<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1995
------------
DOMESTIC PORTFOLIOS
INSTITUTIONAL SERIES
------------
MINI CAP GROWTH
EMERGING GROWTH
CORE GROWTH
INCOME & GROWTH
BALANCED GROWTH
<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
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600 West Broadway
San Diego, California 92101
800-551-8643
TRUSTEES OF NICHOLAS-APPLEGATE MUTUAL FUNDS
Fred C. Applegate
Dr. Arthur B. Laffer
Arthur E. Nicholas, Chairman
Charles E. Young
TRUSTEES OF NICHOLAS-APPLEGATE INVESTMENT TRUST
Dann V. Angeloff
Walter A. Auch
Theodore J. Coburn
Darlene T. DeRemer
George F. Keane
Arthur E. Nicholas, Chairman
OFFICERS
Arthur E. Nicholas, Chairman
Ashley Rabun, President
Pete J. Johnson, Vice President
Thomas Pindelski, Treasurer
E. Blake Moore, Jr., Secretary
INVESTMENT MANAGER
Nicholas-Applegate Capital Management
DISTRIBUTOR
Nicholas-Applegate Securities
CUSTODIAN
PNC Bank
TRANSFER AGENT
State Street Bank & Trust Company
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<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Letter to Shareholders.......................................................................................... 1
Organization.................................................................................................... 2
Capital Markets Review.......................................................................................... 3
Long-Term View of the U.S. Equity and Bond Markets.............................................................. 4
The Portfolios' Overview, Fund Manager Q&A and the Funds' Schedules of Investments
Mini-Cap Growth............................................................................................... 5
Emerging Growth............................................................................................... 11
Core Growth................................................................................................... 27
Income & Growth............................................................................................... 34
Balanced Growth............................................................................................... 43
The Portfolios'
Financial Highlights.......................................................................................... 52
Statements of Assets and Liabilities.......................................................................... 54
Statements of Operations...................................................................................... 55
Statements of Changes in Net Assets........................................................................... 56
Notes to the Financial Statements............................................................................. 58
Notes to the Funds' Financial Statements........................................................................ 64
</TABLE>
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This report is authorized for distribution to shareholders and to others only
when preceded or accompanied by a current prospectus for Nicholas-Applegate
Mutual Funds. Distributor: Nicholas-Applegate Securities.
<PAGE>
(This page intentionally left blank)
<PAGE>
LETTER TO SHAREHOLDERS
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DEAR FELLOW SHAREHOLDER,
We are pleased to present you with this Semi-Annual Report for
Nicholas-Applegate Mutual Funds.
The past six months have been very successful for our shareholders. The U.S.
stock market has delivered strong performance so far this year. In fact, if the
stock market were to end the year with just the gains achieved by September 30,
this year would still go down in the history books as one of the best years for
U.S. stocks in the twentieth century.
We should remember that at the end of last year the newspapers and magazines
were full of gloomy articles about the markets. Those of you who ignored these
articles and stayed with your investment plan have reaped big rewards this year.
And what's going on in the press now? Lately, I've seen article after article
asking if the market has reached a top and is due for some kind of correction
soon.
As long-term investors, we believe you should ignore this speculation. Nobody
knows what the market is going to do tomorrow or the next day, but it's quite
clear what the market has done over the long term. In 1932, in the depths of the
Depression, the Dow Jones Industrial Average sank to a low of 40. In September,
1995, it reached a new high of 4801. That means that over the past 63 years the
Dow has multiplied in value 120 times. And these 63 years included a terrible
World War, the assassination of world leaders, and 40 years of a Cold War that
diverted the energies of many of the world's best and brightest minds.
So what made this phenomenal increase in stock values possible? It's basically
very simple -- companies like those we look for are constantly striving to
introduce new products and services that increase productivity or improve
people's lives in some way. The fax machine. The cassette player on your hip.
The automatic teller at your bank, or in your grocery store. The personal
computer on your desk, or the computer chips under the dashboard of your car.
Shopping from home via cable television. Overnight delivery.
All these innovations add value to the world economy. All are made possible by
the capital invested by people like you and, by their success, they encourage
even more investment. This process is now picking up even more steam with the
opening of major new markets around the world.
At Nicholas-Applegate, we believe that change creates opportunity. In a world
where so much is changing, we think the prospects for long-term investors look
very bright indeed. Keep your eyes on your goals, stick to your financial plan,
and remember -- true wealth comes from staying invested for the long term.
Sincerely,
[SIGNATURE]
Ashley Rabun
President
Nicholas-Applegate Mutual Funds
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1
<PAGE>
ORGANIZATION
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Nicholas-Applegate Mutual Funds (the "Trust") is organized as a diversified,
open-end management investment company which offers 43 separate series comprised
of Portfolios A, with an initial sales charge, B, with a contingent deferred
sales charge, C, with a level asset-based sales charge, Institutional, with no
load, and Qualified, with no load (each a "Portfolio" and collectively the
"Portfolios"). The Portfolios of the Trust seek to achieve their respective
investment objectives by investing all of their assets in corresponding series
of Nicholas-Applegate Investment Trust (the "Master Trust"), a diversified
open-end management investment company offering 12 investment vehicles (the
"Funds"). As of September 30, 1995, the Funds and corresponding Portfolios are
as follows:
<TABLE>
<CAPTION>
INCLUDED
IN INCLUDED IN
FUNDS OF THE PORTFOLIOS OF THIS ANOTHER
MASTER TRUST THE TRUST REPORT REPORT
- ----------------------- --------------------------------------------- ---------- -------------
<S> <C> <C> <C>
Mini-Cap Growth Mini-Cap Growth Institutional x
Emerging Growth Emerging Growth A x
Emerging Growth B x
Emerging Growth C x
Emerging Growth Institutional x
Emerging Growth Qualified x
Core Growth Core Growth A x
Core Growth B x
Core Growth C x
Core Growth Institutional x
Core Growth Qualified x
Income & Growth Income & Growth A x
Income & Growth B x
Income & Growth C x
Income & Growth Institutional x
Income & Growth Qualified x
Balanced Growth Balanced Growth A x
Balanced Growth B x
Balanced Growth C x
Balanced Growth Institutional x
Balanced Growth Qualified x
Government Income Government Income A x
Government Income B x
Government Income C x
Government Income Qualified x
Money Market Money Market Portfolio x
Worldwide Growth Worldwide Growth A x
Worldwide Growth B x
Worldwide Growth C x
Worldwide Growth Institutional x
Worldwide Growth Qualified x
International Growth International Growth A x
International Growth B x
International Growth C x
International Growth Institutional x
International Growth Qualified x
Emerging Countries Emerging Countries A x
Emerging Countries B x
Emerging Countries C x
Emerging Countries Institutional x
Emerging Countries Qualified x
Fully Discretionary Fully Discretionary Institutional x
Short-Intermediate Short-Intermediate Institutional x
</TABLE>
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2
<PAGE>
CAPITAL MARKETS REVIEW
- -------------------------------------------------------------------
The spring and summer of 1995 was a great time for investors in U.S. companies
and fixed-income securities. The environment of slow, stable economic growth
inspired investor and consumer confidence, driving up bond prices and forcing
down interest rates. Many companies surprised stock analysts and investors
during this period by reporting earnings that exceeded expectations. Their
accomplishments were largely rewarded through higher stock prices. Supply and
demand forces added to the rally. U.S. equity mutual funds enjoyed heavy cash
inflows
in late summer. Most of this new money was ear-
marked for U.S. stocks, and U.S. companies added to the rally by repurchasing
shares of their own stocks at a record pace. The resulting combination of rising
demand and shrinking supply had the effect of boosting prices in a market that
was already solidly advancing on the basis of company fundamentals. The Wilshire
5000 Index, a measure of total U.S. stock market performance, rose 19.3% in the
six months from April through September.
The equity-market advance broadened during this period as small and mid-sized
companies emerged as leaders. Projected earnings of small and mid-sized
companies rose sharply based on expectations for improved profit margins due to
lower interest rates and a stronger dollar. Among U.S. companies, technology,
health-care and financial-services firms enjoyed the strongest stock-price
advances in the first three quarters of 1995. Returns among electronic-component
and communications equipment manufacturers were especially strong. The Russell
2000 Index, a measure of smaller-company performance, rose 20.2% from April
through September, while the Standard & Poor's 400 Index of medium-sized
companies advanced 19.3%. The Standard & Poor's 500 Index, a measure of
America's largest companies, gained 18.3%.
Bond prices rose through spring and summer on strong demand. Predictions for
slow, stable economic growth encouraged U.S. investors to purchase bonds.
Meanwhile, foreign central banks were purchasing bonds in a coordinated effort
to strengthen the U.S. dollar in foreign exchange markets. Rising bond prices
drove interest rates down to their lowest levels in more than a year.
This environment was especially conducive to the growth-investing style of
Nicholas-Applegate. Growth stocks outperformed value stocks among small,
mid-sized and large companies. We remain optimistic about the outlook for our
investing style in U.S. equity markets. We continue to seek and find companies
that are growing by taking advantage of the sweeping changes in our economic and
social lives. These include companies that are at the forefront of America's
rising productivity or who are improving our daily lives through innovative new
products and services. We believe equity markets will continue to reward the
companies that are successfully shaping our future.
- --------------------------------------------------------------------------------
3
<PAGE>
LONG-TERM VIEW OF THE U.S. EQUITY AND BOND MARKETS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. INFL U.S. TBILL U.S. LT GVT U.S. SMALL STOCK S&P500
<S> <C> <C> <C> <C> <C>
1925 1.00 1.00 1.00 1.00 1.00
1926 0.99 1.03 1.08 1.00 1.12
1927 0.96 1.06 1.17 1.22 1.53
1928 0.96 1.10 1.18 1.71 2.20
1929 0.96 1.16 1.22 0.83 2.02
1930 0.90 1.18 1.27 0.51 1.52
1931 0.81 1.20 1.20 0.26 0.86
1932 0.73 1.21 1.41 0.24 0.79
1933 0.73 1.21 1.41 0.59 1.21
1934 0.75 1.21 1.55 0.74 1.20
1935 0.77 1.21 1.62 1.03 1.77
1936 0.78 1.22 1.75 1.71 2.37
1937 0.80 1.22 1.75 0.72 1.54
1938 0.78 1.22 1.85 0.95 2.02
1939 0.78 1.22 1.96 0.95 2.01
1940 0.79 1.22 2.08 0.90 1.81
1941 0.86 1.22 2.10 0.82 1.60
1942 0.94 1.22 2.16 1.19 1.93
1943 0.97 1.23 2.21 2.24 2.43
1944 0.99 1.23 2.27 3.45 2.91
1945 1.01 1.24 2.51 5.98 3.96
1946 1.20 1.24 2.51 5.29 3.64
1947 1.31 1.25 2.45 5.34 3.85
1948 1.34 1.26 2.53 5.22 4.06
1949 1.32 1.27 2.69 6.25 4.83
1950 1.39 1.29 2.69 8.68 6.36
1951 1.48 1.31 2.59 9.35 7.89
1952 1.49 1.33 2.62 9.64 9.34
1953 1.50 1.35 2.71 9.01 9.24
1954 1.49 1.36 2.91 14.47 14.11
1955 1.50 1.39 2.87 17.43 18.56
1956 1.54 1.42 2.71 18.18 19.78
1957 1.59 1.46 2.91 15.53 17.65
1958 1.61 1.49 2.73 25.61 25.30
1959 1.64 1.53 2.67 29.80 28.32
1960 1.66 1.57 3.04 28.82 28.45
1961 1.67 1.60 3.07 38.07 36.11
1962 1.69 1.65 3.28 33.54 32.95
1963 1.72 1.70 3.32 41.44 40.47
1964 1.74 1.76 3.44 51.19 47.14
1965 1.78 1.83 3.46 72.57 53.01
1966 1.84 1.92 3.59 67.48 47.67
1967 1.89 2.00 3.26 123.87 59.10
1968 1.98 2.10 3.25 168.43 65.64
1969 2.10 2.24 3.09 126.23 60.06
1970 2.22 2.38 3.46 104.23 62.47
1971 2.29 2.49 3.92 121.42 71.41
1972 2.37 2.59 4.14 126.81 84.96
1973 2.58 2.76 4.09 87.62 72.50
1974 2.89 2.99 4.27 70.14 53.31
1975 3.10 3.16 4.67 107.19 73.14
1976 3.25 3.32 5.45 168.69 90.58
1977 3.47 3.49 5.41 211.50 84.08
1978 3.78 3.74 5.35 261.12 89.59
1979 4.28 4.13 5.28 374.61 106.11
1980 4.81 4.59 5.07 523.99 140.51
1981 5.24 5.27 5.17 596.72 133.62
1982 5.45 5.82 7.25 763.83 162.22
1983 5.65 6.33 7.30 1066.83 198.75
1984 5.88 6.96 8.43 995.68 211.20
1985 6.10 7.50 11.04 1241.23 279.12
1986 6.17 7.96 13.74 1326.27 330.67
1987 6.44 8.39 13.37 1202.97 347.97
1988 6.72 8.93 14.67 1478.14 406.46
1989 7.03 9.67 17.32 1628.59 534.46
1990 7.46 10.43 18.39 1277.45 517.50
1991 7.69 11.01 21.94 1847.63 675.59
1992 7.92 11.40 23.71 2279.04 727.41
1993 8.13 11.73 28.03 2757.15 800.08
1994 8.35 12.19 25.86 2842.77 810.54
1995 8.54 12.69 31.41 3850.33 1051.28
</TABLE>
IBBOTSON ASSOCIATES GROWTH OF $1.00 CHART
SMALL COMPANY STOCK
Small Company Stocks data represents the smallest one-fifth of NYSE stocks
from 1/1/26 through 12/31/81 and Dimensional Fund Advisors ("DFA") Small Company
Fund thereafter, with all income dividends and capital gains distributions, if
any, reinvested.
