9,503 1,252
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 11,845 17,743 33,261 1,157
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 4,070 34,047 28,033 388
- ------------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 0 2,146 1,885 3
- ------------------------------------------------------------------------------------------------------------------------------------
Class B 0 3,688 2,853 2
- ------------------------------------------------------------------------------------------------------------------------------------
Class C 0 9,133 7,528 1
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 13,104 9,361 1
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (1,370) (42,344) (16,080) (1,197)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B (1,299) (8,734) (3,736) (432)
- ------------------------------------------------------------------------------------------------------------------------------------
Class C (2,363) (32,134) (20,988) (343)
- ------------------------------------------------------------------------------------------------------------------------------------
Other Classes (158) (47,985) (23,096) (149)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions 24,916 (3,986) 47,835 2,215
- ------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 27,951 (7,721) 59,555 2,189
====================================================================================================================================
Net Assets:
Beginning of period 0 239,359 179,804 0
- ------------------------------------------------------------------------------------------------------------------------------------
End of period * $ 27,951 $ 231,638 $ 239,359 $ 2,189
- ------------------------------------------------------------------------------------------------------------------------------------
*Including net undistributed (overdistributed) investment income of: $ (5) $ 10,727 $ 5,621 $ 10
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes 65
</TABLE>
<PAGE>
Notes to Financial Statements
June 30, 1999
1. Organization
PIMCO Funds: Multi-Manager Series (the "Trust"), is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company organized as a Massachusetts business trust. The Trust currently
consists of twenty-six 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). Information presented in these financial statements pertains
to the A, B and C classes (the "Retail Classes") of the Trust. Certain detailed
financial information for the Institutional, Administrative and D classes (the
"Other Classes") is provided separately and is available upon request. On June
3, 1999, the Board of Trustees approved the merger of the PIMCO Funds:
Multi-Manager Series Balanced Fund to PIMCO Funds: Pacific Investment Management
Series Strategic Balanced Fund.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements 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 guide-
lines 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
Balanced, Equity Income, Renaissance and Value Funds. Dividends from net
investment income, if any, are declared and paid at least annually to share-
holders 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
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.
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: Balanced Fund - $1,122; Equity Income
Fund - $22,999; Growth Fund - $57,735; Innovation Fund - 24,825; International
Fund - $331,529; Mid-Cap Growth Fund - $8,992; Precious Metals Fund - $8,118;
Renaissance Fund - $70,391;
66
<PAGE>
Small-Cap Value Fund - $2,070; Tax-Efficient Equity Fund - $35; Value Fund -
$52,615; and Value 25 Fund - $110.
Futures and Options. Certain Funds are authorized to enter into futures and
options contracts. 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 and options contracts are imperfect
correlation between the change in market value of the securities held by a Fund
and the prices of futures and options contracts, 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's
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 agreements. 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.
Delayed Delivery Transactions. A Fund may purchase or sell securities on a
when-issued or delayed delivery basis. These transactions involve a commitment
by a Fund to purchase or sell securities for a predetermined price or yield,
with payment and delivery taking place beyond the customary settlement period.
When delayed delivery purchases are outstanding, a Fund will set aside and
maintain until the settlement date in a segregated account, liquid assets in an
amount sufficient to meet the purchase price. When purchasing a security on a
delayed delivery basis, a Fund assumes the rights and risks of ownership of the
security, including the risk of price and yield fluctuations, and takes such
fluctuations into account when determining its net asset value. A Fund may
dispose of or renegotiate a delayed delivery transaction after it is entered
into, and may sell when-issued securities before they are delivered, which may
result in a capital gain or loss. When the Fund has sold a security on a delayed
delivery basis, the Fund does not participate in future gains and losses with
respect to the security. Forward sales commitments are accounted for by the Fund
in the same manner as forward currency contracts discussed above.
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 and Value 25 Funds; 0.55% for the
Target and International Funds; 0.60% for the Renaissance, Small-Cap Value, and
Precious Metals Funds; 0.65% for the Opportunity and Innovation 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's 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 provides administrative services to the Trust for
which it receives from each Fund a monthly administrative fee based on each
share class' average daily net assets. The Administration Fee for the Retail
Classes is charged at the annual rate of 0.65% for the International Fund; 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 International and International Growth 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, 1999
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's 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, 1999, PFD received $9,613,634
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; and (vii) any expenses allocated or allocable to a
specific class of shares, which include service fees payable with respect to the
Administrative Class shares 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 Trust-
ees. 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 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
entire 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.
4. Purchases and Sales of Securities
Purchases and sales of securities (excluding short-term investments) for the
period ended June 30, 1999 were as follows (amounts in thousands):
U.S. Government/Agency All Other
--------------------------------------------------
Purchases Sales Purchases Sales
- ------------------------------------------------------------------------------
Balanced Fund $ 95,179 $ 93,336 $ 62,227 $ 63,077
Capital Appreciation Fund 1,324,269 1,298,054
Equity Income Fund 143,274 157,110
Growth Fund 2,700,173 2,783,041
Innovation Fund 1,267,035 761,668
International Fund 72,005 103,899
Mid-Cap Growth Fund 915,099 700,331
Opportunity Fund 767,967 1,029,559
Precious Metals Fund 11,195 14,740
Renaissance Fund 1,341,957 1,391,833
Small-Cap Value Fund 268,878 209,792
Target Fund 2,263,365 2,448,230
Tax-Efficient Equity Fund 26,595 1,829
Value Fund 226,607 263,988
Value 25 Fund 5,210 2,768
68
<PAGE>
5. Federal Income Tax Matters
As of June 30, 1999, the Fund listed in the table below had remaining capital
loss carryforwards that were realized in current and prior years. Additionally,
the International Fund, Precious Metals Fund, Small Cap Value Fund,
Tax-Efficient Equity Fund, and Value 25 Fund realized capital losses and/or
foreign currency losses during the period November 1, 1998 through June 30,
1999, which the Funds elected to defer to the following fiscal year pursuant to
income tax regulations. The amounts are $332,309, $3,967,828, $573,480,
$174,775, and $5,496 respectively.
The Fund will resume capital gain distributions in the future to the extent
gains are realized in excess of the available carryforwards.
Capital Loss Carryforwards
-----------------------------------
Realized Losses Expiration
- -------------------------------------------------------------------------
Precious Metals Fund $ 1,635,971 6/30/2006
8,161,137 6/30/2007
Small Cap Value Fund 10,713,421 6/30/2007
Tax-Efficient Equity Fund 27,778 6/30/2007
Value 25 Fund 67,139 6/30/2007
<TABLE>
<CAPTION>
6. Transactions in Written Call and Put Options
Transactions in written call and put options were as follows (amounts in thousands):
Balanced Fund Growth Fund Innovation Fund Opportunity Fund
-----------------------------------------------------------------------------------------------
Premium Contracts Premium Contracts Premium Contracts Premium Contracts
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at 06/30/1998 $ 0 0 $ 0 0 $ 650 1,500 $ 0 0
Sales 27 66 1,316 4,436 4,219 7,425 2,957 11,687
Closing Buys 0 0 (340) (956) (3,566) (6,598) (340) (1,000)
Expirations (18) (47) (976) (3,480) (1,141) (2,000) (775) (3,500)
Exercised 0 0 0 0 (162) (327) (1,842) (7,187)
-----------------------------------------------------------------------------------------------
Balance at 06/30/1999 $ 9 19 $ 0 0 $ 0 0 $ 0 0
===============================================================================================
</TABLE>
Renaissance Fund Target Fund
----------------------------------------------
Premium Contracts Premium Contracts
----------------------------------------------
Balance at 06/30/1998 $ 132 630 $ 0 0
Sales 704 4,351 1,590 112,700
Closing Buys (571) (3,675) (1,140) (111,775)
Expirations (132) (630) (450) (925)
Exercised (133) (676) 0 0
----------------------------------------------
Balance at 06/30/1999 $ 0 0 $ 0 0
==============================================
7. In-Kind Transactions
For the year ended June 30, 1999, the following fund realized gains (losses)
from in-kind redemptions of approximately (amounts in thousands):
Capital Appreciation Fund $2,839
69
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1999
8. 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>
Balanced Fund Capital Appreciation Fund
-----------------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998 Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 488 $ 5,467 830 $ 10,035 1,753 $ 43,847 2,800 $ 66,636
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 524 5,866 688 8,086 863 21,095 1,489 35,779
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 633 6,990 671 7,888 1,380 33,638 2,630 62,600
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 401 4,412 504 5,975 23,619 592,800 16,465 395,404
- ---------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 89 926 53 602 249 5,855 38 887
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 146 1,506 26 302 131 3,012 32 737
- ---------------------------------------------------------------------------------------------------------------------------------
Class C 155 1,609 32 367 209 4,830 106 2,440
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes 573 6,005 567 6,512 2,085 49,228 1,684 39,039
- ---------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (486) (5,360) (124) (1,454) (1,376) (34,758) (348) (8,606)
- ---------------------------------------------------------------------------------------------------------------------------------
Class B (291) (3,179) (69) (827) (486) (11,806) (76) (1,820)
- ---------------------------------------------------------------------------------------------------------------------------------
Class C (305) (3,302) (82) (943) (1,280) (31,014) (583) (13,721)
- ---------------------------------------------------------------------------------------------------------------------------------
Other Classes (963) (10,716) (3,066) (36,139) (28,942) (725,336) (7,652) (182,910)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 964 $ 10,224 30 $ 404 (1,795) $ (48,609) 16,585 $ 396,465
=================================================================================================================================
<CAPTION>
Equity Income Fund
-----------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount
-----------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class A 558 $ 8,352 807 $ 13,092
- ------------------------------------------------------------------------------------------
Class B 658 9,636 788 12,684
- ------------------------------------------------------------------------------------------
Class C 1,408 20,733 1,154 18,527
- ------------------------------------------------------------------------------------------
Other Classes 2,442 35,370 1,260 20,453
- ------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 140 1,967 81 1,244
- ------------------------------------------------------------------------------------------
Class B 153 2,148 54 825
- ------------------------------------------------------------------------------------------
Class C 212 2,982 99 1,506
- ------------------------------------------------------------------------------------------
Other Classes 1,420 20,074 1,359 20,925
- ------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (392) (5,776) (195) (3,164)
- ------------------------------------------------------------------------------------------
Class B (358) (5,140) (59) (961)
- ------------------------------------------------------------------------------------------
Class C (1,389) (20,521) (238) (3,868)
- ------------------------------------------------------------------------------------------
Other Classes (4,448) (66,231) (1,659) (26,929)
- ------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 404 $ 3,594 3,451 $ 54,334
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
Opportunity Fund Precious Metals Fund
--------------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998 Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 53,826 $ 1,327,819 19,485 $ 595,236 31,952 $ 172,538 54,468 $ 371,343
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 19 599 0 0 868 4,487 1,291 8,049
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 17,562 394,360 19,302 548,593 31,755 158,888 20,195 124,855
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 106 2,418 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 900 19,986 416 12,054 9 46 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 0 0 20 95 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 3,079 61,578 1,371 36,779 76 363 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (56,632) (1,413,716) (20,762) (639,360) (31,247) (170,496) (54,039) (370,208)
- -----------------------------------------------------------------------------------------------------------------------------------
Class B (8) (534) 0 0 (803) (4,167) (1,019) (6,475)
- -----------------------------------------------------------------------------------------------------------------------------------
Class C (25,198) (571,940) (26,338) (748,168) (32,681) (164,482) (19,787) (124,238)
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes (6) (139) 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions (6,352) $ (179,569) (6,526) $(194,866) (51) $ (2,728) 1,109 $ 3,326
===================================================================================================================================
<CAPTION>
Renaissance Fund
--------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount
--------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class A 9,334 $ 158,557 10,943 $ 203,937
- -------------------------------------------------------------------------------------------------
Class B 2,613 45,572 3,123 57,972
- -------------------------------------------------------------------------------------------------
Class C 5,944 101,621 10,952 202,638
- -------------------------------------------------------------------------------------------------
Other Classes 69 1,189 51 887
- -------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 625 9,525 418 7,011
- -------------------------------------------------------------------------------------------------
Class B 887 13,419 478 8,021
- -------------------------------------------------------------------------------------------------
Class C 3,434 51,677 3,551 59,208
- -------------------------------------------------------------------------------------------------
Other Classes 3 38 0 0
- -------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (9,467) (161,529) (8,781) (164,942)
- -------------------------------------------------------------------------------------------------
Class B (1,743) (29,608) (420) (7,786)
- -------------------------------------------------------------------------------------------------
Class C (9,456) (159,492) (7,456) (138,986)
- -------------------------------------------------------------------------------------------------
Other Classes (82) (1,405) 0 0
- -------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund share transactions 2,161 $ 29,564 12,859 $ 227,960
=================================================================================================
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
Growth Fund Innovation Fund
-----------------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998 Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 18,586 $ 592,678 11,481 $ 330,680 22,267 $ 670,706 17,255 $ 353,943
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 2,319 68,949 588 16,100 7,203 222,514 945 18,925
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 18,554 536,307 13,609 370,235 12,856 386,283 4,460 89,214
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 246 7,429 0 0 978 31,776 6 124
- ----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 690 20,136 809 20,743 166 4,539 174 3,237
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 398 10,649 375 8,981 193 5,125 190 3,439
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 8,069 215,697 9,474 226,702 465 12,329 566 10,261
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0 5 142 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (18,127) (577,520) (12,217) (355,128) (17,585) (517,708) (17,121) (351,255)
- ----------------------------------------------------------------------------------------------------------------------------------
Class B (1,081) (31,680) (476) (12,901) (1,084) (31,174) (708) (13,734)
- ----------------------------------------------------------------------------------------------------------------------------------
Class C (21,434) (618,382) (21,186) (574,802) (6,532) (188,880) (5,262) (103,423)
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes (19) (556) 0 0 (487) (16,345) 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)resulting from
Fund Share transactions 8,201 $ 223,707 2,457 $ 30,610 18,445 $ 579,307 505 $ 10,731
==================================================================================================================================
<CAPTION>
International Fund Mid-Cap Growth Fund
----------------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998 Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 31,483 $ 387,777 21,036 $ 283,880 6,247 $ 138,060 4,474 $ 104,053
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 3,192 36,095 593 7,431 1,268 27,453 2,368 54,506
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 26,758 312,239 21,197 268,540 1,578 33,931 3,986 90,916
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 1,989 21,694 0 0 33,953 745,822 15,177 351,303
- ----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 64 724 99 1,179 206 4,388 51 1,158
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 68 714 57 643 181 3,823 103 2,327
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 913 9,591 973 10,909 278 5,858 185 4,187
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 19 196 0 0 1,138 24,449 999 22,766
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (30,904) (384,482) (21,545) (292,362) (3,372) (73,016) (2,744) (64,062)
- ----------------------------------------------------------------------------------------------------------------------------------
Class B (3,101) (35,264) (625) (7,860) (1,230) (25,970) (316) (7,281)
- ----------------------------------------------------------------------------------------------------------------------------------
Class C (28,746) (337,461) (24,720) (314,820) (2,749) (58,559) (925) (21,124)
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes (329) (3,792) 0 0 (26,494) (579,895) (9,392) (217,945)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from
Fund Share transactions 1,406 $ 8,031 (2,935) $ (42,460) 11,004 $ 246,344 13,966 $ 320,804
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Small-Cap Value Fund Target Fund
-------------------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998 Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount Shares Amount Shares Amount
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 5,904 $ 89,486 4,385 $ 78,581 74,975 $ 1,155,256 70,981 $ 1,137,516
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 2,397 36,302 5,902 105,195 1,206 17,814 601 9,446
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 3,813 57,300 7,001 124,033 11,320 164,138 9,280 143,022
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 3,981 60,011 2,829 50,928 402 6,773 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 241 3,546 71 1,246 517 7,489 2,292 32,770
- -----------------------------------------------------------------------------------------------------------------------------------
Class B 228 3,299 137 2,393 312 4,207 1,280 17,256
- -----------------------------------------------------------------------------------------------------------------------------------
Class C 247 3,581 185 3,224 3,916 52,783 17,369 234,139
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 203 2,992 125 2,197 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (3,663) (53,980) (602) (10,783) (75,504) (1,168,422) (72,612) (1,171,453)
- -----------------------------------------------------------------------------------------------------------------------------------
Class B (2,841) (41,495) (386) (6,886) (1,698) (24,745) (1,100) (16,188)
- -----------------------------------------------------------------------------------------------------------------------------------
Class C (4,402) (64,820) (1,017) (18,158) (21,938) (317,299) (24,627) (371,192)
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes (2,475) (36,584) (2,232) (40,655) (18) (311) 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)resulting from
Fund Share transactions 3,633 $ 59,638 16,398 $ 291,315 (6,510) $ (102,317) 3,464 $ 15,316
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Tax-Efficient
Equity Fund Value Fund Value 25 Fund
------------------------------------------------------------------------------------------
Period from Period from
7/10/1998 to 6/30/1999 Year Ended 6/30/1998 Year Ended 6/30/1999 7/10/1998 to 6/30/1999
Shares Amount Shares Amount Shares Amount Shares Amount
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 699 $ 7,152 2,834 $ 40,949 1,242 $ 19,311 179 $ 1,532
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 682 7,039 445 6,401 613 9,503 146 1,252
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 1,163 11,845 1,253 17,743 2,153 33,261 135 1,157
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 382 4,070 2,359 34,047 1,789 28,033 45 388
- ----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class A 0 0 158 2,146 128 1,885 0 3
- ----------------------------------------------------------------------------------------------------------------------------------
Class B 0 0 274 3,688 196 2,853 0 2
- ----------------------------------------------------------------------------------------------------------------------------------
Class C 0 0 678 9,133 517 7,528 0 1
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 967 13,104 637 9,361 0 1
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class A (132) (1,370) (2,926) (42,344) (1,038) (16,080) (147) (1,197)
- ----------------------------------------------------------------------------------------------------------------------------------
Class B (128) (1,299) (625) (8,734) (242) (3,736) (52) (432)
- ----------------------------------------------------------------------------------------------------------------------------------
Class C (230) (2,363) (2,298) (32,134) (1,356) (20,988) (42) (343)
- ----------------------------------------------------------------------------------------------------------------------------------
Other Classes (15) (158) (3,262) (47,985) (1,483) (23,096) (19) (149)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)resulting from
Fund Share transactions 2,421 $ 24,916 (143) $ (3,986) 3,156 $ 47,835 245 $ 2,215
==================================================================================================================================
</TABLE>
71
<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 for the Class A, B and C
share classes present fairly, in all material respects, the financial position
of the Balanced Fund, Capital Appreciation Fund, Equity Income Fund, Growth
Fund, Innovation Fund, International Fund, Mid-Cap Growth Fund, Opportunity
Fund, Precious Metals Fund, Renaissance Fund, Small-Cap Value Fund, Target Fund,
Tax-Efficient Equity Fund, Value Fund and Value 25 Fund (hereafter referred to
as the "Funds") at June 30, 1999, the results of each of their operations, the
changes in each of their net assets and the financial highlights of the Class A,
B and C share classes 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, 1999 by
correspondence with the custodians and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Kansas City, Missouri
August 13, 1999
72
<PAGE>
Federal Income Tax Information (unaudited)
As required by the Internal Revenue Code regulations, shareholders must be
notified within 60 days of the Trust's fiscal year end (June 30, 1999) regarding
the status of the distributions made to the shareholders.
Dividend Received Deduction. For the benefit of corporate shareholders only, the
portion of dividends paid out of ordinary income earned during certain Funds'
fiscal years ended June 30, 1999 which qualify for the corporate
dividend-received deduction are as follows:
Balanced Fund 27.39%
Capital Appreciation Fund 87.77%
Equity Income Fund 62.42%
Growth Fund 18.69%
Mid-Cap Growth Fund 100.00%
Precious Metals Fund 9.99%
Renaissance Fund 8.11%
Small-Cap Value Fund 65.93%
Target Fund 2.42%
Value Fund 43.33%
Value 25 Fund 100.00%
Capital Gain Distributions. Capital gains distributions paid for all classes of
shares during the fiscal year ended June 30, 1999, were in the amounts as
follows:
Per Share Per Share
Long-Term Short-Term
Capital Gains Capital Gains
- --------------------------------------------------------------------------------
Balanced Fund 1.21626 0.42571
Capital Appreciation Fund 1.64323 0.00792
Equity Income Fund 1.39942 0.36456
Growth Fund 3.11822 0.80518
Innovation Fund 1.25670 -
International Fund 1.14909 -
Mid-Cap Growth Fund 1.06725 -
Opportunity Fund 4.62464 -
Renaissance Fund 0.99112 1.34349
Small-Cap Value Fund 0.24676 0.20297
Target Fund 0.43510 0.54143
Value Fund 1.35064 0.36527
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 2000,
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 1999.
73
<PAGE>
PIMCO Funds: Access to the highest standard
PIMCO Funds offers unique access to the investment expertise of PIMCO Advisors
L.P. PIMCO manages $254 billion, including assets for 46 of the 100 largest U.S.
corporations. The firm's institutional heritage is reflected in the PIMCO Funds,
each seeking the highest caliber performance in a specific investment style.
Manager
PIMCO Advisors L.P., 800 Newport Center Drive,
Newport Beach, CA 92660
Distributor
PIMCO Funds Distributors LLC, 2187 Atlantic Street,
Stamford, CT 06902-6896
Custodian
Investors Fiduciary Trust Company, 801 Pennsylvania,
Kansas City, MO 64105
Shareholder Servicing Agent and Transfer Agent
First Data Investor Services Group, Inc., P.O. Box 9688,
Providence, RI 02940-9688
Independent Accountant
PricewaterhouseCoopers LLP, 1055 Broadway,
Kansas City, MO. 64105
Legal Counsel
Ropes & Gray, One International Place,
Boston MA 02110
For Account Information
For PIMCO Funds account information contact your financial advisor, of 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.
PIMCO
FUNDS
PIMCO Funds
Distributors LLC
2187 Atlantic Street
Stamford, Ct 06902-6896
<PAGE>
PIMCO Funds Shareholder Update
and Annual Report
This Update is published twice a year to provide PIMCO Funds shareholders with
general market commentary and fund information. It also includes the financial
report for the PIMCO Funds Multi-Manager Series.
June 30, 1999
Multi-Manager Series
Share Class
D
Capital Appreciation
Equity Income
Innovation
Mid-Cap Growth
Renaissance
Tax-Efficient Equity
Value
[GRAPHIC APPEARS HERE]
Thinking of hopping on the technology train? Turn to our tech sector overview,
page 4.
Page 2 Today's Investor
The Risks and Rewards of Technology Investing
Page 4 Market Review
Page 5 Manager Spotlight
PIMCO Renaissance Fund's John Schneider
Page 6 In The News
Page 7 Overview: Comprehensive Fund Family
Page 8 Multi-Manager Series
PIMCO Funds Annual Report
PIMCO
FUNDS
[LOGO OF PIMCO FUNDS APPEARS HERE]
<PAGE>
Today's Investor
The Risks and Rewards of Technology Investing
Investing in technology stocks can be a bit like riding a roller coaster. The
steep climbs and sometimes dizzying dips are not for everyone. But as long as
you get on a sturdy vehicle, have an experienced operator, and are prepared to
stay the course, you'll probably find the ride quite satisfying.
And the more you know about this potentially volatile sector, the better
equipped you'll be to deal with its vagaries. So here's the lowdown on these
high-flying stocks.
How would you define technology?
Technology is a broad term. In its most general sense, "technology" simply
refers to any application of science to solve a problem or fulfill a need. But
when we talk about technology stocks, we're really talking about high
technology, and even more specifically, about information technology (IT). And
IT covers pretty much everything to do with computers and communications.
What businesses make up the technology sector?
Analysts divide the technology sector into different categories, although they
may not agree on the same headings. The following is a useful breakdown of the
sector, ranging from the fastest-growing (Internet and networking companies) to
the most cyclical (contract manufacturers and components makers):
1. Internet--includes Internet service providers (ISPs) like AOL, Internet
guides like Yahoo! and online retailers like Amazon.com.
2. Networking--companies that make the gear connecting computers and forming the
Internet, such as Cisco Systems and 3Com.
3. Telecommunications equipment-- MCI Worldcom, Motorola and Lucent are three of
the leaders in this field.
4. Software--Microsoft and Oracle are two of the best-known software
manufacturers.
5. Services--companies providing a range of electronic, information, data and
communications services including First Data and EDS.
6. Computers--Dell, Compaq and IBM are three of the biggest names in personal
computing.
7. Contract manufacturers--includes lesser-known companies like Solectron and
Jabil, which actually produce electronics products for
brand-name companies.
8. Components--includes semiconductor manufacturers such as Intel and Texas
Instruments and disk drive makers such as Seagate
and Quantum Corp.
Many technology companies, of course, don't fall neatly into these categories.
There are numerous companies that fall outside a strict definition of
technology, but use technology in innovative ways to advance their business.
Their stocks offer much of the same risk/reward potential as other, pure
technology stocks.
Are all technology stocks equally volatile?
Technology stocks, as a group, tend to be more volatile than other stocks. But
some, like Internet stocks, are more volatile than others. Take the case of
Yahoo!, the first online navigational guide to the Web and one of the "blue
chips" of Internet investing. Over the past year, it's stock traded at a high of
$244 and a low of $29.50. Now, contrast this to the price fluctuation of the
shares of a computer company--Dell Computer--and a component manufacturer--Intel
(see chart below). While they too have experienced price fluctuations, they look
relatively stable compared to Yahoo! stock.
Some Technology Stocks Are More Volatile Than Others
This chart shows 52-week highs and lows for three kinds of technology stocks
(period ended 06/30/99).
<TABLE>
<CAPTION>
Some Technology Stocks Are More Volatile
Than Others
Low High
<S> <C> <C>
Yahoo $30 $244
Dell $20 $ 55
Intel $35 $ 72
</TABLE>
Source: Bloomberg
What's behind the volatility?
Many of today's most promising technology companies are young and fast growing.
Start-up companies abound. In many cases, the products or services these
companies offer are equally new and untried. The competition to gain a place in
the
Past performance is no guarantee of future results. This article does not
represent a recommendation of any particular security or investment product. It
is not indicative of performance of any PIMCO fund and the Funds do not
necessarily own the securities referenced. PIMCO Innovation Fund, a
technology-oriented mutual fund, is not limited to investing solely in the areas
covered in this article. sun is fierce. And it's not always clear which
companies, or even which technologies, will flourish and which will fall by the
wayside.
2
<PAGE>
sun is fierce. And it's not always clear which companies, or even which
technologies, will flourish and which will fall by the wayside.
But this uncertainty and the resulting price volatility haven't dampened
investor enthusiasm. The potential for these stocks to produce significant
long-term gains continues to attract investors.
Is a technology fund a safer way to invest?
Investing in a technology mutual fund is generally considered less risky than
investing in individual technology stocks. A fund offers instant
diversification, which helps reduce risk. And a diversified technology fund,
rather than a category-specific fund (like an Internet fund), can reduce risk
even further. Moreover, the professional investment management a mutual fund
provides can be particularly important in a highly specialized, quickly changing
sector like technology.
Technology funds, however, can be more volatile than typical mutual funds.
That's because they invest largely in growth stocks and they are sector
funds--both of which make them likely to experience greater price volatility
than more broad-based funds. But as the impressive returns for 1998's top-
performing technology funds show, the greater risks are accompanied by the
potential for greater rewards.
Is it too late to get into technology?
Definitely not. A recent Commerce Department study indicates that electronic
commerce and the information technology industry have generated at least one-
third of the nation's economic growth since 1995. And that momentum shows
no signs of stopping. Most analysts believe we are still in the early stages of
the current technological revolution, equating it to the second inning of a
baseball game. In other words, an investment in technology still looks like a
pretty good bet. The important thing is to invest intelligently.
The Technology Revolution--Still Going Strong
Americans have been adopting new technologies at a rapid rate, and they show no
signs of stopping. This chart shows the number of actual and expected U.S.
households using new technologies.
<TABLE>
<CAPTION>
The Technology Revolution--Still Going Strong U.S. Households (millions)
PCs Cellular Phones Internet On-line Shopping
----- --------------- -------- ----------------
<S> <C> <C> <C> <C>
1994 33.9 15.1 5.8
1995 37.2 21.5 12.7 0.8
1996 39.5 27.7 21.7 2.4
1997 44.5 36.0 25.0 5.0
1998 48.7 42.4 33.3 10.1
1999 53.6 48.0 38.8 13.1
2000 57.3 51.6 44.4 17.8
2001 60.1 55.4 51.3 23.2
2002 61.8 58.1 56.0 30.5
2003 64.1 60.9 59.8 38.4
</TABLE>
Source: Forrester Research, Inc.
Six guidelines for new technology investors
Consider these pointers before you make an investment:
1. Understand the risks as well as the rewards. Technology investing is not for
everyone, particularly not for the risk-averse investor. Its greater risk,
however, is accompanied by greater reward potential.
2. Keep diversified. Don't put all your eggs in one basket. Spread the risk
across several technology holdings. You can achieve instant diversification by
investing in a technology mutual fund.
3. Base your portfolio's technology allocation on your needs and risk profile,
not on unrealistic profit expectations. Even aggressive investors should invest
only a small percentage of their total portfolio in the sector. A technology
investment belongs within a well-balanced, diversified portfolio.
4. Choose an investment vehicle carefully. Of course, you can invest in
individual technology stocks. But you should also consider a technology fund or
a general stock fund with significant weightings in the tech sector. A mutual
fund will give you the benefit of added diversification and professional
management.
5.Invest for the long term. You must be prepared to ride out the volatility most
technology investments experience. Buy and hold. That's the best advice if you
want to reduce the risk and maximize the return potential of your technology
holding.
3
<PAGE>
Stock Market
A Broadened Stock Market Continues Its Ascent
The market corrects and then rises to new heights
<TABLE>
<CAPTION>
S&P 500
Index
-------
<S> <C>
07/03/1998 1146
07/10/1998 1164
07/17/1998 1187
07/24/1998 1141
07/31/1998 1121
08/07/1998 1089
08/14/1998 1063
08/21/1998 1081
08/28/1998 1027
09/04/1998 974
09/11/1998 1010
09/18/1998 1020
09/25/1998 1045
10/02/1998 1003
10/09/1998 984
10/16/1998 1056
10/23/1998 1071
10/30/1998 1099
11/06/1998 1141
11/13/1998 1126
11/20/1998 1164
11/27/1998 1192
12/04/1998 1177
12/11/1998 1166
12/18/1998 1188
12/25/1998 1226
01/01/1999 1229
01/08/1999 1275
01/15/1999 1243
01/22/1999 1225
01/29/1999 1280
02/05/1999 1239
02/12/1999 1230
02/19/1999 1239
02/26/1999 1238
03/05/1999 1275
03/12/1999 1295
03/19/1999 1299
03/26/1999 1283
04/02/1999 1294
04/09/1999 1348
04/16/1999 1319
04/23/1999 1357
04/30/1999 1335
05/07/1999 1345
05/14/1999 1338
05/21/1999 1330
05/28/1999 1302
06/04/1999 1328
06/11/1999 1294
06/18/1999 1343
06/25/1999 1315
06/30/1999 1373
</TABLE>
Source: Bloomberg
This fiscal year certainly was an eventful one for stock investors. The third
quarter of 1998 saw the market correct as a result of concerns over an economic
downturn in and then rises to Asia that appeared to be spreading. In the fourth
quarter, the market rose as these fears began to abate, and the first quarter of
1999 continued the upward trend as the market hit record highs. However,
many industry analysts expressed concern over the narrowness of the market, in
which the largest of the large-cap growth stocks were responsible for much of
this performance. Their concerns proved to be short-lived: in the second quarter
of 1999, the market finally broadened, as smaller-capitalization issues as well
as lower valuation issues showed strength.
The technology sector, particularly the Internet, was an important driver of
performance in the last quarter of 1998 as well as the first quarter of 1999.
However, these issues hit a speed bump early in the second quarter of 1999 as
interest rates began to rise.
Higher valuation growth stocks also had the same inverse relationship with
interest rates. They turned in a strong performance in the last quarter of 1998
and the first quarter of 1999, benefiting from the Federal Reserve's interest
rate cuts. And, like technology stocks, they suffered in the second quarter as a
result of rising interest rates.
In contrast, cyclical and industrial issues saw lackluster performance in the
last quarter of 1998 and the first quarter of 1999. However, in the second
quarter of this year, they benefited not only from a rise in interest rates but
legitimate evidence of a global economic recovery, which resulted in increased
demand for basic materials.
The broadening of the market was welcomed by most analysts. It was largely
viewed as a healthy event, after a long period of domination by one segment of
the market. Looking ahead, we are cautiously optimistic that this broadening
will enable the market to continue its rise, and that more stocks will
participate in this ascent.