LARGE COMPANY STOCK
Large Company Stocks data represents the Standard & Poor's 500 Index which
contains 500 industrial, transportation, utility and financial companies
regarded as generally representative of the U.S. stock market.
LONG-TERM GOVERNMENT BONDS
Long Term Government Bond data is based on a one bond portfolio whose
rolling approximate maturity is twenty years.
TREASURY BILLS
Treasury bill data is measured by a portfolio having a minimum maturity of
one month.
INFLATION
The Consumer Price Index is a measure of change in consumer prices as
determined by a monthly survey of the U.S. Bureau of Labor Statistics. Many
pension and employment contracts are tied to changes in consumer prices, as
protection against inflation and reduced purchasing power.
Each equity and bond index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing (except for the DFA Small Company
Fund's returns which are net of transaction costs). All results are historical.
Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.
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4
<PAGE>
MINI-CAP GROWTH PORTFOLIO
- -------------------------------------------------------------------
GOAL: Seeks to maximize long-term capital appreciation by investing for growth
primarily in companies with less than $100 million in market capitalization.
REVIEW AND OUTLOOK: This new Portfolio provided handsome returns this summer.
It opened July 12 and in less than a full quarter, July 12 to September 30,
1995, its shares had advanced more than 10% on the strength of good stock
selections, especially in health-care and technology sectors. The Portfolio
earned almost double the return of the Russell 2000 Index of small company
stocks during this abbreviated reporting period. By applying our disciplined
investment style to the smallest of publicly-traded companies, we earned
outstanding returns for investors.
In the third quarter, we found great success in our stock choices of
telecommunications and health-care companies. For example, we shared in the
market successes of Pediatric Services of America, which is growing its market
share in the expanding home health-care business. We benefited from Sirrom
Capital Corp.'s growth as a niche player in providing commercial credit to
smaller companies. Among technology companies, we enjoyed strong returns on
Datastream Systems shares, which rose as the company logged solid sales growth
for its industrial maintenance software. Technology companies accounted for 37%
of the Portfolio at the end of the period, including 12% in software companies,
7% in telecommunications companies, and 7% in electronic-component companies.
Health-care companies made up 21% of the Portfolio and financial-services
companies comprised 8% of holdings.
We maintain an upbeat assessment of the mini-cap segment of the market and of
our ability to successfully invest in its companies. The current economic
environment with its slow, stable growth and low interest rates has created a
financial setting that is favorable for these companies. Meanwhile, the rapidly
changing nature of business and society favors companies that can react quickly
and adapt positively to change and that can profit by helping other businesses
do the same. The mini-cap segment of the market includes many companies that are
profiting from these changes. The mini-cap segment is also subject to market
inefficiencies, which we believe provide solid investment opportunities. Because
the mini-cap companies are small and less well known, a high percentage of
investment decisions are made by investors operating on the basis of incomplete
information.
We believe that our stock-picking expertise rests on our prowess in managing
the flow of information. In the first three months of the Mini-Cap Growth
Portfolio, we turned market inefficiencies into healthy profits for our
investors by being able to act quickly and decisively on the best information
available about these companies. We are optimistic that we will continue to
uncover successful mini-cap companies and, in so doing, will provide long-term
growth to investors in the Mini-Cap Growth Portfolio.
REPRESENTATIVE HOLDINGS:
ABR Information Services, Inc.
Pediatric Services of America
Computer Horizons Corp.
Ride, Inc.
DSP Communications, Inc.
Quicksilver, Inc.
MDL Information Systems, Inc.
Sirrom Capital Corp.
Curative Technologies, Inc.
Longhorn Steaks, Inc.
- --------------------------------------------------------------------------------
5
<PAGE>
A CONVERSATION WITH CATHERINE AVERY SOMHEGYI
- -------------------------------------------------------------------
Catherine Avery Somhegyi
[PHOTO] Portfolio Manager
Mini-Cap Growth Portfolio
Q. CATHERINE, NICHOLAS-APPLEGATE LAUNCHED THE
MINI-CAP GROWTH PORTFOLIO THIS SUMMER AND THAT APPEARS TO HAVE BEEN A VERY
TIMELY DECISION. THE PORTFOLIO RETURNED OVER 10% IN LESS THAN THREE MONTHS. WHAT
ARE MINI-CAP COMPANIES, AND WHY ARE THEY DOING SO WELL?
A. We define mini-cap companies as those with less
than $100 million in stock value. You could think of them as the smallest of the
small caps. The really good mini-cap companies are entrepreneurial organizations
that are growing rapidly by developing innovative products or services or by
establishing and expanding market niches. The same economic conditions that
caused small cap stocks to lead the market this summer -- slow, stable growth, a
stronger dollar and low interest rates -- also boosted mini caps.
Q. DO MINI-CAP COMPANIES BEHAVE DIFFERENTLY
THAN SMALL-CAP COMPANIES?
A. Mini caps behave much like small caps but we
believe the potential for growth in this class is even greater. Managing a
portfolio of mini-cap companies is even more demanding than managing a small-cap
portfolio. There are fewer analysts following these stocks and price swings in
both directions can be more pronounced. This creates market inefficiencies and
that plays to some of the best attributes of our management style, which is
based on managing information well. We run a highly developed in-house computer
system that analyzes and ranks these companies based on their financial
information. We combine that information with a well-established nationwide
network of traditional stock analysts who provide local knowledge and insights
into these companies. Through this careful management of the best information
available, we gain an advantage over the other investors operating in this area
of the market using less sophisticated resources.
Q. WHY DO YOU THINK THIS IS A GOOD TIME TO INVEST
IN MINI CAPS?
A. Because that's where the growth is. In today's
markets, smart and nimble competitors are prime beneficiaries of sweeping
economic and social changes, and I think some of the smartest and most flexible
organizations are mini-cap companies.
Q. WHAT IS NICHOLAS-APPLEGATE'S EXPERIENCE IN
MANAGING MINI-CAP INVESTMENTS?
A. We have been managing small-cap portfolios for
institutional clients for more than ten years and, by definition, that has
included investing in mini-caps along with other larger small-cap companies.
Traditionally, a portion of the assets in our small-cap portfolios have been
invested in mini-cap stocks. For about four years now, we have been managing
mini-cap portfolios for institutional accounts. Our new mini-cap mutual fund
uses the same management style, objectives and portfolio managers as we have
used for institutional mini-cap accounts.
Q. WHAT ARE SOME EXAMPLES OF COMPANIES YOU
PURCHASED FOR THE LAUNCH OF THE PORTFOLIO?
A. We put together a diversified Portfolio of
companies. We have holdings in technology, health-care, finance, transportation,
commercial services and consumer products and services. We invested in MDL
Information Systems, a leading supplier of chemical information systems for the
pharmaceutical and chemical industries and a company with great prospects for
earnings growth. We have positions in DSP Communications Inc., a rapidly growing
developer of wireless communications products, and in restaurant operator
Longhorn Steaks, Inc., which continues to grow earnings as it refines its menu
and facilities.
- --------------------------------------------------------------------------------
6
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
MINI-CAP
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 96.4%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
ADVERTISING -- 0.5%
Dimac Corp.*............................... 2,400 $ 45,300
----------
AEROSPACE -- 1.2%
Hexcel Corp.*.............................. 3,700 39,312
Power Control Technologies, Inc.*.......... 8,800 62,700
----------
102,012
----------
AIRLINES -- 0.7%
Atlantic Coast Airlines, Inc............... 600 4,650
Reno Air, Inc.*............................ 6,800 52,700
----------
57,350
----------
APPAREL -- 3.0%
Cole Kenneth Productions, Inc.*............ 900 31,612
Cutter & Buck, Inc.*....................... 5,200 38,350
Donnkenny, Inc.*........................... 3,000 84,375
Marisa Christina, Inc.*.................... 2,400 38,400
Quiksilver, Inc.*.......................... 3,400 92,225
Supreme International Corp.*............... 600 11,400
----------
296,362
----------
AUTOMOTIVE EQUIPMENT
-- 1.1%
Custom Chrome, Inc.*....................... 2,200 49,775
Edelbrock Corp.*........................... 1,400 21,350
Supreme Industries, Inc. Class A*.......... 2,200 20,075
----------
91,200
----------
BIOTECHNOLOGY -- 3.8%
Bio Vascular, Inc.*........................ 3,000 54,000
Cambridge Neuroscience, Inc.*.............. 5,800 55,100
Cytel Corp.*............................... 6,800 47,600
Genelabs Technologies, Inc*................ 13,000 63,375
Guilford Pharmaceuticals*.................. 3,600 43,200
Magainin Pharmaceuticals*.................. 2,700 29,363
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
BIOTECHNOLOGY (CONTINUED)
Martek Biosciences Corp.*.................. 2,500 $ 40,625
----------
333,263
----------
BROADCASTING -- 1.3%
Multi-Market Radio Inc. Class A*........... 4,500 37,125
United Video Satellite G Class A*.......... 2,500 74,375
----------
111,500
----------
BUILDING MATERIALS -- 0.30%
Patrick Industries, Inc.................... 2,200 30,250
----------
CHEMICALS -- 0.5%
Enviromental Technologies*................. 3,700 44,863
----------
COMPUTER/OFFICE AUTOMATION
-- 4.1%
Computer Horizons Corp.*................... 5,600 112,000
Cybex Corp.*............................... 900 22,500
Emulex Corp................................ 2,400 31,800
Key Tronics Corp.*......................... 3,400 49,087
PSC Inc.*.................................. 4,800 57,600
Softdesk, Inc.*............................ 3,200 80,800
----------
353,787
----------
DRUGS/PHARMACEUTICALS
-- 0.8%
Curative Technologies, Inc.*............... 5,000 70,625
----------
ELECTRONIC DATA PROCESSING
-- 1.3%
Cycare Systems, Inc.*...................... 2,900 96,425
Health Management Systems, Inc.*........... 500 14,000
----------
110,425
----------
ELECTRONIC INSTRUMENTS/ DIVERSIFIED -- 2.7%
Aseco Corp................................. 2,700 45,900
Checkmate Electronics, Inc.*............... 3,000 46,125
Data I/ O Corp.*........................... 3,700 32,375
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
7
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
MINI-CAP
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONIC INSTRUMENTS/ DIVERSIFIED
(CONTINUED)
General Scanning*.......................... 1,700 $ 19,125
Robotic Vision Systems, Inc.*.............. 4,000 93,000
----------
236,525
----------
FINANCE COMPANIES -- 5.9%
Aames Financial Corp....................... 4,600 134,550
Consumer Portfolio Services*............... 3,800 89,300
Imperial Cr Industries, Inc.*.............. 4,400 124,850
National Finacial Group, Inc.*............. 3,200 54,800
Resource Bancshares Mortgage Group*........ 3,160 48,190
Sirrom Capital Corp........................ 3,400 61,625
----------
513,315
----------
GAMBLING -- 0.9%
Griffin Gaming Entertainment, Inc.*........ 1,500 19,125
Penn National Gaming, Inc.*................ 3,300 61,875
----------
81,000
----------
GROCERY PRODUCTS -- 1.4%
Alpine Lace Brands, Inc.*.................. 5,800 63,800
Opta Food Ingredients, Inc.*............... 3,700 58,275
----------
122,075
----------
HOMEBUILDING -- 1.1%
Continental Homes Holding Corp............. 3,700 77,700
M / I Schottenstein Homes*................. 2,000 20,500
----------
98,200
----------
INDUSTRIAL ENGINEER/ CONSTRUCTION -- 0.3%
Greenwich Air Services, Inc.*.............. 1,300 26,650
----------
INVESTMENT COMPANIES
-- 0.6%
BHC Financial, Inc......................... 3,000 48,375
----------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
LODGING -- 0.5%
Studio Plus Hotels, Inc.*.................. 1,900 $ 43,700
----------
MACHINERY/EQUIPMENT
-- 2.9%
AG Associates, Inc.*....................... 1,900 48,450
JLG Industries, Inc........................ 2,400 108,000
LSI Industries, Inc........................ 3,000 58,500
Medar, Inc.*............................... 3,900 38,513
----------
253,463
----------
MANAGED HEALTH CARE HMO'S/ PPO'S -- 0.7%
Corvel Corp.*.............................. 1,900 59,850
----------
MEDICAL SPECIALTIES -- 1.1%
Endosonics Corp.*.......................... 6,800 90,100
Perseptive Biosystems, Inc.*............... 100 1,075
----------
91,175
----------
MEDICAL SUPPLIES -- 8.3%
Avecor Cardiovascular, Inc.*............... 1,800 25,200
Circon Corp.*.............................. 3,600 72,450
Conmed Corp.*.............................. 4,000 131,000
Healthdyne Technologies*................... 4,600 62,675
Hologic, Inc.*............................. 2,200 50,600
Inamed Corp.*.............................. 4,300 39,775
Lunar Corp.*............................... 2,700 89,775
Osteotech, Inc.*........................... 2,900 23,925
Protocol Systems, Inc.*.................... 2,000 23,000
Research Industries Corp.*................. 4,400 128,150
Utah Medical Products, Inc.*............... 3,800 60,800
----------
707,350
----------
MEDICAL/NURSING/HEALTH SERVICES -- 4.0%
ABR Information Services, Inc.*............ 4,650 117,412
American Homepatient, Inc.*................ 1,900 48,450
Northstar Health Services, Inc.*........... 3,500 25,813
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
8
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL/NURSING/HEALTH SERVICES (CONTINUED)
Pediatric Services of America*............. 6,100 $ 117,425
Sterling Healthcare Group*................. 2,800 40,600
----------
349,700
----------
MILITARY/DEFENSE TECHNOLOGY
-- 0.6%
Tracor, Inc.*.............................. 3,400 56,100
----------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 3.1%
Metrocall, Inc.*........................... 2,900 80,475
National Wireless Holdings*................ 4,400 57,200
On Assignment, Inc.*....................... 1,600 40,600
PMT Services, Inc.*........................ 3,800 91,675
----------
269,950
----------
OTHER CONSUMER DURABLES
-- 0.6%
Helen of Troy Corp......................... 3,000 55,125
----------
OTHER CONSUMER SERVICES
-- 0.4%
Staff Builders, Inc.*...................... 6,100 31,263
----------
OTHER HEALTH TECHNOLOGY/ SERVICES -- 2.2%
Horizon Mental Health MG*.................. 3,600 54,900
National Dentex Corp.*..................... 2,500 43,750
Summit Medical Systems, Inc................ 2,200 33,000
Transcend Services, Inc.*.................. 8,700 60,900
----------
192,550
----------
OTHER TECHNOLOGY -- 1.1%
Computer Products, Inc.*................... 6,600 53,212
Peak Technologies Group*................... 1,700 45,050
----------
98,262
----------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
PRINTING/FORMS -- 0.6%
Consolidated Graphics, Inc.*............... 2,600 $ 55,900
----------
RECREATIONAL PRODUCTS
-- 1.9%
Cannondale Corp.*.......................... 3,000 49,500
Radica Games LTD........................... 3,000 7,500
Ride, Inc.*................................ 5,000 105,000
----------
162,000
----------
REITS -- 0.5%
Innkeepers USA Trust....................... 4,800 45,600
----------
RENTAL/LEASING COMPANIES
-- 0.7%
Oxford Resources Corp. Class A*............ 2,500 58,750
----------
RESTAURANTS -- 3.6%
Cooker Restaurant Corp..................... 5,000 53,750
Daka International, Inc.*.................. 3,000 98,250
Longhorn Steaks, Inc.*..................... 3,600 63,900
O Charleys, Inc.*.......................... 2,800 42,000
Quality Dining, Inc.*...................... 2,300 41,975
Rainforest Cafe, Inc.*..................... 400 9,300
----------
309,175
----------
SAVINGS & LOAN ASSOCIATIONS -- 0.4%
Quaker City Bancorp, Inc.*................. 2,600 36,400
----------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 6.70%
Adflex Soluctions, Inc.*................... 1,700 38,037
Alpha Industries, Inc...................... 3,700 66,137
Bell Microproducts, Inc.*.................. 4,300 49,450
Emerson Radio Corp.*....................... 15,000 45,000
EPIC Design Technology, Inc.*.............. 1,200 58,200
Interlink Electronics*..................... 4,600 50,025
NU Horizons Electronics Corp.*............. 5,000 67,500
Quality Semiconductor, Inc.*............... 3,400 55,250
Trident Microsystems, Inc.*................ 3,500 76,125
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
9
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
MINI-CAP
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SEMICONDUCTORS/ELECTRONIC COMPONENTS
(CONTINUED)
Triquint Semiconductor, Inc.*.............. 3,100 $ 70,913
----------
576,637
----------
SOAPS/COSMETICS -- 0.9%
Guest Supply, Inc.*........................ 2,400 74,100
----------
SOFTWARE -- 13.1%
Accugraph Corp.*........................... 2,700 8,239
Ciber, Inc.*............................... 2,000 48,500
Consilium Inc.*............................ 3,700 50,412
Control Data Systems, Inc.*................ 4,700 56,987
Data Translation, Inc.*.................... 2,900 51,475
Datastream Systems, Inc.*.................. 3,000 68,250
Eagle Point Software*...................... 2,000 37,500
Edmark Corp................................ 900 43,312
Expert Software, Inc.*..................... 3,300 70,125
Fulcrum Technologies, Inc.................. 1,000 23,375
GSE Systems, Inc.*......................... 2,000 28,000
Inference Corp. Class A*................... 3,000 45,000
IKOS Systems, Inc.......................... 4,000 48,250
Kronos, Inc.*.............................. 1,500 69,375
MDL Information Systems, Inc.*............. 4,500 83,813
Metatec Corp............................... 2,500 31,250
Micrografx, Inc.*.......................... 4,500 52,313
Minnesota Educational Computing Corp.*..... 1,300 35,100
Sanctuary Woods Multimedia Corp.*.......... 8,600 60,200
Systemsoft Corp.*.......................... 4,300 66,113
Veritas Software Co.*...................... 3,800 98,800
Wind River Systems, Inc.*.................. 2,600 61,100
----------
1,137,489
----------
SPECIALTY CHAINS -- 2.1%
Finlay Enterprises, Inc.*.................. 1,900 32,775
Friedmans, Inc. Class A*................... 1,400 30,450
Garden Ridge Corp.*........................ 2,000 56,500
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SPECIALTY CHAINS (CONTINUED)
West Marine, Inc.*......................... 2,000 $ 64,000
----------
183,725
----------
TELECOMMUNICATIONS EQUIPMENT -- 6.6%
Active Voice Corp.*........................ 1,800 51,075
Brightpoint, Inc.*......................... 3,375 56,742
California Amplifier, Inc.*................ 3,600 75,150
Comdial Corp.*............................. 2,400 29,550
DSP Communications, Inc.*.................. 2,900 95,700
Network Express, Inc....................... 2,300 36,657
Pronet Inc.*............................... 2,800 81,550
TCSI Corp.*................................ 6,100 91,500
Tessco Technologies Inc.*.................. 2,200 57,200
----------
575,124
----------
TELEPHONE -- 0.90%
A Plus Communications, Inc.*............... 2,800 42,700
Pricellular Corp. Class A*................. 2,500 31,563
----------
74,263
----------
WHOLESALE DISTRIBUTION
-- 0.9%
Daisytek International Corp.*.............. 2,300 75,612
----------
TOTAL COMMON STOCKS
(Cost $7,892,184)........................................ 8,346,340
----------
- --------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.6%
- --------------------------------------------------------------------------
Melville Corp.
6.650%, 10/02/95 (Cost $228,915)......... 228,915
----------
TOTAL INVESTMENTS -- 99.0%
(Cost $8,121,099)........................................ 8,575,255
OTHER ASSETS LESS LIABILITIES
-- 1.0%.................................................. 85,101
----------
NET ASSETS -- 100.0%....................................... $8,660,356
----------
</TABLE>
- ------------
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
10
<PAGE>
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------
GOAL: Seeks to maximize long-term capital appreciation through investment
primarily in equity securities of successful U.S. companies with less than $500
million in market capitalization.
REVIEW AND OUTLOOK: Shares of the Emerging Growth Portfolio rose briskly
through spring and summer as small-company stocks assumed the lead in the 1995
bull market. The Portfolio's holdings in technology, telecommunications and
health care helped it to post strong returns. The Portfolio's performance was
especially strong during the summer months and resulted from the solid earnings
growth of the companies in the Portfolio. For example, in the third quarter, 94%
of companies held in the Portfolio reported earnings that exceeded or equaled
Wall Street expectations while only 6% reported lower earnings. Standouts among
the Portfolio's holdings included: Phycor, a rapidly growing company that
manages specialty clinics for more than 1,500 physicians in 19 states;
California Amplifier, a leader in microwave communications products; and United
Waste Systems, a solid waste management system that is growing sales through
acquisitions and is growing profits through sound management and cost-cutting
efforts.
We evaluate investment opportunities on a company-by-company basis using a
disciplined process that considers more than 7,500 different stocks. The net
result of these individual investment decisions at the end of September was a
Portfolio that held 40% of assets in technology stocks, including 10% in
software companies, 11% in semiconductor and electronic component companies, 6%
in computer and office automation equipment and 5% in telecommunications
companies. Health technology and services accounted for 17% of the Portfolio's
holdings, with medical supply-companies, at 6% of the Portfolio, the largest
single health-technology component group. Consumer goods and services companies
made up 14% of the Portfolio.
We believe the investing environment will continue to favor our growth-stock
style. The country's slow, stable economic growth has resulted in low interest
rates, which have benefited smaller growth companies. Larger economic trends are
also improving the outlook for the type of companies we seek. Enhanced global
competition has favored companies that help other companies improve
productivity. This has been a major reason for this year's strong rise in
technology company stocks. It is also a reason for our continued confidence in
those technology companies that possess clear visions and strong products and
that command stable market share or operate in well-defined market niches.
We continue to find and invest in dynamic, growing small companies. We remain
confident that the best American small companies will continue to grow and
prosper. We believe that having a part of your portfolio invested in smaller
companies through the Emerging Growth Portfolio is a good way to achieve
long-term growth of capital.
REPRESENTATIVE HOLDINGS:
Steris Corp.
Phycor, Inc.
Aspect Telecommunications
Sierra Semiconductor Co.
Kemet Corp.
Nautica Enterprises, Inc.
United Waste Systems, Inc.
Target Therapeutics, Inc.
Wolverine Worldwide, Inc.
Quarterdeck Corp.