Bond Market
Bond Yields Move Higher
After falling to 4.7% late last year, bond yields have moved higher
<TABLE>
<CAPTION>
30 - Year
U.S.Treasury
Yields
--------------
<S> <C>
07/03/1998 5.6%
07/10/1998 5.6%
07/17/1998 5.7%
07/24/1998 5.7%
07/31/1998 5.7%
08/07/1998 5.6%
08/14/1998 5.5%
08/21/1998 5.4%
08/28/1998 5.3%
09/04/1998 5.3%
09/11/1998 5.2%
09/18/1998 5.1%
09/25/1998 5.1%
10/02/1998 4.8%
10/09/1998 5.1%
10/16/1998 5.0%
10/23/1998 5.2%
10/30/1998 5.2%
11/06/1998 5.4%
11/13/1998 5.3%
11/20/1998 5.2%
11/27/1998 5.2%
12/04/1998 5.0%
12/11/1998 5.0%
12/18/1998 5.0%
12/25/1998 5.2%
01/01/1999 5.1%
01/08/1999 5.3%
01/15/1999 5.1%
01/22/1999 5.1%
01/29/1999 5.1%
02/05/1999 5.4%
02/12/1999 5.4%
02/19/1999 5.4%
02/26/1999 5.6%
03/05/1999 5.6%
03/12/1999 5.5%
03/19/1999 5.6%
03/26/1999 5.6%
04/02/1999 5.6%
04/09/1999 5.5%
04/16/1999 5.6%
04/23/1999 5.6%
04/30/1999 5.7%
05/07/1999 5.8%
05/14/1999 5.9%
05/21/1999 5.8%
05/28/1999 5.8%
06/04/1999 6.0%
06/11/1999 6.2%
06/18/1999 6.0%
06/25/1999 6.2%
06/30/1999 6.0%
</TABLE>
Source: Bloomberg
In our last report to shareholders we suggested that the historic 18-year bull
market for bonds had come to an end. The bond market seemed to agree as Treasury
prices fell throughout most of late last year, higher. the first half of this
year.
Inflation fears have dominated the fixed income marketplace in 1999. OPEC's cuts
in oil production sent gasoline prices climbing, which negatively affected
inflation reports for the month of April. The economy, fueled by stock market
gains, grew faster than expected, adding to speculation that higher inflation
was just around the corner. In addition, foreign economies, particularly in
Asia, began to recover, as synchronized global central-bank easings appeared to
be having a positive impact.
As a result, the Federal Reserve moved to a tightening bias in May and then
raised the Fed funds rate by a quarter-point to 5.0% at the end of June. The
move capped a difficult period for the bond market as Treasury prices fell
steadily, with long-term yields rising over one percentage point, breaking above
6% for the first time since early 1998.
Looking ahead, it appears the economy has come to a crossroads. Deflationary
forces, including the glut of global capacity and strong productivity gains,
remain at work. However, reflationary forces, including central bank easings and
a tight U.S. labor market, are also in play. The Fed appears to share this view,
moving back to a neutral stance after its recent tightening, explaining that
productivity gains continued to offset the wage inflation pressures created by a
tight labor market.
We believe that these forces may well offset one another, creating an
environment where interest rates remain in a relatively narrow range of between
5% and 6 1/2%. The opposing forces will likely keep inflation subdued, between
2% and 3%. In periods where deflationary forces dominate, interest rates could
fall toward the lower end of the range. In this environment of lower interest
rate volatility, securities that provide incremental yield will become more
attractive to bond investors.
4
<PAGE>
Manager Spotlight
PIMCO Renaissance Fund
John Schneider
John Schneider is the portfolio manager of PIMCO Renaissance Fund. Previously
Senior Vice President and Principal at Schneider Capital Management, he has over
12 years of investment experience, with a focus on value equity management.
Prior to Schneider Capital Management, he was Director of Research and a Member
of the Operating Committee at Newbold's Asset Management. John took over
management of PIMCO Renaissance Fund on May 10, 1999. We had a chance to speak
with him recently.
Q: Could you explain your "value" investment style and how you are implementing
that strategy in managing the Renaissance Fund?
A: My value investment style is simple. I seek undervalued companies that show
signs of a turnaround catalyst. This investment style is nearly identical to the
philosophy under which PIMCO Renaissance Fund was being managed. Therefore, the
investment objective will remain the same. However, previously, Renaissance Fund
was more of a blend of value and growth stocks. Under my management, it is now
more of a `pure' value fund. For instance, the Fund has more of a focus on
cyclical stocks, including current holdings such as Smurfit-Stone and Union
Pacific Resources.
Q: How does the Renaissance Fund fit into today's market?
A: While this market is considered by many to be overvalued, I believe there are
some really terrific opportunities out there in the form of undervalued stocks.
My job is to ferret out these `diamonds in the rough.' Fortunately, the past
several months have seen a broadening of the market, which has caused an
increase in investor interest in these undervalued stocks.
Q: Are there any particular sectors you are focusing on?
A: Now that the global economy appears to be recovering, there is increased
demand for paper products from Asia, Europe and Latin America. After years of
pricing pressure, this increased demand is allowing paper companies to raise
prices and increase profits--so we find paper an attractive area for investment.
We are also investing in energy services, particularly North American natural
gas, for similar reasons. The oversupply of gas has disappeared and there is an
increase in demand for gas at the same time there has been a decrease in
drilling activity. As a result, there has been a sharp increase in prices.
Q: Are there any sectors in which you are investing that are not considered
traditional value sectors?
A: We are investing in technology companies, such as Micron Technology. That's
because the semiconductor industry has suffered in the last several years as a
result of decreased demand, which is partially due to the Asian economic crisis.
This, in turn, has resulted in a surplus of memory chips, which has caused the
industry to lose money.
However, competitors have left this industry and we see an increase in demand on
the horizon. This has prompted our interest in these undervalued stocks, since
they are showing signs of a turnaround. We also believe there are many
opportunities in the HMO industry. That's because a number of weaker players
have been forced to withdraw from the industry, reducing competition. And HMOs
are finally raising prices in excess of medical inflation, which is improving
profit margins.
Q: Now for the $64,000 question. Do you believe value stocks will continue their
recent out-performance of growth stocks?
A: Value stocks have under-performed growth stocks for an extended period of
time. In fact, value was recently as cheap as it has ever been relative to
growth, so I believe it makes sense that value stocks catch up with growth
stocks. Of course, I'm not saying there won't be periods in which value
underperforms growth, but I believe we're seeing the beginning of a market
broadening that should last a significant length of time.
Past performance is no guarantee of future results. The views of Mr. Schneider
are not indicative of the past or future performance of any PIMCO Fund. For more
details on the Renaissance Fund, see page 14.
5
<PAGE>
In The News
Recent News on PIMCO Funds
PIMCO Funds and the portfolio managers were mentioned in numerous print and
television media during the second quarter of this year. The following are
highlights from a few of these commentaries:
*Growing Strong A May 3 Barron's article and a May 27 column in The Wall Street
Journal featured PIMCO as one of the top selling fund complexes, both
year-to-date and for the month of April. PIMCO was the fourth largest fund
complex--based on year-to-date sales--as of April 30.
* Innovation Continues to be Noticed PIMCO Innovation Fund, and its manager
Dennis McKechnie, continued to attract the attention of the media during the
second quarter. Not only was the Fund the focus of feature articles in
Individual Investor (June 4) and The Orange County Register(April 4), its
manager, Dennis McKechnie, was quoted on the technology sector in numerous
pieces. McKechnie was also a guest on CNBC and was a featured speaker at the
Morningstar/L.A. Times Investment Conference on May 22.
* Don't Forget About Mid-Caps The PIMCO Mid-Cap Growth Fund was featured as one
of the best performing funds in the mid-cap sector in an article in the April
issue of On Wall Street. The author commented on the mid-cap marketplace,
stating, "The class offers some of the fizz of small-cap stocks without all of
their risk."
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, 1999.
- --------------------------------------------------------------------------------
PIMCO STOCK FUNDS Overall 3 Year 5 Year 10 Year
- --------------------------------------------------------------------------------
Renaissance **** 4 4 3
Capital Appreciation **** 4 4 -
Innovation ***** 5 - -
- --------------------------------------------------------------------------------
PIMCO BOND FUNDS Overall 3 Year 5 Year 10 Year
- --------------------------------------------------------------------------------
Short-Term ***** 5 5 5
Low Duration ***** 5 5 5
Total Return ***** 5 5 5
High Yield ***** 5 5 -
Foreign Bond ***** 5 5 -
The chart above is based on June 30, 1999 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 3,043, 1,878 and 748 domestic
equity funds and 1,543, 1,102 and 371 taxable bond funds rated, respectively.
Morningstar proprietary ratings reflect historical risk-adjusted performance and
are subject to monthly changes. Therefore, past ratings are not a guarantee of
future results. Overall ratings are calculated from a fund's 3-, 5- and 10-year
(if applicable) average annual total returns in excess of 90-day Treasury bill
returns with appropriate fee adjustments and a risk factor that reflects fund
performance below 90-day T-bill returns. Ratings are based on institutional
class shares. Class D shares, which were initially offered in April 1998, have
not yet been rated by Morningstar. Had Class D shares been in existence for the
same time period as the institutional class shares, they may have received
different ratings due to Class D shares' higher expenses. Ratings for other
share classes of Renaissance, Growth and Innovation may vary. 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.
With a dollar cost averaging plan there is no assurance of making a profit or a
guarantee against loss during declining markets. Investors should consider their
ability to continue investing during periods of low price levels.
6
<PAGE>
The PIMCO Funds Family
PIMCO Funds offers unique access to the investment expertise of PIMCO Advisors
L.P. PIMCO Advisors manages $254 billion, including assets for 46 of the 100
largest U.S. corporations. The firm's institutional heritage is reflected in the
PIMCO Funds, each seeking the highest caliber performance in a specific
investment style. To learn more about any of the PIMCO Funds, please call us at
1-800-227-7337.
<TABLE>
<CAPTION>
Fund Name Objective Primary Portfolio Composition
<S> <C> <C>
Stock Funds Equity Income Current income and long-term growth Stocks of companies with below-average P/Es
and above-average dividends
Value Long-term growth of capital and income Stocks of companies with below-average P/Es
Renaissance Long-term growth of capital and income Stocks of companies with below- average
valuations
Tax-Efficient Equity Maximum after-tax growth of capital A broadly diversified portfolio of at least
250 common stocks of companies with larger
market capitalizations
StocksPLUS Total return exceeding the S&P 500 Index S&P 500 Index stock index futures backed by
a portfolio of short-term, fixed-income
securities
Capital Appreciation Growth of capital Stocks of larger-capitalized
companies the manager believes are
reasonably priced
Mid-Cap Growth Growth of capital Stocks of medium-capitalized companies
the manager believes are reasonably priced
Innovation Capital appreciation Stocks of technology-related companies
Stock and Bond Strategic Total return S&P 500 Index stock futures backed by a
Funds Balanced portfolio of short-term, fixed income
securities, and intermediate-term investment
grade bonds
Bond Funds Short-Term Maximum current income consistent Money market securities and short-term
with preservation of capital and bonds (up to 1 year duration)
daily liquidity
Low Duration Maximum total return Shorter-term, investment grade bonds
(1-3 year duration)
Real Return Bond Maximum real return Inflation-indexed government bonds
Total Return Maximum total return Intermediate-term, investment grade bonds
(3-6 year duration)
Total Return Maximum total return Mortgage-related securities
Mortgage (2-6 year duration)
High Yield Maximum total return High-yield bonds (2-6 year duration)
Municipal Bond High current income exempt from Investment grade municipal bonds
federal income tax (3-10 year duration)
Foreign Bond Maximum total return Intermediate-term, investment grade foreign
bonds (3-6 year duration)
</TABLE>
7
<PAGE>
PIMCO Funds Annual Report
Dear Fellow Shareholder:
The past year has been an eventful time, both in the geopolitical sphere and in
the financial markets. After flaring up in March, the Kosovo Crisis is now on
the road to resolution. It proved, in the end, to have surprisingly little
impact on the U.S. stock and bond markets.
Large-cap growth stocks continued to dominate the stock market through the 12
months ending in April, when their hegemony began to falter, the market
broadened and value stocks emerged from the sidelines. Value investing appeared
to be back. Then towards the end of June, the stock market teetered back in the
direction of growth stocks. No one can guarantee what will happen next, but all
of these events serve to underscore the importance of portfolio diversification.
Of course, there was also the much hyped advent of the "Dow 10,000". After
topping 10,000 for the first time in mid-March, the Dow Jones Industrial Average
waited until April to close above that mark. It then thundered past 11,000, only
to fall back and waver between the two markers for the past few months. To think
it was a mere three and a half years ago that the Dow Jones broke 5,000!
The past 12 months have been eventful at PIMCO Funds too. We are now one of the
country's fastest-growing fund families, with assets under management recently
surpassing $50 billion. And in January, PIMCO announced the formation of a new
investment division, PIMCO Equity Advisors, to focus on our expanding slate of
stock mutual funds. Based in New York City, the division is headed by Ken Corba,
a 14-year investment veteran. PIMCO Equity Advisors currently manages PIMCO
Renaissance, Growth, Target, Opportunity and Innovation Funds, with almost $6
billion in assets under management as of June 30, 1999.
As we move toward the new millennium, we will of course continue to work hard to
help you meet your financial objectives. As viable opportunities arise, we will
be expanding our fund family to offer you additional investment options managed
by PIMCO's investment professionals.
Inside this Annual, you will find detailed information on our Multi-Manager
Series of stock funds. As you will see, these Funds have continued to report
strong relative performance. I encourage you to review the information and
commentary carefully. And once again, I would like to thank you for the trust
you've placed in us through your investments. If you have any questions
regarding your investment, pleaser call us at 1-800-426-0107. Or visit our Web
site at www.pimcofunds.com.
Sincerely,
[SIGNATURE OF STEPHEN TREADWAY APPEARS HERE]
Stephen Treadway
President
July 30, 1999
A Word About the Year 2000
We at PIMCO are dedicated to making our computer systems fully operational
before, during, and after 2000. Similarly, our analysts and portfolio managers
take Year 2000 risks into account along with other investment consideratiions
when making investment decisions, such as choosing counterparties and evaluating
risks associated with portfolio securities. This evaluation often differs for
different issuers and depending upon the investment objectives, policies, and
restrictions applicable to a portfolio. The information available for different
issuers and counterparties varies substantially in accuracy and completeness. In
particular, little information exists about companies that are not registered
with the United States Securities and Exchange Commission and about foreign
issuers, counterparties, markets, and other institutions.
While we are dedicated to making the transition to Year 2000 a smooth one, we
cannot guarantee investment performance or that Year 2000 will not result in
losses. Investments in companies with real or perceived Year 2000 problems may
decline in value or fail on scheduled dividend, interest, or principal payments.
Any such failures may affect the fund's performance./1/
/1/ This is a Year 2000 Readiness Disclosure.
8
<PAGE>
PIMCO Funds Financial Information
We are pleased to present an in-depth review of the PIMCO Multi-Manager Series
Funds as of June 30, 1999. In order to help analyze, compare and contrast the
Funds, the report is broken down into a number of sections. Listed below is a
table of contents and descriptions of the various sections.
Pages 10-17 Fund Summaries
A summary of a Fund's performance record and portfolio composition,
and a review from the Fund's investment manager.
Pages 18-25 Schedule of Investments
The schedule of investments includes a listing of securities in the Fund's
portfolio as of June 30, 1999, including the number of shares or principal
amount and value as of that date.
Schedule of
Fund Name Fund Summary Investments
Capital Appreciation Fund Page 10 Page 18
Equity Income Fund Page 11 Page 19
Innovation Fund Page 12 Page 20
Mid-Cap Growth Fund Page 13 Page 21
Renaissance Fund Page 14 Page 22
Tax-Efficient Equity Fund Page 15 Page 23
Value Fund Page 16 Page 25
Page 26 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.
Page 27 Statements 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.
Page 28 Statements 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 29-30 Statements of Changes in Net Assets
This statement reports the increase or decrease in a Fund's net assets during
the reporting period. Changes in net assets aredue to a variety of factors,
including investment operations, dividends, distributions and capital share
transactions.
Pages 31-34 Notes to Financial Statements
A description of the significant accounting policies of the Funds, and more
detailed information about the schedules and tables that appear in the report.
9
<PAGE>
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
FUND INCEPTION DATE
3/8/91
TOTAL NET ASSETS
$1.1 billion
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 6/30/99
D Shares Lipper
S&P 500 Cap App.
Index Fund Avg.
- --------------------------------------------------------------------------------
1 year 10.2% 22.8% 20.0%
3 years 24.1% 29.1% 16.7%
5 years 24.0% 27.9% 19.3%
Inception 19.0% -- --
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO S&P 500
Capital Appreciation Index
Month Fund D
- ---------------------------------------------------------------------------
<S> <C> <C>
03/31/91 10,000 10,000
04/30/91 9,705 10,024
05/31/91 10,182 10,457
06/30/91 9,630 9,978
07/31/91 10,316 10,443
08/31/91 10,636 10,691
09/30/91 10,486 10,512
10/31/91 10,842 10,653
11/30/91 10,523 10,224
12/31/91 11,982 11,393
01/31/92 11,863 11,181
02/29/92 11,988 11,327
03/31/92 11,590 11,106
04/30/92 11,561 11,432
05/31/92 11,606 11,488
06/30/92 11,237 11,317
07/31/92 11,561 11,780
08/31/92 11,270 11,539
09/30/92 11,563 11,674
10/31/92 11,962 11,714
11/30/92 12,659 12,113
12/31/92 12,831 12,262
01/31/93 13,263 12,364
02/28/93 13,099 12,533
03/31/93 13,700 12,797
04/30/93 13,360 12,488
05/31/93 13,962 12,822
06/30/93 14,181 12,860
07/31/93 13,975 12,808
08/31/93 14,482 13,294
09/30/93 14,903 13,192
10/31/93 14,935 13,465
11/30/93 14,632 13,337
12/31/93 15,043 13,498
01/31/94 15,568 13,957
02/28/94 15,352 13,578
03/31/94 14,581 12,986
04/30/94 14,631 13,152
05/31/94 14,615 13,368
06/30/94 14,199 13,041
07/31/94 14,541 13,469
08/31/94 14,971 14,021
09/30/94 14,565 13,678
10/31/94 14,895 13,986
11/30/94 14,209 13,476
12/31/94 14,345 13,676
01/31/95 14,331 14,031
02/28/95 15,042 14,578
03/31/95 15,697 15,008
04/30/95 16,232 15,450
05/31/95 16,821 16,067
06/30/95 17,544 16,440
07/31/95 18,512 16,986
08/31/95 18,686 17,028
09/30/95 19,421 17,747
10/31/95 19,052 17,683
11/30/95 19,631 18,460
12/31/95 19,596 18,815
01/31/96 20,249 19,456
02/29/96 21,010 19,636
03/31/96 21,043 19,825
04/30/96 21,301 20,117
05/31/96 21,833 20,636
06/30/96 21,786 20,715
07/31/96 20,683 19,800
08/31/96 21,567 20,217
09/30/96 22,883 21,355
10/31/96 23,452 21,944
11/30/96 25,151 23,603
12/31/96 24,750 23,135
01/31/97 26,185 24,581
02/28/97 25,907 24,773
03/31/97 24,954 23,756
04/30/97 25,742 25,174
05/31/97 27,377 26,706
06/30/97 28,540 27,903
07/31/97 31,615 30,123
08/31/97 30,420 28,436
09/30/97 32,254 29,993
10/31/97 31,664 28,991
11/30/97 32,461 30,333
12/31/97 33,091 30,854
01/31/98 32,558 31,195
02/28/98 34,939 33,445
03/31/98 36,868 35,158
04/30/98 36,865 35,511
05/31/98 36,240 34,901
06/30/98 37,780 36,319
07/31/98 36,692 35,932
08/31/98 30,693 30,737
09/30/98 32,405 32,706
10/31/98 33,886 35,366
11/30/98 36,065 37,510
12/31/98 38,763 39,671
01/31/99 40,015 41,330
02/28/99 38,406 40,045
03/31/99 39,328 41,648
04/30/99 40,673 43,261
05/31/99 39,266 42,239
06/30/99 41,626 44,584
</TABLE>
* Past performance is not an indication of future results. Excluding the
6-month return, these returns represent the blended performance of the Fund's
Class D shares (for the period from 4/8/98) and the prior performance of the
Fund's institutional class shares (for the period from 3/8/91), adjusted for
Class D expenses. See page 17 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 1.9%
Telecommunications systems/software
- --------------------------------------------------------------------------------
Microsoft Corp. 1.9%
Computer software
- --------------------------------------------------------------------------------
Tyco International Limited 1.8%
Fire protection systems
- --------------------------------------------------------------------------------
Tellabs, Inc. 1.8%
Voice data communications equipment
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1.6%
Discount stores
- --------------------------------------------------------------------------------
Johnson Controls, Inc. 1.5%
Building controls: auto products
- --------------------------------------------------------------------------------
Texas Instruments, Inc. 1.5%
Semiconductors; electrical equipment
- --------------------------------------------------------------------------------
Honeywell, Inc. 1.5%
Computers/industrial control systems
- --------------------------------------------------------------------------------
International Business Machines Corp. 1.5%
Manufacturer of business machines
- --------------------------------------------------------------------------------
Allied Signal, Inc. 1.5%
Aerospace, automotive fibers
- --------------------------------------------------------------------------------
Top Ten Total 16.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 21.2%
- --------------------------------------------------------------------------------
Technology 16.1%
- --------------------------------------------------------------------------------
Consumer Discretionary 15.9%
- --------------------------------------------------------------------------------
Capital Goods 10.0%
- --------------------------------------------------------------------------------
Health Care 7.4%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96.3%
- --------------------------------------------------------------------------------
Cash Equivalents 3.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Capital Appreciation Fund posted a solid returns of 10.2% for the one-year
period ended June 30, 1999.
The telecom sector contributed significantly to the Fund's performance this
year, benefiting from an increased demand from corporations for data
communications capabilities. One standout in particular was Tellabs, which
designs, manufactures, markets, and services voice, data and video transport and
network access systems used worldwide by public telephone companies,
long-distance carriers, and wireless service products. The company has benefited
from the explosion in the telecommunications infrastructure business, as demand
for Internet access continues to grow. The company also benefited from its
strong acquisition strategy, which has enabled it to grow larger and more
efficient.
Consumer cyclicals also contributed positively to the Fund's performance. A
strong domestic economy and tight labor market this year resulted in a high
level of consumer confidence. Companies such as Wal-Mart, Circuit City, The Gap,
Home Depot, Lowe's and TJX all benefited from this trend. In particular, The Gap
saw its stock price rise significantly during the year. The company continued
its expansion, currently operating over 2,000 stores selling casual apparel,
personal care and other accessories for all age groups. Its brands, which
include Gap, GapKids, babyGap, Banana Republic and Old Navy, all benefited from
strong branding. Same-store sales continued to grow, with the company realizing
strong growth in particular from its lower-end Old Navy division.
Tyco International, an international manufacturing conglomerate, also did well
for the Fund. The company benefited from a stronger global economy, which
created an increased demand for its products. It also continued to benefit from
its successful acquisition policy, which included purchases of ADT, AMP, Raychem
and Central Sprinkler.
One disappointment for the Fund this year was HealthSouth, a health
maintenance organization. Its lackluster performance was directly attributable
to the lack of pricing power in the HMO industry. The industry was plagued by an
inability to raise its fees high enough to meet anticipated price increases by
the medical profession. General uncertainty about profitability led the manager
to sell this holding.
PIMCO Capital Appreciation Fund was rewarded for its growth-at-a-price
investment philosophy in the second quarter of 1999, as interest rates rose and
investors shied away from the highest valuation growth stocks. In this market
environment, the manager is optimistic that the Fund's strong performance will
continue.
10 See page 18 for financial details.
<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
FUND INCEPTION DATE
3/8/91
TOTAL NET ASSETS
$202.0 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 6/30/99
D Shares Lipper
S&P 500 Equity Inc.
Index Fund Avg.
- --------------------------------------------------------------------------------
1 year 12.2% 22.8% 11.4%
3 years 20.1% 29.1% 19.5%
5 years 20.6% 27.9% 19.2%
Inception 16.5% -- --
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO S&P 500
Equity Income Index
Month Fund D
<S> <C> <C>
03/31/91 10,000 10,000
04/30/91 10,066 10,024
05/31/91 10,632 10,457
06/30/91 10,259 9,978
07/31/91 10,830 10,443
08/31/91 10,987 10,691
09/30/91 11,044 10,512
10/31/91 11,118 10,653
11/30/91 10,671 10,224
12/31/91 11,607 11,393
01/31/92 11,891 11,181
02/29/92 12,189 11,327
03/31/92 11,987 11,106
04/30/92 12,199 11,432
05/31/92 12,216 11,488
06/30/92 12,223 11,317
07/31/92 12,766 11,780
08/31/92 12,391 11,539
09/30/92 12,493 11,674
10/31/92 12,505 11,714
11/30/92 12,879 12,113
12/31/92 13,266 12,262
01/31/93 13,330 12,364
02/28/93 13,603 12,533
03/31/93 13,910 12,797
04/30/93 13,633 12,488
05/31/93 13,733 12,822
06/30/93 13,972 12,860
07/31/93 13,945 12,808
08/31/93 14,432 13,294
09/30/93 14,416 13,192
10/31/93 14,528 13,465
11/30/93 14,377 13,337
12/31/93 14,332 13,498
01/31/94 14,803 13,957
02/28/94 14,479 13,578
03/31/94 13,896 12,986
04/30/94 14,001 13,152
05/31/94 14,083 13,368
06/30/94 13,880 13,041
07/31/94 14,333 13,469
08/31/94 14,915 14,021
09/30/94 14,636 13,678
10/31/94 14,804 13,986
11/30/94 14,006 13,476
12/31/94 14,045 13,676
01/31/95 14,499 14,031
02/28/95 14,967 14,578
03/31/95 15,394 15,008
04/30/95 15,788 15,450
05/31/95 16,364 16,067
06/30/95 16,412 16,440
07/31/95 16,981 16,986
08/31/95 17,215 17,028
09/30/95 17,663 17,747
10/31/95 17,589 17,683
11/30/95 18,187 18,460
12/31/95 18,672 18,815
01/31/96 18,946 19,456
02/29/96 19,192 19,636
03/31/96 19,570 19,825
04/30/96 20,057 20,117
05/31/96 20,374 20,636
06/30/96 20,411 20,715
07/31/96 19,466 19,800
08/31/96 20,127 20,217
09/30/96 20,815 21,355
10/31/96 21,281 21,944
11/30/96 22,878 23,603
12/31/96 22,593 23,135
01/31/97 23,085 24,581
02/28/97 23,744 24,773
03/31/97 22,942 23,756
04/30/97 23,772 25,174
05/31/97 25,254 26,706
06/30/97 25,958 27,903
07/31/97 27,600 30,123
08/31/97 26,968 28,436
09/30/97 28,641 29,993
10/31/97 27,751 28,991
11/30/97 28,893 30,333
12/31/97 29,567 30,854
01/31/98 29,673 31,195
02/28/98 31,411 33,445
03/31/98 32,884 35,158
04/30/98 32,393 35,511
05/31/98 32,198 34,901
06/30/98 31,509 36,319
07/31/98 30,252 35,932
08/31/98 26,126 30,737
09/30/98 28,046 32,706
10/31/98 29,804 35,366
11/30/98 31,840 37,510
12/31/98 31,951 39,671
01/31/99 31,258 41,330
02/28/99 30,226 40,045
03/31/99 30,480 41,648
04/30/99 33,885 43,261
05/31/99 34,607 42,239
06/30/99 35,354 44,584
</TABLE>
* Past performance is not an indication of future results. Excluding the
6-month return, these returns represent the blended performance of the Fund's
Class D shares (for the period from 4/8/98) and the prior performance of the
Fund's institutional class shares (for the period from 3/8/91), adjusted for
Class D expenses. See page 17 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
USX-U.S. Steel Group, Inc. 4.1%
Integrated steel producer
- --------------------------------------------------------------------------------
Union Planters Corp. 4.0%
Commercial banking
- --------------------------------------------------------------------------------
Harris Corp. 3.9%
Govt. systems/communications
- --------------------------------------------------------------------------------
B.F. Goodrich Co. 2.2%
Aerospace/special chemicals
- --------------------------------------------------------------------------------
Whirlpool Corp. 2.2%
Major household appliances
- --------------------------------------------------------------------------------
Bell Atlantic Corp. 2.2%
Telephone services
- --------------------------------------------------------------------------------
Hubbell, Inc. 'B' 2.2%
Electric wiring devices
- --------------------------------------------------------------------------------
Springs Industries, Inc. 'A' 2.2%
Finished fabrics/home furnishing
- --------------------------------------------------------------------------------
GTE Corp. 2.2%
Largest independent telephone system
- --------------------------------------------------------------------------------
Repsol 2.1%
Integrated oil company
- --------------------------------------------------------------------------------
Top Ten Total 27.3%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 19.8%
- --------------------------------------------------------------------------------
Consumer Discretionary 15.7%
- --------------------------------------------------------------------------------
Utilities 11.5%
- --------------------------------------------------------------------------------
Energy 10.3%
- --------------------------------------------------------------------------------
Materials & Processing 9.9%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 100.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Equity Income Fund returned 12.2% for the one-year period ended June 30,
1999.
These results were in line with the Lipper Equity Income Fund Average, which
returned 11.4% for the same period.
For much of the year, the market was extremely narrow, with the largest of the
large-cap growth stocks completely dominating the market, which certainly hurt
the performance of the Fund. However, in the second quarter of 1999, the market
rotated away from these stocks and towards lower valuation issues. As a result,
PIMCO Equity Income Fund saw very strong performance in that quarter.
One of the best performing sectors for the Fund this period was technology.
The sector received attention from investors seeking stocks with the greatest
growth expectations. Technology also benefited from an improving global economy,
which caused increased demand for items like semiconductors.
Another sector that contributed to the Fund's performance was telecommunica-
tions. The sector benefited from increased demand from corporations
for data communications capabilities. One standout in this sector was GTE. GTE
provides inter-networking services ranging from dial-up Internet access for
consumers to Web-based applications for Fortune 500 companies. The company
benefited from increased revenues, new product development, and the sale of some
of its business units.
Bell Atlantic also turned in a strong performance this year. The tele-
communications company is still benefiting from economies of scale resulting
from its merger with NYNEX two years ago. The company also experienced higher
usage of its network facilities and an increase in access lines in service. As
the demand for telecommunications capabilities widens, the manager is optimistic
that this company will continue to see strong earnings growth.
One disappointment for the Fund during this period was J.C. Penney. The
department store chain was plagued by disappointing earnings throughout the
year. In addition, the company's management was not able to offer a strategy for
the company's turnaround that was satisfactory to Wall Street. However, the
manager remains optimistic about the company because it owns the Eckerd Drug
chain, which offers strong earnings and growth potential. In addition, the
company's valuations are extremely low, which makes it relatively attractive to
investors.
A broadening of the market in the second quarter of 1999 has been beneficial
to the Fund's performance, and the manager believes that the Fund is poised to
continue its outperformance in this environment.
See page 19 for financial details. 11
<PAGE>
PIMCO Innovation Fund
OBJECTIVE
Capital appreciation; no consideration given to income
PORTFOLIO
Primarily technology-related stocks of companies of all sizes
FUND INCEPTION DATE
12/22/94
TOTAL NET ASSETS
$1.3 billion
NUMBER OF SECURITIES IN THE PORTFOLIO
43 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE *
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
D Shares Lipper
S&P 500 Science & Tech.
Index Fund Avg.
- --------------------------------------------------------------------------------
1 year 61.6% 22.8% 67.7%
3 years 36.4% 29.1% 30.5%
Inception 38.3% -- --
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
Page 12 - Class D Leslie VegaFinancial Printing GroupPage 12 Class D
<TABLE>
<CAPTION>
PIMCO S&P 500
Innovation Index
Month Fund D
<S> <C> <C>
12/31/94 10,000 10,000
01/31/95 9,920 10,259
02/28/95 10,551 10,659
03/31/95 10,872 10,974
04/30/95 11,343 11,297
05/31/95 11,613 11,748
06/30/95 12,896 12,021
07/31/95 14,098 12,420
08/31/95 14,429 12,451
09/30/95 14,769 12,977
10/31/95 14,589 12,930
11/30/95 14,990 13,498
12/31/95 14,533 13,758
01/31/96 14,338 14,226
02/29/96 15,035 14,358
03/31/96 14,912 14,496
04/30/96 16,502 14,710
05/31/96 17,846 15,089
06/30/96 17,117 15,147
07/31/96 14,687 14,478
08/31/96 15,579 14,783
09/30/96 17,702 15,615
10/31/96 17,579 16,046
11/30/96 18,635 17,258
12/31/96 17,962 16,917
01/31/97 18,950 17,974
02/28/97 16,808 18,114
03/31/97 15,705 17,370
04/30/97 15,955 18,407
05/31/97 17,962 19,528
06/30/97 18,129 20,403
07/31/97 20,812 22,026
08/31/97 20,313 20,792
09/30/97 21,821 21,931
10/31/97 20,417 21,198
11/30/97 20,323 22,180
12/31/97 19,584 22,560
01/31/98 20,358 22,810
02/28/98 22,857 24,455
03/31/98 23,719 25,707
04/30/98 25,433 25,966
05/31/98 23,819 25,520
06/30/98 26,848 26,556
07/31/98 27,004 26,273
08/31/98 21,619 22,475
09/30/98 25,612 23,915
10/31/98 26,586 25,860
11/30/98 29,561 27,427
12/31/98 35,183 29,008
01/31/99 41,520 30,221
02/28/99 36,952 29,281
03/31/99 40,075 30,453
04/30/99 39,578 31,632
05/31/99 38,608 30,885
06/30/99 43,396 32,600
</TABLE>
* Past performance is not an indication of future results. Class D shares
commenced operations after the inception date shown. Total return for the
periods shown before the inception of Class D shares reflects the performance
for one of the Fund's oldest classes of shares (Class C), restated to reflect
the operating expenses for Class D shares. See page 17 for Footnotes, which
include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investment
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 5.1%
Computer network products
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 4.7%
Telecommunications systems/software
- --------------------------------------------------------------------------------
Microsoft Corp. 4.1%
Computer software
- --------------------------------------------------------------------------------
America Online, Inc. 4.1%
Online computer services
- --------------------------------------------------------------------------------
Motorola, Inc. 3.8%
Semiconductors; comm. equipment
- --------------------------------------------------------------------------------
Siebel Systems, Inc. 3.4%
Marketing info. for software systems
- --------------------------------------------------------------------------------
Nokia Corp. 3.4%
Telecommunication systems & equipment
- --------------------------------------------------------------------------------
Tellabs Inc. 3.4%
Voice data communications equipment
- --------------------------------------------------------------------------------
Sun Microsystems, Inc. 3.3%
Marketer of networked workstations
- --------------------------------------------------------------------------------
Xilinx, Inc. 3.2%
Supplier of semiconductors
- --------------------------------------------------------------------------------
Top Ten Total 38.5%
- --------------------------------------------------------------------------------
Top 4 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 70.4%
- --------------------------------------------------------------------------------
Communications 10.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 6.3%
- --------------------------------------------------------------------------------
Health Care 5.9%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 92.8%
- --------------------------------------------------------------------------------
Cash Equivalents 7.2%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Innovation Fund posted stellar returns for the one-year period ended June
30, 1999, returning 61.6%. This handily outperformed the S&P 500 Index return of
22.8% for the same period.