- --------------------------------------------------------------------------------
11
<PAGE>
A CONVERSATION WITH CATHERINE AVERY SOMHEGYI
- -------------------------------------------------------------------
Catherine Avery Somhegyi
[PHOTO] Portfolio Manager
Emerging Growth Portfolio
Q. CATHERINE, SMALLER-COMPANY STOCKS ENJOYED
SIGNIFICANT GAINS FROM APRIL THROUGH SEPTEMBER WITH THE EMERGING GROWTH
PORTFOLIO PROVING ESPECIALLY ADEPT AT FINDING SUCCESS WITHIN THE GROUP. WHAT WAS
HAPPENING IN THE MARKETS AND THE ECONOMY OVER THE MIDDLE PART OF 1995 TO SMALL
CAPS AND THE PORTFOLIO?
A. As a class, smaller-company stocks were helped
by the strong performance of technology-company stocks and from slow, stable
economic growth and low interest rates. Of course, there were a host of other
factors, but these are the ones that really tipped the balance in favor of
smaller companies. We benefited from especially strong earnings growth by the
companies in the Portfolio. That is really the strength and the intent of our
bottom-up investment style. We look on a company-by-company basis over a broad
universe of more than 7,500 stocks. We identify and invest in companies that are
using change to their advantage, and that are exhibiting the fundamental
strengths that we believe will translate into rapid share-price appreciation.
This proved a highly effective strategy through spring and summer, and we think
it is the best strategy for long-term investing in equities.
Q. WHAT IS YOUR OUTLOOK FOR NEXT YEAR?
A. Our outlook relates to our style: As bottom-up
investment managers, we continue to identify and invest in companies that we
believe are going to grow earnings in this slow-growth economy. I think there is
still room for small-cap stocks to grow and I think it is likely that
small-company growth will exceed large-company growth for some time. The
Institutional Brokers Estimate System (I/B/E/S), an organization that analyzes
earnings trends on a company-by-company basis, projects that small companies'
earnings will grow 18%, on average, over the next five years, while
large-company earnings will rise at only a 13% rate. That's a great outlook for
small-company stocks for next year and beyond.
Q. HOW DOES NICHOLAS-APPLEGATE'S STYLE OF
INVESTING IN SMALL-COMPANIES DIFFER FROM THAT OF OTHER MANAGERS?
A. I think that what distinguishes our investment
style from others is how we define growth and how that guides our investment
decisions. We look for the kinds of positive, sustainable changes in companies
that will lead to earnings accelerations and to capital appreciation. We devote
a lot of time, energy and resources to developing good investment ideas and to
determining that the good companies we have identified are in fact great
investment opportunities. We are disciplined in our approach, which means that
investors who depend on us for the small-company growth portion of their
portfolios don't have to worry that we'll shift our style or focus with the
latest market trend into some other class of investments. It also means we won't
hold onto a stock just because it performed well in the past. We aren't
sentimental. We strive always to move the Portfolio to strength.
- --------------------------------------------------------------------------------
12
<PAGE>
- -------------------------------------------------------------------
Q. GIVEN THOSE ELEMENTS OF YOUR STYLE, DO YOU
EVER CONSCIOUSLY DECIDE TO CONCENTRATE ON PROMISING SECTORS OR INDUSTRIES LIKE
TECHNOLOGY?
A. We focus on where the growth is going to come
from and then we build our portfolio stock by stock, based on company
fundamentals and market analysis. This accounts for our record of investing in
promising sectors at opportune times. Our portfolio adjusts well for change as
it happens, not as the result of top-down calls or market forecasts.
Q. WHY SHOULD INDIVIDUAL INVESTORS INCLUDE SMALL-
COMPANY STOCKS AS A PORTION OF THEIR INDIVIDUAL PORTFOLIOS?
A. If you look at the research of Ibbotson Associates
you'll see that, historically, small-company stocks have earned superior
long-term returns over all other classes of U.S. financial assets. Companies
developing new and innovative products to meet the present and future needs of
consumers and businesses have long fueled the growth of our economy. I see no
reason to believe that situation is going to change. Also, bank accounts,
certificates of deposit and bonds traditionally haven't stayed very far ahead of
inflation. Large-cap stocks have done better than bonds, but since the 1920s,
nothing has helped investors create wealth like small-company stocks.
Q. WHAT ARE SOME EXAMPLES OF COMPANIES YOU
ADDED OR DELETED FROM THE PORTFOLIO DURING THE PERIOD?
A. We bought Consolidated Graphics and Premenos
Technology in September. Consolidated Graphics is aggressively acquiring market
share in the offset-printing business. We believe it is on track to become in
the print-shop business what Staples and Office Depot have become in the
office-supplies business. Premenos is a leader in the development of
electronic-data-interchange software, which is used by businesses to interact
with customers and suppliers using the Internet. We sold Skywest, Inc. in
September. The company's earnings have been soft and are likely to continue soft
as a result of increased competition. We also sold our position in Cheesecake
Factory because of slow sales growth in its bakery stores.
- --------------------------------------------------------------------------------
13
<PAGE>
EMERGING GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING GROWTH INSTITUTIONAL PORTFOLIO WITH THE RUSSELL 2000 GROWTH INDEX.
<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(10/1/93 -- 09/30/95) (10/01/94 -- 09/30/95)
13.09% 32.82%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Emerging Growth Institutional Portfolio Russell 2000 Growth Index
10/2/97 250,000 250,000
12/97 249920 256565
3/98 234855 246126
6/98 217519 230682
9/98 240633 252190
12/98 241147 250325
3/99 255254 264052
6/99 284571 290246
9/99 319619 323250
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Emerging Growth Institutional Portfolio with the
Russell 2000 Growth Index from the commencement of operations of the Portfolio
on October 1, 1993 to the end of the Trust's semi-annual period on September 30,
1995, on a cumulative basis. All return calculations reflect the reinvestment of
income dividends and capital gains distributions, if any, as well as all fees
and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been assumed by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no assumption of fees and
expenses in excess of expense limitations.
The Russell 2000 Growth Index is an unmanaged index containing those securities
in the Russell 2000 Index with a greater-than-average growth orientation.
Companies in this index generally have higher price-to-book and price-earnings
ratios. The Russell 2000 Index is an unmanaged index and is a widely regarded
small-cap index of the 2,000 smallest securities in the Russell 3000 Index which
comprises the 3,000 largest U.S. securities as determined by total market
capitalization.
Index returns reflect the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.
- --------------------------------------------------------------------------------
14
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 93.5%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
ADVERTISING -- 0.2%
Heritage Media Corp. Class A*.............. 37,900 $ 1,141,737
------------
AEROSPACE -- 0.1%
Hexcel Corp.*.............................. 43,600 463,250
------------
AGRICULTURE -- 0.2%
Dekalb Genetics Corp. Class B.............. 19,500 916,500
------------
AIR FREIGHT/SHAPING
-- 0.6%
Airborne Freight Corp...................... 110,900 2,717,050
Atlas Air, Inc.*........................... 33,000 734,250
------------
3,451,300
------------
AIRLINES -- 0.9%
America West Airlines, Inc.*............... 100,400 1,556,200
Mesa Airlines, Inc.*....................... 300,800 3,064,400
Midwest Express Holdings, Inc.*............ 10,000 225,000
------------
4,845,600
------------
ALCOHOLIC BEVERAGES -- 0.6%
Canandaigua Wine, Inc. Class A*............ 62,400 3,034,200
------------
APPAREL -- 2.5%
Authentic Fitness Corp..................... 22,000 495,000
Cole Kenneth Productions, Inc.*............ 41,800 1,468,225
Donnkenny, Inc.*........................... 48,500 1,364,062
Marisa Christina, Inc.*.................... 40,400 646,400
Nautica Enterprises, Inc.*................. 107,175 3,670,744
Playtex Products, Inc...................... 22,900 197,512
Quiksilver, Inc.*.......................... 34,400 $ 933,100
St. John Knits, Inc........................ 20,000 975,000
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
APPAREL (CONTINUED)
Wolverine Worldwide, Inc................... 129,200 3,536,850
------------
13,286,893
------------
AUTOMOTIVE EQUIPMENT
-- 0.5%
Custom Chrome, Inc.*....................... 10,000 226,250
Intermet Corp.............................. 20,000 225,000
Titan Wheel International, Inc............. 135,975 2,328,572
Top Source Technologies, Inc.*............. 17,300 152,456
------------
2,932,278
------------
BIOTECHNOLOGY -- 4.7%
Agouron Pharmaceuticals, Inc.*............. 57,200 1,644,500
Applied Bioscience International, Inc.*.... 80,000 510,000
Bio-Vascular, Inc.*........................ 30,000 540,000
Biochem Pharma, Inc.*...................... 63,600 2,027,250
Carrington Laboratories, Inc.*............. 70,000 2,432,500
Cephalon, Inc.*............................ 18,500 508,750
Cytel Corp.*............................... 30,000 210,000
Genzyme Corp.*............................. 50,000 725,000
Gilead Sciences, Inc.*..................... 15,000 330,000
Idexx Laboratories Corp.*.................. 96,800 3,605,800
Immulogic Pharmaceutical Corp.*............ 40,000 490,000
Interneuron Pharmaceuticals, Inc.*......... 30,000 345,000
Martek Biosciences Corp.*.................. 37,000 601,250
Matrix Pharmaceuticals, Inc.*.............. 40,000 $ 560,000
Mentor Corp................................ 77,300 3,517,150
Mycogen Corp.*............................. 25,000 343,750
Neurogen Corp.*............................ 48,000 1,068,000
Northfield Laboratories, Inc.*............. 40,000 740,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
15
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
BIOTECHNOLOGY (CONTINUED)
Quintiles Transnational Corp.*............. 32,800 1,935,200
Regeneron Pharmaceuticals, Inc.*........... 40,000 625,000
Sepracor, Inc.*............................ 20,000 432,500
Sequus Pharmaceuticals, Inc.*.............. 136,500 1,586,812
Vical, Inc.*............................... 30,000 352,500
------------
25,130,962
------------
BROADCASTING -- 2.1%
American Radio Systems Corp.*.............. 52,400 1,296,900
Citicasters, Inc.*......................... 34,600 1,154,775
Data Broadcasting Corp.*................... 60,000 461,250
E Z Communication, Inc. Class A*........... 10,000 192,500
Emmis Broadcasting Corp. Class A*.......... 35,100 1,101,262
Evergreen Media Corp. Class A*............. 54,400 1,550,400
Heftel Broadcastingn Corp. Class A*........ 20,000 385,000
Renaissance Communications Corp.*.......... 44,100 1,543,500
Saga Communications, Inc. Class A*......... 40,050 635,794
SFX Broadcasting, Inc. Class A*............ 12,000 342,000
United Video Satellite Group, Inc. Class
A*....................................... 9,500 282,625
Westcott Communications, Inc.*............. 60,000 $ 907,500
Westwood One, Inc.......................... 72,200 1,299,600
Young Broadcasting Corp. Class A*.......... 11,400 356,250
------------
11,509,356
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
BUILDING MATERIALS -- 0.0%
Republic Gypsum Co......................... 20,200 239,875
------------
BUILDING MATERIAL CHAINS -- 0.3%
Mueller Industries, Inc.*.................. 32,300 1,675,562
------------
CATALOG/OUTLET STORES
-- 0.2%
Black Box Corp.*........................... 20,000 370,000
The Sports Authority, Inc.*................ 31,900 881,237
------------
1,251,237
------------
CHEMICALS -- 0.7%
Bush Boake Allen, Inc.*.................... 64,400 1,819,300
Mississippi Chemical Corp.................. 96,800 2,032,800
------------
3,852,100
------------
COMPUTERS/OFFICE AUTOMATION -- 5.7%
Auspex Systems, Inc.*...................... 120,300 1,879,687
Boca Research, Inc.*....................... 89,700 2,175,225
Cognex Corp.*.............................. 60,500 2,919,125
Computer Horizons Corp.*................... 20,000 400,000
Computervision Corp.*...................... 104,400 1,265,850
Danka Business Systems
PLC Sponsored ADR (Argentina)............ 18,800 676,800
Diamond Multimedia Systems, Inc.*.......... 86,900 2,802,525
Eltron International, Inc.*................ 39,900 1,127,175
Emulex Corp................................ 33,600 445,200
Microcom, Inc.*............................ 41,400 781,425
Micros Systems, Inc.*...................... 27,800 $ 993,850
Mylex Corp.*............................... 20,000 340,000
Optical Data Systems, Inc.*................ 66,600 2,597,400
Pinacle Systems, Inc.*..................... 32,600 1,002,450
Planar Systems, Inc.*...................... 41,200 834,300
Safeguard Scientifics, Inc.*............... 58,650 2,815,200
Softdesk, Inc.*............................ 4,800 121,200
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
16
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
COMPUTERS/OFFICE AUTOMATION (CONTINUED)
StorMedia, Inc.*........................... 72,500 3,280,625
Telxon Corp................................ 151,600 3,619,450
Titan Corp.*............................... 69,500 668,937
------------
30,746,424
------------
CONSUMER ELECTRICALS
-- 0.3%
Harman International Industries, Inc....... 34,440 1,687,560
------------
CONTAINERS -- 0.1%
Aptargroup, Inc............................ 14,500 480,313
------------
CONTRACT DRILLING -- 0.9%
Global Marine, Inc......................... 214,900 1,531,162
Nabors Industries, Inc.*................... 58,300 550,206
Noble Drilling Corp.*...................... 165,700 1,284,175
Reading & Bates Corp....................... 124,600 1,495,200
------------
4,860,743
------------
DEPARTMENT/DISCOUNT STORES -- 0.6%
Carson Pirie Scott & Co.*.................. 133,600 2,538,400
Proffitt's, Inc.*.......................... 25,200 693,000
------------
3,231,400
------------
DRUGS/PHARMACEUTICALS
-- 1.0%
Dura Pharmaceuticals, Inc.*................ 101,800 3,028,550
Jones Medical Industries, Inc.............. 15,000 $ 268,125
North American Biologicals, Inc.*.......... 60,400 498,300
Owen Healthcare, Inc.*..................... 10,000 163,125
Watson Pharmaceuticals, Inc.*.............. 29,600 1,213,600
------------
5,171,700
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONIC DATA PROCESSING -- 1.8%
Affiliated Computer Services, Inc.*........ 23,700 693,225
Concord Computing Corp.*................... 66,400 2,025,200
Envoy Corp.*............................... 63,100 757,200
Fair Isaac & Co., Inc...................... 16,600 481,400
Health Management Systems, Inc.*........... 91,500 2,562,000
Sungard Data Systems, Inc.*................ 91,100 2,664,675
Systems & Computer Technology Corp......... 6,900 186,300
Transaction Network Services, Inc.......... 17,400 467,625
------------
9,837,625
------------
ELECTRONIC INSTRUMENTS
-- 4.3%
Belden, Inc................................ 38,800 1,018,500
Checkpoint Systems, Inc.*.................. 113,400 2,990,925
Cincinnati Microwave, Inc.*................ 63,200 955,900
Coherent, Inc.*............................ 90,700 3,310,550
Credence Systems Corp.*.................... 82,950 3,006,937
Cyberoptics Corp.*......................... 12,000 408,000
FSI International, Inc.*................... 126,900 4,219,425
Lo-Jack Corp.*............................. 127,500 2,103,750
Mattson Technology, Inc.*.................. 46,800 1,989,000
Oak Industries, Inc.*...................... 50,000 $ 1,506,250
Robotic Vision Systems, Inc.*.............. 43,400 1,009,050
Trimble Navigation LTD..................... 34,700 876,175
------------
23,394,462
------------
ENTERTAINMENT -- 0.9%
Hollywood Entertainment Corp.*............. 130,600 2,799,737
Movies, Inc.*.............................. 10,000 196,250
Movie Gallery, Inc.*....................... 27,000 1,154,250
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
17
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
ENTERTAINMENT (CONTINUED)
Regal Cinemas, Inc.*....................... 21,950 902,694
------------
5,052,931
------------
ENVIRONMENTAL SERVICES
-- 2.0%
Newpark Resources, Inc.*................... 57,000 997,500
Republic Waste Industries*................. 19,000 439,375
Sanifill, Inc.*............................ 52,200 1,709,550
Tetra Technologies, Inc.*.................. 42,300 581,625
United Waste Systems, Inc.*................ 86,600 3,615,550
U.S. Filter Corp.*......................... 58,000 1,392,000
U.S.A. Waste Services, Inc.*............... 96,100 1,873,950
------------
10,609,550
------------
FINANCE COMPANIES
-- 1.9%
Aames Financial Corp....................... 8,000 234,000
AmeriCredit Corp.*......................... 104,000 1,547,000
CMAC Investment Corp....................... 40,300 2,120,787
Imperial Credit Industries, Inc.*.......... 30,000 851,250
MS Financial, Inc.*........................ 15,000 172,500
NAL Financial Group, Inc.*................. 45,000 770,625
North American Mortgage Co................. 69,600 $ 1,809,600
Olympic Financial LTD*..................... 34,700 949,912
West Corp., Inc............................ 56,100 1,136,025
World Acceptance Corp.*.................... 28,500 406,125
------------
9,997,824
------------
FOOD CHAINS -- 0.3%
Casey's General Stores, Inc................ 61,900 1,400,487
------------
GAMBLING -- 1.4%
Casino Data Systems........................ 30,000 802,500
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
GAMBLING (CONTINUED)
Grand Casinos, Inc.*....................... 78,800 3,201,250
Griffen Gaming & Entertainment, Inc.*...... 7,820 99,705
Players International, Inc................. 131,800 1,894,625
Station Casinos, Inc.*..................... 94,600 1,454,475
------------
7,452,555
------------
GROCERY PRODUCTS -- 0.1%
Alpine Lace Brands, Inc.*.................. 10,000 110,000
Opta Food Ingredients, Inc.*............... 25,000 393,750
------------
503,750
------------
HOME FURNISHINGS -- 0.1%
Renters Choice, Inc.*...................... 25,000 765,625
------------
HOMEBUILDING -- 1.2%
Champion Enterprises, Inc.*................ 59,700 1,186,537
Oakwood Homes Corp......................... 37,400 1,318,350
Redman Industries, Inc.*................... 30,400 790,400
Toll Brothers, Inc.*....................... 81,000 1,528,875
U.S. Home Corp............................. 62,400 1,560,000
------------
6,384,162
------------
HOSPITALS -- 1.0%
Community Health Systems, Inc.*............ 95,500 3,855,812
Gulf South Medical Supply, Inc.*........... 41,800 $ 1,029,325
Health Management Associates, Inc. Class
A........................................ 21,812 700,711
------------
5,585,848
------------
INDUSTRIAL ENGINEERING/ CONSTRUCTION -- 0.1%
Greenwich Air Services, Inc.*.............. 8,300 170,150
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
18
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
INDUSTRIAL ENGINEERING/ CONSTRUCTION
(CONTINUED)
Insituform Technologies, Inc. Class A*..... 27,000 378,000
------------
548,150
------------
LODGING -- 0.6%
Doubletree Corp.*.......................... 14,300 318,175
John Q. Hammons Hotels, Inc.*.............. 19,900 256,212
Prime Hospitality Corp.*................... 187,500 1,921,875
Studio Plus Hotels, Inc.*.................. 26,500 609,500
------------
3,105,762
------------
MACHINERY/EQUIPMENT
-- 2.2%
AG Associates, Inc.*....................... 19,100 487,050
Agco Corp.................................. 25,950 1,180,725
Brooks Automation, Inc.*................... 25,100 539,650
Computational Systems, Inc.*............... 20,000 325,000
Digitran Systems, Inc.*.................... 14,500 14,500
Duriron Company, Inc....................... 21,900 640,575
Gasonics International Corp.*.............. 47,900 1,784,275
Greenfield Industries, Inc................. 57,900 1,780,425
Helix Technology Corp...................... 31,500 1,456,875
IMO Industries, Inc.*...................... 40,200 371,850
Plasma & Materials Technologies, Inc.*..... 15,000 264,375
Trimas Corp................................ 28,600 593,450
Watkins-Johnson Co......................... 30,600 $ 1,675,350
Zebra Technologies Corp. Class A*.......... 15,200 809,400
------------
11,923,500
------------
MANAGED HEALTHCARE/ HMO'S/PPO'S -- 0.6%
Apogee, Inc.*.............................. 39,900 728,175
CRA Managed Care, Inc.*.................... 19,100 413,037
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MANAGED HEALTHCARE/ HMO'S/PPO'S (CONTINUED)
Inphynet Medical Management, Inc.*......... 19,100 358,125
Medcath, Inc.*............................. 18,200 336,700
OccuSystems, Inc.*......................... 26,600 551,950
Orthodontic Centers of America, Inc.*...... 19,600 632,100
Sierra Health Services, Inc.*.............. 10,000 250,000
------------
3,270,087
------------
MEDICAL SPECIALTIES -- 0.2%
Endosonics Corp.*.......................... 8,100 107,325
Express Scripts, Inc. Class A*............. 21,600 950,400
------------
1,057,725
------------
MEDICAL SUPPLIES -- 5.6%
Amsco International, Inc.*................. 71,600 1,423,050
AVECOR Cardiovascular, Inc.*............... 19,100 267,400
Benson Eyecare Corp.*...................... 80,000 790,000
Conmed Corp................................ 6,800 222,700
Daig Corp.*................................ 14,500 351,625
Diagnostic Products Corp................... 11,100 427,350
Hologic, Inc.*............................. 30,000 690,000
Instent, Inc.*............................. 20,000 325,000
Invacare Corp.............................. 47,500 2,280,000
Keravision, Inc.*.......................... 40,000 435,000
Lunar Corp.*............................... 8,000 266,000
Medisense, Inc.*........................... 33,100 798,537
Metra Biosystems, Inc.*.................... 34,000 $ 663,000
Nellcor, Inc.*............................. 90,700 4,478,312
Omnicare, Inc.............................. 106,200 4,141,800
Orthofix International N.V................. 28,600 443,300
Osteotech, Inc.*........................... 10,000 82,500
Ostex International, Inc.*................. 20,000 447,500
Research Industries Corp.*................. 9,000 262,125
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
19
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL SUPPLIES (CONTINUED)
ResMed, Inc.*.............................. 29,400 521,850
Serologicals Corp.*........................ 10,000 155,000
Steris Corp.*.............................. 146,200 6,158,675
Target Therapeutics, Inc.*................. 49,600 3,472,000
Uromed Corp.*.............................. 15,000 150,000
Ventritex, Inc.*........................... 15,000 322,500
Vital Signs, Inc........................... 19,000 394,250
------------
29,969,474
------------
MEDICAL/NURSING/HEALTH SERVICES -- 3.4%
ABR Information Services, Inc.*............ 10,950 276,487
American Homepatient, Inc.*................ 23,900 609,450
American Oncology Resources, Inc.*......... 46,900 2,016,700
EmCare Holdings, Inc.*..................... 20,300 449,138
Genesis Health Ventures, Inc.*............. 88,700 3,171,025
Mariner Health Group, Inc.*................ 143,300 2,024,112
Pacific Physician Services, Inc............ 40,000 690,000
Pediatric Services of America, Inc.*....... 15,100 290,675
Phycor, Inc.*.............................. 155,575 5,328,444
Renal Treatment Centers, Inc.*............. 45,100 1,668,700
Rotech Medical Corp.*...................... 77,700 $ 1,932,788
------------
18,457,519
------------
METALS -- 0.5%
Agnico-Eagle Mines, Inc.................... 60,200 835,275
Commonwealth Aluminum Corp................. 100,000 1,750,000
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
METALS (CONTINUED)
UNR Industries, Inc........................ 39,900 344,137
------------
2,929,412
------------
MULTI-LINE INSURERS
-- 0.1%
Penncorp Financial Group, Inc.............. 29,100 694,762
------------
OIL/GAS PRODUCTION
-- 1.0%
Barrett Resources Corp.*................... 45,900 1,032,750
Benton Oil & Gas Co.*...................... 66,600 740,925
Brown (Tom), Inc.*......................... 58,700 799,787
Global Natural Resources, Inc.*............ 48,800 481,900
Nuevo Energy Co.*.......................... 10,000 225,000
Phoenix Resource Companies, Inc............ 9,500 368,125
Pogo Producing Co.......................... 26,000 591,500
Vintage Petroleum, Inc..................... 51,500 1,081,500
------------
5,321,487
------------
OILFIELD SERVICES/EQUIPMENT -- 1.7%
BJ Services Co.*........................... 110,400 2,787,600
Camco International, Inc................... 29,700 727,650
Energy Ventures, Inc.*..................... 15,000 348,750