Telecom equipment stocks contributed significantly to the Fund's performance
this year. The sector benefited from the increased demand from companies for
data transmission capabilities, which resulted in increased spending by phone
companies. The sector also benefited from higher-than- expected cellular phone
subscriptions, driven by more competitive pricing plans and improved cellular
phone technology. For instance, Nokia, the Finnish cellular phone manufacturer,
saw its sales rise as a result of the increase in overall cellular phone
subscriptions. Motorola also benefited from this subscription increase and the
introduction of a more competitive digital phone product line.
America Online was a standout performer for the Fund this year. The company's
new subscriptions continued to exceed forecasts, which helped to boost its stock
price. The company also benefited from its position as the market leader among
Internet access providers, which enabled it to increase advertising revenue.
Despite a strong overall performance for the year, the company suffered in the
second quarter of 1999, as investors punished Internet stocks in the face of
fears over rising interest rates.
A disappointing sector for the Fund was PCs. The anticipated increase in Y2K
PC sales did not occur, and PC stocks saw lackluster results for much of the
year. In addition, pricing pressures in the industry have kept profit margins
down. As a result, the manager reduced the Fund's PC exposure, although he is
confident that this seasonal business will see improvement in the second half of
the year due to back-to-school and holiday PC buying. In particular, PC maker
Compaq negatively affected the Fund's performance. The company did not meet its
March earnings estimate and continued to have problems reducing its channel
inventory as more lean competitors, such as Dell, have mastered inventory
management.
The Fund ably weathered the volatility of the market this year and, looking
ahead, the manager is optimistic that it will continue its outperformance in the
coming year.
12 See page 20 for financial details.
<PAGE>
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
FUND INCEPTION DATE
8/26/91
TOTAL NET ASSETS
$1.0 billion
NUMBER OF SECURITIES IN THE PORTFOLIO
99 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Cadence Capital Management
- --------------------------------------------------------------------------------
PERFORMANCE *
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
D Shares Russell Lipper
S&P Mid-Cap Mid-Cap Mid-Cap
Index Index Fund Avg.
- --------------------------------------------------------------------------------
1 year 0.3% 17.2% 11.3% 13.4%
3 years 17.9% 22.5% 19.6% 16.6%
5 years 20.2% 22.3% 20.9% 19.7%
Inception 16.5% -- -- --
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO
Mid-Cap S&P Russell
Growth Mid-Cap Mid-Cap
Month Fund D Index Index
<S> <C> <C> <C>
08/31/91 10,000 10,000 10,000
09/30/91 9,947 9,967 9,942
10/31/91 10,307 10,358 10,145
11/30/91 10,013 10,009 9,726
12/31/91 11,316 11,192 10,816
01/31/92 11,325 11,390 11,019
02/29/92 11,432 11,571 11,272
03/31/92 11,086 11,135 10,984
04/30/92 11,009 11,002 11,070
05/31/92 11,016 11,107 11,142
06/30/92 10,721 10,789 10,961
07/31/92 11,012 11,325 11,419
08/31/92 10,686 11,054 11,156
09/30/92 11,035 11,209 11,388
10/31/92 11,392 11,477 11,666
11/30/92 12,074 12,119 12,254
12/31/92 12,306 12,525 12,583
01/31/93 12,758 12,682 12,835
02/28/93 12,360 12,504 12,849
03/31/93 12,860 12,936 13,267
04/30/93 12,504 12,598 12,916
05/31/93 13,035 13,172 13,326
06/30/93 13,434 13,238 13,476
07/31/93 13,265 13,212 13,541
08/31/93 13,917 13,758 14,143
09/30/93 14,286 13,903 14,198
10/31/93 14,136 13,949 14,209
11/30/93 13,737 13,640 13,880
12/31/93 14,191 14,273 14,383
01/31/94 14,480 14,605 14,779
02/28/94 14,455 14,398 14,578
03/31/94 13,924 13,731 13,957
04/30/94 13,970 13,833 14,053
05/31/94 13,712 13,702 14,072
06/30/94 13,251 13,230 13,656
07/31/94 13,546 13,678 14,124
08/31/94 14,251 14,395 14,794
09/30/94 13,882 14,126 14,432
10/31/94 14,157 14,281 14,543
11/30/94 13,483 13,636 13,901
12/31/94 13,800 13,762 14,082
01/31/95 13,663 13,905 14,371
02/28/95 14,490 14,634 15,115
03/31/95 14,951 14,888 15,547
04/30/95 15,284 15,187 15,782
05/31/95 15,806 15,554 16,300
06/30/95 16,733 16,187 16,848
07/31/95 18,306 17,031 17,666
08/31/95 18,442 17,346 17,937
09/30/95 18,699 17,767 18,342
10/31/95 18,407 17,310 17,932
11/30/95 18,755 18,066 18,824
12/31/95 18,873 18,021 18,933
01/31/96 19,240 18,282 19,332
02/29/96 19,701 18,903 19,786
03/31/96 19,941 19,130 20,073
04/30/96 20,351 19,714 20,641
05/31/96 20,688 19,981 20,953
06/30/96 20,261 19,681 20,638
07/31/96 19,285 18,350 19,361
08/31/96 20,331 19,408 20,283
09/30/96 21,751 20,254 21,285
10/31/96 21,889 20,313 21,455
11/30/96 23,214 21,457 22,762
12/31/96 23,189 21,481 22,530
01/31/97 24,132 22,287 23,373
02/28/97 23,721 22,104 23,338
03/31/97 23,036 21,162 22,346
04/30/97 23,522 21,710 22,902
05/31/97 25,140 23,609 24,573
06/30/97 26,353 24,272 25,377
07/31/97 28,787 26,675 27,494
08/31/97 28,738 26,643 27,194
09/30/97 30,755 28,175 28,747
10/31/97 30,095 26,949 27,628
11/30/97 30,294 27,348 28,286
12/31/97 30,992 28,409 29,067
01/31/98 30,430 27,870 28,520
02/28/98 32,211 30,177 30,750
03/31/98 33,191 31,538 32,208
04/30/98 33,661 32,115 32,289
05/31/98 32,501 30,670 31,291
06/30/98 33,109 30,863 31,724
07/31/98 32,155 29,666 30,211
08/31/98 26,415 24,145 25,377
09/30/98 28,320 26,398 27,019
10/31/98 29,093 28,758 28,862
11/30/98 30,693 30,193 30,227
12/31/98 33,410 33,840 31,998
01/31/99 31,960 32,524 31,944
02/28/99 30,221 30,819 30,880
03/31/99 30,366 31,682 31,847
04/30/99 31,918 34,179 34,200
05/31/99 31,844 34,329 34,101
06/30/99 33,191 36,163 35,305
</TABLE>
* Past performance is not an indication of future results. Excluding the
6-month return, these returns represent the blended performance of the Fund's
Class D shares (for the period from 4/8/98) and the prior performance of the
Fund's institutional class shares (for the period from 3/8/91), adjusted for
Class D expenses. See page 17 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Best Buy Co., Inc. 1.4%
Electronics supply store
- --------------------------------------------------------------------------------
Waters Corp. 1.4%
Liquid Chromatography
- --------------------------------------------------------------------------------
Premark International, Inc. 1.4%
Commercial food equipment products
- --------------------------------------------------------------------------------
Hertz Corp. 'A' 1.4%
Auto/construction equip. rental service
- --------------------------------------------------------------------------------
General Dynamics Corp. 1.4%
Aerospace/defense equip.
- --------------------------------------------------------------------------------
VERITAS Software Corp. 1.4%
Storage mgmt. software
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 1.4%
Multi-user application server systems
- --------------------------------------------------------------------------------
Food Lion, Inc. 'A' 1.4%
Food supermarket chain
- --------------------------------------------------------------------------------
Bed, Bath & Beyond, Inc. 1.3%
Domestic/home products superstores
- --------------------------------------------------------------------------------
Southdown, Inc. 1.3%
Cement/concrete/environmental services
- --------------------------------------------------------------------------------
Top Ten Total 13.8%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 21.9%
- --------------------------------------------------------------------------------
Financial & Business Services 20.9%
- --------------------------------------------------------------------------------
Technology 17.1%
- --------------------------------------------------------------------------------
Capital Goods 7.2%
- --------------------------------------------------------------------------------
Health Care 6.4%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 96.4%
- --------------------------------------------------------------------------------
Cash Equivalents 3.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
PIMCO Mid-Cap Growth Fund returned 0.3% for the one-year period ended June 30,
1999. It is important to note that, for the three-month period ended June 30,
1999, the Fund returned 9.3%.
The Fund's lackluster performance for this one-year period can be attributed
to the fact that, for much of the year, the market was extremely narrow and
dominated by the largest of the large-cap growth stocks. As a result, mid-cap
growth-at-a-reasonable-price stocks were overlooked by investors. However, in
the second quarter of 1999, the market rotated away from these large-cap high
valuation issues and towards smaller- capitalization and lower valuation issues,
which resulted in strong performance by the Fund in the second quarter.
The technology sector positively impacted the Fund this year. This sector
benefited from investor enthusiasm for stocks with the greatest growth
potential. Fund holding Citrix Systems, a distributed computing company,
benefited from corporations' increased demand for networking capabilities. The
company saw a rise in sales of its software, which links computers to networks
and provides systems solutions for different networks. In addition, Fund holding
Comdisco saw a large uptick in its stock price as a result of the sale of one of
its units to IBM.
Another strong sector for the Fund was consumer cyclicals. A growing domestic
economy, tight labor market and low inflation combined to fuel investor
confidence, which resulted in an increase in consumer spending. Harley Davidson
benefited from this increase as demand for its high-end motorcycles skyrocketed.
Other beneficiaries of the strong economy included holdings Abercrombie &
Fitch and Tommy Hilfiger. The growing clout and spending power of the American
teenager contributed to their sales growth. And demographics also helped, as
there are more young people to purchase their goods. Both companies also
benefited from strong branding and high earnings-per-share growth.
One disappointment for the Fund this year was Jones Apparel. The women's
apparel and shoe maker suffered from execution problems related to its line of
shoes. It also lost market share in the past year by missing fashion trends. The
manager removed this holding from the Fund.
Despite disappointing performance for the one-year period, the Fund showed
strong performance in the second quarter of 1999, as the market broadened and
medium- capitalization and lower valuation stocks became more attractive to
investors. The manager is optimistic that, as this market environment continues,
the Fund's strong performance will continue as well.
See page 21 for financial details. 13
<PAGE>
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
FUND INCEPTION DATE
4/18/88
TOTAL NET ASSETS
$659.8 million
NUMBER OF SECURITIES IN THE PORTFOLIO
82 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
PIMCO Equity Advisors
- --------------------------------------------------------------------------------
PERFORMANCE *
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
D Shares Lipper
S&P 500 Russell Equity Inc.
Index 1000 Index Fund Avg.
- --------------------------------------------------------------------------------
1 year 10.0% 22.8% 16.4% 11.4%
5 years 22.8% 27.9% 24.6% 19.2%
10 years 14.9% 18.8% 17.1% 13.8%
Inception 14.8% -- -- --
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO
Renaissance S&P 500 Russell 1000
Month Fund D Index Index
<S> <C> <C> <C>
04/30/88 10,000 10,001 10,000
05/31/88 10,000 10,088 10,145
06/30/88 10,232 10,551 10,625
07/31/88 10,200 10,511 10,628
08/31/88 10,062 10,154 10,419
09/30/88 10,211 10,586 10,758
10/31/88 10,329 10,880 11,002
11/30/88 10,275 10,725 10,868
12/31/88 10,614 10,913 11,000
01/31/89 10,932 11,711 11,754
02/28/89 10,877 11,420 11,568
03/31/89 10,976 11,686 11,822
04/30/89 11,264 12,292 12,307
05/31/89 11,586 12,790 12,797
06/30/89 11,674 12,717 12,748
07/31/89 11,898 13,866 13,608
08/31/89 12,269 14,137 13,945
09/30/89 12,122 14,079 13,812
10/31/89 11,895 13,753 13,319
11/30/89 11,883 14,033 13,472
12/31/89 11,886 14,370 13,770
01/31/90 11,304 13,406 12,912
02/28/90 11,304 13,579 13,238
03/31/90 11,597 13,939 13,373
04/30/90 11,247 13,590 12,852
05/31/90 11,948 14,915 13,919
06/30/90 11,896 14,814 13,603
07/31/90 11,567 14,766 13,484
08/31/90 10,780 13,431 12,298
09/30/90 10,011 12,777 11,703
10/31/90 9,600 12,722 11,543
11/30/90 9,934 13,544 12,343
12/31/90 10,118 13,922 12,657
01/31/91 10,444 14,529 13,227
02/28/91 11,070 15,568 14,106
03/31/91 11,338 15,945 14,315
04/30/91 11,457 15,983 14,421
05/31/91 12,062 16,674 14,959
06/30/91 11,639 15,910 14,329
07/31/91 12,064 16,651 14,929
08/31/91 12,555 17,046 15,201
09/30/91 12,757 16,761 15,089
10/31/91 13,025 16,986 15,339
11/30/91 12,623 16,301 14,552
12/31/91 13,583 18,166 15,771
01/31/92 13,827 17,828 15,796
02/29/92 14,098 18,060 16,183
03/31/92 13,833 17,708 15,948
04/30/92 13,847 18,228 16,635
05/31/92 13,997 18,318 16,718
06/30/92 13,839 18,045 16,614
07/31/92 14,154 18,782 17,255
08/31/92 13,976 18,398 16,728
09/30/92 14,120 18,614 16,959
10/31/92 14,092 18,678 16,975
11/30/92 14,451 19,314 17,532
12/31/92 14,749 19,551 17,949
01/31/93 14,985 19,715 18,471
02/28/93 14,860 19,983 19,121
03/31/93 15,425 20,405 19,685
04/30/93 15,299 19,912 19,432
05/31/93 15,663 20,445 19,823
06/30/93 15,979 20,504 20,260
07/31/93 16,345 20,422 20,487
08/31/93 17,400 21,197 21,226
09/30/93 17,690 21,034 21,260
10/31/93 17,944 21,469 21,246
11/30/93 17,492 21,265 20,807
12/31/93 18,024 21,522 21,202
01/31/94 18,545 22,254 22,005
02/28/94 18,342 21,650 21,252
03/31/94 17,332 20,706 20,462
04/30/94 17,215 20,971 20,854
05/31/94 17,143 21,315 21,094
06/30/94 16,742 20,793 20,589
07/31/94 17,165 21,476 21,230
08/31/94 17,969 22,356 21,839
09/30/94 17,948 21,810 21,115
10/31/94 17,904 22,300 21,409
11/30/94 17,170 21,488 20,544
12/31/94 17,237 21,806 20,781
01/31/95 17,281 22,372 21,420
02/28/95 17,665 23,244 22,267
03/31/95 18,145 23,929 22,756
04/30/95 18,486 24,634 23,475
05/31/95 18,531 25,619 24,463
06/30/95 18,998 26,214 24,794
07/31/95 19,937 27,083 25,658
08/31/95 20,160 27,151 26,020
09/30/95 20,813 28,297 26,961
10/31/95 20,873 28,196 26,693
11/30/95 21,874 29,434 28,045
12/31/95 22,144 30,001 28,750
01/31/96 22,905 31,022 29,646
02/29/96 23,206 31,309 29,870
03/31/96 23,395 31,611 30,378
04/30/96 23,792 32,077 30,494
05/31/96 24,348 32,904 30,876
06/30/96 24,400 33,029 30,901
07/31/96 23,364 31,570 29,733
08/31/96 24,272 32,236 30,584
09/30/96 25,474 34,050 31,799
10/31/96 26,352 34,989 33,029
11/30/96 27,692 37,634 35,424
12/31/96 27,753 36,889 34,972
01/31/97 28,763 39,193 36,667
02/28/97 28,616 39,501 37,206
03/31/97 27,894 37,878 35,868
04/30/97 29,070 40,139 37,374
05/31/97 30,871 42,583 39,464
06/30/97 32,485 44,490 41,157
07/31/97 35,353 48,030 44,253
08/31/97 34,507 45,340 42,678
09/30/97 37,023 47,823 45,255
10/31/97 35,313 46,226 43,993
11/30/97 36,692 48,366 45,937
12/31/97 37,726 49,196 47,278
01/31/98 37,749 49,740 46,612
02/28/98 40,601 53,327 49,749
03/31/98 42,184 56,058 52,793
04/30/98 43,142 56,622 53,147
05/31/98 42,250 55,649 52,360
06/30/98 42,563 57,909 53,031
07/31/98 41,694 57,293 52,098
08/31/98 34,294 49,009 44,346
09/30/98 35,497 52,149 46,891
10/31/98 37,034 56,391 50,525
11/30/98 39,375 59,808 52,880
12/31/98 42,115 63,255 54,678
01/31/99 44,760 65,900 55,115
02/28/99 42,576 63,852 54,338
03/31/99 44,505 66,406 55,463
04/30/99 46,765 68,978 60,643
05/31/99 45,353 67,350 59,976
06/30/99 46,818 71,088 61,715
</TABLE>
* Past performance is not an indication of future results. Class D shares
commenced operations after the inception date shown. Total return for the
periods shown before the inception of Class D shares reflects the performance
for this Fund's oldest class of shares (Class C), restated to reflect the
operating expenses for Class D shares. Had Class D share returns been restated
without regard to the lower operating expenses of Class D shares, the total
return figures for the 1-, 5-, 10-year and since inception periods would have
been lower, namely 11.5%, 17.8%, 14.0% and 13.6%, respectively. See page 17
for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Aetna, Inc. 4.6%
Multiline insurance business
- --------------------------------------------------------------------------------
Micron Technology, Inc. 3.5%
Microcomputer parts
- --------------------------------------------------------------------------------
Conseco, Inc. 3.0%
Life insurance co.
- --------------------------------------------------------------------------------
Arrow Electronics, Inc. 2.9%
Distributor of electronic components
- --------------------------------------------------------------------------------
Asia Pulp & Paper Co. 2.9%
Pulp & paper products
- --------------------------------------------------------------------------------
Valero Energy Corp. 2.8%
Oil and gas refining/marketing
- --------------------------------------------------------------------------------
Smurfit-Stone Container Corp. 2.6%
Paperboard & packaged products
- --------------------------------------------------------------------------------
Nabors Industries, Inc. 2.5%
Contract drilling & services
- --------------------------------------------------------------------------------
Fleet Financial Group, Inc. 2.4%
Commercial banking
- --------------------------------------------------------------------------------
MediaOne Group, Inc. 2.3%
Cable/telecommunications service
- --------------------------------------------------------------------------------
Top Ten Total 29.5%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Financial & Business Services 17.8%
- --------------------------------------------------------------------------------
Technology 16.2%
- --------------------------------------------------------------------------------
Energy 14.7%
- --------------------------------------------------------------------------------
Materials & Processing 14.5%
- --------------------------------------------------------------------------------
Health Care 10.3%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 97.0%
- --------------------------------------------------------------------------------
Cash Equivalients 3.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Renaissance Fund returned
10.0%.
The telecom sector contributed greatly to the Fund's performance this year.
For instance, Motorola saw its stock price improve after introducing a new
product line of advanced digital technology cellular phones. The company is
regaining the market share it lost in the last several years as it continues to
offer more competitive products. Another of the Fund's telecom holdings,
MediaOne, was driven higher based on news that AT&T would be purchasing the
cable service and telecommunications provider.
Technology also turned in solid performance for the Fund this year. An
improving global economy resulted in greater demand for semiconductors, PCs and
other `cyclical technology' products. For instance, Micron Technology, a maker
of semiconductors, performed well as orders began to increase, and investor
sentiment regarding semiconductors became positive because of the brightening
global economic outlook. Another tech stock that contributed to the Fund's
performance was IBM, driven by increased revenues from its service business. IBM
has effected a corporate turn-around by moving away from dependence on its PC
and mainframe businesses and focusing on other opportunities, including
consulting and the formation of strategic alliances with a number of other
companies.
Another standout stock for the Fund this year was Anheuser-Busch. The beer
producer and distributor benefited from a surge in domestic beer sales volume,
as well as increased profit margins, as much of the pricing pressure on beer has
eased. The company continues to benefit from strong brand recognition.
One disappointment for the Fund this year was Mirage Resorts. Mirage Resorts
owns and operates casino-based entertainment resorts in Las Vegas and Laughlin,
Nevada. The company suffered from the increasingly competitive nature of the
casino industry, with new and more elaborate casinos being built every quarter.
It also reported earnings disappointments this year that resulted from decreased
traffic to its casinos.
Looking ahead, the manager believes the Fund is well-positioned to benefit
from the recent market broadening as well as the improving global economy, both
of which significantly helped its performance in the second quarter.
14 See page 22 for financial details.
<PAGE>
PIMCO Tax-Efficient Equity Fund
OBJECTIVE
Maximum after-tax growth of capital
PORTFOLIO
Broadly diversified portfolio of at least 250 common stocks of companies with
larger market capitalizations
FUND INCEPTION DATE
7/10/98
TOTAL NET ASSETS
$28.0 million
NUMBER OF SECURITIES IN THE PORTFOLIO
244 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
Parametric Portfolio Associates
- --------------------------------------------------------------------------------
PERFORMANCE *
- --------------------------------------------------------------------------------
Total Return For periods ended 6/30/99
D Shares Lipper
S&P 500 Gr. & Income
Index Fund Avg.
- --------------------------------------------------------------------------------
Inception/1./ 15.9% -- --
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO S&P 500
Tax-Efficient Index
Month Equity Fund D
<S> <C> <C>
07/31/98 10,000 10,000
08/31/98 8,564 8,554
09/30/98 9,001 9,102
10/31/98 9,843 9,843
11/30/98 10,342 10,439
12/31/98 10,957 11,041
01/31/99 11,311 11,502
02/28/99 10,936 11,145
03/31/99 11,332 11,591
04/30/99 11,738 12,040
05/31/99 11,394 11,755
06/30/99 12,059 12,408
</TABLE>
* Past performance is not an indication of future results. The adjusted returns
above include the effect of paying the applicable sales charges. See page 17
for Footnotes, which include additional details.
/1/Returns for the inception period are cumulative because the Fund is less than
1 year old.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Microsoft Corp. 4.7%
Computer software
- --------------------------------------------------------------------------------
General Electric Co. 3.0%
Consumer/Indus. products broadcasting
- --------------------------------------------------------------------------------
Intel Corp. 2.3%
Semiconductors memory circuits
- --------------------------------------------------------------------------------
International Business Machines Corp. 2.2%
Business machines
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 1.9%
Computer network products
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1.9%
Discount stores
- --------------------------------------------------------------------------------
AT&T Corp. 1.8%
Telecommunications services
- --------------------------------------------------------------------------------
Exxon Corp. 1.7%
Leading oil co
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 1.6%
Telecommunications systems/software
- --------------------------------------------------------------------------------
Merck & Co., Inc. 1.6%
Ethical drugs/spec. chemicals
- --------------------------------------------------------------------------------
Top Ten Total 22.7%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Technology 20.3%
- --------------------------------------------------------------------------------
Financial & Business Services 16.2%
- --------------------------------------------------------------------------------
Consumer Discretionary 12.3%
- --------------------------------------------------------------------------------
Health Care 10.9%
- --------------------------------------------------------------------------------
Communications 8.2%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 98.9%
- --------------------------------------------------------------------------------
Cash Equivalents 1.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the period since inception through June 30, 1999, PIMCO Tax-Efficient Equity
Fund returned 15.9%.
PIMCO Tax-Efficient Equity Fund was started on July 10, 1998. The Fund is an
actively managed stock fund seeking low tax exposure without compromising return
potential. Its manager uses an innovative investment process featuring
quantitative stock selection and active tax management.
The technology sector performed well for the Fund this year. Increased demand
for technology, coupled with investor enthusiasm for stocks with the greatest
expectations for earnings growth, helped to boost the prices of many tech
stocks. For instance, Microsoft proved to be an outstanding holding for the Fund
this year. The software company benefited from its market dominance and strong
earnings growth. It also received a boost from investor enthusiasm over its new
product pipeline, which includes updated versions of Microsoft Office and
Microsoft Windows. Cisco Systems was another standout for the Fund this year.
The company continued to successfully position itself as the industry leader
within the Internet networking sector. Another technology standout was IBM,
which has been successful in implementing its turnaround strategy. The company
has changed its focus from the PC and mainframe business to consulting and other
higher profit margin businesses. Its stock received a large boost in May when
the company unveiled its plans for expanding into the Internet business, which
investors greeted with much enthusiasm.
The health care sector made a solid contribution to the Fund's performance
this year. In particular, high-growth companies such as Amgen, Pfizer and Merck
all performed well for much of the year, until interest rate concerns caused
their stock prices to drop in the second quarter of 1999.
One disappointment for the Fund this year was Coca-Cola. The beverage producer
and bottler suffered for much of the year from its exposure to the weakened
global economy, from which it derives much of its sales.
Looking ahead, the manager intends to continue with its disciplined,
long-term, approach to stock selection based on fundamental valuations and the
principles of portfolio diversification and risk control. The manager is
optimistic that, with interest rates in check and earnings growth on the rise,
the Fund will continue its strong performance.
See page 23 for financial details.
15
<PAGE>
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
FUND INCEPTION DATE
12/30/91
TOTAL NET ASSETS
$231.6 million
NUMBER OF SECURITIES IN THE PORTFOLIO
41 (not including short-term instruments)
PIMCO ADVISORS INSTITUTIONAL MANAGER
NFJ Investment Group
- --------------------------------------------------------------------------------
PERFORMANCE *
- --------------------------------------------------------------------------------
Average Annual Total Return For periods ended 6/30/99
D Shares Lipper
S&P 500 Gr. & Income
Index Fund Avg.
- --------------------------------------------------------------------------------
1 year 12.0% 22.8% 14.5%
3 years 18.8% 29.1% 21.6%
5 years 20.8% 27.9% 21.7%
Inception 16.7% -- --
Change in Value
$10,000 invested at the Fund's inception
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PIMCO S&P 500
Value Index
Month Fund D
<S> <C> <C>
12/31/91 10,000 10,000
01/31/92 10,286 9,814
02/29/92 10,630 9,942
03/31/92 10,388 9,748
04/30/92 10,432 10,034
05/31/92 10,338 10,083
06/30/92 10,115 9,933
07/31/92 10,470 10,339
08/31/92 10,164 10,128
09/30/92 10,302 10,247
10/31/92 10,364 10,282
11/30/92 10,918 10,632
12/31/92 11,269 10,762
01/31/93 11,503 10,852
02/28/93 11,624 11,000
03/31/93 11,983 11,232
04/30/93 11,770 10,961
05/31/93 11,933 11,254
06/30/93 12,012 11,287
07/31/93 11,951 11,242
08/31/93 12,596 11,668
09/30/93 12,624 11,579
10/31/93 13,057 11,818
11/30/93 12,921 11,706
12/31/93 13,066 11,847
01/31/94 13,668 12,250
02/28/94 13,442 11,918
03/31/94 12,716 11,398
04/30/94 12,558 11,544
05/31/94 12,553 11,734
06/30/94 12,261 11,446
07/31/94 12,769 11,822
08/31/94 13,304 12,307
09/30/94 12,895 12,006
10/31/94 13,029 12,275
11/30/94 12,370 11,828
12/31/94 12,484 12,004
01/31/95 12,820 12,315
02/28/95 13,389 12,795
03/31/95 13,754 13,173
04/30/95 14,122 13,560
05/31/95 14,655 14,102
06/30/95 14,907 14,430
07/31/95 15,559 14,909
08/31/95 15,747 14,946
09/30/95 16,179 15,577
10/31/95 16,221 15,521
11/30/95 16,915 16,202
12/31/95 17,273 16,515
01/31/96 17,762 17,077
02/29/96 18,147 17,235
03/31/96 18,289 17,401
04/30/96 18,524 17,657
05/31/96 18,894 18,113
06/30/96 18,806 18,182
07/31/96 17,789 17,379
08/31/96 18,477 17,745
09/30/96 18,977 18,744
10/31/96 19,243 19,261
11/30/96 20,889 20,717
12/31/96 20,706 20,306
01/31/97 21,397 21,575
02/28/97 21,756 21,744
03/31/97 20,989 20,851
04/30/97 21,811 22,095
05/31/97 23,093 23,441
06/30/97 23,674 24,491
07/31/97 25,233 26,439
08/31/97 24,697 24,958
09/30/97 26,177 26,325
10/31/97 24,853 25,446
11/30/97 25,454 26,624
12/31/97 26,030 27,081
01/31/98 26,129 27,381
02/28/98 27,676 29,355
03/31/98 28,792 30,859
04/30/98 28,234 31,169
05/31/98 28,108 30,633
06/30/98 28,151 31,878
07/31/98 26,963 31,538
08/31/98 23,094 26,978
09/30/98 24,417 28,707
10/31/98 26,568 31,041
11/30/98 28,085 32,923
12/31/98 28,596 34,820
01/31/99 27,901 36,276
02/28/99 26,838 35,149
03/31/99 26,774 36,555
04/30/99 29,585 37,971
05/31/99 30,384 37,074
06/30/99 31,526 39,132
</TABLE>
* Past performance is not an indication of future results. Excluding the 6-month
return, these returns represent the blended performance of the Fund's retail
Class D shares (for the period from 4/8/98) and the prior performance of the
Fund's institutional class shares (for the period from 12/30/91), adjusted for
Class D expenses. See page 17 for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Top 10 Holdings % of Total Investments
- --------------------------------------------------------------------------------
Bell Atlantic Corp. 4.2%
Telephone service
- --------------------------------------------------------------------------------
GTE Corp. 4.0%
Independent telephone service
- --------------------------------------------------------------------------------
Thomas & Betts Corp. 3.9%
Electric conductors components
- --------------------------------------------------------------------------------
Mobil Corp. 3.9%
Int'l oil/gas exploration & development
- --------------------------------------------------------------------------------
SUPERVALU, Inc. 3.8%
Large food wholesaler
- --------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 3.7%
Public service electric & gas
- --------------------------------------------------------------------------------
Kimberly-Clark Corp. 3.7%
Consumer products/newsprint
- --------------------------------------------------------------------------------
Mallinckrodt, Inc. 3.7%
Healthcare products/spec. chemicals
- --------------------------------------------------------------------------------
NICOR, Inc. 3.6%
Utility holding/natural gas
- --------------------------------------------------------------------------------
DTE Energy Co. 3.5%
Electric & steam utility
- --------------------------------------------------------------------------------
Top Ten Total 38.0%
- --------------------------------------------------------------------------------
Top 5 Industries % of Total Investments
- --------------------------------------------------------------------------------
Consumer Discretionary 13.7%
- --------------------------------------------------------------------------------
Consumer Staples 13.5%
- --------------------------------------------------------------------------------
Utilities 10.9%
- --------------------------------------------------------------------------------
Energy 9.6%
- --------------------------------------------------------------------------------
Communications 8.2%
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
Common Stock 95.0%
- --------------------------------------------------------------------------------
Cash Equivalents 5.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
For the one-year period ended June 30, 1999, PIMCO Value Fund returned 12.0%.
Lower valuation issues were out of favor for most of this one-year period, as
the largest of the large-cap growth stocks dominated the market. However, in the
second quarter of 1999, the market rotated toward lower valuation and
smaller-capitalization stocks. This shift came about as a result of the
improving global economy, which caused an increased demand for capital goods, as
well as rising interest rates, which caused investors to shy away from higher
valuation growth stocks. As a result, PIMCO Value Fund saw strong performance in
the last quarter of this one-year period, despite less impressive performance in
the first three quarters.
The technology sector performed well for the Fund this year. As the global
economy began to improve, demand increased for semiconductors, PCs and other
technology.
Apple Computer, for instance, was a stand-out performer this year. The PC maker
experienced better-than-expected sales of its iMac computer, its latest product
offering, which was enthusiastically received by consumers. The company has
continued its successful comeback with more innovative product offerings and has
gained significant market share.