Marine Drilling Co., Inc................... 38,000 161,500
Pool Energy Services Co.*.................. 10,200 89,250
Pride Petroleum Services, Inc.*............ 50,000 500,000
Smith International, Inc................... 63,100 1,096,362
Varco International, Inc.*................. 94,700 958,838
Weatherford International, Inc.*........... 171,000 $ 2,223,000
------------
8,892,950
------------
OTHER COMMERCIAL/ INDUSTRIAL SERVICES
-- 0.8%
Copart, Inc.*.............................. 21,100 480,025
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
20
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
OTHER COMMERCIAL/ INDUSTRIAL SERVICES
(CONTINUED)
G&K Services, Inc. Class A................. 16,450 382,462
HighwayMaster Communications, Inc.*........ 15,000 195,000
National Education Corp.*.................. 40,000 320,000
National Wireless Holdings, Inc.*.......... 9,500 123,500
Robert Half International, Inc.*........... 34,500 1,177,313
Romac International, Inc.*................. 20,000 340,000
U.S. Delivery Systems, Inc.*............... 39,500 1,135,625
------------
4,153,925
------------
OTHER CONSUMER DURABLES -- 0.2%
China Yuchai International LTD............. 14,000 171,500
Sola International, Inc.*.................. 30,000 663,750
------------
835,250
------------
OTHER CONSUMER NON-DURABLES -- 0.3%
Blyth Industries, Inc.*.................... 27,000 1,262,250
USA Detergents, Inc.*...................... 29,000 601,750
------------
1,864,000
------------
OTHER CONSUMER SERVICES
-- 0.6%
Apollo Group, Inc. Class A*................ 14,799 $ 388,474
Arch Communications Group, Inc.*........... 49,000 1,286,250
Equity Corp. International*................ 10,000 247,500
Norrell Corp............................... 21,900 711,750
Staff Builders, Inc.*...................... 63,400 324,925
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER CONSUMER SERVICES
(CONTINUED)
U.S. Order, Inc.*.......................... 28,800 532,800
------------
3,491,699
------------
OTHER ENERGY -- 0.2%
Trigen Energy, Inc......................... 46,500 1,028,812
------------
OTHER FINANCIAL SERVICES
-- 0.1%
WFS Financial, Inc.*....................... 30,000 682,500
------------
OTHER HEALTH TECHNOLOGY/ SERVICES -- 0.4%
C.I.S. Technologies, Inc.*................. 60,000 232,500
Horizon Mental Health Management, Inc.*.... 15,600 237,900
Physician Reliance Network, Inc.*.......... 20,700 765,900
RTW, Inc.*................................. 34,000 943,500
Summit Medical Systems, Inc................ 15,900 238,500
------------
2,418,300
------------
OTHER INSURANCE SERVICES
-- 0.1%
Fidelity National Financial, Inc........... 22,600 322,050
First American Financial Corp.............. 11,400 275,025
------------
597,075
------------
OTHER PRODUCERS/ MANUFACTURING -- 1.2%
Blount, Inc. Class A....................... 12,600 $ 600,075
BMC Industries, Inc........................ 39,800 1,537,275
Lydall, Inc.*.............................. 18,700 465,163
Nu-Kote Holding, Inc. Class A*............. 79,400 1,726,950
Simula, Inc.*.............................. 49,650 1,247,456
Wolverine Tube, Inc.*...................... 19,100 723,413
------------
6,300,332
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
21
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
OTHER RETAIL TRADE
-- 0.2%
Corporate Express, Inc..................... 19,350 471,656
------------
OTHER TECHNOLOGY -- 1.2%
Henry (Jack) & Associates.................. 20,000 405,000
Hutchinson Technology, Inc.*............... 40,000 2,490,000
Renaissance Solutions, Inc.*............... 23,100 563,063
Technology Solutions Company*.............. 30,000 540,000
Vicor Corp.*............................... 67,000 1,620,563
3D Systems Corp.*.......................... 46,900 785,575
------------
6,404,201
------------
PRINTING/FORMS -- 0.7%
Consolidated Graphics, Inc.*............... 60,300 1,296,450
Devon Group, Inc.*......................... 9,500 410,875
Scientific Games Holding Corp.*............ 55,000 2,055,625
------------
3,762,950
------------
PROPERTY-CASUALTY INSURERS -- 0.3%
Allied Group, Inc.......................... 18,000 589,500
Foremost Corp. of America.................. 5,900 261,075
Vesta Insurance Group, Inc................. 21,400 $ 829,250
------------
1,679,825
------------
REAL ESTATE BROKERS/SERVICES -- 0.2%
Amresco, Inc............................... 53,000 689,000
NHP, Inc.*................................. 25,000 346,875
Redwood Trust, Inc......................... 14,000 281,750
------------
1,317,625
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
RECREATIONAL PRODUCTS
-- 0.2%
Ride, Inc.*................................ 30,000 630,000
Toro Co.................................... 14,800 466,200
------------
1,096,200...
------------
REAL ESTATES INVESTMENT TRUSTS -- 1.2%
Beacon Properties Corp..................... 15,500 331,313
CWM Mortgage Holdings, Inc................. 140,500 1,896,750
Equity Inns, Inc........................... 30,700 360,725
FelCor Suite Hotels, Inc................... 19,100 573,000
Macerich Co. (The)......................... 31,500 669,375
Mid-America Apartment Communities, Inc..... 13,400 331,650
Oasis Residential, Inc..................... 20,200 454,500
Shurgard Storage Centers, Inc. Class A..... 25,100 624,363
Storage USA, Inc........................... 24,300 750,263
Sunstone Hotel Investors, Inc.*............ 20,000 192,500
Weeks Corp................................. 19,900 480,088
------------
6,664,527
------------
RESTAURANTS -- 1.6%
Apple South, Inc........................... 138,400 3,148,600
Applebee's International, Inc.............. 99,400 $ 2,708,650
CKE Restaurants, Inc....................... 42,100 547,300
Daka International, Inc.*.................. 23,000 753,250
Longhorn Steaks, Inc.*..................... 13,500 239,625
O'Charleys, Inc.*.......................... 35,170 527,550
Papa John's International, Inc.*........... 12,200 549,000
------------
8,473,975
------------
RETAIL/FOOD DISTRIBUTION
-- 0.4%
Richfood Holdings, Inc..................... 95,700 2,410,444
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
22
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SAVINGS & LOAN ASSOCIATIONS -- 0.3%
Commercial Federal Corp.*.................. 43,000 1,537,250
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 11.5%
Adflex Solutions, Inc.*.................... 15,000 335,625
ALANTEC Corp.*............................. 45,500 1,444,625
ANADIGICS, Inc.*........................... 20,000 555,000
Burr-Brown Corp.*.......................... 41,700 1,553,325
Chips & Technologies, Inc.*................ 120,900 1,632,150
C.P. Clare Corp.*.......................... 5,700 145,350
Dallas Semiconductor Corp.................. 20,000 410,000
Electro Scientific Industries, Inc......... 28,400 990,450
Electroglas, Inc........................... 47,200 3,215,500
Emerson Radio Corp.*....................... 70,200 210,600
Epic Design Technology, Inc.*.............. 43,700 2,119,450
Exar Corp.*................................ 93,600 3,346,200
Flextronics International, LTD............. 61,100 1,573,325
Hadco Corp.*............................... 37,100 1,010,975
Information Storage Devices, Inc.*......... 35,000 $ 791,875
Interlink Electronics, Inc.*............... 13,200 143,550
International Rectifier Corp.*............. 35,800 1,440,950
Kemet Corp.*............................... 108,800 3,726,400
Kent Electronics Corp.*.................... 15,000 658,125
Level One Communications, Inc.*............ 49,100 1,153,850
Marshall Industries*....................... 38,100 1,438,275
Merix Corp.*............................... 37,600 1,203,200
Oak Technology, Inc.*...................... 73,300 3,078,600
Orbit Semiconductor, Inc.*................. 19,500 370,500
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SEMICONDUCTORS/ELECTRONIC COMPONENTS
(CONTINUED)
Pioneer Standard Electronics, Inc.......... 157,675 2,759,313
Quality Semiconductor, Inc.*............... 26,500 430,625
Sanmina Corp.*............................. 40,000 1,910,000
SDL, Inc.*................................. 58,000 1,638,500
Semitool, Inc.*............................ 38,500 962,500
Sierra Semiconductor Corp.*................ 85,900 4,219,838
Silicon Valley Group, Inc.*................ 87,100 3,364,238
Symmetricom, Inc.*......................... 87,400 1,966,500
S3, Inc.*.................................. 82,800 2,887,650
Tower Semiconductor LTD.................... 67,700 2,200,250
Trident Microsystems, Inc.*................ 42,800 930,900
Triquint Semiconductor, Inc.*.............. 46,200 1,056,825
Ultratech Stepper, Inc.*................... 80,400 3,396,900
Wyle Electronics, Inc...................... 40,000 1,795,000
------------
62,066,939
------------
SOAPS/COSMETICS -- 0.0%
Guest Supply, Inc.*........................ 1,300 40,138
------------
SOFTWARE -- 10.4%
Activision, Inc.*.......................... 80,000 $ 1,270,000
Applix, Inc.*.............................. 41,100 904,200
ArcSys, Inc.*.............................. 61,400 2,532,750
Artisoft Inc............................... 40,000 425,000
Astea International, Inc.*................. 25,000 500,000
Atria Software, Inc.*...................... 45,200 1,322,100
Business Objects SA
Sponsored ADR (France)*.................. 54,500 2,323,063
CBT Group PLC
Sponsored ADR (Ireland)*................. 40,800 1,948,200
Cognos, Inc.*.............................. 83,000 2,842,750
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
23
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SOFTWARE (CONTINUED)
Computron Software, Inc.*.................. 5,000 86,250
Continuum, Inc.*........................... 19,600 752,150
Control Data Systems, Inc.*................ 47,400 574,725
Datastream Systems, Inc.*.................. 5,800 131,950
Dendrite International, Inc.*.............. 5,500 83,875
Edmark Corp................................ 10,000 481,250
Fulcrum Technologies, Inc.*................ 16,000 374,000
HCIA, Inc.*................................ 20,000 515,000
HNC Software, Inc.*........................ 40,800 1,071,000
Hummingbird Communications LTD.*........... 30,000 1,117,500
Hyperion Software Corp.*................... 22,400 1,271,200
Ikos Systems, Inc.*........................ 3,600 42,750
Inference Corp.*........................... 4,000 60,000
Integrated Silicon Systems*................ 20,500 615,000
Integrated Systems, Inc.*.................. 19,100 749,675
Intersolv*................................. 91,500 1,841,438
Maxis, Inc.*............................... 16,500 726,000
McAfee Associates, Inc.*................... 28,600 1,472,900
MDL Information Systems, Inc.*............. 19,100 $ 355,738
Medic Computer Systems, Inc.*.............. 19,100 969,325
Mercury Interactive Corp.*................. 40,000 1,110,000
National Instruments Corp.*................ 24,000 486,000
NETCOM On-Line Communication Services,
Inc.*.................................... 44,000 1,936,000
Novadigm, Inc.*............................ 40,000 675,000
On Technology Corp.*....................... 7,000 120,750
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SOFTWARE (CONTINUED)
Open Environment Corp.*.................... 36,600 640,500
Perceptron, Inc.*.......................... 23,800 571,200
Performance Systems International, Inc.*... 99,700 2,143,550
Platinum Technology, Inc.*................. 149,263 3,059,892
Premenos Technology Corp.*................. 10,000 325,000
PRI Automation, Inc.*...................... 59,700 2,447,700
Pure Software, Inc.*....................... 5,000 178,750
Quarterdeck Corp.*......................... 83,700 1,621,688
Rainbow Technologies, Inc.*................ 36,300 716,925
Seer Technologies, Inc.*................... 5,000 75,625
Shiva Corp.*............................... 5,800 355,250
Sierra On-Line, Inc........................ 77,700 3,049,725
Smith Mico Software, Inc.*................. 8,000 79,000
Software Artistry, Inc.*................... 40,000 760,000
Stac Electronics*.......................... 98,000 918,750
Sterling Software, Inc.*................... 59,900 2,725,450
Structural Dynamics Research*.............. 96,000 1,782,000
Syncronys Softcorp......................... 20,000 270,000
Systemsoft Corp.*.......................... 19,100 293,663
Unison Software, Inc.*..................... 5,000 $ 75,000
USDATA Corp.*.............................. 5,000 122,500
Videoserver, Inc.*......................... 40,000 1,410,000
Wind River Systems*........................ 27,100 636,850
------------
55,946,557..