Another sector that contributed to the Fund's performance was tele-
communications. The sector benefited from increased demand from corporations for
data communications capabilities. One standout in this sector was GTE. GTE
provides inter-networking services ranging from dial-up Internet access for
consumers to Web-based applications for Fortune 500 companies. The company
benefited from increased revenues, new product development, and the sale of some
of its business units.
Basic materials, while a strong performer for the Fund in the second quarter
of 1999, performed poorly for the one-year period. Companies such as John Deere
and U.S. Steel suffered under extreme pricing pressures, which greatly narrowed
their profit margins. However, this sector was a strong contributor to the
Fund's performance in the second quarter, as the global economy improved, demand
for basic materials increased, and pricing pressures eased.
While the Fund's performance was hurt by the narrowness of the market for most
of the past year, the Fund turned in a strong performance in the second quarter,
as lower valuation and cyclical stocks finally outperformed growth stocks.
Looking ahead, we believe the Fund is poised to continue this performance in the
current market environment.
See page 25 for financial details.
16
<PAGE>
- --------------------------------------------------------------------------------
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.
The PIMCO stock funds can invest a portion of their assets in foreign
securities, which can involve special risks due to foreign economic and
political developments. The Innovation Fund concentrates its portfolio in one
sector, making it more volatile than a more diversified stock portfolio, and it,
therefore, 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 100 is an index of Stock companies with medium
capitalizations.
Lipper averages are calculated by Lipper Analytical Services, Inc., a nationally
recognized mutual fund performance evaluation firm. They are total return
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 06902-6896, 1-800-277-7337, www.pimcofunds.com. Please read
the prospectus carefully before you invest or send money.
17
<PAGE>
Schedule of Investments
Capital Appreciation Fund
June 30, 1999
Value
Shares (000s)
COMMON STOCKS 101.0%
Building 2.0%
Centex Corp. 305,800 $ 11,487
Lafarge Corp. 289,450 10,257
------------
21,744
Capital Goods 10.4%
Tyco International Limited 224,800 21,300
Johnson Controls, Inc. 256,000 17,744
Honeywell, Inc. 147,700 17,115
AlliedSignal, Inc. 268,600 16,922
United Technologies Corp. 210,600 15,097
Textron, Inc. 170,900 14,067
General Electric Co. 113,000 12,769
General Dynamics Corp. 4,000 274
------------
115,288
Communications 4.5%
GTE Corp. 204,000 15,453
SBC Communications, Inc. 227,600 13,201
ALLTEL Corp. 182,400 13,042
Qualcomm, Inc. (b) 53,300 7,649
------------
49,345
Consumer Discretionary 16.6%
Wal-Mart Stores, Inc. 383,700 18,514
TJX Cos., Inc. 487,600 16,243
Home Depot, Inc. 233,900 15,072
Lowe's Cos., Inc. 256,600 14,546
Gap, Inc. 270,300 13,616
Harley-Davidson, Inc. 245,900 13,371
Tandy Corp. 269,900 13,191
CVS Corp. 251,500 12,764
Cintas Corp. 184,000 12,362
Circuit City Stores 132,500 12,322
Dayton Hudson Corp. 174,900 11,368
Ford Motor Co. 190,400 10,746
Mohawk Industries, Inc. (b) 335,800 10,200
General Motors Corp. 135,800 8,963
B.J.'s Wholesale Club, Inc. (b) 10,000 301
Delphi Automotive Systems (b) 1 0
Mattel, Inc. 1 0
------------
183,579
Consumer Services 6.0%
Gannett, Inc. 200,000 14,275
New York Times Co. 385,800 14,202
McGraw-Hill Companies, Inc. 248,500 13,403
Waste Management, Inc. 241,900 13,002
CBS Corp. 256,500 11,142
------------
66,024
Consumer Staples 3.5%
Anheuser Busch Cos., Inc. 188,200 13,350
Kroger Co. (b) 475,600 13,287
Safeway, Inc. (b) 234,500 11,608
------------
38,245
Energy 5.6%
Royal Dutch Petroleum Co. 224,800 13,544
Atlantic Richfield Co. 161,100 13,462
Unicom Corp. 311,600 12,016
Peco Energy Co. 285,700 11,964
Energy East Corp. 411,400 10,696
------------
61,682
Financial & Business Services 22.2%
Omnicom Group 198,000 15,840
Chase Manhattan Corp. 160,500 13,903
Bank of New York 370,800 13,604
Hartford Financial Services Group, Inc. 213,000 12,421
Fleet Financial Group, Inc. 273,100 12,119
Citigroup, Inc. 252,250 11,982
Bank of America Corp. 162,915 11,944
Associates First Capital Corp. 'A' 267,374 11,848
American Express Co. 88,900 11,568
Wells Fargo & Co. 270,100 11,547
Bank One Corp. 193,100 11,501
Capital One Financial Corp. 205,400 11,438
Alliance Capital Management LP 344,400 11,128
Marsh & Mclennan Cos. 147,300 11,121
Federal National Mortgage Association 157,800 10,790
Equity Residential Properties Trust 239,400 10,788
Southtrust Corp. 280,650 10,770
Federal Home Loan Mortgage Corp. 183,200 10,626
Comerica, Inc. 176,400 10,485
Countrywide Credit Industries, Inc. 230,000 9,832
Morgan Stanley, Dean Witter, Discover and Co. 58,300 5,976
Lehman Brothers Holdings, Inc. 60,100 3,741
------------
244,972
Health Care 7.7%
Boston Scientific Corp. (b) 313,200 13,761
Bristol-Myers Squibb Co. 178,000 12,538
CIGNA Corp. 136,700 12,166
Warner-Lambert Co. 171,500 11,898
United Healthcare Corp. 177,000 11,085
Wellpoint Health Networks, Inc. (b) 125,500 10,652
Biogen, Inc. (b) 107,000 6,881
Schering-Plough Corp. 122,600 6,498
------------
85,479
Materials & Processing 2.4%
Weyerhaeuser Co. 197,700 13,592
Georgia-Pacific Corp. 270,600 12,820
------------
26,412
Technology 16.9%
Lucent Technologies, Inc. 333,910 22,518
Microsoft Corp. (b) 238,600 21,519
Tellabs, Inc. (b) 310,000 20,944
Texas Instruments, Inc. 118,100 17,125
International Business Machines Corp. 131,000 16,932
Cisco Systems, Inc. (b) 230,200 14,848
BMC Software, Inc. (b) 258,500 13,959
Motorola, Inc. 142,800 13,530
Uniphase Corp. (b) 81,000 13,446
Altera Corp. (b) 308,700 11,364
Compuware Corp. (b) 341,200 10,854
Computer Associates International, Inc. 177,100 9,740
------------
186,779
Transportation 1.0%
Southwest Airlines Co. 338,000 10,520
Utilities 2.2%
Ameritech Corp. 181,400 13,333
Consolidated Edison, Inc. 237,700 10,756
------------
24,089
------------
Total Common Stocks 1,114,158
(Cost $891,804) ------------
SHORT-TERM INSTRUMENTS 3.9%
Principal
Amount
(000s)
Repurchase Agreement 3.9%
State Street Bank
3.500% due 07/01/1999 $ 42,629 42,629
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $43,483,170. Repurchase
proceeds are $42,633,144.)
Total Short-Term Instruments ------------
(Cost $42,629) 42,629
------------
Total Investments (a) 104.9% $ 1,156,787
(Cost $934,433)
Other Assets and Liabilities (Net) (4.9%) (53,161)
------------
Net Assets 100.0% $ 1,103,626
------------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $934,542 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 232,473
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (10,228)
------------
Unrealized appreciation-net $ 222,245
============
(b) Non-income producing security.
See accompanying notes
18
<PAGE>
Schedule of Investments
Equity Income Fund
June 30, 1999
Value
Shares (000s)
COMMON STOCKS 98.7%
Aerospace 2.2%
BFGoodrich Co. 105,000 $ 4,462
Capital Goods 8.0%
Hubbell, Inc. 'B' 96,000 4,356
GATX Corp. 109,000 4,149
Deere & Co. 102,600 4,066
Dana Corp. 79,900 3,680
------------
16,251
Communications 6.3%
Bell Atlantic Corp. 66,932 4,376
GTE Corp. 56,800 4,303
U.S. West, Inc. 69,000 4,054
------------
12,733
Consumer Discretionary 15.5%
Whirlpool Corp. 59,200 4,381
Springs Industries, Inc. 'A' 99,000 4,319
Armstrong World Industries 72,000 4,162
Ford Motor Co. 71,400 4,030
Penny J.C., Inc. 81,000 3,934
Eastman Kodak Co. 56,000 3,794
UST, Inc. 129,400 3,785
American Greetings Corp. 'A' 98,000 2,952
------------
31,357
Consumer Staples 7.9%
SUPERVALU, Inc. 164,600 4,228
RJ Reynolds Tobacco Holdings, Inc. 126,600 3,988
Anheuser Busch Cos., Inc. 56,000 3,972
Kimberly-Clark Corp. 65,500 3,733
------------
15,921
Energy 10.1%
Repsol SA SP - ADR 208,500 4,235
USX Marathon Group 129,000 4,201
Kerr McGee Corp. 81,000 4,065
Mobil Corp. 41,000 4,059
Ultramar Diamond Shamrock Corp. 180,500 3,937
------------
20,497
Environmental Services 2.0%
Browning Ferris Industries, Inc. 94,000 4,042
Financial & Business Services 19.6%
Union Planters Corp. 180,000 8,044
Edwards (A.G.), Inc. 128,000 4,128
Morgan, J.P. & Co., Inc. 29,100 4,088
Deluxe Corp. 105,000 4,088
KeyCorp 123,000 3,951
Republic New York Corp. 57,900 3,948
HRPT Properties Trust 252,600 3,868
PNC Bank Corp. 65,000 3,746
Ohio Casualty Corp. 102,400 3,699
------------
39,560
Health Care 2.0%
Mallinckrodt, Inc. 109,700 3,990
------------
Materials & Processing 9.8%
USX-U.S. Steel Group, Inc. 299,400 8,084
Georgia-Pacific Corp. (Timber Group) 156,700 3,957
Tenneco, Inc. 164,000 3,916
Westvaco Corp. 134,000 3,886
------------
19,843
Technology 3.9%
Harris Corp. 199,400 7,814
Utilities 11.4%
NICOR, Inc. 105,000 3,997
Constellation Energy Group, Inc. 133,000 3,940
Peoples Energy Corp. 103,000 3,882
Public Service Enterprise Group, Inc. 94,500 3,863
DTE Energy Co. 95,000 3,800
Central & South West Corp. 148,800 3,478
------------
22,960
------------
Total Common Stocks 199,430
(Cost $180,043) ------------
Value
(000s)
Total Investments (a) 98.7% $ 199,430
(Cost $180,043)
Other Assets and Liabilities (Net) 1.3% 2,575
------------
Net Assets 100.0% $ 202,005
------------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $180,175 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 27,086
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (7,831)
-------------
Unrealized appreciation-net $ 19,255
-------------
See accompanying notes
19
<PAGE>
Schedule of Investments
Innovation Fund
June 30, 1999
Value
Shares (000s)
COMMON STOCKS 95.0%
Communications 10.5%
Nokia Corp. SP- ADR 480,000 $ 43,950
MCI WorldCom, Inc. (b) 470,000 40,537
General Instrument Corp. (b) 880,000 37,400
Qwest Communications International, Inc. (b) 310,000 10,249
------------
132,136
Consumer Discretionary 6.4%
Corning, Inc. 480,000 33,660
Gemstar International Group Limited (b) 428,000 27,927
Time Warner, Inc. 270,000 19,845
------------
81,432
Health Care 6.1%
United Healthcare Corp. 305,000 19,101
IDEC Pharmaceuticals Corp. (b) 247,500 19,073
Medtronic, Inc. 203,190 15,823
Minimed, Inc. (b) 155,000 11,925
Bausch & Lomb, Inc. 140,000 10,710
------------
76,632
Technology 72.0%
Cisco Systems, Inc. (b) 1,030,000 66,435
Lucent Technologies, Inc. 895,000 60,357
Microsoft Corp. (b) 590,000 53,211
America Online, Inc. (b) 479,600 52,996
Motorola, Inc. 514,900 48,787
Siebel Systems, Inc. (b) 670,000 44,471
Tellabs, Inc. (b) 645,000 43,578
Sun Microsystems, Inc. (b) 630,000 43,391
Xilinx, Inc. (b) 715,000 40,934
Yahoo, Inc. (b) 219,500 37,809
Broadcom Corp. (b) 260,000 37,586
Dell Computer Corp. (b) 1,005,000 37,185
Oracle Corp. (b) 810,000 30,071
Maxim Integrated Products, Inc. (b) 430,000 28,595
Jabil Circuit, Inc. (b) 590,000 26,624
Inktomi Corp. (b) 193,000 25,199
International Business Machines Corp. 190,000 24,558
Uniphase Corp. (b) 140,000 23,240
Covad Communications Group, Inc. (b) 395,000 21,058
Texas Instruments, Inc. 120,000 17,400
Teradyne, Inc. (b) 260,000 18,655
Veritas Software Corp. (b) 185,000 17,563
Vitesse Semiconductor Co. (b) 250,000 16,859
Altera Corp. (b) 440,000 16,198
Electronics for Imaging, Inc. (b) 270,000 13,871
LSI Logic Corp. (b) 291,500 13,445
EMC Corp. (b) 220,000 12,100
I2 Technologies, Inc. (b) 270,000 11,610
Adaptec, Inc. (b) 300,000 10,594
Atmel Corp. (b) 350,000 9,166
ASM Lithography Holding NV (b) 129,000 7,659
------------
911,205
------------
Total Common Stocks 1,201,405
(Cost $794,237) ============
SHORT-TERM INSTRUMENTS 7.4%
Principal
Amount
(000s)
Repurchase Agreement 7.4%
State Street Bank
3.500% due 07/01/1999 $ 93,312 93,312
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.625% 06/30/2001
valued at $44,181,524 and U.S. Treasury
Note 7.875% 08/15/2001 valued at
$51,001,879. Repurchase proceeds
are $93,321,072.)
------------
Total Short-Term Instruments 93,312
(Cost $93,312) ============
Value
(000s)
Total Investments (a) 102.4% $ 1,294,717
(Cost $887,549)
Other Assets and Liabilities (Net) (2.4%) (29,814)
------------
Net Assets 100.0% $ 1,264,903
------------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $898,378 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 405,714
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (9,375)
------------
Unrealized appreciation-net $ 369,339
============
(b) Non-income producing security.
See accompanying notes
20
<PAGE>
Schedule of Investments
Mid-Cap Growth Fund
June 30, 1999
Value
Shares (000s)
COMMON STOCKS 97.8%
Aerospace 0.0%
Howmet International, Inc. (b) 25,000 $ 430
Building 2.0%
Lennar Corp. 443,300 10,639
Pulte Corp. 410,400 9,465
-------------
20,104
Capital Goods 7.3%
Waters Corp. (b) 276,800 14,705
General Dynamics Corp. 204,900 14,035
Lear Corp. (b) 265,100 13,189
Tower Automotive, Inc. (b) 427,700 10,880
Rockwell International Corp. 176,200 10,704
Federal-Mogul Corp. 188,900 9,823
-------------
73,336
Communications 1.5%
CenturyTel, Inc. 280,350 11,144
Superior Telecom, Inc. 154,678 3,867
-------------
15,011
Consumer Discretionary 22.3%
Best Buy Co., Inc. (b) 219,400 14,810
Premark International, Inc. 375,300 14,074
Hertz Corp. 'A' (b) 226,600 14,049
Bed, Bath & Beyond, Inc. (b) 358,200 13,791
Abercrombie & Fitch Co. 'A' (b) 273,600 13,133
Intimate Brands, Inc. 261,240 12,376
Family Dollar Stores, Inc. 513,400 12,322
Dial Corp. 306,800 11,409
Galileo International, Inc. (b) 212,900 11,377
Outback Steakhouse, Inc. (b) 286,000 11,243
Snyder Communications, Inc. 327,900 10,739
B.J.'s Wholesale Club, Inc. (b) 345,300 10,381
Dollar Tree Stores, Inc. 226,000 9,944
Hasbro, Inc. 346,950 9,693
Shaw Industries, Inc. 578,200 9,540
Tommy Hilfiger Corp. (b) 128,800 9,467
Maytag Corp. 132,500 9,233
Mandalay Resort Group (b) 434,700 9,183
Westpoint Stevens, Inc. (b) 297,200 8,860
Furniture Brands International, Inc. (b) 306,100 8,533
Mattel, Inc. 1 0
-------------
224,157
Consumer Services 3.2%
ACNielsen Corp. (b) 374,200 11,319
Reader's Digest Assn., Inc. 'A' 278,200 11,058
Darden Restaurants, Inc. 454,700 9,918
-------------
32,295
Consumer Staples 5.4%
Food Lion, Inc. 'A' 1,169,700 13,890
SUPERVALU, Inc. 450,700 11,577
Kroger Co. (b) 391,400 10,935
Flowers Industries, Inc. 439,450 9,531
McCormick & Co. 276,100 8,714
-------------
54,647
Energy 0.9%
Kerr McGee Corp. 95,800 4,808
Occidental Petroleum Corp. 169,400 3,578
Dynegy, Inc. 29,400 599
-------------
8,985
Financial & Business Services 21.2%
Liberty Property Trust 507,200 12,617
Duke Realty Investments 531,400 11,990
Protective Life Corp. 331,200 10,930
Allmerica Financial Corp. 171,300 10,417
Deluxe Corp. 265,500 10,338
Apartment Investment & Management Co. 'A' (b) 235,800 10,080
Zions Bancorporation 157,400 9,995
Bank United Corp. 'A' 245,300 9,858
Travelers Property Casualty 'A' 249,600 9,766
Huntington Bancshares 278,100 9,734
Valassis Communications, Inc. (b) 261,450 9,576
Dime Bancorp, Inc. 474,000 9,539
Ambac Financial Group, Inc. 164,400 9,391
First Tennessee National Corp. 240,900 9,229
Mutual Risk Management Limited 274,962 9,177
BB&T Corp. 248,400 9,113
Finova Group, Inc. 170,100 8,952
CCB Financial Corp. 167,400 8,851
Providian Financial Corp. 94,350 8,822
Equity Residential Properties Trust 193,100 8,701
Meristar Hospitality Corp. 363,500 8,156
Peoples Heritage Financial Group 307,600 5,787
Bear Stearns Co., Inc. 53,800 2,515
-------------
213,534
Health Care 6.4%
Medimmune, Inc. 187,300 12,690
Allergan, Inc. 109,100 12,110
Trigon Healthcare, Inc. (b) 315,100 11,462
C.R. Bard, Inc. 198,200 9,476
VISX, Inc. (b) 99,400 7,871
Bausch & Lomb, Inc. 100,100 7,658
Pacificare Health Systems 'B' (b) 53,300 3,834
-------------
65,101
Materials & Processing 4.7%
Southdown, Inc. 210,300 13,512
Boise Cascade Corp. 241,800 10,367
Temple-Inland, Inc. 143,500 9,794
Willamette Industries 205,100 9,447
Martin Marietta Materials, Inc. 73,800 4,354
-------------
47,474
Technology 17.4%
Veritas Software Corp. (b) 147,800 14,032
Citrix Systems, Inc. (b) 246,800 13,944
Vitesse Semiconductor Co. (b) 195,800 13,204
Comverse Technology, Inc. (b) 172,950 13,058
Lexmark International Group, Inc. 'A' (b) 197,200 13,028
Unisys Corp. (b) 321,300 12,511
Symbol Technologies, Inc. 333,300 12,290
NCR Corp. (b) 242,600 11,842
Legato Systems, Inc. (b) 200,800 11,596
PMC - Sierra, Inc. (b) 192,600 11,351
Adobe Systems, Inc. 137,100 11,264
The Reynolds & Reynolds Co. 475,000 11,073
Xilinx, Inc. (b) 186,600 10,683
CSG Systems International, Inc. 384,600 10,072
Adaptec, Inc. (b) 143,700 5,074
-------------
175,022
Utilities 5.5%
Florida Progress Corp. 263,900 10,902
DQE, Inc. 232,200 9,317
BEC Energy 223,900 9,236
NiSource, Inc. 353,700 9,130
Minnesota Power, Inc. 447,700 8,898
IPALCO Enterprises, Inc. 388,300 8,227
-------------
55,710
-------------
Total Common Stocks 985,806
(Cost $839,053) =============
SHORT-TERM INSTRUMENTS 3.6%
Principal
Amount
(000s)
Repurchase Agreement 3.6%
State Street Bank
3.500% due 07/01/1999 $ 36,648 36,648
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $37,381,579. Repurchase
proceeds are $36,651,563.)
-------------
Total Short-Term Instruments 36,648
(Cost $36,648) =============
Total Investments (a) 101.4% $ 1,022,454
(Cost $875,701)
Other Assets and Liabilities (Net) (1.4%) (14,329)
-------------
Net Assets 100.0% $ 1,008,125
=============
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $875,778 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 166,941
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (20,265)
-------------
Unrealized appreciation-net $ 146,676
-------------
(b) Non-income producing security.
See accompanying notes 21
<PAGE>
Schedule of Investments
Renaissance Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
COMMON STOCKS 95.8%
- --------------------------------------------------------------------------------
Aerospace 1.3%
Lockheed Martin Corp. 235,000 $ 8,754
Capital Goods 2.3%
New Holland NV 508,000 8,700
Valmet Corp. OYJ 484,000 5,488
Harnischfeger Industries, Inc. 373,300 747
-----------
14,935
Communications 4.6%
MediaOne Group, Inc. (b) 204,000 15,173
ICO Global Communications (b) 1,268,178 7,649
Comsat Corp. 233,900 7,602
-----------
30,424
Consumer Discretionary 7.0%
Hitachi Limited 1,417,000 13,295
Ikon Office Solutions, Inc. 600,000 9,000
K Mart Corp. (b) 450,000 7,397
International Game Technology 300,000 5,550
Rite Aid Corp. 225,000 5,541
Exide Corp. 213,000 3,142
Ford Motor Co. 27,600 1,558
Mirage Resorts, Inc. (b) 40,200 673
-----------
46,156
Consumer Staples 4.2%
Tate & Lyle PLC 1,338,000 8,404
Dole Food Co. 211,000 6,198
Philip Morris Cos., Inc. 145,000 5,827
Corn Products International, Inc. 180,000 5,479
Suiza Foods Corp. (b) 50,000 2,094
-----------
28,002
Energy 14.5%
Valero Energy Corp. 850,900 18,241
Nabors Industries, Inc. (b) 666,600 16,290
Union Pacific Resources Group 778,400 12,698
Atlantic Richfield Co. 129,500 10,821
Rowan Cos., Inc. (b) 475,000 8,758
Kerr McGee Corp. 148,000 7,428
Tosco Corp. 257,500 6,679
R&B Falcon Corp. (b) 648,000 6,075
Gulf Canada Resources Limited 1,116,600 4,676
Ocean Energy, Inc. (b) 400,000 3,850
-----------
95,516
Environmental Services 0.5%
Browning Ferris Industries, Inc. 77,700 3,341
Financial & Business Services 17.6%
Aetna, Inc. 332,600 29,747
Conseco, Inc. 645,000 19,632
Fleet Financial Group, Inc. 354,400 15,726
Chase Manhattan Corp. 128,200 11,105
Fremont General Corp. 567,000 10,702
Everest Reinsurance Holdings, Inc. 208,200 6,793
Pacific Century Financial Corp. 303,500 6,543
Cdn Hotel Income Trust (b) 981,500 6,332
Federal National Mortgage Association 50,500 3,453
Loews Corp. 40,000 3,165
Catellus Development Corp. (b) 171,700 2,661
-----------
115,859
Health Care 10.2%
Foundation Health Systems, Inc. 'A' (b) 1,007,000 15,105
CIGNA Corp. 150,600 13,403
Tenet Healthcare Corp. (b) 701,500 13,022
Beverly Enterprises, Inc. (b) 1,166,900 9,408
Pacificare Health Systems 'B' (b) 90,000 6,474
ICN Pharmaceuticals, Inc. 141,400 4,551
Oxford Health Plans, Inc. (b) 213,400 3,321
Omnicare, Inc. 100,000 1,262
Pacificare Health Systems, Inc. 'B' 10,000 719
-----------
67,265
Materials & Processing 14.4%
Asia Pulp & Paper Co. Limited SP-ADR 1,965,800 18,921
Smurfit-Stone Container Corp. (b) 832,000 17,108
Ucar International, Inc. (b) 526,000 13,282
Gaylord Container Corp. 'A' (b) 1,128,000 8,954
Hercules, Inc. 199,000 7,823
Rayonier, Inc. 142,400 7,093
Cabot Corp. 220,000 5,321
Norsk Hydro AS SP - ADR 122,800 4,697
Arch Chemicals, Inc. 166,600 4,050
Mercer International, Inc. 557,500 3,345
LTV Corp. 273,000 1,826
Reynolds Metals Co. 20,000 1,180
Longview Fibre Co. 68,000 1,063
-----------
94,663
Technology 16.0%
Micron Technology, Inc. (b) 569,000 22,938
Arrow Electronics, Inc. 996,000 18,924
Teradyne, Inc. (b) 169,200 12,140
NEC Corp. 902,000 11,222
Vishay Intertechnology, Inc. (b) 418,125 8,781
Seagate Technology, Inc. (b) 322,200 8,256
Koninklijke Philips Electronics NV SP - ADR 65,688 6,625
Kulicke & Soffa Industries (b) 191,100 5,124
Thermo Electron Corp. (b) 202,000 4,053
Hutchinson Technology (b) 90,000 2,498
Motorola, Inc. 22,100 2,094
Xerox Corp. 27,100 1,601
Amkor Technology, Inc. (b) 127,000 1,302
-----------
105,558
Transportation 0.2%
Burlington Northern Santa Fe Corp. 50,000 1,550
Utilities 3.0%
Midamerican Energy Holdings Co. 209,000 7,237
Niagara Mohawk Holdings, Inc. 317,800 5,105
Citizens Utilities Co. 'B' 416,100 4,629
Western Resources, Inc. 100,000 2,662
-----------
19,633
-----------
Total Common Stocks 631,656
(Cost $608,643) ===========
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 2.9%
- --------------------------------------------------------------------------------
Principal
Amount
(000s)
Repurchase Agreement 2.9%
State Street Bank
3.500% due 07/01/1999 $ 19,345 19,345
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 5.250% 05/31/2001
valued at $19,734,286. Repurchase
proceeds are $19,346,881.)
----------
Total Short-Term Instruments 19,345
(Cost $19,345) ==========
Total Investments (a) 98.7% $ 651,001
(Cost $627,988)
Other Assets and Liabilities (Net) 1.3% 8,824
----------
Net Assets 100.0% $ 659,825
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $628,733 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost $ 48,351
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value (26,083)
----------
Unrealized appreciation-net $ 22,268
==========
(b) Non-income producing security.
22 See accompanying notes
<PAGE>
Schedule of Investments
Tax-Efficient Equity Fund
June 30, 1999
Value
Shares (000s)
COMMON STOCKS 99.6%
Aerospace 0.4%
Boeing Co. 1,800 $ 80
Raytheon Co. 'B' 600 42
------
122
Building 0.4%
Crane Co. 1,700 53
Centex Corp. 1,100 41
Kaufman & Broad Home Corp. 900 22
------
116
Capital Goods 8.2%
General Electric Co. 7,400 836
AlliedSignal, Inc. 2,600 164
Tyco International Limited 1,500 142
United Technologies Corp. 1,800 129
Honeywell, Inc. 1,000 116
McDermott International, Inc. 4,000 113
Dana Corp. 2,200 101
Ingersoll-Rand Co. 1,200 78
Johnson Controls, Inc. 1,000 69
Caterpillar, Inc. 1,100 66
Paccar, Inc. 1,200 64
Avery Dennison Corp. 1,000 60
Navistar International Corp. (b) 1,200 60
Textron, Inc. 700 58
General Dynamics Corp. 800 55
Briggs & Stratton Corp. 900 52
Nacco Industries, Inc. 'A' 600 44
PPG Industries, Inc. 500 30
Engelhard Corp. 1,300 29
Parker Hannifin Corp. 500 23
Minnesota Mining & Manufacturing Co. 100 9
Dover Corp. 100 4
------
2,302
Communications 8.3%
AT&T Corp. 9,150 511
MCI WorldCom, Inc. (b) 4,900 423
SBC Communications, Inc. 5,600 325
Bell Atlantic Corp. 4,300 281
BellSouth Corp. 5,100 239
GTE Corp. 2,400 182
Nortel Networks Corp. 1,100 95
U.S. West, Inc. 1,500 88
Vodafone Group PLC SP - ADR 400 79
ALLTEL Corp. 1,000 72
CenturyTel, Inc. 500 20
------
2,315
Consumer Discretionary 12.3%
Wal-Mart Stores, Inc. 11,100 535
Procter & Gamble Co. 3,200 286
Home Depot, Inc. 3,500 225
Gap, Inc. 4,275 215
Time Warner, Inc. 2,400 176
Ford Motor Co. 2,900 163
General Motors Corp. 1,700 112
Avon Products, Inc. 2,000 111
TJX Cos., Inc. 3,000 100
Federated Department Stores, Inc. (b) 1,700 90
VF Corp. 2,000 86
Eastman Kodak Co. 1,200 81
Pitney Bowes, Inc. 1,200 77
Walgreen Co. 2,600 76
Cendant Corp. (b) 3,700 76
Dayton Hudson Corp. 1,100 72
Sears Roebuck & Co. 1,600 71
Alberto-Culver Co. 2,500 67
Brunswick Corp. 2,300 64
Masco Corp. 2,200 64
Lowe's Cos., Inc. 1,100 62
Liz Claiborne, Inc. 1,700 62
Harrah's Entertainment, Inc. (b) 2,300 51
Emerson Electric Co. 800 50
Maytag Corp. 700 49
Costco Cos., Inc. (b) 600 48
UST, Inc. 1,600 47
American Greetings Corp. 'A' 1,500 45
MAY Department Stores Co. 1,100 45
Armstrong World Industries 700 40
Corning, Inc. 500 35
Hasbro, Inc. 1,200 34
Colgate-Palmolive Co. 300 30
Dollar General Corp. 906 26
Cooper Tire & Rubber Co. 1,000 24
Consolidated Stores Corp. (b) 700 19
Newell Rubbermaid, Inc. 400 19
Wm. Wrigley Jr. Co. 100 9
Goodyear Tire & Rubber Co. 100 6
------
3,448
Consumer Services 3.9%
McDonald's Corp. 3,600 149
King World Productions, Inc. 3,600 125
Viacom, Inc. 'B' (b) 2,800 123
Gannett, Inc. 1,600 114
Waste Management, Inc. 2,100 113
Interpublic Group of Companies, Inc. 1,300 113
Carnival Corp. 'A' 2,200 107
Times Mirror Co. 'A' 1,300 77
Knight-Ridder, Inc. 1,300 71
Tribune Co. 500 44
McGraw-Hill Companies, Inc. 800 43
New York Times Co. 600 22
------
1,101
Consumer Staples 5.9%
Coca-Cola Co. 6,400 400
Philip Morris Cos., Inc. 4,600 185
General Mills, Inc. 1,700 137
Anheuser Busch Cos., Inc. 1,900 135
Kimberly-Clark Corp. 2,000 114
SUPERVALU, Inc. 3,900 100
Safeway, Inc. (b) 1,800 89
Brown-Forman Corp. 1,200 78
Clorox Co. 700 75
H.J. Heinz Co. 1,300 65
Albertson's, Inc. 1,200 62
Bestfoods 1,200 59
Sysco Corp. 1,600 48
Sara Lee Corp. 1,700 39
Adolph Coors Co. 'B' 700 35
Pepsico, Inc. 300 12
Kellogg Co. 200 7
------
1,640
Energy 5.6%
Exxon Corp. 6,200 478
Mobil Corp. 2,700 267
Chevron Corp. 1,900 181
Royal Dutch Petroleum Co. 2,500 151
Rowan Cos., Inc. (b) 4,800 89
Sunoco, Inc. 2,300 69
Phillips Petroleum Co. 1,200 60
Texaco, Inc. 900 56
Atlantic Richfield Co. 600 50
AES Corp. (b) 700 41
Ashland, Inc. 1,000 40
Peco Energy Co. 800 34
Southern Co. 1,000 27
Enron Corp. 300 25
------
1,568
Financial & Business Services 16.4%
Citigroup, Inc. 9,200 437
American International Group, Inc. 2,513 294
Bank of America Corp. 3,639 267
Bank One Corp. 3,824 228
Chase Manhattan Corp. 2,500 216
Morgan Stanley, Dean Witter, Discover and Co. 2,000 205
Federal National Mortgage Association 2,300 157
First Union Corp. 2,800 131
Charles Schwab Corp. 1,150 126
Allstate Corp. 3,000 108
MBNA Corp. 3,500 107
Bank of New York 2,900 106
American Express Co. 800 104
Wells Fargo & Co. 2,400 103
Sun Trust Banks, Inc. 1,400 97
Conseco, Inc. 3,100 94
MGIC Investment Corp. 1,800 88
Mellon Bank Corp. 2,400 87
See accompanying notes 23
<PAGE>
Schedule of Investments (Cont.)
Tax-Efficient Equity Fund
June 30, 1999
Value
Shares (000s)
- --------------------------------------------------------------------------------
Omnicom Group 1,000 $ 80
Automatic Data Processing, Inc. 1,800 79
Countrywide Credit Industries, Inc. 1,800 77
State Street Corp. 900 77
SLM Holding Corp. 1,400 64
Washington Mutual, Inc. 1,800 64
Lehman Brothers Holdings, Inc. 1,000 62
Regions Financial Corp. 1,600 62
National City Corp. 900 59
Northern Trust Corp. 600 58
Federal Home Loan Mortgage Corp. 1,000 58
Progressive Corp. 400 58
Fleet Financial Group, Inc. 1,300 58
Lincoln National Corp. 1,000 52
Aon Corp. 1,200 50
Bear Stearns Co., Inc. 1,025 48
Hartford Financial Services Group, Inc. 800 47
Equifax, Inc. 1,300 46
Marsh & Mclennan Cos 600 45
Torchmark Corp. 1,300 44
Associates First Capital Corp. 'A' 1,000 44
BankBoston Corp. 800 41
PNC Bank Corp. 700 40
Golden West Financial Corp. 400 39
Deluxe Corp. 1,000 39
MBIA, Inc. 600 39
Unum Corp. 700 38
Capital One Financial Corp. 600 33
KeyCorp 900 29
Franklin Resources, Inc. 700 28
BB&T Corp. 600 22
Provident Cos., Inc. 'B' 400 16
Republic New York Corp. 200 14
------
4,565
Health Care 11.0%
Merck & Co., Inc. 6,000 444
Bristol-Myers Squibb Co. 5,600 394
Johnson & Johnson 3,400 333
Pfizer, Inc. 2,900 318
Schering-Plough Corp. 4,800 254
Abbott Laboratories 4,600 209
Amgen, Inc. (b) 3,000 182
Warner-Lambert Co. 2,400 167
American Home Products Corp. 2,100 121
Medtronic, Inc. 1,400 109
Eli Lilly & Co. 1,500 107
HEALTHSOUTH Corp. (b) 5,500 82
Cardinal Health, Inc. 900 58
Guidant Corp. 1,100 57
Biomet, Inc. 1,300 52
Watson Pharmaceuticals, Inc. (b) 1,100 39
United Healthcare Corp. 600 38
St. Jude Medical Inc. 1,000 36
Becton Dickinson & Co. 1,100 33
CIGNA Corp. 300 27
------
3,060
Materials & Processing 2.9%
Rohm & Haas Co. 4,100 176
E.I. Du Pont de Nemours, Inc. 2,300 157
Alcoa, Inc. 1,400 87
Owens-Illinois, Inc. (b) 2,000 65
Allegheny Teledyne, Inc. 2,800 63
Fort James Corp. 1,600 61
Air Products & Chemicals 1,100 44
Praxair, Inc. 900 44
Tenneco, Inc. 1,500 36
Hercules, Inc. 700 28
FMC Corp. (b) 400 27
Nucor Corp. 400 19
------
807
Technology 20.4%
Microsoft Corp. (b) 14,800 1,335
Intel Corp. 11,000 655
International Business Machines Corp. 4,700 607
Cisco Systems, Inc. (b) 8,400 542
Lucent Technologies, Inc. 6,800 459
Hewlett Packard Co. 3,300 332
Dell Computer Corp. (b) 6,800 251
America Online, Inc. (b) 2,200 243
Oracle Corp. (b) 6,000 223
Sun Microsystems, Inc. (b) 2,600 179
Tellabs, Inc. (b) 2,400 162
EMC Corp. (b) 2,400 132
Compuware Corp. (b) 3,000 95
Applied Materials, Inc. (b) 1,200 89
BMC Software, Inc. (b) 1,500 81
Gateway, Inc. (b) 1,100 65
Xerox Corp. 1,000 59
Solectron Corp. (b) 800 53
Computer Sciences Corp. 700 48
Ceridian Corp. (b) 1,200 39
Unisys Corp. (b) 700 27
EG&G, Inc. 600 21
IMS Health, Inc. 400 13
------
5,710
Transportation 1.0%
Delta Air Lines, Inc. 1,500 86
Burlington Northern Santa Fe Corp. 2,400 74
Southwest Airlines Co. 1,800 56
AMR Corp. (b) 500 34
Kansas City Southern Industries, Inc. 500 32
------
282
Utilities 2.9%
Ameritech Corp. 3,500 257
Central & South West Corp. 3,500 82
Columbia Gas Systems, Inc. 1,300 81
Coastal Corp. 2,000 80
Duke Energy Corp. 1,200 65
GPU, Inc. 1,200 51
DTE Energy Co. 1,200 48
Edison International 1,500 40
Consolidated Edison, Inc. 700 32
Public Service Enterprise Group, Inc. 600 25
Constellation Energy Group, Inc. 400 12
Sempra Energy 500 11
Peoples Energy Corp. 200 8
------
792
------
Total Common Stocks 27,828
(Cost $24,538) ======
SHORT-TERM INSTRUMENTS 1.1%
Principal
Amount
(000s)
Repurchase Agreement 1.1%
State Street Bank
3.500% due 07/01/1999 $ 318 318
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.375% 03/31/2001
valued at $328,672. Repurchase
proceeds are $318,031.)
----------
Total Short-Term Instruments 318
==========
(Cost $318)
Total Investments (a) 100.7% $ 28,146
(Cost $24,856)
Other Assets and Liabilities (Net) (0.7%) (195)
----------
Net Assets 100.0% $ 27,951
==========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $24,882 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 3,640
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (376)
----------
Unrealized appreciation-net $ 3,264
==========
(b) Non-income producing security.
24 See accompanying notes
<PAGE>
Schedule of Investments
Value Fund
June 30, 1999
Value
Shares (000s)
COMMON STOCKS 94.0%
Aerospace 1.9%
Northrop Grumman Corp. 66,000 $ 4,376
Capital Goods 3.9%
Dana Corp. 102,700 4,731
Deere & Co. 108,000 4,280
------------
9,011
Communications 8.1%
Bell Atlantic Corp. 146,000 9,545
GTE Corp. 122,000 9,242
------------
18,787
Consumer Discretionary 13.5%
Thomas & Betts Corp. 191,000 9,025
UST, Inc. 272,400 7,968
Whirlpool Corp. 64,000 4,736
Tupperware Corp. 183,000 4,667
American Greetings Corp. 'A' 128,000 3,856
Brunswick Corp. 40,400 1,125
------------
31,377
Consumer Services 3.8%
King World Productions, Inc. 129,000 4,491
Central Newspapers, Inc. 'A' 115,000 4,327
------------
8,818
Consumer Staples 13.3%
SUPERVALU, Inc. 342,000 8,785
Kimberly-Clark Corp. 150,000 8,550
Whitman Corp. 261,000 4,698
IBP, Inc. 193,000 4,584
Anheuser Busch Cos., Inc. 60,000 4,256
------------
30,873
Energy 9.5%
Mobil Corp. 90,000 8,910
Kerr McGee Corp. 88,000 4,416
Repsol SA SP - ADR 216,000 4,388
Ultramar Diamond Shamrock Corp. 194,000 4,232
------------
21,946
Environmental Services 1.9%
Browning Ferris Industries, Inc. 103,000 4,429
Financial & Business Services 7.7%
Union Planters Corp. 103,000 4,603
PNC Bank Corp. 78,000 4,495
Republic New York Corp. 65,000 4,432
Loews Corp. 55,500 4,391
------------
17,921
Health Care 7.5%
Mallinckrodt, Inc. 235,000 8,547
American Home Products Corp. 81,000 4,658
CIGNA Corp. 30,700 2,732
Mylan Laboratories, Inc. 58,200 1,542
------------
17,479
Materials & Processing 6.2%
USG Corp. 80,000 4,480
USX-U.S. Steel Group, Inc. 160,000 4,320
Westvaco Corp. 144,000 4,176
IMC Global, Inc. 76,700 1,333
------------
14,309
Technology 5.9%
Harris Corp. 117,000 4,585
Sterling Software, Inc. (b) 169,000 4,510
Apple Computer, Inc. 96,000 4,446
------------
13,541
Utilities 10.8%
Public Service Enterprise Group, Inc. 210,000 8,584
NICOR, Inc. 219,700 8,362
DTE Energy Co. 200,000 8,000
------------
24,946
------------
Total Common Stocks 217,813
============
(Cost $198,964)
SHORT-TERM INSTRUMENTS 5.0%
Repurchase Agreement 5.0%
State Street Bank
3.500% due 07/01/1999 $ 11,554 $ 11,554
(Dated 06/30/1999. Collateralized by
U.S. Treasury Note 6.375% 09/30/2001
valued at $11,790,033. Repurchase
proceeds are $11,555,123.)
------------
Total Short-Term Instruments 11,554
(Cost $11,554) ============
Total Investments (a) 99.0% $ 229,367
(Cost $210,518)
Other Assets and Liabilities (Net) 1.0% 2,271
------------
Net Assets 100.0% $ 231,638
============
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $211,558 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost $ 25,023
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value (7,214)
------------
Unrealized appreciation-net $ 17,809
============
(b) Non-income producing security.
See accompanying notes 25
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected Per Share Data
for the Year or Period Ended: Capital Appreciation Fund Equity Income Fund
----------------------------------------------------------------------
06/30/1999 06/30/1998 (b) 06/30/1999 06/30/1998 (b)
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 26.01 $ 25.41 $ 16.04 $ 16.71
- --------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (a) 0.06 0.02 0.40 0.09
- --------------------------------------------------------------------------------------------------------------------
Net Realized / Unrealized Gain (Loss)
on Investments (a) 2.34 0.58 1.27 (0.66)
- --------------------------------------------------------------------------------------------------------------------
Total Income from
Investment Operations 2.40 0.60 1.67 (0.57)
- --------------------------------------------------------------------------------------------------------------------
Dividends from Net Investment
Income (0.13) 0.00 (0.36) (0.10)
- --------------------------------------------------------------------------------------------------------------------
Distributions from Net Realized
Capital Gains (1.65) 0.00 (1.76) 0.00
- --------------------------------------------------------------------------------------------------------------------
Total Distributions (1.78) 0.00 (2.12) (0.10)
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value End of Period 26.63 26.01 15.59 16.04
- --------------------------------------------------------------------------------------------------------------------
Total Return 10.17% 2.36% 12.21% (3.43)%
- --------------------------------------------------------------------------------------------------------------------
Net Assets End of Period (000s) $ 339 $ 118 $ 106 $ 104
- --------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average
Net Assets 1.10% 1.10%* 1.10% 1.10%*
- --------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.24% 0.27%* 2.73% 2.23%*
- --------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 120% 75% 76% 45%
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Innovation Fund Mid-Cap Growth Fund
----------------------------------------------------------------------
06/30/1999 06/30/1998 (b) 06/30/1999 06/30/1998 (b)
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 24.28 $ 21.50 $ 23.99 $ 23.97
- --------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (a) (0.29) (0.05) 0.03 0.00
- --------------------------------------------------------------------------------------------------------------------
Net Realized / Unrealized Gain (Loss)
on Investments (a) 14.79 2.83 (0.04) 0.02
- --------------------------------------------------------------------------------------------------------------------
Total Income from
Investment Operations 14.50 2.78 (0.01) 0.02
- --------------------------------------------------------------------------------------------------------------------
Dividends from Net Investment
Income 0.00 0.00 (0.01) 0.00
- --------------------------------------------------------------------------------------------------------------------
Distributions from Net Realized
Capital Gains (1.26) 0.00 (1.07) 0.00
- --------------------------------------------------------------------------------------------------------------------
Total Distributions (1.26) 0.00 (1.08) 0.00
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value End of Period 37.52 24.28 22.90 23.99
- --------------------------------------------------------------------------------------------------------------------
Total Return 61.62% 12.93% 0.25% 0.08%
- --------------------------------------------------------------------------------------------------------------------
Net Assets End of Period (000s) $ 18,366 $ 139 $ 359 $ 142
- --------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average
Net Assets 1.30% 1.30%* 1.10% 1.10%*
- --------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.89)% (0.99)%* 0.16% 0.03%*
- --------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 119% 100% 85% 66%
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Selected Per Share Data Tax Efficient
for the Year or Period Ended: Renaissance Fund Equity Fund
---------------------------------------------------
06/30/1999 06/30/1998 (b) 06/30/1999 (c)
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 19.10 $ 18.99 $ 10.00
- -------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (a) 0.00 0.01 0.03
- -------------------------------------------------------------------------------------------------
Net Realized / Unrealized Gain (Loss)
on Investments (a) 1.45 0.10 1.56
- -------------------------------------------------------------------------------------------------
Total Income from
Investment Operations 1.45 0.11 1.59
- -------------------------------------------------------------------------------------------------
Dividends from Net Investment
Income 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------
Distributions from Net Realized
Capital Gains (2.33) 0.00 0.00
- -------------------------------------------------------------------------------------------------
Total Distributions (2.33) 0.00 0.00
- -------------------------------------------------------------------------------------------------
Net Asset Value End of Period 18.22 19.10 11.59
- -------------------------------------------------------------------------------------------------
Total Return 10.01% 0.58% 15.90%
- -------------------------------------------------------------------------------------------------
Net Assets End of Period (000s) $ 192 $ 126 $ 869
- -------------------------------------------------------------------------------------------------
Ratio of Expenses to Average
Net Assets 1.25% 1.25%* 1.11%*
- -------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.02)% 0.21%* 0.30%*
- -------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 221% 192% 13%
- -------------------------------------------------------------------------------------------------
<CAPTION>
Value Fund
--------------------------------
06/30/1999 06/30/1998 (b)
<S> <C> <C>
Net Asset Value Beginning of Period $ 15.64 $ 15.99
- -------------------------------------------------------------------------------
Net Investment Income (Loss) (a) 0.23 0.04
- -------------------------------------------------------------------------------
Net Realized / Unrealized Gain (Loss)
on Investments (a) 1.37 (0.34)
- -------------------------------------------------------------------------------
Total Income from
Investment Operations 1.60 (0.30)
- -------------------------------------------------------------------------------
Dividends from Net Investment
Income (0.23) (0.05)
- -------------------------------------------------------------------------------
Distributions from Net Realized
Capital Gains (1.72) 0.00
- -------------------------------------------------------------------------------
Total Distributions (1.95) (0.05)
- -------------------------------------------------------------------------------
Net Asset Value End of Period 15.29 15.64
- -------------------------------------------------------------------------------
Total Return 12.00% (1.85)%
- -------------------------------------------------------------------------------
Net Assets End of Period (000s) $ 118 $ 98
- -------------------------------------------------------------------------------
Ratio of Expenses to Average
Net Assets 1.10% 1.10%*
- -------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets 1.61% 1.23%*
- -------------------------------------------------------------------------------
Portfolio Turnover Rate 101% 77%
- -------------------------------------------------------------------------------
* Annualized
(a) Per share amounts based on average number of shares outstanding during the period.
(b) Commenced operations on April 8, 1998.
(c) Commenced operations on July 10, 1998.
</TABLE>
26 See accompanying notes
<PAGE>
Statements of Assets and Liabilities
June 30, 1999
<TABLE>
<CAPTION>
Capital
Appreciation Equity Income Innovation Mid-Cap
Amounts in thousands, except per share amounts Fund Fund Fund Growth Fund
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments, at value $1,156,787 $ 199,430 $1,294,717 $1,022,454
--------------------------------------------------------------------
Cash 0 0 1,420 140
--------------------------------------------------------------------
Receivable for investments and foreign currency sold 5,177 8,862 58,078 4,923
--------------------------------------------------------------------
Receivable for Fund shares sold 2,353 373 7,026 4,079
--------------------------------------------------------------------
Interest and dividends receivable 1,193 573 102 958
--------------------------------------------------------------------
1,165,510 209,238 1,361,343 1,032,554
--------------------------------------------------------------------
Liabilities:
Payable for investments and foreign currency purchased $ 40,234 $ 4,285 $ 92,960 $ 14,879
--------------------------------------------------------------------
Payable for Fund shares redeemed 15,807 260 1,752 8,744
--------------------------------------------------------------------
Accrued investment advisory fee 405 75 606 363
--------------------------------------------------------------------
Accrued administration fee 253 50 373 240
--------------------------------------------------------------------
Accrued distribution fee 81 29 516 119
--------------------------------------------------------------------
Accrued servicing fee 89 16 233 84
--------------------------------------------------------------------
Due to custodian 5,015 2,518 0 0
--------------------------------------------------------------------
61,884 7,233 96,440 24,429
--------------------------------------------------------------------
Net Assets $1,103,626 $ 202,005 $1,264,903 $1,008,125
--------------------------------------------------------------------
Net Assets Consist of:
Paid in capital $ 756,091 $ 157,826 $ 799,215 $ 859,420
--------------------------------------------------------------------
Undistributed (overdistributed) net investment income 1,527 4,946 0 1,312
--------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) 123,654 19,846 58,521 640
--------------------------------------------------------------------
Net unrealized appreciation (depreciation) 222,354 19,387 407,167 146,753
--------------------------------------------------------------------
$1,103,626 $ 202,005 $1,264,903 $1,008,125
--------------------------------------------------------------------
Net Assets:
Class D $ 339 $ 106 $ 18,386 $ 359
--------------------------------------------------------------------
Other Classes 1,103,287 201,899 1,246,517 1,007,766
--------------------------------------------------------------------
Shares Issued and Outstanding:
Class D 13 7 490 16
--------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share
(Net Assets Per Share Outstanding
Class D $ 26.63 $ 15.59 $ 37.52 $ 22.90
--------------------------------------------------------------------
Cost of Investments Owned $ 934,433 $ 180,043 887,549 $ 875,701
--------------------------------------------------------------------
<CAPTION>
Renaissance Tax-Efficient
Amounts in thousands, except per share amounts Fund Equity Fund Value Fund
---------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments, at value $ 651,001 $ 28,146 $ 229,367
- ------------------------------------------------------------------------------------------------------------------
Cash 6,508 0 9
- ------------------------------------------------------------------------------------------------------------------
Receivable for investments and foreign currency sold 22,149 0 4,806
- ------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 854 249 342
- ------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 658 20 672
- ------------------------------------------------------------------------------------------------------------------
681,170 28,415 235,196
- ------------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investments and foreign currency purchased $ 17,499 $ 197 $ 3,062
- ------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 2,828 155 233
- ------------------------------------------------------------------------------------------------------------------
Accrued investment advisory fee 322 10 91
- ------------------------------------------------------------------------------------------------------------------
Accrued administration fee 215 8 68
- ------------------------------------------------------------------------------------------------------------------
Accrued distribution fee 347 10 71
- ------------------------------------------------------------------------------------------------------------------
Accrued servicing fee 134 5 33
- ------------------------------------------------------------------------------------------------------------------
Due to custodian 0 79 0
- ------------------------------------------------------------------------------------------------------------------
21,345 464 3,558
- ------------------------------------------------------------------------------------------------------------------
Net Assets $ 659,825 $ 27,951 $ 231,638
- ------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Paid in capital $ 542,158 $ 24,894 $ 189,075
- ------------------------------------------------------------------------------------------------------------------
Undistributed (overdistributed) net investment income 41,268 (5) 10,727
- ------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) 53,387 (228) 12,987
- ------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) 23,012 3,290 18,849
- ------------------------------------------------------------------------------------------------------------------
$ 659,825 $ 27,951 $ 231,638
- ------------------------------------------------------------------------------------------------------------------
Net Assets:
Class D $ 192 $ 869 $ 118
- ------------------------------------------------------------------------------------------------------------------
Other Classes 659,633 27,082 231,520
- ------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Class D 11 75 8
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share
(Net Assets Per Share Outstanding
Class D $ 18.22 $ 11.59 $ 15.29
- ------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 627,988 $ 24,856 $ 210,518
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes 27
<PAGE>
Statements of Operations
For the period ended June 30, 1999
<TABLE>
<CAPTION>
Capital
Appreciation Equity Income Innovation Mid-Cap
Amounts in thousands Fund Fund Fund Growth Fund
------------ ------------- ---------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 13,332 $ 7,107 $ 523 $ 8,522
- ------------------------------------------------------------------------------------------------------------------------------------
Interest 1,771 278 2,234 2,371
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income 15,103 7,385 2,757 10,893
====================================================================================================================================
Expenses:
Investment advisory fees 5,058 893 4,454 3,927
- ------------------------------------------------------------------------------------------------------------------------------------
Administration fees 3,130 580 2,740 2,642
- ------------------------------------------------------------------------------------------------------------------------------------
Servicing fees - Class D 1 0 19 1
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees - Other Classes 1,971 472 5,555 2,546
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 86 15 44 64
- ------------------------------------------------------------------------------------------------------------------------------------
Interest expense 2 1 1 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 10,248 1,961 12,813 9,180
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 4,855 5,424 (10,056) 1,713
====================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 127,483 28,130 85,853 867
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized (loss) on
futures and written options contracts 0 0 (3,778) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized (loss) on foreign
currency transactions 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (27,333) (8,864) 250,480 7,029
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on futures and written options contracts 0 0 324 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on translation of assets and liabilities denominated
in foreign currencies 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net Gain 100,150 19,266 332,879 7,896
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Assets
Resulting from Operations $ 105,005 $ 24,690 $ 322,823 $ 9,609
====================================================================================================================================
<CAPTION>
Renaissance Tax-Efficient
Amounts in thousands Fund Equity Fund* Value Fund
------------- -------------- -----------
Investment Income:
Dividends, net of foreign taxes $ 6,743 $ 157 $ 6,038
- -----------------------------------------------------------------------------------------------------------------
Interest 923 14 250
- -----------------------------------------------------------------------------------------------------------------
Total Income 7,666 171 6,288
=================================================================================================================
Expenses:
Investment advisory fees 3,771 57 1,044
- -----------------------------------------------------------------------------------------------------------------
Administration fees 2,514 49 778
- -----------------------------------------------------------------------------------------------------------------
Servicing fees - Class D 0 2 0
- -----------------------------------------------------------------------------------------------------------------
Distribution and/or servicing fees - Other Classes 5,637 89 1,203
- -----------------------------------------------------------------------------------------------------------------
Trustees' fees 49 1 18
- -----------------------------------------------------------------------------------------------------------------
Interest expense 7 0 0
- -----------------------------------------------------------------------------------------------------------------
Total Expenses 11,978 198 3,043
- -----------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (4,312) (27) 3,245
=================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 101,571 (228) 29,420
- -----------------------------------------------------------------------------------------------------------------
Net realized (loss) on
futures and written options contracts (642) 0 0
- -----------------------------------------------------------------------------------------------------------------
Net realized (loss) on foreign
currency transactions (1) 0 0
- -----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on investments (42,439) 3,290 (6,992)
- -----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on futures and written options contracts (77) 0 0
- -----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on translation of assets and liabilities denominated
in foreign currencies (2) 0 0
- -----------------------------------------------------------------------------------------------------------------
Net Gain 58,410 3,062 22,428
- -----------------------------------------------------------------------------------------------------------------
Net Increase in Assets
Resulting from Operations $ 54,098 $ 3,035 $ 25,673
=================================================================================================================
</TABLE>
* Commenced operations on July 10, 1998.
28 See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Amounts in thousands Capital Appreciation Fund Equity Income Fund
---------------------------- ----------------------------
Year Ended Year Ended Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 4,855 $ 4,296 $ 5,424 $ 4,503
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 127,483 89,980 28,130 23,527
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) (27,333) 125,025 (8,864) 4,261
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 105,005 219,301 24,690 32,291
===================================================================================================================================
Distributions to Shareholders:
From net investment income
Class D (1) 0 (3) (1)
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes (5,605) (3,830) (5,316) (4,434)
- -----------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income
Class D 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class D (14) 0 (12) 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes (70,693) (50,344) (22,655) (20,707)
- -----------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class D 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (76,313) (54,174) (27,986) (25,142)
===================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class D 360 115 89 108
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 691,020 560,304 74,002 64,648
- -----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 15 0 15 1
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 62,910 43,103 27,156 24,499
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class D (165) 0 (112) 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes (802,749) (207,057) (97,556) (34,922)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions (48,609) 396,465 3,594 54,334
- -----------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (19,917) 561,592 298 61,483
===================================================================================================================================
Net Assets:
Beginning of period 1,123,543 561,951 201,707 140,224
- -----------------------------------------------------------------------------------------------------------------------------------
End of period * $ 1,103,626 $ 1,123,543 $ 202,005 $ 201,707
- -----------------------------------------------------------------------------------------------------------------------------------
* Including net undistributed (overdistributed) investment income of: $ 1,527 $ 2,964 $ 4,946 $ 4,754
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Innovation Fund
-----------------------------------
Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998
Operations:
<S> <C> <C>
Net investment income (loss) $ (10,056) $ (4,786)
- ------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 82,075 18,138
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 250,804 109,570
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 322,823 122,922
==================================================================================================================
Distributions to Shareholders:
From net investment income
Class D 0 0
- ------------------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ------------------------------------------------------------------------------------------------------------------
In excess of net investment income
Class D 0 0
- ------------------------------------------------------------------------------------------------------------------
Other Classes 0 0
- ------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class D (143) 0
- ------------------------------------------------------------------------------------------------------------------
Other Classes (23,411) (15,217)
- ------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class D 0 0
- ------------------------------------------------------------------------------------------------------------------
Other Classes 0 (2,685)
- ------------------------------------------------------------------------------------------------------------------
Total Distributions (23,554) (17,902)
==================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class D 30,881 124
- ------------------------------------------------------------------------------------------------------------------
Other Classes 1,280,398 462,082
- ------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 142 0
- ------------------------------------------------------------------------------------------------------------------
Other Classes 21,993 16,937
- ------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class D (15,840) 0
- ------------------------------------------------------------------------------------------------------------------
Other Classes (738,267) (468,412)
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions 579,307 10,731
- ------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 878,576 115,751
==================================================================================================================
Net Assets:
Beginning of period 386,327 270,576
- ------------------------------------------------------------------------------------------------------------------
End of period * $ 1,264,903 $ 386,327
- ------------------------------------------------------------------------------------------------------------------
* Including net undistributed (overdistributed) investment income of: $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes 29
<PAGE>
Statements of Changes in Net Assets (Cont.)
<TABLE>
<CAPTION>
Amounts in thousands Mid-Cap Growth Fund Renaissance Fund
-----------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Increase (Decrease) in Net Assets from: June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 1,713 $ 841 $ (4,312) $ (1,489)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 867 58,714 100,928 123,570
- -----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 7,029 57,682 (42,518) 4,045
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 9,609 117,237 54,098 126,126
===================================================================================================================================
Distributions to Shareholders:
From net investment income
Class D 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes (423) (1,495) 0 (425)
- -----------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income
Class D 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class D (9) 0 (13) 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes (41,274) (30,237) (80,848) (80,722)
- -----------------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class D 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (41,706) (31,732) (80,861) (81,147)
===================================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class D 438 142 84 126
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 944,828 600,636 306,855 465,308
- -----------------------------------------------------------------------------------------------------------------------------------
Issued in reorganization
Class D 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 10 0 13 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes 38,508 30,438 74,646 74,240
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class D (229) 0 (27) 0
- -----------------------------------------------------------------------------------------------------------------------------------
Other Classes (737,211) (310,412) (352,007) (311,714)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund
share transactions 246,344 320,804 29,564 227,960
- -----------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 214,247 406,309 2,801 272,939
===================================================================================================================================
Net Assets:
Beginning of period 793,878 387,569 657,024 384,085
- -----------------------------------------------------------------------------------------------------------------------------------
End of period * $ 1,008,125 $ 793,878 $ 659,825 $ 657,024
- -----------------------------------------------------------------------------------------------------------------------------------
* Including net undistributed (overdistributed)
investment income of: $ 1,312 $ 52 $ 41,268 $ 46,534
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Tax-Efficient
Equity Fund Value Fund
-------------------------------------------------------------
Period from
July 10, 1998 Year Ended Year Ended
Increase (Decrease) in Net Assets from: to June 30, 1999 June 30, 1999 June 30, 1998
<S> <C> <C> <C>
Operations:
Net investment income (loss) $ (27) $ 3,245 $ 2,032
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (228) 29,420 29,304
- ----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 3,290 (6,992) 3,088
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations 3,035 25,673 34,424
============================================================================================================================
Distributions to Shareholders:
From net investment income
Class D 0 (2) 0
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 (3,075) (2,015)
- ----------------------------------------------------------------------------------------------------------------------------
In excess of net investment income
Class D 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
From net realized capital gains
Class D 0 (11) 0
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 (26,320) (20,689)
- ----------------------------------------------------------------------------------------------------------------------------
In excess of net realized capital gains
Class D 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Total Distributions 0 (29,408) (22,704)
============================================================================================================================
Fund Share Transactions:
Receipts for shares sold
Class D 750 8 100
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 29,356 99,132 90,008
- ----------------------------------------------------------------------------------------------------------------------------
Issued in reorganization
Class D 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 0 13 0
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes 0 28,058 21,627
- ----------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed
Class D 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------
Other Classes (5,190) (131,197) (63,900)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund
share transactions 24,916 (3,986) 47,835
- ----------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 27,951 (7,721) 59,555
============================================================================================================================
Net Assets:
Beginning of period 0 239,359 179,804
- ----------------------------------------------------------------------------------------------------------------------------
End of period * $ 27,951 $ 231,638 $ 239,359
- ----------------------------------------------------------------------------------------------------------------------------
* Including net undistributed (overdistributed)
investment income of: $ (5) 10,727 $ 5,621
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
30 See accompanying notes
<PAGE>
Notes to Financial Statements
June 30, 1999
1. Organization
PIMCO Funds: Multi-Manager Series (the "Trust") is registered under the
Investment Company Act of 1940, as amended as an open-end management investment
company organized as a Massachusetts business trust. The Trust currently
consists of twenty-six 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). Information presented in these financial statements pertains
to the Class D shares of the Trust. Certain detailed financial information for
the Institutional, Administrative, A, B and C 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 the preparation of its financial statements 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, Value and Renaissance 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.
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 - $22,999; Innovation
Fund - $24,825; Mid-Cap Growth Fund - $8,992; Renaissance Fund - $70,391;
Tax-Efficient Equity Fund - $35; and Value Fund - $52,615.
31
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1999
Futures and Options. Certain Funds are authorized to enter into futures and
options contracts. 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 and options contracts are imperfect
correlation between the change in market value of the securities held by a Fund
and the prices of futures and options contracts, 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's
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 agreements. 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: 0.60% for the Renaissance
Fund; 0.65% for the Innovation Fund; 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's assets. 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 provides administrative services to the Trust for
which it receives from each Fund a monthly administrative fee based on each
share class' average daily net assets. The Administration Fee for Class D is
charged at the annual rate of 0.40%. The Administration Fee for the
Institutional and Administrative Classes is charged at the annual rate of 0.25%.
The Administration Fee for the A, B and C Classes is charged at the annual rate
of 0.40%.
Distribution and Servicing Fees. PIMCO Funds Distributors LLC ("PFD"), 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.
32
<PAGE>
Pursuant to the Distribution and Servicing Plans adopted by the A, B, C 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 A,B,C 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's 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 Class A, B
and C shares. For the period ended June 30, 1999, PFD received $5,993,353
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; and (vii) any expenses allocated or allocable to a
specific class of shares, which include service fees payable with respect to the
Administrative Class shares 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, 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 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
entire 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.