------------
SPECIALTY CHAINS -- 1.3%
Compusa, Inc.*............................. 83,700 3,599,100
Friedman's Inc. Class A*................... 15,900 345,825
Just for Feet, Inc.*....................... 40,800 1,254,600
Men's Warehouse, Inc.*..................... 31,800 1,144,800
Petco Animal Supplies, Inc.*............... 17,100 444,600
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
24
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SPECIALTY CHAINS (CONTINUED)
Regis Corp................................. 14,500 311,750
West Marine, Inc.*......................... 1,600 51,200
------------
7,151,875
------------
SPECIALTY INSURERS -- 0.0%
United Dental Care, Inc.*.................. 5,000 150,000
------------
TELECOMMUNICATIONS EQUIPMENT -- 5.4%
ACT Networks, Inc.*........................ 61,100 656,825
Aspect Telecommunications Corp.*........... 195,000 5,265,000
Bolt, Beranek & Newman, Inc.*.............. 116,100 4,339,238
Brightpoint, Inc.*......................... 42,625 716,633
BroadBand Technologies, Inc.*.............. 23,800 511,700
Cable Design Technologies*................. 19,000 570,000
California Amplifier, Inc.*................ 20,000 417,500
Coherent Communications Systems, Inc.*..... 20,000 550,000
Comversa Technology, Inc................... 100,000 2,175,000
Digital Link Corp.*........................ 59,800 1,539,850
DSP Communications, Inc.*.................. 60,300 $ 1,989,900
Eicon Technology Corp.*.................... 15,000 121,400
Harmonic Lightwaves, Inc.*................. 26,600 478,800
Inter-Tel, Inc.*........................... 35,700 629,213
P Com, Inc.*............................... 30,000 1,342,500
Pairgain Technologies, Inc.*............... 8,000 276,000
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT (CONTINUED)
Picturetel Corp.*.......................... 68,200 3,086,050
ProNet, Inc.*.............................. 9,500 276,688
Spectrian Corp............................. 58,600 1,999,725
Tekelec*................................... 22,900 515,250
Teltrend, Inc.*............................ 35,200 1,161,600
Tessco Technologies, Inc................... 27,800 722,800
------------
29,341,672
------------
TELEPHONE -- 0.5%
A-Plus Communications, Inc.*............... 10,000 152,500
Commnet Cellular, Inc.*.................... 64,500 1,870,500
Intermedia Communications of Florida,
Inc.*.................................... 30,000 457,500
Metrocall, Inc.*........................... 15,000 416,250
------------
2,896,750
------------
TOBACCO PRODUCTS -- 0.4%
Mafco Consolidated Group, Inc.*............ 83,800 2,157,850
------------
WHOLESALE DISTRIBUTION
-- 0.3%
Daisytek International Corp.*.............. 2,200 72,325
GEAC Computer Corp. LTD*................... 41,200 567,240
U.S. Office Products Co.*.................. 47,400 716,925
------------
1,356,490
------------
TOTAL COMMON STOCKS -- 93.5%
(Cost $381,249,292)...................................... 503,363,454
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
25
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C> <C>
COMMERCIAL PAPER -- 3.1%
- ------------------------------------------------
Household Finance
Co. 6.500%,
10/02/95......... $11,842,000 $ 11,837,723
J.P. Morgan & Co.
6.500%,
10/02/95......... 4,924,000 4,922,222
------------
TOTAL COMMERCIAL PAPER
(Cost $16,759,945).............. 16,759,945
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
REPURCHASE AGREEMENT -- 1.7%
- ------------------------------------------------
J.P. Morgan & Co.,
Inc. $9,398,000
at 6.200%
(Agreement dated
09/29/95; to be
repurchased at
$9,402,856 on
10/02/95;
collateralized by
$7,453,000 U.S.
Treasury Notes,
10.000% due
05/15/10) (Value
$9,865,400) (Cost
$9,398,000)...... $ 9,398,000 $ 9,398,000
------------
TOTAL INVESTMENTS -- 98.3%
(Cost $407,407,237)............. 529,521,399
OTHER ASSETS LESS LIABILITIES --
1.7%............................ 9,012,006
------------
NET ASSETS -- 100.0%.............. $538,533,405
------------
<FN>
- ------------
* Non-income producing security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
26
<PAGE>
CORE GROWTH PORTFOLIO
- -------------------------------------------------------------------
GOAL: Seeks to maximize long-term capital appreciation through investment
primarily in U.S. companies, generally over $500 million in total stock market
value.
REVIEW AND OUTLOOK: The Core Growth Portfolio delivered strong returns to
investors through spring and summer. Our holdings in technology,
telecommunications, health care and health services helped lift the Portfolio's
return well ahead of the Standard & Poor's indexes for large and mid-sized
companies. Our choice of equities within the mid-cap class, which currently
constitute the bulk of the Portfolio's holdings, helped us achieve this superior
performance. On average, mid-sized companies' stocks, as measured by the
Standard & Poor's 400 Index, outperformed large companies' stocks, as measured
by the Standard & Poor's 500 Index, by 19.3% to 18.3% from April through
September.
The Portfolio's performance was tied to our investing style, which emphasizes
growth. Our investment process involves a continuous company-by-company search
for the market's best investment opportunities. We look for solid, sustainable
earnings growth combined with favorable valuations and market recognition of a
company's success. This led us to such standout holdings during the period as:
Glenayre Technologies, Inc., which experienced strong order growth for its
wireless telecommunications equipment; sportswear and footwear maker Nike, which
boosted sales and grabbed market share at the expense of rival Reebok; and
Medtronic, Inc., a leading developer and manufacturer of medical devices for
cardiovascular treatments. Medtronic stock soared during the period as the
company continued to expand its business from pacemakers into a full line of
heart products.
We believe medium-sized companies continue to offer some compelling advantages
over other investment classes. They are small enough to be flexible, allowing
them to anticipate and react to changes in the business environment. Yet they
are large enough to have the financial resources necessary to weather tight
economic times. We remain optimistic about their prospects for providing solid
returns in the near term as well as the long term.
REPRESENTATIVE HOLDINGS:
Glenayre Technologies, Inc.
Ceridian Corp.
CUC International, Inc.
Nike, Inc.
Amgen, Inc.
Loewen Group, Inc.
Medtronic, Inc.
SunAmerica, Inc.
HFS, Inc.
Green Tree Financial Corp.
- --------------------------------------------------------------------------------
27
<PAGE>
A CONVERSATION WITH JACK MARSHALL
- -------------------------------------------------------------------
Jack Marshall
[PHOTO] Portfolio Manager
Core Growth Portfolio
Q. JACK, MID-SIZED COMPANIES' STOCKS IN GENERAL
AND THE NICHOLAS-APPLEGATE CORE GROWTH PORTFOLIO IN PARTICULAR SET A BLISTERING
PACE FROM APRIL THROUGH SEPTEMBER. WHAT CONTRIBUTED TO THE SHARP RISE OF THE
MID-CAP STOCKS AND OF THE CORE GROWTH PORTFOLIO?
A. First of all, we define mid-cap as companies with
market capitalizations, or total stock value, of between $500 million and $5
billion. That comprises roughly 1,500 hundred companies out there. Our portfolio
typically has about 75-80% of its holdings in companies in this market niche.
Within this area, the average company is growing its earnings at about 25% to
30%. This is quite a bit higher than the 14% growth rate for the large-cap
companies of the Standard & Poor's 500 Index.
There are a number of reasons why mid-cap stocks have appreciated lately. We've
had a reversal of the economic trends that we faced in 1994 and even in the
early part of this year. The economy is now slower, showing more stable growth.
This has a positive effect for good, strong, growing companies. Interest rates
have come down and have been level recently. This is also favorable for
high-growth companies as the ratio of stock prices to earnings tends to expand
in this environment. Finally, the Federal Reserve Bank has been leaning toward
further easing of interest rates, which is keeping investors focused on stronger
growing companies with visible earnings trends. The companies that benefit from
these changing conditions are the types of companies we seek out.
Q. WHAT DISTINGUISHES NICHOLAS-APPLEGATE'S
PORTFOLIO MANAGEMENT STYLE FROM THAT OF OTHER MID-CAP MANAGERS?
A. We are a growth-style manager looking for
change at the margin. That means we want to identify companies that are growing
by doing something new, by changing with the times. The really good companies
are changing ahead of the times and we strive very hard to find these companies.
We look for the winners, companies with new products, new processes or new
strategies to gain market share. Our growth style of investing showed strongly
through spring and summer.
Q. WHERE DO YOU SEE THE BEST OPPORTUNITIES IN
THIS MARKET?
A. We're focused on some sectors of the market
where there are strong long-term trends. There are three in particular I'd like
to mention, one being the telecommunications area. We are really benefiting from
all the cable companies, the long distance companies, the regional Bell
operators competing against each other. We have invested in a lot of companies
that supply components to these companies and are benefiting significantly. A
second sector would be the biotechnology area, as the FDA has become much more
aggressive in getting new drugs out into the marketplace. We've invested in some
companies that are benefiting from that trend. And then, finally, there is the
specialty retail area. For example, we've invested in Staples, a rapidly growing
office-supply store.
- --------------------------------------------------------------------------------
28
<PAGE>
- -------------------------------------------------------------------
Q. IS YOUR INVESTMENT STYLE ONE THAT ATTEMPTS TO
CASH IN ON THE MOMENTUM OF RAPIDLY RISING STOCKS?
A. We want to see that the market is beginning to
recognize a stock's potential before we invest in it and that means rising stock
prices. But we are not momentum players in the sense that people on Wall Street
use that term. For us, market recognition is just one of four fundamental
factors we weigh in determining whether to buy a stock. First and foremost, we
want to identify companies that are using change to their advantage. Second, we
want to see the results of positive, sustainable change reflected in the
companies' earnings or projected earnings. Next, we want to see good value for
our investment dollar and then, finally, we want to see market recognition. We
use this market-recognition test only to make sure that we don't show up at the
party too early. Because by the time we get to the market recognition test, we
have already researched the company through our bottom-up stock analysis and we
know that there's a reason for the party to take place.
Q. WHAT ARE SOME EXAMPLES OF STOCKS YOU'VE
RECENTLY BOUGHT AND SOLD AND SOME OF THE REASONS BEHIND YOUR DECISIONS?
A. We recently purchased America Online, a
company that provides access to the Internet and other on-line sources of
information for personal computer operators. The company continues to add
subscribers to its service at a very healthy pace and it is improving margins
and earnings. In August, we bought Biogen, a company that develops
pharmaceuticals. Biogen has an impressive pipeline of products to fight various
forms of cancer and should be the beneficiary of federal regulators' efforts to
streamline the approval process. Among computer-chip makers, we bought Intel
shares and we sold our position in Integrated Devices. Intel is the world's
leading designer and manufacturer of microprocessors, the computer chips that
act as the engines of personal computers. We expect the company to benefit from
strong Christmas sales of personal computers. Integrated Devices is one of many
companies fighting for shares of the market for a special type of chip called an
SRAM. We expect that the highly competitive market for SRAMs will serve to
dampen returns for Integrated Devices, which had been a strong performer for the
Portfolio. We also sold our position in Boston Chicken, a restaurant
specializing in take-home meals. We believed the company's high operating
expenses and aggressive expansion plans could erode earnings growth.