4. Purchases and Sales of Securities
Purchases and sales of securities (excluding short-term investments) for the
period ended June 30, 1999 were as follows (amounts in thousands):
U.S. Government/Agency All Other
--------------------------------------------------
Purchases Sales Purchases Sales
- --------------------------------------------------------------------------------
Capital Appreciation Fund $1,324,269 $1,298,054
Equity Income Fund 143,274 157,110
Innovation Fund 1,267,035 761,668
Mid-Cap Growth Fund 915,099 700,331
Renaissance Fund 1,341,957 1,391,833
Tax-Efficient Equity Fund 26,595 1,829
Value Fund 226,607 263,988
5. Transactions in Written Call and Put Options
Transactions in written call and put options were as follows
(amounts in thousands):
Innovation Fund Renaissance Fund
-------------------------------------------------
Premium Contracts Premium Contracts
-------------------------------------------------
Balance at 06/30/1998 $ 650 1,500 $ 132 630
Sales 4,219 7,425 704 4,351
Closing Buys (3,566) (6,598) (571) (3,675)
Expirations (1,141) (2,000) (132) (630)
Exercised (162) (327) (133) (676)
-------------------------------------------------
Balance at 06/30/1999 $ 0 0 $ 0 0
=================================================
33
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1999
6. 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>
Capital Appreciation Fund
---------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class D 14 $ 360 5 $ 115
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 27,601 691,020 23,379 560,304
- ------------------------------------------------ --------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 1 15 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 2,673 62,910 1,860 43,103
- ------------------------------------------------ --------------------------------------------------------------------------------
Cost of shares redeemed
Class D (7) (165) 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes (32,077) (802,749) (8,659) (207,057)
- ------------------------------------------------ --------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions (1,795) $ (48,609) 16,585 $ 396,465
================================================ ================================================================================
<CAPTION>
Equity Income Fund
--------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class D 6 $ 89 7 $ 108
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 5,060 74,002 4,002 64,648
- ------------------------------------------------ --------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 1 15 0 1
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 1,924 27,156 1,593 24,499
- ------------------------------------------------ --------------------------------------------------------------------------------
Cost of shares redeemed
Class D (7) (112) 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes (6,580) (97,556) (2,151) (34,922)
- ------------------------------------------------ --------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions 404 $ 3,594 3,451 $ 54,334
================================================ ================================================================================
<CAPTION>
Innovation Fund
--------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class D 951 $ 30,881 6 $ 124
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 42,353 1,280,398 22,660 462,082
- ------------------------------------------------ --------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 5 142 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 824 21,993 930 16,937
- ------------------------------------------------ --------------------------------------------------------------------------------
Cost of shares redeemed
Class D (472) (15,840) 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes (25,216) (738,267) (23,091) (468,412)
- ------------------------------------------------ --------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions 18,445 $ 579,307 505 $ 10,731
================================================ ================================================================================
<CAPTION>
Mid-Cap Growth Fund
--------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class D 20 $ 438 6 $ 142
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 43,026 944,828 25,999 600,636
- ------------------------------------------------ --------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 0 10 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 1,803 38,508 1,338 30,438
- ------------------------------------------------ --------------------------------------------------------------------------------
Cost of shares redeemed
Class D (10) (229) 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes (33,835) (737,211) (13,377) (310,412)
- ------------------------------------------------ --------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions 11,004 $ 246,344 13,966 $ 320,804
================================================ ================================================================================
<CAPTION>
Renaissance Fund
--------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class D 5 $ 84 7 $ 126
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 17,955 306,855 25,062 465,308
- ------------------------------------------------ --------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 1 13 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 4,948 74,646 4,447 74,240
- ------------------------------------------------ --------------------------------------------------------------------------------
Cost of shares redeemed
Class D (2) (27) 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes (20,746) (352,007) (16,657) (311,714)
- ------------------------------------------------ --------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions 2,161 $ 29,564 12,859 $ 227,960
================================================ ================================================================================
<CAPTION>
Tax-Efficient
Equity Fund
---------------------------
Period from 7/10/1998
to 6/30/1999
Shares Amount
---------------------------
<S> <C> <C>
Receipts for shares sold
Class D 75 $ 750
- ------------------------------------------------ -------------------------------------
Other classes 2,851 29,356
- ------------------------------------------------ -------------------------------------
Issued as reinvestment of distributions
Class D 0 0
- ------------------------------------------------ -------------------------------------
Other classes 0 0
- ------------------------------------------------ -------------------------------------
Cost of shares redeemed
Class D 0 0
- ------------------------------------------------ --------------------------------------
Other classes (505) (5,190)
- ------------------------------------------------ --------------------------------------
Net increase resulting from
Fund share transactions 2,421 $ 24,916
================================================ ======================================
<CAPTION>
Value Fund
--------------------------------------------------------------------------------
Year Ended 6/30/1999 Year Ended 6/30/1998
Shares Amount Shares Amount
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receipts for shares sold
Class D 1 $ 8 6 $ 100
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 6,890 99,132 5,791 90,008
- ------------------------------------------------ --------------------------------------------------------------------------------
Issued as reinvestment of distributions
Class D 1 13 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes 2,076 28,058 1,478 21,627
- ------------------------------------------------ --------------------------------------------------------------------------------
Cost of shares redeemed
Class D 0 0 0 0
- ------------------------------------------------ --------------------------------------------------------------------------------
Other classes (9,111) (131,197) (4,119) (63,900)
- ------------------------------------------------ --------------------------------------------------------------------------------
Net increase resulting from
Fund share transactions (143) $ (3,986) 3,156 $ 47,835
================================================ ================================================================================
</TABLE>
7. In-Kind Transactions
For the year ended June 30, 1999, the following fund realized gains (losses)
from in-kind redemptions of approximately (amounts in thousands):
Capital Appreciation Fund $2,839
8. Federal Income Tax Matters
As of June 30, 1999, the Fund listed in the table below had remaining capital
loss carryforwards that were realized in current and prior years. Additionally,
the Tax-Efficient Equity Fund realized capital losses, in the amount of
$174,775, during the period November 1, 1998 through June 30, 1999, which the
Fund elected to defer to the following fiscal year pursuant to income tax
regulations.
The Fund will resume capital gain distributions in the future to the extent
gains are realized in excess of the available carryforwards.
Capital Loss Carryforwards
-------------------------------------
Realized Losses Expiration
- -----------------------------------------------------------------------------
Tax-Efficient Equity Fund $ 27,778 6/30/2007
34
<PAGE>
Report of Independent Accountants
To the Trustees and the Class D 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, changes
in net assets and the financial highlights for the Class D shares present
fairly, in all material respects, the financial position of the Capital
Appreciation Fund, Equity Income Fund, Innovation Fund, Mid-Cap Growth Fund,
Renaissance Fund, Tax-Efficient Equity Fund and Value Fund (hereafter referred
to as the "Funds") at June 30, 1999, the results of each of their operations,
the changes in each of their net assets and the financial highlights for the
Class D 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, 1999 by
correspondence with the custodians and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Kansas City, Missouri
August 13, 1999
35
<PAGE>
Federal Income Tax Information (unaudited)
As required by the Internal Revenue Code regulations, shareholders must be
notified within 60 days of the Trust's fiscal year end (June 30, 1999) regarding
the status of the distributions made to the shareholders.
Dividend Received Deduction. For the benefit of corporate shareholders only, the
portion of dividends paid out of ordinary income earned during certain Funds'
fiscal years ended June 30, 1999 which qualify for the corporate
dividend-received deduction are as follows:
Capital Appreciation Fund 87.77%
Equity Income Fund 62.42%
Mid-Cap Growth Fund 100.00%
Renaissance Fund 8.11%
Value Fund 43.33%
Capital Gain Distributions. Capital gains distributions paid for all classes of
shares during the fiscal year ended June 30, 1999, were in the amounts as
follows:
Per Share Per Share
Long-Term Short-Term
Capital Gains Capital Gains
- --------------------------------------------------------------------------------
Capital Appreciation Fund 1.64323 0.00792
Equity Income Fund 1.39942 0.36456
Innovation Fund 1.25670 -
Mid-Cap Growth Fund 1.06725 -
Renaissance Fund 0.99112 1.34349
Value Fund 1.35064 0.36527
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 2000,
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 1999.
36
<PAGE>
PIMCO Funds: Access to the highest standard
PIMCO Funds offers unique access to the investment expertise of PIMCO Advisors
L.P. PIMCO manages $254 billion, including assets for 46 of the 100 largest U.S.
corporations. The firm's institutional heritage is reflected in the PIMCO
Funds, each seeking the highest caliber performance in a specific investment
style.
Manager PIMCO Advisors L.P., 800 Newport Center Drive,
Newport Beach, CA 92660
Distributor PIMCO Funds Distributors LLC, 2187 Atlantic Street,
Stamford, CT 06902-6896
Custodian Investors Fiduciary Trust Company, 801 Pennsylvania,
Kansas City, MO 64105
Shareholder First Data Investor Services Group, Inc. , P.O. Box 9688,
Servicing Agent and Providence, RI 02940-9688
Transfer Agent
Independent PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City,
Accountant MO, 64105
Legal Counsel Ropes & Gray, One International Place, Boston, MA 02110
P2032 6/99
PIMCO
FUNDS
PIMCO Funds
Distributors LLC
2187 Atlantic Street
Stanford, CT 06902-6896
<PAGE>
PIMCO Funds Asset Allocation Series
Institutional and Administrative Classes
Annual Report
June 30, 1999
<PAGE>
Dear Fellow Shareholder:
The past year has been an eventful time, both in the geopolitical sphere and in
the financial markets. After flaring up in March, the Kosovo Crisis is now on
the road to resolution. It proved, in the end, to have surprisingly little
impact on the U.S. stock and bond markets.
Large-cap growth stocks continued to dominate the domestic stock market for the
past 12 months, until April, when their leadership began to falter, the market
broadened and value stocks emerged from the sidelines. Value investing appeared
to be back. Then towards the end of June, the stock market teetered back in the
direction of growth stocks.
The bond market had a particularly difficult time in the first half of the
second quarter, with long-term government interest rates moving up by more than
one percentage point (which drove down bond prices). However, things rebounded
when the Federal Reserve announced they were tightening monetary policy at the
end of the second quarter. The bond market reacted favorably to this move and to
comments from the policy-making committee that were interpreted to mean that
future hikes in interest rates may be limited.
These fluctuations and events proved, once again, that no one can guarantee what
will happen next, and an investor's best protection is portfolio
diversification.
The past 12 months have been eventful at PIMCO Funds too. We are now one of the
country's fastest-growing fund families, with assets under management recently
surpassing $50 billion. In January, PIMCO announced the formation of a new
investment division, PIMCO Equity Advisors, to focus on our expanding slate of
stock mutual funds. As viable opportunities arise in the future, we will be
expanding our fund family to offer you additional investment options managed by
PIMCO's investment professionals.
Inside this Annual Report, you will find detailed information on our Asset
Allocation Portfolios. I encourage you to review the information and commentary
carefully. Once again, I would like to thank you for the trust you've placed in
us through your investments. If you have any questions regarding your
investment, contact your financial adviser, or call us at 1-800-426-0107. Or
visit our Web site at www.pimcofunds.com.
Sincerely,
William D. Cvengros
Chairman of the Board
July 30, 1999
1
<PAGE>
PIMCO Funds 90/10 Portfolio
ANNUAL REPORT JUNE 30, 1999
FUND CHARACTERISTICS
Objective:
Long-term capital appreciation
Portfolio:
80-100% PIMCO Stock Funds
0-20% PIMCO Bond Funds
Inception Date:
February 26, 1999
Dividend Frequency:
Annually
Net Assets:
$10.6 million
INVESTMENT PERFORMANCE AND PORTFOLIO COMPOSITION
TOTAL RETURN INVESTMENT PERFORMANCE
<TABLE>
<CAPTION>
Institutional Class Administrative Class
- -----------------------------------------------------------------------------
<S> <C> <C>
Inception 11.73% 11.64%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
PIMCO Stock Funds % of Total PIMCO Bond Funds % of Total
Investments Investments
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Short Duration
- --------------------------------------------------------------------------------------------------
Enhanced Equity Fund 12.2% Money Market Fund 1.2%
- --------------------------------------------------------------------------------------------------
Target Fund 5.6% Intermediate Duration
- --------------------------------------------------------------------------------------------------
Growth Fund 4.0% Total Return Fund 12.4%
- --------------------------------------------------------------------------------------------------
Opportunity 1.8% High Yield
- --------------------------------------------------------------------------------------------------
Blend High Yield 1.6%
- --------------------------------------------------------------------------------------------------
StocksPLUS Fund 12.0% International
- --------------------------------------------------------------------------------------------------
Capital Appreciation Fund 3.9% Foreign Bond Fund 0.8%
- --------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund 5.4% Total Bond Funds 16.0%
- --------------------------------------------------------------------------------------------------
Small-Cap Growth Fund 1.8%
- --------------------------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------------------------
Value Fund 18.3%
- --------------------------------------------------------------------------------------------------
Small-Cap Value Fund 3.4%
- --------------------------------------------------------------------------------------------------
International
- --------------------------------------------------------------------------------------------------
International Fund 15.6%
- --------------------------------------------------------------------------------------------------
Total Stock Funds 84.0%
- --------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO INSIGHTS
The PIMCO Funds Asset Allocation Series consists of three professionally managed
mutual funds that invest in a diversified portfolio of PIMCO Funds. The 90/10
Portfolio seeks long-term capital appreciation. The Portfolio's strategic
allocation is 90% stock funds and 10% bond funds. For the period since inception
through June 30, 1999, the PIMCO 90/10 Portfolio posted a return of 11.73% for
Institutional Class shares.
As of June 30, 1999, the Portfolio's actual allocation was 84% stock funds and
16% bond funds. During the period, the Portfolio had an overweight position in
stock funds, which was significantly positive for performance as equities did
better than fixed income. However, at the end of the second quarter the
Portfolio tactically overweighted bonds relative to stocks. This decision
reflected changes in our proprietary asset allocation models, which now favor
fixed income over equities.
Within the equity portion of the Portfolio, we maintained a neutral position
with regard to value stocks versus growth stocks and large-cap stocks versus
small-cap stocks. This was a drag on performance in the first quarter as growth
stocks continued to dominate, but enhanced returns in the second quarter as the
market finally began to broaden. Lastly, the Portfolio slightly favored non-U.S.
equities, which had a positive impact on returns.
Specifically within the stock portion of the Portfolio, the Value Fund, which
has a relatively large weighting, had a terrific second quarter, outperforming
the S&P 500 Index by a wide margin. Value stocks, which had been out of favor,
came alive as investors shied away from higher valuation growth stocks due to
rising interest rates and an improving global economy. Broad market funds, such
as StocksPLUS and Enhanced Equity, both had slightly higher returns than the S&P
500 for the second quarter. The International Fund performance beat its
benchmark due to a higher than benchmark allocation to emerging markets, which
surged during the first half of this year as these economies began to show signs
of recovering.
Only a small percentage of the Portfolio's assets were invested in fixed income
during the first half of this year, split between the Total Return, High Yield,
Foreign Bond and the Money Market Funds. This asset allocation boosted returns
as stocks outperformed bonds over that period. The S&P 500 Index rose 12.4% over
the six-month period ended June 30, 1999 versus the Lehman Brothers Aggregate
Bond Index which declined 1.4%.
2
<PAGE>
PIMCO Funds 60/40 Portfolio
ANNUAL REPORT JUNE 30, 1999
FUND CHARACTERISTICS
Objective:
Long-term capital appreciation and current income
Portfolio:
50-70% PIMCO Stock Funds
30-50% PIMCO Bond Funds
Inception Date:
February 26, 1999
Dividend Frequency:
Quarterly
Net Assets:
$15.7 million
INVESTMENT PERFORMANCE AND PORTFOLIO COMPOSITION
TOTAL RETURN INVESTMENT PERFORMANCE
<TABLE>
<CAPTION>
Institutional Class Administrative Class
- -------------------------------------------------------------------------------
<S> <C> <C>
Inception 7.80% 7.71%
</TABLE>
<TABLE>
<CAPTION>
PIMCO Stock Funds % of Total PIMCO Bond Funds % of Total
Investments Investments
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Short Duration
- ----------------------------------------------------------------------------------------------------
Enhanced Equity Fund 8.2% Money Market Fund 1.1%
- ----------------------------------------------------------------------------------------------------
Target Fund 3.8% Intermediate Duration
- ----------------------------------------------------------------------------------------------------
Growth Fund 2.7% Total Return Fund 36.0%
- ----------------------------------------------------------------------------------------------------
Opportunity 1.2% High Yield
- ----------------------------------------------------------------------------------------------------
Blend High Yield 4.4%
- ----------------------------------------------------------------------------------------------------
StocksPLUS Fund 8.0% International
- ----------------------------------------------------------------------------------------------------
Capital Appreciation Fund 2.6% Foreign Bond Fund 2.1%
- ----------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund 3.6% Total Bond Funds 43.6%
- ----------------------------------------------------------------------------------------------------
Small-Cap Growth Fund 1.2%
- ----------------------------------------------------------------------------------------------------
Value
- ----------------------------------------------------------------------------------------------------
Value Fund 12.3%
- ----------------------------------------------------------------------------------------------------
Small-Cap Value Fund 2.3%
- ----------------------------------------------------------------------------------------------------
International
- ----------------------------------------------------------------------------------------------------
International Fund 10.5%
- ----------------------------------------------------------------------------------------------------
Total Stock Funds 56.4%
- ----------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO INSIGHTS
The 60/40 Portfolio seeks long-term capital appreciation and current income. The
Portfolio's strategic allocation is 60% stock funds and 40% bond funds. For the
period since inception through June 30, 1999, the PIMCO 60/40 Portfolio posted a
return of 7.80% for Institutional Class shares.
As of June 30, 1999, the Portfolio's actual allocation was 56% stock funds and
44% bond funds. The Portfolio's overweight position in stock funds was a
significant positive for performance. However, at the end of the second quarter
the Portfolio tactically overweighted bonds relative to stocks. This decision
reflected changes in our proprietary asset allocation models, which now favor
fixed income over equities.
Within the equity portion of the Portfolio, we maintained a neutral position
with regard to value stocks versus growth stocks and large-cap stocks versus
small-cap stocks. This was a drag on performance in the first quarter as growth
stocks continued to dominate, but enhanced returns in the second quarter as the
market finally began to broaden. The Portfolio slightly favored non-U.S.
equities, which had a positive impact on returns.
The Value Fund, which has a relatively large weight in the Portfolio, had a
terrific second quarter, outperforming the S&P 500 Index by a wide margin. Value
stocks, which had been out of favor, came alive as investors shied away from
higher valuation growth stocks due to rising interest rates and an improving
global economy. Broad market funds, such as StocksPLUS and Enhanced Equity, both
had slightly higher returns than the S&P 500 for the second quarter. The
International Fund beat its benchmark due to a higher allocation to emerging
markets, which surged during the first half of this year as these economies
began to show signs of recovering.
As for the bond portion of the Portfolio, although the Total Return Fund had
negative returns in the second quarter, it did outperform the Lehman Brothers
Aggregate Bond Index. Limited holdings of below-investment grade bonds enhanced
returns as the Fund's emphasis on less cyclical credits proved beneficial in the
face of expectations of Fed tightening. The Fund maintained an above benchmark
weighting in mortgage-backed securities, which has significantly contributed to
performance over the past six months, but was negative for performance in the
second quarter. However, this position will be maintained as our outlook for a
range-bound interest rate environment makes this sector a good way to enhance
yield without adding significant risk. The High Yield Fund, which has a small
weight in the Portfolio, underperformed its benchmark as fear of higher
inflation and Federal Reserve tightening took its toll on high yield spreads.
However, our positions in the energy sector helped performance, and we will
continue to hold this industry.
3
<PAGE>
PIMCO Funds 30/70 Portfolio
ANNUAL REPORT JUNE 30, 1999
FUND CHARACTERISTICS
Objective:
Current income with long-term capital appreciation as a secondary objective
Portfolio:
20-35% PIMCO Stock Funds
65-75% PIMCO Bond Funds
Inception Date:
February 26, 1999
Dividend Frequency:
Monthly
Net Assets:
$7.1 million
INVESTMENT PERFORMANCE AND PORTFOLIO COMPOSITION
TOTAL RETURN INVESTMENT PERFORMANCE
<TABLE>
<CAPTION>
Institutional Class Administrative Class
- ------------------------------------------------------------------------------
<S> <C> <C>
Inception 3.78% 3.70%
</TABLE>
<TABLE>
<CAPTION>
PIMCO Stock Funds % of Total PIMCO Bond Funds % of Total
Investments Investments
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Short Duration
- ------------------------------------------------------------------------------------------------
Enhanced Equity Fund 4.1% Money Market Fund 1.1%
- ------------------------------------------------------------------------------------------------
Target Fund 1.9% Intermediate Duration
- ------------------------------------------------------------------------------------------------
Growth Fund 1.4% Total Return Fund 59.9%
- ------------------------------------------------------------------------------------------------
Opportunity 0.6% High Yield
- ------------------------------------------------------------------------------------------------
Blend High Yield 7.2%
- ------------------------------------------------------------------------------------------------
StocksPLUS Fund 4.0% International
- ------------------------------------------------------------------------------------------------
Capital Appreciation Fund 1.3% Foreign Bond Fund 3.5%
- ------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund 1.8% Total Bond Funds 71.7%
- ------------------------------------------------------------------------------------------------
Small-Cap Growth Fund 0.6%
- ------------------------------------------------------------------------------------------------
Value
- ------------------------------------------------------------------------------------------------
Value Fund 6.2%
- ------------------------------------------------------------------------------------------------
Small-Cap Value Fund 1.1%
- ------------------------------------------------------------------------------------------------
International
- ------------------------------------------------------------------------------------------------
International Fund 5.3%
- ------------------------------------------------------------------------------------------------
Total Stock Funds 28.3%
- ------------------------------------------------------------------------------------------------
</TABLE>
PORTFOLIO INSIGHTS
The 30/70 Portfolio seeks current income, with long-term capital appreciation as
a secondary objective. The Portfolio's strategic allocation is 30% stock funds
and 70% bond funds. For the period since inception through June 30, 1999, the
PIMCO 30/70 Portfolio posted a return of 3.78% for Institutional Class shares.
As of June 30, 1999, the Portfolio's actual allocation was 28% stock funds and
72% bond funds. The Portfolio's overweight position in stock funds was a
significant positive for performance. However, at the end of the second quarter,
the Portfolio tactically overweighted bonds relative to stocks. This decision
reflected changes in our proprietary asset allocation models, which now favor
fixed income over equities.
Within the equity portion of the Portfolio, we maintained a neutral position
with regard to value stocks versus growth stocks and large-cap stocks versus
small-cap stocks. This was a drag on performance in the first quarter as growth
stocks continued to dominate, but enhanced returns in the second quarter as the
market finally began to broaden. The Portfolio slightly favored non-U.S.
equities, which had a positive impact on returns. The Value Fund outperformed
the S&P 500 Index by a wide margin in the second quarter. Broad market funds,
such as StocksPLUS and Enhanced Equity, both had slightly higher returns than
the S&P 500 for the second quarter. The International Fund beat its benchmark
due to a higher allocation to emerging markets.
As for the bond portion of the Portfolio, although the Total Return Fund had
negative returns in the second quarter, it did slightly outperform the Lehman
Brothers Aggregate Bond Index over the same period. Limited holdings of below-
investment grade bonds enhanced returns as the Fund's emphasis on less cyclical
credits proved beneficial in the face of expectations of Fed tightening. The
Fund maintained an above benchmark weighting in mortgage-backed securities,
which has significantly contributed to performance over the past six months, but
was negative for performance in the second quarter. However, this position will
be maintained as our outlook for a range-bound interest rate environment makes
this sector a good way to enhance yield without adding significant risk. The
High Yield Fund, which has a small weight in the Portfolio, underperformed its
benchmark as fear of higher inflation and Federal Reserve tightening took its
toll on high yield spreads. However, our positions in the energy area also
helped performance, and we will continue to hold this industry.
4
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
90/10 Portfolio
Selected Per Share Data for the Period Ended June 30,1999: Institutional Class Administrative Class
02/26/1999- 02/26/1999-
06/30/1999 06/30/1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 10.91 $ 10.91
Net Investment Income (a) 0.05 0.04
Net Realized / Unrealized Gain (Loss) on Investments (a) 1.23 1.23
Total Income from Investment Operations 1.28 1.27
Dividends from Net Investment Income 0.00 0.00
Distributions from Net Realized Capital Gains 0.00 0.00
Tax Basis Return of Capital 0.00 0.00
Total Distributions 0.00 0.00
Net Asset Value End of Period 12.19 12.18
Total Return 11.73% 11.64%
Net Assets End of Period (000s) $ 11 $ 11
Ratio of Expenses to Average Net Assets* 0.10% 0.35%
Ratio of Net Investment Income (Loss)
to Average Net Assets* 1.17% 0.95%
Portfolio Turnover Rate 48% 48%
<CAPTION>
60/40 Portfolio
Selected Per Share Data for the Period Ended June 30,1999: Institutional Class Administrative Class
02/26/1999- 02/26/1999-
06/30/1999 06/30/1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 10.55 $ 10.55
Net Investment Income (a) 0.09 0.09
Net Realized / Unrealized Gain (Loss) on Investments (a) 0.73 0.72
Total Income from Investment Operations 0.82 0.81
Dividends from Net Investment Income (0.10) (0.09)
Distributions from Net Realized Capital Gains 0.00 0.00
Tax Basis Return of Capital 0.00 0.00
Total Distributions (0.10) (0.09)
Net Asset Value End of Period 11.27 11.27
Total Return 7.80% 7.71%
Net Assets End of Period (000s) $ 11 $ 11
Ratio of Expenses to Average Net Assets* 0.10% 0.35%
Ratio of Net Investment Income (Loss) 2.52% 2.44%
to Average Net Assets*
Portfolio Turnover Rate 39% 39%
<CAPTION>
30/70 Portfolio
Selected Per Share Data for the Period Ended June 30,1999: Institutional Class Administrative Class
02/26/1999- 02/26/1999-
06/30/1999 06/30/1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ $
10.09 10.09
Net Investment Income (a) 0.15 0.14
Net Realized / Unrealized Gain (Loss) on Investments (a) 0.23 0.23
Total Income from Investment Operations 0.38 0.37
Dividends from Net Investment Income (0.14) (0.13)
Distributions from Net Realized Capital Gains 0.00 0.00
Tax Basis Return of Capital 0.00 0.00
Total Distributions (0.14) (0.13)
Net Asset Value End of Period 10.33 10.33
Total Return 3.78% 3.70%
Net Assets End of Period (000s) $ 10 $ 10
Ratio of Expenses to Average Net Assets* 0.10% 0.35%
Ratio of Net Investment Income (Loss) 4.20% 4.03%
to Average Net Assets*
Portfolio Turnover Rate 37% 37%
</TABLE>
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
5
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
June 30, 1999
Amounts in thousands, except per share amounts 90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
<S> <C> <C> <C>
Assets:
Investments, at value $ 10,358 $ 15,743 $ 6,975
Cash and foreign currency 112 0 0
Receivable for investments and foreign currency sold 0 106 0
Receivable for Fund shares sold 209 178 179
Interest and dividends receivable 5 30 26
------------------------------------------------------------------
$ 10,684 $ 16,057 $ 7,180
------------------------------------------------------------------
Liabilities:
Payable for investments and foreign currency purchased $ 113 $ 0 $ 14
Payable for Fund shares redeemed 3 189 0
Dividends payable 0 45 23
Accrued administration fee 3 5 2
Accrued distribution fee 5 8 4
Accrued servicing fee 2 3 2
Other liabilities 0 110 1
------------------------------------------------------------------
$ 126 $ 360 $ 46
------------------------------------------------------------------
------------------------------------------------------------------
Net Assets $ 10,558 $ 15,697 $ 7,134
------------------------------------------------------------------
Net Assets Consist of:
Paid in capital $ 9,757 $ 15,089 $ 7,095
Undistributed net investment income 169 173 49
Accumulated undistributed net realized gain 96 67 3
Net unrealized appreciation (depreciation) 536 368 (13)
------------------------------------------------------------------
$ 10,558 $ 15,697 $ 7,134
------------------------------------------------------------------
Net Assets:
Institutional Class $ 11 $ 11 $ 10
Administrative Class 11 11 10
Other Classes 10,536 15,675 7,114
Shares Issued and Outstanding:
Institutional Class 1 1 1
Administrative Class 1 1 1
Net Asset Value and Redemption Price Per Share
(Net Assets Per Share Outstanding):
Institutional Class $ 12.19 $ 11.27 $ 10.33
Administrative Class 12.18 11.27 10.33
Cost of Investments Owned $ 9,822 $ 15,375 $ 6,988
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
For the period ended June 30,1999
Amounts in thousands 90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
<S> <C> <C> <C>
Investment Income:
Dividends, net of foreign taxes $ 86 $ 180 $ 135
Interest 1 1 1
-------------------------------------------------
Total Income 87 181 136
-------------------------------------------------
Expenses:
Administration fees 14 20 10
Distribution and/or servicing fees - Other Classes 35 46 25
-------------------------------------------------
Total Expenses 49 66 35
-------------------------------------------------
Net Investment Income 38 115 101
=================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 160 140 15
Net capital gain distributions received from underlying funds 113 94 37
Net change in unrealized appreciation (depreciation) on investments 536 368 (13)
-------------------------------------------------
Net Gain (Loss) 809 602 39
-------------------------------------------------
Net Increase in Assets Resulting from Operations $ 847 $ 717 $ 140
=================================================
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Amounts in thousands 90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
Period from Period from Period from
September 30,1998 September 30,1998 September 30,1998
to June 30, 1999 to June 30, 1999 to June 30, 1999
<S> <C> <C> <C>
Increase (Decrease) in Net Assets from:
Operations:
Net investment income $ 38 $ 115 $ 101
Net realized gain 160 140 15
Net capital gain distributions received from underlying funds 113 94 37
Net change in unrealized appreciation (depreciation) 536 368 (13)
---------------------------------------------------------
Net increase resulting from operations 847 717 140
---------------------------------------------------------
Distributions to Shareholders:
From net investment income
Institutional Class 0 0 0
Administrative Class 0 0 0
Other Classes (38) (109) (101)
In excess of net investment income
Institutional Class 0 0 0
Administrative Class 0 0 0
Other Classes (8) 0 0
---------------------------------------------------------
Total Distributions (46) (109) (101)
---------------------------------------------------------
Fund Share Transactions:
Receipts for shares sold
Institutional Class 10 10 10
Administrative Class 10 10 10
Other Classes 10,508 16,555 7,664
Issued as reinvestment of distributions
Institutional Class 0 0 0
Administrative Class 0 0 0
Other Classes 45 62 71
Cost of shares redeemed
Institutional Class 0 0 0
Administrative Class 0 0 0
Other Classes (816) (1,548) (660)
---------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions 9,757 15,089 7,095
---------------------------------------------------------
Total Increase (Decrease) in Net Assets 10,558 15,697 7,134
---------------------------------------------------------
Net Assets:
Beginning of period 0 0 0
End of period * $ 10,558 $ 15,697 $ 7,134
=========================================================
*Including net undistributed (overdistributed) investment
income of: $ 169 $ 173 $ 49
---------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
8
<PAGE>
1. Organization
PIMCO Funds: Multi-Manager Series (the "Trust"), is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company organized as a Massachusetts business trust. The Trust currently
consists of twenty-six funds. Information presented in these financial
statements pertains to the Asset Allocation Series of the Trust which is
comprised of the 90/10 Portfolio, 60/40 Portfolio, and 30/70 Portfolio,
collectively referred to as (the "Portfolios"). The Portfolios are a
professionally-managed series of the Trust designed to take advantage of the
benefits of asset allocation. Each Portfolio seeks to achieve its particular
investment objective by investing within specified equity and fixed income
ranges among a number of other mutual funds in the PIMCO Funds (the "Underlying
Funds"). The Portfolios may offer up to five classes of shares: Institutional,
Administrative, A, B and C. 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). Information presented in these
financial statements pertains to the Institutional and Administrative Classes
(the "Institutional Classes") of the Trust. Certain detailed financial
information for the A, B, and C 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 the preparation of its financial statements 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. Investments in the Underlying Funds are valued at the price
of each Institutional share class of the respective Underlying Fund determined
as of the close of the New York Stock Exchange or the valuation date.
Securities Transactions and Investment Income. Securities transactions are
recorded as of the trade date. Realized gains and losses from securities sold
are recorded on the identified cost basis. Distributions from the Underlying
Funds are recorded on the ex-dividend date.
Dividends and Distributions to Shareholders. Dividends from net investment
income, if any, are declared and paid to shareholders of record at least monthly
by the 30/70 Portfolio, at least quarterly by 60/40 Portfolio and at least
annually by the 90/10 Portfolio . Net long-term capital gains earned by a
Portfolio, 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.
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.
Federal Income Taxes. Each Portfolio 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.
3. Fees, Expenses, and Related Party Transactions
Administration Fee. PIMCO Advisors L.P. ("PIMCO Advisors") provides
administrative services to the Trust for which it receives monthly
administrative fees based on each share class' average daily net assets. The
Administration Fee for the Institutional Classes is charged at the annual rate
of 0.15%. PIMCO Advisors has voluntarily undertaken to waive a portion of the
administrative fee it is entitled to receive for Institutional Classes of each
Portfolio until further notice. As a result, during the period of the waiver,
each Portfolio will pay administrative fees to the Administrator at the annual
rate of 0.10%. The Administration Fee for the Other Classes is charged at the
annual rate of 0.40% on the first 2.5 billion of net assets and 0.35% based on
such net assets in excess of $2.5 billion. In addition, the Portfolios
indirectly bear their pro-rata share of expenses of the underlying funds.
Expenses. Under the terms of the Administrative Agreement PIMCO Advisers has
agreed to bear any and all fees and expenses of the Portfolio (other than the
administrative fee payable under the agreement), except for (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;
9
<PAGE>
(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 Adviser, any
Portfolio Manager, or the Trust, and any counsel retained exclusively for their
benefit; (vi) extraordinary expenses, including costs of litigation and
indemnification expenses; (vii) any expenses allocated or allocable to a
specific class of shares, which include distribution and/or service fees payable
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.
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 entire Board receives an additional annual retainer of
$3,000. These expenses are allocated to the Portfolios and to the Funds of the
Trust according to their respective net assets.
Distribution and Servicing Fees. PIMCO Funds Distributors LLC ("PFD"), 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 Portfolio, 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 Portfolio 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 A, B and C
Classes of the Trust, the Trust compensates PFD 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 Class A, Class B and Class C. The Trust paid PFD distribution
and servicing fees at an effective rate as set forth below (calculated as a
percentage of each Portfolio's average daily net assets attributable to each
class):
Distribution Fee(%) Servicing Fee(%)
Class A
All Portfolios -- 0.25
Class B
All Portfolios 0.75 0.25
Class C
All Portfolios 0.75 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 Class A, B
and C shares. For the period ended June 30, 1999, PFD received $69,050
representing commissions (sales charges) and contingent deferred sales charges.
4. Purchase and Sale of Securities
Purchases and sales of securities (excluding short-term investments) for the
period ended June 30, 1999 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Purchases Sales
<S> <C> <C>
90/10 Portfolio $12,220 $2,558
60/40 Portfolio 18,215 2,980
30/70 Portfolio 8,355 1,382
</TABLE>
10
<PAGE>
5. Risk Factors of the Funds
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and tax results that would not be present in a direct
investment in the Underlying Funds. Under certain circumstances, an Underlying
Fund may pay a redemption request by a Portfolio wholly or partly by a
distribution in kind of securities from its portfolio, instead of cash, in
accordance with the rules of the Securities and Exchange Commission. In such
cases, the Portfolios may hold securities distributed by an Underlying Fund
until PIMCO Advisors determines that it is appropriate to dispose of such
securities.
Each of the Underlying Funds may invest in certain specified derivative
securities, including: interest rate swaps, caps and floors for hedging
purposes; exchange-traded options; over-the-counter options executed with
primary dealers, including long calls and puts and covered calls and financial
futures and options. Certain of the Underlying Funds may invest in restricted
securities; instruments issued by trusts, partnerships or other issuers,
including pass-through certificates representing participations in, or debt
instruments backed by, the securities owned by such issuers. These Underlying
Funds also may engage in securities lending, reverse repurchase agreements and
dollar roll transactions. In addition, certain of the Underlying Funds may
invest in below-investment grade debt, debt obligations of foreign issuers and
stocks of foreign corporations, securities in foreign investment funds or
trusts, foreign derivative securities including futures contracts, options,
interest rate and currency swap transactions, and various other investment
vehicles, each with inherent risks.
The officers and directors of the Trust also serve as officers and
directors/trustees of the Underlying Funds. Conflicts may arise as these
companies seek to fulfill their fiduciary responsibilities to both the
Portfolios and Underlying Funds.
6. 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
(amounts in thousands):
<TABLE>
<CAPTION>
90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
Period Ended 6/30/1999 Period Ended 6/30/1999 Period Ended 6/30/1999
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Institutional Class 1 $ 10 1 $ 10 1 $ 10
Administrative Class 1 10 1 10 1 10
Other Classes 938 10,508 1,529 16,555 746 7,664
Issued as reinvestment of distributions
Institutional Class 0 0 0 0 0 0
Administrative Class 0 0 0 0 0 0
Other Classes 4 45 6 62 7 71
Cost of shares redeemed
Institutional Class 0 0 0 0 0 0
Administrative Class 0 0 0 0 0 0
Other Classes (72) (816) (141) (1,548) (64) (660)
Net increase resulting from Fund share transactions 872 $ 9,757 1,396 $15,089 691 $7,095
</TABLE>
The following schedule shows the number of shareholders each owning 5% or more
of a Fund and the total percentage of the Fund held by such shareholders:
<TABLE>
<CAPTION>
5% or Greater Shareholders
Number % of Fund Held
<S> <C> <C>
90/10 Portfolio 1 100%
60/40 Portfolio 1 100%
30/70 Portfolio 1 100%
</TABLE>
11
<PAGE>
Report of Independent Accountants
To the Trustees and Institutional and Administrative Class 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, changes
in net assets and the financial highlights for the Institutional and
Administrative share classes present fairly, in all material respects, the
financial position of the 90/10 Portfolio, 60/40 Portfolio and 30/70 Portfolio
(constituting the PIMCO Funds Asset Allocation Series of PIMCO Funds: Multi-
Manager Series, hereafter referred to as the "Portfolios") at June 30, 1999, the
results of each of their operations, the changes in each of their net assets and
the financial highlights for the Institutional and Administrative share classes
for the period February 26, 1999 (commencement of operations) through June 30,
1999, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolios' 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, 1999, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Kansas City, Missouri
August 13, 1999
12
<PAGE>
FEDERAL INCOME TAX INFORMATION (unaudited)
As required by the Internal Revenue Code regulations, shareholders must be
notified within 60 days of the Trust's fiscal year end (June 30, 1999)
regarding the status of the distributions made to the shareholders.
Dividend Received Deduction. For the benefit of corporate shareholders only, the
portion of dividends paid out of ordinary income earned during certain Funds'
fiscal years ended June 30, 1999 which qualify for the corporate dividend-
received deduction are as follows:
<TABLE>
<S> <C>
90/10 Portfolio 4.96%
60/40 Portfolio 3.50%
30/70 Portfolio 2.01%
</TABLE>
13
<PAGE>
PIMCO Advisors Holdings L.P. is the nation's third largest publicly traded
investment management firm with assets under management in excess of $254
billion. PIMCO Advisors is recognized for providing consistent performance and
high-quality service to mutual fund and institutional clients worldwide.
Its investment firms are:
Pacific Investment Management Company/Newport Beach, California
Oppenheimer Capital/New York, New York
Columbus Circle Investors/Stamford, Connecticut
Cadence Capital Management/Boston, Massachusetts
NFJ Investment Group/Dallas, Texas
Parametric Portfolio Associates/Seattle, Washington
PIMCO Equity Advisors/New York, New York , a division of PIMCO Advisors L.P.
Units of PIMCO Advisors Holdings L.P. trade on the New York Stock Exchange under
the ticker symbol "PA."
14
<PAGE>
Trustees and Officers
William D. Cvengros, Chairman and Trustee
Stephen J. Treadway, President, Chief Executive Officer and Trustee
E. Philip Cannon, Trustee
Donald P. Carter, Trustee
Gary A. Childress, Trustee
Richard L. Nelson, Trustee
Lyman W. Porter, Trustee
Alan Richards, Trustee
Dr. Joel Segall, Trustee
W. Bryant Stooks, Trustee
Gerald M. Thorne, Trustee
Newton B. Schott, Jr., Secretary
John P. Hardaway, Treasurer
Investment Adviser and Administrator
PIMCO Advisors L.P.
800 Newport Center Drive, Suite 600
Newport Beach, California 92660
Custodian
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent
National Financial Data Services
330 W. 9th Street, 4th Floor
Kansas City, Missouri 64105
Counsel
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Independent Accountants
PricewaterhouseCoopers LLP
1055 Broadway
Kansas City, Missouri 64105
PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, CT 06902-6896
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 precede 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.
<PAGE>
PIMCO Funds Shareholder Update and Annual Report
This Update is published twice a year to provide PIMCO Funds Asset Allocation
Series shareholders with general market commentary and investment information.
It also includes the annual report for the PIMCO Funds Asset Allocation Series.
June 30, 1999
Asset Allocation Series
Share Classes
A B C
90/10 Portfolio
60/40 Portfolio
30/70 Portfolio
[GRAPHIC APPEARS HERE]
Thinking of hopping on the technology train? Turn to our tech sector overview,
page 4.
Page 2 Asset Allocation Committee Report
Continued Economic Strength
- --------------------------------------------------------------------------------
Page 3 Manager Spotlight
Q & A With Bill Gross
- --------------------------------------------------------------------------------
Page 4 Today's Investor
The Risks and Rewards of Technology Investing
- --------------------------------------------------------------------------------
Page 6 Asset Allocation Series
PIMCO Funds Annual Report
- --------------------------------------------------------------------------------
Page 7 PIMCO Funds
90/10 Portfolio
- --------------------------------------------------------------------------------
Page 8 PIMCO Funds
60/40 Portfolio
- --------------------------------------------------------------------------------
Page 9 PIMCO Funds
30/70 Portfolio
- --------------------------------------------------------------------------------
Page 10 Underlying PIMCO Funds
[LOGO OF PIMCO FUNDS APPEARS HERE]
<PAGE>
Asset Allocation
Committee Report
Continued Economic Strength
Stocks
This year certainly was an eventful one for stock investors. The third quarter
of 1998 saw the market correct as a result of concerns over an economic downturn
in Asia that appeared to be spreading. In the fourth quarter, the market rose as
these fears began to abate, and the first quarter of 1999 continued the upward
trend as the market hit record highs. During this period, many pundits expressed
concern over the narrowness of the market, in which the largest of the large-cap
growth stocks were responsible for much of this stellar performance. Their
concerns proved to be short- lived: in the second quarter of 1999, the market
finally broadened, as smaller-capitalization issues as well as lower valuation
issues enjoyed strong performance.
The technology sector, particularly the Internet, was an important driver of
performance in the last quarter of 1998 as well as the first quarter of 1999.
However, these issues hit a speed bump early in the second quarter of 1999 as
interest rates began to rise.
Higher valuation growth stocks also had the same inverse relationship with
interest rates. They turned in a strong performance in the last quarter of 1998
and the first quarter of 1999, benefiting from the Federal Reserve's interest
rate cuts. And, like technology stocks, they suffered in the second quarter as a
result of rising interest rates.
The broadening of the market was welcomed by most investment experts. It was
largely viewed as a healthy event, after a long period of domination by one
segment of the market. Looking ahead, we are cautiously optimistic that this
broadening will enable the market to continue its rise, and that more stocks
will participate in this ascent.
Bonds
Inflation fears have dominated the fixed income marketplace in 1999. The
economy, fueled by stock market gains, grew faster than expected, adding to
speculation that higher inflation was just around the corner.
As a result, the Federal Reserve moved to a tightening bias in May and then
raised the fed funds rate by a quarter-point to 5.0% at the end of June. The
move capped a difficult period for the bond market as Treasury prices fell
steadily, with long-term yields rising over one percentage point, breaking above
6% for the first time since early 1998.
Looking ahead, it appears the economy has come to a crossroads. Deflationary
forces, including the glut of global capacity and strong productivity gains,
remain at work. However, reflationary forces, including central bank easings and
a tight U.S. labor market, are also in play. We believe that these forces may
well offset one another, creating an environment where interest rates remain in
a relatively narrow range of between 5 and 6 1/2%. The opposing forces will
likely keep inflation subdued, between 2% and 3%. In periods where deflationary
forces dominate, interest rates could fall toward the lower end of the range and
vice versa.
U.S. 30 Year Treasury Yield (%)
Interest rates have moved higher
[LINE GRAPH APPEARS HERE]
U.S 30-Year Treasury Yield (%)
<TABLE>
<CAPTION>
30 Year
Treasury
Yield
--------
<S> <C>
07/03/1998 5.600
07/10/1998 5.626
07/17/1998 5.747
07/24/1998 5.687
07/31/1998 5.714
08/07/1998 5.632
08/14/1998 5.541
08/21/1998 5.434
08/28/1998 5.339
09/04/1998 5.289
09/11/1998 5.230
09/18/1998 5.148
09/25/1998 5.110
10/02/1998 4.841
10/09/1998 5.110
10/16/1998 4.979
10/23/1998 5.179
10/30/1998 5.158
11/06/1998 5.388
11/13/1998 5.251
11/20/1998 5.219
11/27/1998 5.160
12/04/1998 5.041
12/11/1998 5.020
12/18/1998 5.000
12/25/1998 5.220
01/01/1999 5.090
01/08/1999 5.270
01/15/1999 5.110
01/22/1999 5.080
01/29/1999 5.090
02/05/1999 5.350
02/12/1999 5.420
02/19/1999 5.390
02/26/1999 5.570
03/05/1999 5.590
03/12/1999 5.520
03/19/1999 5.560
03/26/1999 5.590
04/02/1999 5.590
04/09/1999 5.460
04/16/1999 5.570
04/23/1999 5.600
04/30/1999 5.660
05/07/1999 5.810
05/14/1999 5.920
05/21/1999 5.750
05/28/1999 5.830
06/04/1999 5.960
06/11/1999 6.160
06/18/1999 5.970
06/25/1999 6.150
06/30/1999 5.960
</TABLE>
Source: Bloomberg
Portfolio Composition
During the latest quarter our research dictated a move from an overweighted to
an underweighted equity position. The modest tactical asset allocation moves are
based primarily on a systematic process utilizing several proprietary asset
allocation models developed within PIMCO Advisors L.P. The primary reason behind
the most recent tactical move was the result of models tracking relative
valuation measures and Equity Risk Premium measures. Several of our indicators
changed from favoring equities (which they have for quite some time) to favoring
bonds. Rising interest rates and corporate earnings not rising enough to
compensate for increased interest rates triggered the models to signal that the
risk/return tradeoff now favors bonds. One could also make the argument that
most of the pain in the fixed income market is behind us. We believe bonds
should perform well going forward and, on a risk-adjusted basis, they currently
are slightly more attractive then equities.
2
<PAGE>
Manager Spotlight
Managing Director and Portfolio Manager
Q & A with Bill Gross
Bill Gross is widely regarded as one of the premier investment managers in the
U.S. In fact, Morningstar named him and his management team the 1998 Fixed
Income Manager of the Year. And with more than $27 billion in assets, the
flagship PIMCO Total Return Fund is the largest bond fund in the country. We
recently spoke with him regarding his latest outlook for the economy and the
bond market.
Q: The bond market continued to have problems in the second quarter. What
happened?
A: Responding to a stronger than expected economy, renewed inflation fears and
the beginnings of a recovery in Asia, long-term interest rates rose--climbing
over one percentage point this quarter to break 6% for the first time since
early 1998. Bond prices have an inverse relationship with interest rates, so the
bond market suffered, with Treasury prices in particular falling steadily. To
cap things off, prevailing economic conditions prompted the Federal Reserve to
increase the fed funds rate a quarter-point in June.
[PHOTO OF BILL GROSS APPEARS HERE]
Q: Will we see any other interest rate increases in 1999?
A: Initially, the market interpreted Federal Reserve comments to mean this may
be the only increase we would see. But, I think the Fed was telling us that they
are open-minded and that they will take a fresh look at the evidence before
making future policy decisions. It is apparent that one of the main factors they
will focus on is the U.S. stock market. I do not think, however, that the Fed is
likely to embark on a protracted series of rate hikes.
Q: Why would the stock market influence future Fed decisions?
A: The stock market is increasingly influencing economic activity through a
mechanism called the wealth effect. As the stock market rises, consumers spend
some of their capital gains or "wealth." This spending pumps up the economy. A
problem arises, however, when excessive gains in the stock market lead to
excessive spending. In this case, the economy can overheat and cause inflation.
Federal Reserve Chairman Alan Greenspan has tolerated this sort of wealth effect
growth in the past because it was offset by weakness in the global economy. But
as the global picture has improved recently, the Fed has had to become more
sensitive to what is going on in the stock market.
Q: What has changed in the global economy?
A: Synchronized central bank easing around the world has created a floor on
which to build a global economic recovery. At the same time, it appears that
structural rigidities around the world will probably keep the global economy
from growing too fast and creating inflationary pressures.
Q: Given all this information, what can we expect from the U.S. economy going
forward?
A: The U.S. economy has come to a crossroads with deflationary forces and
reflationary forces offsetting one another. At some point one of these forces
will break out. But until then, we expect the economic expansion to continue,
albeit at a more moderate pace. We foresee inflation to remain subdued in the 2%
to 3% range and long-term interest rates to remain range-bound between 5% to
6-1/2%.
Q: What opportunities exist for bond investors in this type of environment?
A: In this environment of lower interest rate volatility, securities that
provide incremental yield will be more attractive to bond investors. We will
continue to use mortgages as a prudent way to boost yield without adding
significant risk. In addition, as interest rates approach the top of our
forecasted range, we will push our target duration slightly above the benchmark.
Past performance is no guarantee of future results. The views of Mr. Gross are
not indicative of the past or future performance of any PIMCO Fund.
3
<PAGE>
Today's Investor
The Risks and Rewards of Technology Investing
[GRAPHIC APPEARS HERE]
Investing in technology stocks can be a bit like riding a roller coaster. The
steep climbs and sometimes dizzying dips are not for everyone. But you can gain
exposure to the tech sector without buying individual technology stocks, or even
investing in a pure technology mutual fund. Many general equity funds have
substantial technology holdings as part of their diversified portfolios. This
can reduce the risks associated with tech investing.
So if you're intrigued by this dynamic sector, read on. Here's the lowdown on
these high-flying stocks.
How would you define technology?
Technology is a broad term. In its most general sense, "technology" simply
refers to any application of science to solve a problem or fulfill a need. But
when we talk about technology stocks, we're really talking about high
technology, and even more specifically, about information technology (IT). IT
covers pretty much everything to do with computers and communications.
What businesses make up the technology sector?
Analysts divide the technology sector into different categories, although they
may not agree on the same headings. The following is a useful breakdown of the
sector, ranging from the fastest-growing (Internet and networking companies) to
the most cyclical (contract manufacturers and components makers):
1. Internet--includes Internet service providers (ISPs) like AOL, Internet
guides like Yahoo! and online retailers like Amazon.com.
2. Networking--companies that make the gear connecting computers and forming the
Internet, such as Cisco Systems and 3Com.
3. Telecommunications equipment--MCI Worldcom, Motorola and Lucent are three of
the leaders in this field.
4. Software--Microsoft and Oracle are two of the best-known software
manufacturers.
5. Services--companies providing a range of electronic, information, data and
communications services including First Data and EDS.
6. Computers--Dell, Compaq and IBM are three of the biggest names in personal
computing.
7. Contract manufacturers--includes lesser-known companies like Solectron and
Jabil, which actually produce electronics products for brand-name companies.
8. Components--includes semiconductor manufacturers such as Intel and Texas
Instruments and disk drive makers such as Seagate and Quantum Corp.
Many technology companies, of course, don't fall neatly into these categories.
And there are numerous companies that fall outside a strict definition of
technology, but use technology in innovative ways to advance their business.
Their stocks offer much of the same risk/reward potential as other, pure
technology stocks.
Are all technology stocks equally volatile?
Technology stocks, as a group, tend to be more volatile than other stocks. But
some, like Internet stocks, are more volatile than others. Take the case of
Yahoo!, the first online navigational guide to the Web and one of the "blue
chips" of Internet investing. Over the last year, it has traded at a high of
$244 and a low of $29.50. Now, contrast this to the price fluctuation of the
shares of a computer company--Dell Computer--and a component manufacturer--
Intel (see chart below). While they too have experienced price fluctuations,
they look relatively stable compared to Yahoo! stock.
Some Technology Stocks Are More Volatile Than Others
This chart shows 52-week highs and lows for three kinds of technology stocks
(period ended 06/30/99).
[BAR CHART APPEARS HERE]
Some Technology Stocks Are More Volatile Than Others
Low High
Yahoo $ 30 $ 244
Dell $ 20 $ 55
Intel $ 35 $ 72
Source Bloomberg
What's behind the volatility?
Many of today's most promising technology companies are young and fast-growing.
Start-up companies abound. In many cases, the products or services these
companies offer are equally new and untried. The competition to gain a
Past performance is no guarantee of future results. This article does not
represent a recommendation of any particular security or investment product. It
is not indicative of performance of any PIMCO fund and the Funds do not
necessarily own the securities referenced. PIMCO Innovation Fund, a
technology-oriented mutual fund, is not limited to investing solely in the areas
covered in this article.
4
<PAGE>
place in the sun is fierce. And it's not always clear which companies, or even
which technologies, will flourish and which will fall by the wayside.
But this uncertainty and the resulting price volatility haven't dampened
investor enthusiasm. The potential for these stocks to produce significant
long-term gains continues to attract investors.
How can investors gain technology exposure?
As we suggested above, there's more than one way to tap into this dynamic
sector. Of course, investors can buy the stocks of technology companies.
Investing in a technology mutual fund, however, can reduce risk by offering
instant diversification and professional investment management--particularly
important in a highly specialized, quickly changing sector like technology. And
a diversified technology fund, rather than a category-specific fund (like an
Internet fund), can further reduce portfolio volatility.
Another way to access this sector that involves even less risk is to invest in a
general stock mutual fund with a substantial technology weighting. This allows
investors to benefit when tech stocks are doing well, but the more diversified
portfolio provides a cushion if technology stocks take a downturn.
Above all, investors need to ensure their portfolios are not over-allocated to
technology stocks. Even aggressive investors should invest only a small
percentage of their total portfolio in the sector. Professional asset allocation
expertise plus ongoing rebalancing will ensure a portfolio maintains the right
balance.
The Technology Revolution--Still Going Strong
Americans have been adopting new technologies at a rapid rate, and they show no
signs of stopping. This chart shows the number of actual and expected U.S.
households using new technologies.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
The Technology Revolution-- U.S. Households (millions) On-line
Still Going Strong PCs Cellular Phones Internet Shopping
--- --------------- -------- --------
<S> <C> <C> <C> <C>
1994 33.9 15.1 5.8
1995 37.2 21.5 12.7 0.8
1996 39.5 27.7 21.7 2.4
1997 44.5 36.0 25.0 5.0
1998 48.7 42.4 33.3 10.1
1999 53.6 48.0 38.8 13.1
2000 57.3 51.6 44.4 17.8
2001 60.1 55.4 51.3 23.2
2002 61.8 58.1 56.0 30.5
2003 64.1 60.9 59.8 38.4
</TABLE>
Source: Forrester Research, Inc.
Is the technology sector still growing?
Definitely. A recent Commerce Department study indicates that electronic
commerce and the information technology industry have generated at least one-
third of the nation's economic growth since 1995, while accounting for only 8%
of its total economic output. And that momentum shows no signs of stopping.
The fact is, Americans are adopting new technologies at an unprecedented rate.
For example, fewer than six million American households had Internet access in
1994. That number topped 33 million in 1998, and is expected to exceed 59
million by the end of 2003. And between the years 1994 and 1998, the number of
American households using cellular phones skyrocketed from 15 million to over 42
million. By the end of 2003, analysts predict that over 60 million U.S.
households will be cell phone subscribers.
In fact, most analysts believe we are still in the early stages of the current
technological revolution, equating it to the second inning of a baseball game.
In other words, an investment in technology still looks like a pretty good bet.
Given the importance of not over-weighting an investment portfolio with
technology stocks, many investors choose to work with a professional financial
adviser and a team of asset allocation specialists. A PIMCO Funds Asset
Allocation Portfolio can provide exposure to the technology sector within a
broadly diversified, single portfolio investment. Consult your financial adviser
for more information on the technology holdings in your portfolio.
5
<PAGE>
Asset Allocation Series
PIMCO Funds Annual Report
Dear Fellow Shareholder:
The past year has been an eventful time, both in the geopolitical sphere and in
the financial markets. After flaring up in March, the Kosovo Crisis is now on
the road to resolution. It proved, in the end, to have surprisingly little
impact on the U.S. stock and bond markets.
Large-cap growth stocks continued to dominate the domestic stock market for the
past 12 months, until April, when their hegemony began to falter, the market
broadened and value stocks emerged from the sidelines. Value investing appeared
to be back. Then towards the end of June, the stock market teetered back in the
direction of growth stocks.
The bond market had a particularly difficult time in the first half of the
second quarter, with long-term government interest rates moving up by more than
one percentage point (which drove down bond prices). However, it rebounded when
the Federal Reserve announced they were tightening monetary policy at the end of
the second quarter. The bond market reacted favorably to this move and to
comments from the policy-making committee that were interpreted to mean that
future hikes in interest rates may be limited.
These fluctuations and events proved, once again, that no one can guarantee what
will happen next, and an investor's best protection is portfolio
diversification.
The past 12 months have been eventful at PIMCO Funds too. We are now one of the
country's fastest-growing fund families, with assets under management recently
surpassing $50 billion. And in January, PIMCO announced the formation of a new
investment division, PIMCO Equity Advisors, to focus on our expanding slate of
stock mutual funds. As viable opportunities arise in the future, we will be
expanding our fund family to offer you additional investment options managed by
PIMCO's institutional-quality investment professionals.
Inside this Annual Report, you will find detailed information on our Asset
Allocation Portfolios. I encourage you to review the information and commentary
carefully. And once again, I would like to thank you for the trust you've placed
in us through your investments. If you have any questions regarding your
investment, contact your financial advisor, or call us at 1-800-426-0107. Or
visit our Web site at www.pimcofunds.com.
A Word About the Year 2000
We at PIMCO are dedicated to making our computer systems fully operational
before, during, and after 2000. Similarly, our analysts and portfolio managers
take Year 2000 risks into account along with other investment considerations
when making investment decisions, such as choosing counterparties and evaluating
risks associated with portfolio securities. This evaluation often differs for
different issuers and depends upon the investment objectives, policies, and
restrictions applicable to a portfolio. The information available for different
issuers and counterparties varies substantially in accuracy and completeness. In
particular, little information exists about companies that are not registered
with the United States Securities and Exchange Commission and about foreign
issuers, counterparties, markets, and other institutions.
While we are dedicated to making the transition to Year 2000 a smooth one, we
cannot guarantee investment performance or that Year 2000 will not result in
losses. Investments in companies with real or perceived Year 2000 problems may
decline in value or fail on scheduled dividend, interest, or principal payments.
Any such failures may affect the fund's performance./1/
/1/ This is a Year 2000 Readiness Disclosure.
Sincerely,
/s/ Stephen Treadway
Stephen Treadway
President
July 30, 1999
<PAGE>
PIMCO Funds 90/10 Portfolio
OBJECTIVE
Long-term capital appreciation
PORTFOLIO
80-100% PIMCO Stock Funds
0-20% PIMCO Bond Funds
INCEPTION DATE
9/30/98
DIVIDEND FREQUENCY
Annually
NET ASSETS
$10.6 million
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 06/30/99
A Shares B Shares C Shares
Adjusted Adjusted Adjusted
- --------------------------------------------------------------------------------
Inception 23.7% 16.9% 23.0% 18.0% 22.0%
* The adjusted returns above include the effect of paying the applicable sales
charges. Past performance is not an indication of future results. See page 10
for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The PIMCO Funds Asset Allocation Series consists of three professionally managed
mutual funds that invest in a diversified portfolio of PIMCO Funds. The 90/10
Portfolio seeks long-term capital appreciation. The fund's strategic allocation
is 90% stock funds and 10% bond funds. In the second quarter the fund's Class A
shares posted a return of 8.9%, the Class B shares returned 8.7%, and the Class
C shares returned 8.7%.
As of June 30, 1999, the Fund's actual allocation was 84% stock funds and 16%
bond funds. This compares to an allocation of 96% stock funds and 4% bond funds
for the period ended December 31, 1998. During the past six months the Fund had
an overweight position in stock funds, which was a significant positive for
performance as equities did better than fixed income. However, at the end of the
quarter the portfolio tactically overweighted bonds relative to stocks. This
decision reflected changes in our proprietary asset allocation models, which now
favor fixed income over equities.
Within the equity portion of the Portfolio, we maintained a neutral position
with regard to value stocks versus growth stocks and large-cap stocks versus
small-cap stocks. This was a drag on performance in the first quarter as growth
stocks continued to dominate, but enhanced returns in the second quarter as the
market finally began to broaden. Lastly, the Fund slightly favored non-U.S.
equities, which had a positive impact on returns.
Specifically within the stock portion of the Portfolio, the Value Fund, which
has a relatively large weight in the fund, had a terrific second quarter,
outperforming the S&P 500 Index by a wide margin. Value stocks, which had been
out of favor, came alive as investors shied away from higher valuation growth
stocks due to rising interest rates and an improving global economy. Broad
market funds, such as StocksPLUS and Enhanced Equity, both had slightly higher
returns than the S&P 500 for the second quarter. The International Fund
performance beat its benchmark due to a higher than benchmark allocation to
emerging markets, which surged during the first half of this year as these
economies began to show signs of recovering.
Only a small percentage of the Fund's assets were invested in fixed income
during the first half of this year, split between the Total Return, High Yield
Fund, the Foreign Bond and the Money Market Funds. This asset allocation boosted
returns as stocks outperformed bonds over that period.The S&P 500 Index rose
12.4% over the six- month period ended June 30, 1999 versus the Lehman Brothers
Aggregate Bond Index which fell -1.4%.
Looking ahead, interest rates have backed up significantly over the past six
months, but as we expect the economy to moderate in the near term, the worst may
be over for the bond market. In addition, our latest research dictated a move
from an overweight to an underweight equity position. The modest tactical asset
allocation move was based primarily on the signals generated by a systematic
process utilizing several proprietary asset allocation models developed within
PIMCO Advisors L.P. Several of these indicators changed from favoring equities
to favoring bonds. Rising interest rates and the fact that corporate earnings
did not rise enough to compensate triggered the models to signal that the
risk/return tradeoff now favored bonds. Bonds should perform well going forward
and, on a risk-adjusted basis, we believe they are currently more attractive
than equities.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
16% PIMCO Bond Funds
84% PIMCO Stock Funds
PIMCO Stock Funds % of
Total Investments
- -------------------------------------------------------------------------------
Growth
- -------------------------------------------------------------------------------
Enhanced Equity Fund 12.2%
- -------------------------------------------------------------------------------
Target Fund 5.6%
- -------------------------------------------------------------------------------
Growth Fund 4.0%
- -------------------------------------------------------------------------------
Opportunity Fund 1.8%
- -------------------------------------------------------------------------------
Blend
- -------------------------------------------------------------------------------
StocksPLUS Fund 12.0%
- -------------------------------------------------------------------------------
Capital Appreciation Fund 3.9%
- -------------------------------------------------------------------------------
Mid-Cap Growth Fund 5.4%
- -------------------------------------------------------------------------------
Small-Cap Growth Fund 1.8%
- -------------------------------------------------------------------------------
Value
- -------------------------------------------------------------------------------
Value Fund 18.3%
- -------------------------------------------------------------------------------
Small-Cap Value Fund 3.4%
- -------------------------------------------------------------------------------
International
- -------------------------------------------------------------------------------
International Fund 15.6%
- -------------------------------------------------------------------------------
Total Stock Funds 84.0%
- -------------------------------------------------------------------------------
PIMCO Bond Funds
- -------------------------------------------------------------------------------
Short Duration
- -------------------------------------------------------------------------------
Money Market Fund 1.2%
- -------------------------------------------------------------------------------
Intermediate Duration
- -------------------------------------------------------------------------------
Total Return Fund 12.4%
- -------------------------------------------------------------------------------
High Yield
- -------------------------------------------------------------------------------
High Yield Fund 1.6%
- -------------------------------------------------------------------------------
International
- -------------------------------------------------------------------------------
Foreign Bond Fund 0.8%
- -------------------------------------------------------------------------------
Total Bond Funds 16.0%
- -------------------------------------------------------------------------------
See page 11 for financial details.
7
<PAGE>
PIMCO Funds 60/40 Portfolio
June 30, 1999
OBJECTIVE
Long-term capital appreciation and current income
PORTFOLIO
50-70% PIMCO
Stock Funds
30-50% PIMCO
Bond Funds
INCEPTION DATE
9/30/98
DIVIDEND FREQUENCY
Quarterly
NET ASSETS
$15.7 million
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 06/30/99
A Shares B Shares C Shares
Adjusted Adjusted Adjusted
- --------------------------------------------------------------------------------
Inception 15.5% 9.2% 14.8% 9.8% 13.8%
* The adjusted returns above include the effect of paying the applicable sales
charges. Past performance is not an indication of future results. See page 10
for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The 60/40 Portfolio seeks long-term capital appreciation and current income. The
funds strategic allocation is 60% stock funds and 40% bond funds. In the second
quarter the fund's Class A shares posted a return of 5.6%, the Class B shares
returned 5.4%, and the Class C shares returned 5.3%.
As of June 30, 1999, the Fund's actual allocation was 56% stock funds and 44%
bond funds. This compares to an allocation of 65% stock funds and 35% bond funds
for the period ended December 31, 1998. The Fund's overweight position in stock
funds was a significant positive for performance. However, at the end of the
second quarter the Portfolio tactically overweighted bonds relative to stocks.
This decision reflected changes in our proprietary asset allocation models,
which now favor fixed income over equities.
Within the equity portion of the Portfolio we maintained a neutral position
with regard to value stocks versus growth stocks and large-cap stocks versus
small-cap stocks. This was a drag on performance in the first quarter as growth
stocks continued to dominate, but enhanced returns in the second quarter as the
market finally began to broaden. The Fund slightly favored non-U.S. equities,
which had a positive impact on returns.
The Value Fund, which has a relatively large weight in the fund, had a
terrific second quarter, outperforming the S&P 500 Index by a wide margin. Value
stocks, which had been out of favor, came alive as investors shied away from
higher valuation growth stocks due to rising interest rates and an improving
global economy. Broad market funds, such as StocksPLUS and Enhanced Equity, both
had slightly higher returns than the S&P 500 for the second quarter. The
International Fund beat its benchmark due to a higher allocation to emerging
markets, which surged during the first half of this year as these economies
began to show signs of recovering.
As for the bond portion of the Portfolio, although the Total Return Fund had
negative returns in the second quarter, it did outperform the Lehman Brothers
Aggregate Bond Index. Limited holdings of below-investment grade bonds enhanced
returns as the Fund's emphasis on less cyclical credits proved beneficial in the
face of expectations of Fed tightening. The Fund maintained an above benchmark
weighting in mortgage-backed securities, which has significantly contributed to
performance over the past six months, but was negative for performance in the
second quarter. However, this position will be maintained as our outlook for a
range-bound interest rate environment makes this sector a good way to enhance
yield without adding significant risk. The High Yield Fund, which has a small
weight in the Portfolio, underperformed its benchmark as fear of higher
inflation and Federal Reserve tightening took its toll on high yield spreads.
However, our positions in the energy sector helped performance, and we will
continue to hold this industry.
Looking ahead, interest rates have backed up significantly over the past six
months, but as we expect the economy to moderate in the near term, the worst may
be over for the bond market. In addition, our latest research dictated a move
from an overweight to an underweight equity position. The modest tactical asset
allocation move was based primarily on the signals generated by a systematic
process utilizing several proprietary asset allocation models developed within
PIMCO Advisors L.P. Several of these indicators changed from favoring equities
to favoring bonds. Bonds should perform well going forward and, on a
risk-adjusted basis, we believe they are currently more attractive than
equities.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
44% PIMCO Bond Funds
56% PIMCO Stock Funds
PIMCO Stock Funds % of
Total Investments
- --------------------------------------------------
Growth
- --------------------------------------------------
Enhanced Equity Fund 8.2%
- --------------------------------------------------
Target Fund 3.8%
- --------------------------------------------------
Growth Fund 2.7%
- --------------------------------------------------
Opportunity Fund 1.2%
- --------------------------------------------------
Blend
- --------------------------------------------------
StocksPLUS Fund 8.0%
- --------------------------------------------------
Capital Appreciation Fund 2.6%
- --------------------------------------------------
Mid-Cap Growth Fund 3.6%
- --------------------------------------------------
Small-Cap Growth Fund 1.2%
- ---------------------------------------------- ----
Value
- --------------------------------------------------
Value 12.3%
- --------------------------------------------------
Small-Cap Value Fund 2.3%
- --------------------------------------------------
International
- --------------------------------------------------
International Fund 10.5%
- --------------------------------------------------
Total Stock Funds 56.4%
- --------------------------------------------------
PIMCO Bond Funds
- --------------------------------------------------
Short Duration
- --------------------------------------------------
Money Market Fund 1.1%
- --------------------------------------------------
Intermediate Duration
- --------------------------------------------------
Total Return Fund 36.0%
- --------------------------------------------------
High Yield
- --------------------------------------------------
High Yield Fund 4.4%
- --------------------------------------------------
International
- --------------------------------------------------
Foreign Bond Fund 2.1%
- --------------------------------------------------
Total Bond Funds 43.6%
- --------------------------------------------------
See page 11 for financial details.
8
<PAGE>
June 30, 1999
OBJECTIVE
Current income with long-term capital appreciation as a secondary objective
PORTFOLIO
25-35% PIMCO Stock Funds
65-75% PIMCO Bond Funds
INCEPTION DATE
9/30/98
DIVIDEND FREQUENCY
Monthly
NET ASSETS
$7.1 million
PIMCO Funds 30/70 Portfolio
- --------------------------------------------------------------------------------
PERFORMANCE*
- --------------------------------------------------------------------------------
Total Return For period ended 06/30/99
A Shares B Shares C Shares
Adjusted Adjusted Adjusted
- --------------------------------------------------------------------------------
Inception 6.9% 2.1% 6.3% 1.3% 5.3%
* The adjusted returns above include the effect of paying the applicable sales
charges. Past performance is not an indication of future results. See page 10
for Footnotes, which include additional details.
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
The 30/70 Portfolio seeks current income, with long-term capital appreciation a
secondary objective. The Fund's strategic allocation is 30% stock funds and 70%
bond funds. In the second quarter the fund's Class A shares posted a return of
2.3%, the Class B shares returned 2.1%, and the Class C shares returned 2.1%.
As of June 30, 1999, the Fund's actual allocation was 28% stock funds and 72%
bond funds. This compares to an allocation of 33% stock funds and 67% bond funds
for the period ended December 31, 1998. The Fund's overweight position in stock
funds was a significant positive for performance. However, at the end of the
second quarter the portfolio tactically overweighted bonds relative to stocks.
This decision reflected changes in our proprietary asset allocation models,
which now favor fixed income over equities.
Within the equity portion of the Portfolio we maintained a neutral position
with regard to value stocks versus growth stocks and large-cap stocks versus
small-cap stocks. This was a drag on performance in the first quarter as growth
stocks continued to dominate, but enhanced returns in the second quarter as the
market finally began to broaden. The Fund slightly favored non-U.S. equities,
which had a positive impact on returns.
The Value Fund outperformed the S&P 500 Index by a wide margin in the second
quarter. Broad market funds, such as StocksPLUS and Enhanced Equity, both had
slightly higher returns than the S&P 500 for the second quarter. The
International Fund beat its benchmark due to a higher allocation to emerging
markets.
As for the bond portion of the Portfolio, although the Total Return Fund had
negative returns in the second quarter, it did slightly outperform the Lehman
Brothers Aggregate Bond Index over the same period. Limited holdings of
below-investment grade bonds enhanced returns as the Fund's emphasis on less
cyclical credits proved beneficial in the face of expectations of Fed
tightening. The Fund maintained an above benchmark weighting in mortgage-backed
securities, which has significantly contributed to performance over the past six
months, but was negative for performance in the second quarter. However, this
position will be maintained as our outlook for a range-bound interest rate
environment makes this sector a good way to enhance yield without adding
significant risk. The High Yield Fund, which has a small weight in the
Portfolio, underperformed its benchmark as fear of higher inflation and Federal
Reserve tightening took its toll on high yield spreads. However, our positions
in the energy area also helped performance, and we will continue to hold this
industry.
Looking ahead, interest rates have backed up significantly over the past six
months, but as we expect the economy to moderate in the near term, the worst may
be over for the bond market. In addition, our latest research dictated a move
from an overweight to an underweight equity position. The modest tactical asset
allocation move was based primarily on the signals generated by a systematic
process utilizing several proprietary asset allocation models developed within
PIMCO Advisors L.P. Several of these indicators changed from favoring equities
to favoring bonds. Bonds should perform well going forward and, on a
risk-adjusted basis, we believe they are currently more attractive than
equities.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
28% PIMCO Stock Fund
72% PIMCO Bond Funds
PIMCO Stock Funds % of
Total Investments
- ------------------------------------------------
Growth
- ------------------------------------------------
Enhanced Equity Fund 4.1%
- ------------------------------------------------
Target Fund 1.9%
- ------------------------------------------------
Growth Fund 1.4%
- ------------------------------------------------
Opportunity Fund 0.6%
- ------------------------------------------------
Blend
- ------------------------------------------------
StocksPLUS Fund 4.0%
- ------------------------------------------------
Capital Appreciation Fund 1.3%
- ------------------------------------------------
Mid-Cap Growth Fund 1.8%
- ------------------------------------------------
Small-Cap Growth Fund 0.6%
- ------------------------------------------------
Value
- ------------------------------------------------
Value 6.2%
- ------------------------------------------------
Small-Cap Value Fund 1.1%
- ------------------------------------------------
International
- ------------------------------------------------
International Fund 5.3%
- ------------------------------------------------
Total Stock Funds 28.3%
- ------------------------------------------------
PIMCO Bond Funds
- ------------------------------------------------
Short Duration
- ------------------------------------------------
Money Market Fund 1.1%
- ------------------------------------------------
Intermediate Duration
- ------------------------------------------------
Total Return Fund 59.9%
- ------------------------------------------------
High Yield
- ------------------------------------------------
High Yield Fund 7.2%
- ------------------------------------------------
International
- ------------------------------------------------
Foreign Bond Fund 3.5%
- ------------------------------------------------
Total Bond Funds 71.7%
- ------------------------------------------------
See page 11 for financial details.
9
<PAGE>
PIMCO Funds Profiles
PIMCO Funds Asset Allocation Portfolios invest solely in Institutional Class
shares of PIMCO Funds. These Funds are run by PIMCO Advisors' institutional-
quality investment managers. Together, PIMCO manages $254 billion in assets and
boasts an institutional client list that includes 46 of the 100 largest U.S.
corporations.
PIMCO's investment managers are dedicated to specific disciplines, ensuring that
each PIMCO Fund consistently adheres to its stated investment objective and
strategy.
The following provides a closer look at each of the PIMCO Funds held in the
PIMCO Funds Asset Allocation Portfolios as of December 31, 1998.
<TABLE>
<CAPTION>
PIMCO STOCK FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Name Objective Primary Portfolio Composition
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Growth Long-term growth of capital Stocks of larger-capitalized companies
Target Capital appreciation Stocks of medium-capitalized companies
Opportunity Capital appreciation Stocks of smaller-capitalized companies
Enhanced Equity Total return exceeding the S&P 500 Index Stocks represented in the S&P 500 Index
- ------------------------------------------------------------------------------------------------------------------------------------
Blend StocksPLUS Total return exceeding the S&P 500 Index S&P 500 stock index futures backed by a
portfolio of short-term, fixed-income
securities
Capital Appreciation Growth of capital Stocks of larger-capitalized companies the
manager believes are reasonably priced
Mid-Cap Growth Growth of capital Stocks of medium-capitalized companies the
manager believes are reasonably priced
Small-Cap Growth Growth of capital Stocks of smaller-capitalized companies the
manager believes are reasonably priced
- ------------------------------------------------------------------------------------------------------------------------------------
Value Value Long-term growth of capital and income Stocks of companies with below-average P/Es
Small-Cap Value Long-term growth of capital and income Stocks of smaller-capitalized companies with
below-average P/Es
- ------------------------------------------------------------------------------------------------------------------------------------
International International Capital appreciation Stocks of non-U.S. companies in developed and
emerging markets
PIMCO BOND FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Name Objective Primary Portfolio Composition
- ------------------------------------------------------------------------------------------------------------------------------------
Short Duration Money Market Maximum current income, consistent with Money market securities (LESS THAN 90 days)
preservation of capital and daily
liquidity
- ------------------------------------------------------------------------------------------------------------------------------------
Intermediate Total Return Maximum total return Intermediate-term, investment-grade bonds
Duration (3-6 year duration)
- ------------------------------------------------------------------------------------------------------------------------------------
High Yield High Yield Maximum total return High-yield bonds (2-6 year duration)
- ------------------------------------------------------------------------------------------------------------------------------------
International Foreign Bond Maximum total return Investment-grade foreign bonds (3-7 year
duration)
</TABLE>
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 for
the 90/10 Portfolio and the 60/40 Portfolio include the effect of paying the
maximum initial sales charge of 5.5%. The adjusted figures for Class A shares
for the 30/70 Portfolio include the effect of paying the maximum initial sales
charge of 4.5%. 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 Fund 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 Small-Cap Value Fund generally invest in small- cap stocks,
which can be riskier than the overall stock market. For additional details on
the underlying PIMCO Funds in the Asset Allocation Series portfolios, 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.
10
<PAGE>
Schedule of Investments
June 30, 1999
Value
90/10 Portfolio Shares (000s)
PIMCO FUNDS (b) 98.1%
Value 123,824 $ 1,895
International 139,455 1,620
Total Return 127,019 1,287
Enhanced Equity 97,249 1,260
StockPLUS 81,496 1,240
Target 32,663 579
Mid-Cap Growth 24,367 561
Growth 13,380 418
Capital Appreciation 15,224 409
Small Cap-Value 22,092 355
Opportunity 7,669 186
Small Cap-Growth 15,953 182
High Yield 14,876 163
Money Market 122,334 122
Foreign 7,817 81
---------
Total Investments (a) 98.1% $ 10,358
(Cost $9,822) =========
Other Assets and Liabilities (Net) 1.9% 200
---------
Net Assets 100.0% $ 10,558
=========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $9,835, was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 532
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (9)
---------
Unrealized appreciation-net $ 523
=========
(b) Institutional Class shares of each PIMCO Fund.
60/40 Portfolio
PIMCO FUNDS (b) 100.3%
Total Return 559,951 $ 5,672
Value 126,214 1,931
International 142,139 1,652
Enhanced Equity 99,075 1,284
StockPLUS 83,064 1,264
High Yield 62,553 686
Target 33,249 590
Mid-Cap Growth 24,815 571
Growth 13,628 426
Capital Appreciation 15,508 416
Small Cap-Value 22,498 361
Foreign 32,878 339
Opportunity 7,813 190
Small Cap-Growth 16,250 185
Money Market 176,063 176
---------
Total Investments (a) 100.3% $ 15,743
(Cost $15,375) =========
Other Assets and Liabilities (Net) (0.3%) (46)
---------
Net Assets 100.0% $ 15,697
=========
- --------------------------------------------------------------------------------
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $15,396 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 504
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (157)
---------
Unrealized appreciation-net $ 347
=========
(b) Institutional Class shares of each PIMCO Fund.
Value
30/70 Portfolio Shares (000s)
PIMCO FUNDS (b) 97.8%
Total Return 412,302 $ 4,177
High Yield 45,602 500
Value 28,110 430
International 31,663 368
Enhanced Equity 22,082 286
StockPLUS 18,502 282
Foreign 23,961 247
Target 7,418 132
Mid-Cap Growth 5,531 127
Growth 3,040 95
Capital Appreciation 3,458 93
Small Cap-Value 5,014 81
Money Market 74,071 74
Opportunity 1,744 42
Small Cap-Growth 3,627 41
---------
Total Investments (a) 97.8% $ 6,975
(Cost $6,988) =========
Other Assets and Liabilities (Net) 2.2% 159
---------
Net Assets 100.0% $ 7,134
=========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1999, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes of $7,017 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 118
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (160)
---------
Unrealized depreciation-net $ (42)
=========
(b) Institutional Class shares of each PIMCO Fund.
See accompanying notes 11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C>
Selected Per Share Data for the Period Ended June 30, 1999: 90/10 Portfolio (b) 60/40 Portfolio (b)
------------------------------ -------------------------------
Class A Class B Class C Class A Class B Class C
Net Asset Value Beginning of Period $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (a) 0.16 0.16 0.07 0.31 0.16 0.18
- ------------------------------------------------------------------------------------------------------------------------------------
Net Realized / Unrealized Gain (Loss) on Investments (a) 2.19 2.13 2.22 1.23 1.31 1.29
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income from Investment Operations 2.35 2.29 2.29 1.54 1.47 1.47
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from Net Investment Income (0.15) (0.15) (0.15) (0.27) (0.22) (0.23)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends in Excess of Net Investment Income (0.03) (0.03) (0.03) 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.18) (0.18) (0.18) (0.27) (0.22) (0.23)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value End of Period 12.17 12.11 12.11 11.27 11.25 11.24
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 23.69% 23.03% 23.03% 15.50% 14.83% 14.82%
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets End of Period (000s) $ 647 $1,920 $7,969 $2,196 $3,653 $9,826
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets * 0.65% 1.40% 1.40% 0.65% 1.40% 1.40%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets * 1.91% 1.87% 0.77% 3.76% 1.92% 2.14%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 48% 48% 48% 39% 39% 39%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
30/70 Portfolio (b)
------------------------------
Class A Class B Class C
<S> <C> <C> <C>
Net Asset Value Beginning of Period $10.00 $10.00 $10.00
- -----------------------------------------------------------------------------------------------
Net Investment Income (Loss) (a) 0.58 0.32 0.26
- -----------------------------------------------------------------------------------------------
Net Realized / Unrealized Gain (Loss) on Investments (a) 0.11 0.31 0.36
- -----------------------------------------------------------------------------------------------
Total Income from Investment Operations 0.69 0.63 0.62
- -----------------------------------------------------------------------------------------------
Dividends from Net Investment Income (0.36) (0.31) (0.32)
- -----------------------------------------------------------------------------------------------
Dividends in Excess of Net Investment Income 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
Total Distributions (0.36) (0.31) (0.32)
- -----------------------------------------------------------------------------------------------
Net Asset Value End of Period 10.33 10.32 10.30
- -----------------------------------------------------------------------------------------------
Total Return 6.91% 6.29% 6.27%
- -----------------------------------------------------------------------------------------------
Net Assets End of Period (000s) $ 407 $1,738 $4,969
- -----------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets * 0.65% 1.40% 1.40%
- -----------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets(*) 7.54% 4.09% 3.39%
- -----------------------------------------------------------------------------------------------
Portfolio Turnover Rate 37% 37% 37%
- -----------------------------------------------------------------------------------------------
</TABLE>
* Annualized
(a) Per share amounts based on average number of shares outstanding during the
period.
(b) Commenced operations on September 30, 1998
12 See accompanying notes
<PAGE>
Statements of Assets and Liabilities
June 30, 1999
<TABLE>
<CAPTION>
Amounts in thousands, except per share amounts 90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
--------------- --------------- ---------------
<S> <C> <C> <C>
Assets:
Investments, at value $ 10,358 $ 15,743 $ 6,975
- -------------------------------------------------------------------------------------------------------------------------------
Cash and foreign currency 112 0 0
- -------------------------------------------------------------------------------------------------------------------------------
Receivable for investments and foreign currency sold 0 106 0
- -------------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 209 178 179
- -------------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 5 30 26
- -------------------------------------------------------------------------------------------------------------------------------
10,684 16,057 7,180
- -------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investments and foreign currency purchased $ 113 $ 0 $ 14
- -------------------------------------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 3 189 0
- -------------------------------------------------------------------------------------------------------------------------------
Dividends payable 0 45 23
- -------------------------------------------------------------------------------------------------------------------------------
Accrued administration fee 3 5 2
- -------------------------------------------------------------------------------------------------------------------------------
Accrued distribution fee 5 8 4
- -------------------------------------------------------------------------------------------------------------------------------
Accrued servicing fee 2 3 2
- -------------------------------------------------------------------------------------------------------------------------------
Other liabilities 0 110 1
- -------------------------------------------------------------------------------------------------------------------------------
126 360 46
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 10,558 $ 15,697 $ 7,134
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Paid in capital $ 9,757 $ 15,089 $ 7,095
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 169 173 49
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain 96 67 3
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) 536 368 (13)
- -------------------------------------------------------------------------------------------------------------------------------
$ 10,558 $ 15,697 $ 7,134
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Class A $ 647 $ 2,196 $ 407
- -------------------------------------------------------------------------------------------------------------------------------
Class B 1,920 3,653 1,738
- -------------------------------------------------------------------------------------------------------------------------------
Class C 7,969 9,826 4,969
- -------------------------------------------------------------------------------------------------------------------------------
Other Classes 22 22 20
- -------------------------------------------------------------------------------------------------------------------------------
Shares Issued and Outstanding:
Class A 53 195 39
- -------------------------------------------------------------------------------------------------------------------------------
Class B 159 325 168
- -------------------------------------------------------------------------------------------------------------------------------
Class C 658 874 482
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price * Per Share
(Net Assets Per Share Outstanding)
Class A $ 12.17 $ 11.27 $ 10.33
- -------------------------------------------------------------------------------------------------------------------------------
Class B 12.11 11.25 10.32
- -------------------------------------------------------------------------------------------------------------------------------
Class C 12.11 11.24 10.30
- -------------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 9,822 $ 15,375 $ 6,988
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* With respect to the Retail Classes, the redemption price varies by the
length of time the shares are held.
See accompanying notes 13
<PAGE>
Statements of Operations
For the period ended June 30, 1999
<TABLE>
<CAPTION>
Amounts in thousands 90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
--------------- --------------- ---------------
<S> <C> <C> <C>
Investment Income:
Dividends $ 86 $ 180 $ 135
- ----------------------------------------------------------------- --------------- --------------- --------------
Interest 1 1 1
- ----------------------------------------------------------------- --------------- --------------- --------------
Total Income 87 181 136
- ----------------------------------------------------------------- --------------- --------------- --------------
Expenses:
Administration fees 14 20 10
- ---------------------------------------------------------------- -------------- -------------- --------------
Distribution fees - Class B 5 12 6
- ---------------------------------------------------------------- -------------- -------------- --------------
Distribution fees - Class C 20 22 13
- ---------------------------------------------------------------- -------------- -------------- --------------
Servicing fees - Class A 1 1 0
- ---------------------------------------------------------------- -------------- -------------- --------------
Servicing fees - Class B 2 4 2
- ---------------------------------------------------------------- -------------- -------------- --------------
Servicing fees - Class C 7 7 4
- ---------------------------------------------------------------- -------------- -------------- --------------
Total expenses 49 66 35
- ---------------------------------------------------------------- -------------- -------------- --------------
Net Investment Income (Loss) 38 115 101
- ---------------------------------------------------------------- -------------- -------------- --------------
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments 160 140 15
- ---------------------------------------------------------------- -------------- -------------- --------------
Net capital gain distributions received from underlying funds 113 94 37
- ---------------------------------------------------------------- -------------- -------------- --------------
Net change in unrealized appreciation (depreciation) on investments 536 368 (13)
- ---------------------------------------------------------------- -------------- -------------- --------------
Net Gain 809 602 39
- ---------------------------------------------------------------- -------------- -------------- --------------
Net Increase in Assets Resulting from Operations $ 847 $ 717 $ 140
- ---------------------------------------------------------------- -------------- -------------- --------------
</TABLE>
14 See accompanying notes
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Amounts in thousands 90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
------------------ ------------------ ------------------
Period from Period from Period from
September 30, 1998 September 30, 1998 September 30, 1998
to June 30 1999 to June 30 1999 to June 30 1999
Increase (Decrease) in Net Assets from:
Operations:
<S> <C> <C> <C>
Net investment income $ 38 $ 115 $ 101
- ------------------------------------------------------------- ------------------ ------------------ ------------------
Net realized gain 160 140 15
- ------------------------------------------------------------- ------------------ ------------------ ------------------
Net capital gain distributions received from underlying funds 113 94 37
- ------------------------------------------------------------- ------------------ ------------------ ------------------
Net change in unrealized appreciation (depreciation) 536 368 (13)
- ------------------------------------------------------------- ------------------ ------------------ ------------------
Net increase resulting from operations 847 717 140
- ------------------------------------------------------------- ------------------ ------------------ ------------------
Distributions to Shareholders:
From net investment income
Class A (2) (16) (7)
- ------------------------------------------------------------- ----------------- ----------------- -----------------
Class B (10) (33) (35)
- ------------------------------------------------------------- ----------------- ----------------- -----------------
Class C (26) (60) (59)
- ------------------------------------------------------------- ----------------- ----------------- -----------------
Other Classes 0 0 0
- ------------------------------------------------------------- ----------------- ----------------- -----------------
In excess of net investment income
Class A (1) 0 0
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Class B (2) 0 0
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Class C (5) 0 0
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Other Classes 0 0 0
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Total Distributions (46) (109) (101)
- ------------------------------------------------------------ ------------------ ----------------- ----------------
Fund Share Transactions:
Receipts for shares sold
Class A 713 2,249 487
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Class B 1,910 4,008 1,840
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Class C 7,885 10,298 5,337
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Other Classes 20 20 20
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Issued as reinvestment of distributions
Class A 3 6 3
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Class B 12 24 26
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Class C 30 32 42
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Other Classes 0 0 0
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Cost of shares redeemed
Class A (118) (128) (86)
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Class B (164) (567) (142)
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Class C (534) (853) (432)
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Other Classes 0 0 0
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Net increase (decrease) resulting from Fund share
transactions 9,757 15,089 7,095
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Total Increase in Net Assets 10,558 15,697 7,134
- ------------------------------------------------------------ ------------------ ----------------- -----------------
Net Assets:
Beginning of period 0 0 0
- ------------------------------------------------------------------------------- ----------------- -----------------
End of period * $ 10,558 $ 15,697 $ 7,134
- ------------------------------------------------------------------------------- ----------------- -----------------
* Including net undistributed (overdistributed)
investment income of: $ 169 $ 173 $ 49
- ------------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
See accompanying notes 15
<PAGE>
Notes to Financial Statements
June 30, 1999
1. Organization
PIMCO Funds: Multi-Manager Series (the "Trust"), is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company organized as a Massachusetts business trust. The Trust currently
consists of twenty-six funds. Information presented in these financial
statements pertains to the Asset Allocation Series of the Trust which is
comprised of the 90/10 Portfolio, 60/40 Portfolio, and 30/70 Portfolio,
collectively referred to as (the "Portfolios"). The Portfolios are a
professionally-managed series of the Trust designed to take advantage of the
benefits of asset allocation. Each Portfolio seeks to achieve its particular
investment objective by investing within specified equity and fixed income
ranges among a number of other mutual funds in the PIMCO Funds family (the
"Underlying Funds"). The Portfolios may offer up to five classes of shares:
Institutional, Administrative, A, B and C. 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). Information
presented in these financial statements pertains to the A,B, and C Classes (the
"Retail Classes") of the Trust. Certain detailed financial information for the
Institutional and Administrative 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 the preparation of its financial statements 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. Investments in the Underlying Funds are valued at the price
of each Institutional share class of the respective Underlying Fund determined
as of the close of the New York Stock Exchange or the valuation date.
Securities Transactions and Investment Income. Securities transactions are
recorded as of the trade date. Realized gains and losses from securities sold
are recorded on the identified cost basis. Distributions from the Underlying
Funds are recorded on the ex-dividend date.
Dividends and Distributions to Shareholders. Dividends from net investment
income, if any, are declared and paid to shareholders of record at least monthly
by the 30/70 Portfolio, at least quarterly by 60/40 Portfolio and at least
annually by the 90/10 Portfolio. Net long-term capital gains earned by a
Portfolio, 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.
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.
Federal Income Taxes. Each Portfolio 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.
3. Fees, Expenses, and Related Party Transactions Administration Fee. PIMCO
Advisors L.P. ("PIMCO Advisors") provides administrative services to the Trust
for which it receives monthly administrative fees based on each share class'
average daily net assets. The Administration Fee for the Retail Classes is
charged at the annual rate of 0.40% on the first $2.5 billion of net assets and
0.35% in excess of $2.5 billion. The Administration Fee for Other Classes is
charged at the annual rate of 0.15%. PIMCO Advisors has voluntarily undertaken
to waive a portion of the administrative fee it is entitled to receive for Other
Classes of each Portfolio until further notice. As a result, during the period
of the waiver, each Portfolio will pay administrative fees to the Administrator
at the annual rate of 0.10%. In addition, the Portfolios indirectly bear their
pro-rata share of expenses of the underlying funds.
Expenses. Under the terms of the Administrative Agreement PIMCO Advisers has
agreed to bear any and all fees and expenses of the Portfolio (other than the
administrative fee payable under the agreement), except for (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 Adviser, any Portfolio
Manager, or the Trust, and any counsel retained exclusively for their benefit;
16
<PAGE>
(vi) extraordinary expenses, including costs of litigation and indemnification
expenses; (vii) any expenses allocated or allocable to a specific class of
shares, which include distribution and/or service fees payable 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.
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 entire Board receives an additional annual retainer of
$3,000. These expenses are allocated to the Portfolios and to the Funds of the
Trust according to their respective net assets.
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.
Pursuant to the Distribution and Servicing Plans adopted by the A, B and C
Classes of the Trust, the Trust compensates PFD 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 Class A, Class B and Class C. The Trust paid PFD distribution
and servicing fees at an effective rate as set forth below (calculated as a
percentage of each Portfolio's average daily net assets attributable to each
class):
Distribution Fee(%) Servicing Fee (%)
- --------------------------------------------------------------------------------
Class A
All Portfolios -- 0.25
Class B
All Portfolios 0.75 0.25
Class C
All Portfolios 0.75 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 Class A, B
and C shares. For the period ended June 30, 1999, PFD received $87,230
representing commissions (sales charges) and contingent deferred sales charges.
4. Purchase and Sale of Securities
Purchases and sales of securities (excluding short-term investments) for the
period ended June 30, 1999 were as follows (amounts in thousands):
Purchases Sales
- --------------------------------------------------------------------------------
90/10 Portfolio $12,220 $ 2,558
60/40 Portfolio 18,215 2,980
30/70 Portfolio 8,355 1,382
5. Risk Factors of the Funds
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and tax results that would not be present in a direct
investment in the Underlying Funds. Under certain circumstances, an Underlying
Fund may pay a redemption request by a Portfolio wholly or partly by a
distribution in kind of securities from its portfolio, instead of cash, in
accordance with the rules of the Securities and Exchange Commission. In such
cases, the Portfolios may hold securities distributed by an Underlying Fund
until PIMCO Advisors determines that it is appropriate to dispose of such
securities.
Each of the Underlying Funds may invest in certain specified derivative
securities, including: interest rate swaps, caps and floors for hedging
purposes; exchange-traded options; over-the-counter options executed with
primary dealers, including long calls and puts and covered calls and financial
futures and options. Certain of the Underlying Funds may invest in restricted
securities; instruments issued by trusts, partnerships or other issuers,
including pass-through certificates representing participations in, or debt
instruments backed by, the securities owned by such issuers. These Underlying
Funds also may engage in securities lending, reverse repurchase agreements and
dollar roll transactions. In addition, certain of the Underlying Funds may
invest in below-investment grade debt, debt obligations of foreign issuers and
stocks of foreign corporations, securities in foreign investment funds or
trusts, foreign derivative securities including futures contracts, options,
interest rate and currency swap transactions, and various other investment
vehicles, each with inherent risks.
The officers and directors of the Trust also serve as officers and
directors/trustees of the Underlying Funds. Conflicts may arise as these
companies seek to fulfill their fiduciary responsibilities to both the
Portfolios and Underlying Funds.
17
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1999
6. 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>
90/10 Portfolio 60/40 Portfolio 30/70 Portfolio
---------------------- ---------------------- ----------------------
Period from Period from Period from
9/30/1998 to 6/30/1999 9/30/1998 to 6/30/1999 9/30/1998 to 6/30/1999
Shares Amount Shares Amount Shares Amount
---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Receipts for shares sold
Class A 63 $ 713 206 $ 2,249 47 $ 487
- -------------------------------------------- ---------------------- ---------------------- ----------------------
Class B 172 1,910 374 4,008 179 1,840
- -------------------------------------------- ---------------------- ---------------------- ----------------------
Class C 703 7,885 949 10,298 520 5,337
- -------------------------------------------- ---------------------- ---------------------- ----------------------
Other Classes 2 20 2 20 2 20
- -------------------------------------------- ---------------------- ---------------------- ----------------------
Issued as reinvestment of distributions
Class A 0 3 1 6 0 3
- -------------------------------------------- ---------------------- ---------------------- ----------------------
Class B 1 12 2 24 3 26
- -------------------------------------------- ---------------------- ---------------------- ----------------------
Class C 3 30 3 32 4 42
- -------------------------------------------- ---------------------- ---------------------- ----------------------
Other Classes 0 0 0 0 0 0
- -------------------------------------------- ---------------------- ---------------------- ----------------------
Cost of shares redeemed
Class A (10) (118) (12) (128) (8) (86)
- ------------------------------------------- ---------------------- ---------------------- ----------------------
Class B (14) (164) (51) (567) (14) (142)
- ------------------------------------------- ---------------------- ---------------------- ----------------------
Class C (48) (534) (78) (853) (42) (432)
- ------------------------------------------- ---------------------- ---------------------- ----------------------
Other Classes 0 0 0 0 0 0
- ------------------------------------------ ---------------------- ---------------------- ----------------------
Net increase resulting from
Fund share transactions 872 $ 9,757 1,396 $ 15,089 691 $ 7,095
- ------------------------------------------- ---------------------- ---------------------- ----------------------
</TABLE>
18
<PAGE>
Report of Independent Accountants
June 30, 1999
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, changes
in net assets and the financial highlights for the Class A, B and C share
classes present fairly, in all material respects, the financial position of the
90/10 Portfolio, 60/40 Portfolio and 30/70 Portfolio (constituting the PIMCO
Funds Asset Allocation Series of PIMCO Funds: Multi-Manager Series, hereafter
referred to as the "Portfolios") at June 30, 1999, the results of each of their
operations, the changes in each of their net assets and the financial highlights
for the Class A, B and C share classes for the period September 30, 1998
(commencement of operations) through June 30, 1999, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolios' 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, 1999, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Kansas City, Missouri
August 13, 1999
19
<PAGE>
Federal Income Tax Information (Unaudited)
June 30, 1999
As required by the Internal Revenue Code regulations, shareholders must be
notified within 60 days of the Trust's fiscal year end (June 30, 1999) regarding
the status of the distributions made to the shareholders.
Dividend Received Deduction. For the benefit of corporate shareholders only, the
portion of dividends paid out of ordinary income earned during certain Funds'
fiscal years ended June 30, 1999 which qualify for the corporate dividend-
received deduction are as follows:
90/10 Portfolio 4.96%
60/40 Portfolio 3.50%
30/70 Portfolio 2.01%
20
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PIMCO Funds Asset Allocation Series
Actively managed portfolios of select PIMCO Funds
<S> <C> <C>
PIMCO Funds Asset Allocation Manager PIMCO Advisors L.P., 800 Newport Center Drive,
Newport Beach, CA 92660
Series offers unique access to the
allocation and investment Distributor PIMCO Funds Distributors LLC, 2187 Atlantic Street,
Stamford, CT 06902-6896
capabilities of PIMCO Advisors
L.P., manager of $254 billion, Custodian Investors Fiduciary Trust Company, 801 Pennsylvania,
Kansas City, MO 64105
including assets for 46 of the 100
largest U.S. corporations. To learn Shareholder First Data Investor Services Group, Inc., P.O. Box 9688,
Servicing Agent and Providence, RI 02940-9688
more about PIMCO Funds Asset Transfer Agent
Allocation Portfolios, speak to
Independent PricewaterhouseCoopers LLP, 1055 Broadway,
your financial advisor, or call Accountant Kansas City, MO 64105
1-800-227-7337 Legal Counsel Ropes & Gray, One International Place,
Boston, MA 02110
For Account For PIMCO Funds Asset Allocation account information
Information contact your 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 8:30am to 8:30 pm Eastern Time.
This is a copy of a report by PIMCO Funds to its Asset Allocation Series
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 Asset Allocation Series prospectus, which describes in greater detail
the investment policies, management fees and other matters of interest to
prospective investors. Please read prospectus carefully before you invest or send
money PZ030 7/99
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PIMCO
Funds
PIMCO Funds
Distributors LLC
2187 Atlantic Street
Stamford, CT 06902