- --------------------------------------------------------------------------------
29
<PAGE>
CORE GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
CORE GROWTH INSTITUTIONAL PORTFOLIO WITH THE S&P 500 INDEX.
<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(04/19/93 -- 09/30/95) (10/01/94 -- 09/30/95)
14.14% 30.85%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Core Growth Institutional
Portfolio S&P 500 Index
4/19/93 250,000 250,000
6/93 271800 252580
9/93 293200 259094
12/93 287320 265114
3/94 267098 255045
6/94 251721 256113
9/94 264149 268640
12/94 257101 268603
3/95 275902 294796
6/95 306728 322923
9/95 345643 348594
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in Core Growth Institutional Portfolio with the Standard &
Poor's ("S&P") 500 Index from the commencement of operations of the Portfolio on
April 19, 1993 to the end of the Trust's semi-annual period on September 30,
1995, on a cumulative basis. All return calculations reflect the reinvestment of
income dividends and capital gains distributions, if any, as well as all fees
and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been assumed by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no assumption of fees and
expenses in excess of expense limitations.
The S&P 500 Index is an unmanaged index containing 500 industrial,
transportation, utility and financial companies regarded as generally
representative of the U.S. stock market.
The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.
- --------------------------------------------------------------------------------
30
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
CORE
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 90.1%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
AIRLINES -- 1.7%
Comair Holdings, Inc....................... 120,000 $ 3,180,000
Southwest Airlines......................... 110,000 2,777,500
------------
5,957,500
------------
APPAREL -- 1.6%
Nike, Inc. Class B......................... 50,000 5,556,250
------------
BIOTECHNOLOGY -- 2.9%
Amgen, Inc.*............................... 106,500 5,311,687
Biogen, Inc.*.............................. 80,000 4,800,000
------------
10,111,687
------------
BROADCASTING -- 5.3%
British Sky Broadcasting Sponsored ADR
(United Kingdom)......................... 135,000 4,876,875
Infinity Broadcasting Corp. Class A*....... 179,400 5,875,350
Sinclair Broadcast Group, Inc. Class A*.... 125,000 3,593,750
Tele-Communications, Inc. Class A TCI
Group*................................... 164,400 2,887,275
Tele-Communications, Inc. Class A Liberty
Media Group*............................. 41,100 1,099,425
------------
18,332,675
------------
CHEMICALS -- 0.9%
IMC Global, Inc............................ 50,900 3,225,788
------------
COMPUTERS/OFFICE AUTOMATION
-- 7.0%
Ceridian Corp.............................. 147,000 6,523,125
Cisco Systems, Inc.*....................... 71,200 4,912,800
Computer Sciences Corp.*................... 70,100 4,512,688
Danka Business Systems PLC Sponsored ADR
(Argentina).............................. 100,000 3,600,000
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
COMPUTERS/OFFICE AUTOMATION
(CONTINUED)
Read-Rite Corp.*........................... 129,000 $ 4,708,500
------------
24,257,113
------------
DEPARTMENT/DISCOUNT STORES -- 2.3%
Federated Department Stores, Inc.*......... 140,000 3,972,500
Kohls Corp.*............................... 80,000 4,150,000
------------
8,122,500
------------
DRUGS/PHARMACEUTICALS
-- 3.9%
Chiron Corp.*.............................. 44,300 4,009,150
Genzyme Corp. -- General Division*......... 85,000 4,930,000
Ivax Corp.................................. 146,300 4,407,287
------------
13,346,437
------------
ELECTRONIC DATA PROCESSING -- 2.2%
First Financial Management Corp............ 39,900 3,895,237
Fiserv, Inc.*.............................. 125,000 3,609,375
------------
7,504,612
------------
ELECTRONICS/MUSIC CHAINS -- 1.0%
Tandy Corp................................. 58,600 3,559,950
------------
ENTERTAINMENT -- 1.4%
Viacom, Inc. Class B*...................... 95,000 4,726,250
------------
FINANCE COMPANIES
-- 0.7%
Green Tree Financial Corp.................. 38,600 2,354,600
------------
FOOD CHAINS -- 1.5%
Safeway, Inc.*............................. 121,500 5,072,625
------------
GAMBLING -- 2.1%
Gtech Holdings Corp.*...................... 135,000 4,066,875
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
31
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
CORE
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
GAMBLING (CONTINUED)
Mirage Resorts, Inc.*...................... 100,000 $ 3,287,500
------------
7,354,375
------------
HOMEBUILDING -- 2.2%
Centex Corp................................ 125,000 3,625,000
Pulte Corp................................. 139,000 3,944,125
------------
7,569,125
------------
HOSPITALS -- 0.6%
Vencor, Inc.*.............................. 60,750 1,944,000
------------
LODGING -- 1.7%
HFS, Inc.*................................. 61,400 3,215,825
Host Marriott Corp.*....................... 216,500 2,679,187
------------
5,895,012
------------
MEDICAL SUPPLIES
-- 2.6%
Cordis Corp.*.............................. 55,000 4,661,250
Medtronic, Inc............................. 82,400 4,429,000
------------
9,090,250
------------
OIL/GAS PRODUCTION
--2.5%
Enron Oil & Gas Co......................... 120,000 2,610,000
Mitchell Energy & Development Class B...... 114,900 2,025,113
Triton Energy Corp......................... 80,000 3,870,000
------------
8,505,113
------------
OILFIELD SERVICES/ EQUIPMENT -- 1.7%
Baker Hughes, Inc.......................... 100,500 2,047,687
Western Atlas, Inc.*....................... 84,600 4,007,925
------------
6,055,612
------------
OTHER COMMERCIAL/ INDUSTRIAL SERVICES
-- 4.5%
CUC International, Inc.*................... 193,012 6,731,293
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER COMMERCIAL/ INDUSTRIAL SERVICES
(CONTINUED)
Mobile Telecommunication Technologies
Corp.*................................... 147,100 $ 4,541,713
Paging Network, Inc.*...................... 92,000 4,416,000
------------
15,689,006
------------
OTHER CONSUMER SERVICES -- 1.3%
Loewen Group, Inc.......................... 108,000 4,455,000
------------
OTHER ENERGY -- 1.0%
Tidewater, Inc............................. 119,100 3,349,688
------------
OTHER FINANCIAL SERVICES -- 2.5%
Equifax, Inc............................... 110,000 4,606,250
SunAmerica, Inc............................ 66,100 4,156,038
------------
8,762,288
------------
PAPER -- 3.4%
Boise Cascade Corp......................... 85,600 3,456,100
Bowater, Inc............................... 102,300 4,769,737
Champion International Corp................ 65,400 3,523,425
------------
11,749,262
------------
PUBLISHING -- 1.0%
News Corp. LTD Sponsored ADR (Australia)... 160,000 3,520,000
------------
RESTAURANTS -- 1.4%
Lone Star Steakhouse & Saloon*............. 120,000 4,920,000
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 7.6%
Analog Devices, Inc.*...................... 164,400 5,692,350
Atmel Corp.*............................... 162,000 5,467,500
Intel Corp................................. 65,000 3,908,125
Maxim Integrated Products, Inc.*........... 107,200 7,932,800
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
32
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SEMICONDUCTORS/ELECTRONIC COMPONENTS
(CONTINUED)
Oak Technology, Inc........................ 80,000 $ 3,360,000
------------
26,360,775
------------
SOFTWARE -- 5.2%
Autodesk, Inc.............................. 50,200 2,196,250
Cadence Design Systems, Inc.*.............. 169,300 6,645,025
Oracle Corp.*.............................. 44,250 1,698,094
Parametric Technology Corp.*............... 55,000 3,382,500
Synopsys, Inc.*............................ 130,000 3,997,500
------------
17,919,369
------------
SPECIALTY CHAINS
-- 3.4%
Borders Group, Inc.*....................... 171,500 2,936,937
Micro Warehouse, Inc.*..................... 66,200 3,028,650
Staples, Inc.*............................. 202,500 5,720,625
------------
11,686,212
------------
SPECIALTY INSURERS
-- 2.3%
MGIC Investment Corp....................... 83,600 4,786,100
PMI Group, Inc............................. 70,000 3,316,250
------------
8,102,350
------------
TELECOMMUNICATIONS EQUIPMENT -- 6.4%
Allen Group, Inc........................... 95,000 3,443,750
DSC Communications Corp.*.................. 110,300 6,535,275
Glenayre Technologies, Inc.*............... 97,500 7,020,000
Tellabs, Inc.*............................. 123,000 5,181,375
------------
22,180,400
------------
TELEPHONE -- 3.1%
LCI International, Inc.*................... 110,000 4,317,500
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELEPHONE (CONTINUED)
Vodafane Group PLC Sponsored ADR
(United Kingdom)......................... 58,800 $ 2,410,800
WorldCom, Inc.*............................ 128,500 4,128,063
------------
10,856,363
------------
WHOLESALE DISTRIBUTION
-- 1.20%
Alco Standard Corp......................... 47,200 4,000,200
------------
TOTAL COMMON STOCKS
(Cost $232,512,379)........................................ 312,092,387
------------
- ------------------------------------------------------------------------------
PREFERRED STOCK -- 2.2%
- ------------------------------------------------------------------------------
Telecommunications Equipment Nokia Corp.
Sponsored ADR (Finland)
(Cost $4,041,910 )....................... 110,000 7,672,500
------------
PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------
COMMERCIAL PAPER -- 7.3%
- ------------------------------------------------------------------------------
Household Finance Corp.
6.500%, 10/02/95......................... $17,349,000 17,342,735
J. P. Morgan & Co.
6.500%, 10/02/95......................... 7,722,000 7,719,212
------------
TOTAL COMMERCIAL PAPER
(Cost $25,061,947)......................................... 25,061,947
------------
TOTAL INVESTMENTS -- 99.6%
(Cost $261,616,236)........................................ 344,826,834
OTHER ASSETS LESS LIABILITIES -- 0.4%........................
1,549,037
------------
NET ASSETS -- 100.0%......................................... $346,375,871
------------
</TABLE>
- ------------
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
33
<PAGE>
INCOME & GROWTH PORTFOLIO
- -------------------------------------------------------------------
GOAL: Seeks to maximize total return through investment primarily in
convertible and equity securities of U.S. companies.
REVIEW AND OUTLOOK: The Income and Growth Portfolio, a convertible bond fund,
earned strong returns from April through September. Performance of the Portfolio
was propelled by solid advances in both the stock and the bond markets.
The Portfolio seeks to tap the growth potential of small and mid-sized
companies that have issued bonds or other securities that are convertible into
common stocks. By investing in these securities, the Portfolio gains exposure to
exciting, dynamic companies, earns income and seeks to reduce risk. For example,
the Portfolio benefited during the period from its holdings in Chiron Corp.
Convertible notes of this biotechnology company rose during the period on news
of successful tests of the company's drug to treat ALS, or Lou Gehrig's disease.
Convertible notes of MFS Communications also contributed to the Portfolio's
advance as the telecommunications company continued to expand sales and stood to
gain from further deregulation of the local telephone industry.
With its growth emphasis, the Portfolio benefited from the strong performances
of technology, health-care and biotechnology issues through spring and summer.
The declining-to-stable interest rate environment, which began in November 1994,
enhanced the Portfolio's return through September 1995.
We continue to find and invest in attractive convertible securities, offering
compelling mixes of growth potential and protection from market declines. We
believe the Portfolio is well positioned to take advantage of the current slow
economic growth environment.
REPRESENTATIVE HOLDINGS:
Ceridian Corp.
OmniCom Group, Inc.
Healthsouth Corp.
Motorola, Inc.
Genesis Health Ventures
American General Corp.
Aspect Telecommunications
Danka Business Systems
Chiron Corp.
MFS Communications, Inc.
- --------------------------------------------------------------------------------
34
<PAGE>
A CONVERSATION WITH JOHN WYLIE
- -------------------------------------------------------------------
John Wylie
[PHOTO] Portfolio Manager
Income and Growth Porfolio
Q. JOHN, THE INCOME AND GROWTH PORTFOLIO REALLY
CAME ON STRONG FROM APRIL THROUGH SEPTEMBER. WHAT WAS HAPPENING IN THE MARKETS
FOR CONVERTIBLE SECURITIES DURING THE PERIOD? AND WHAT CAUSED THE PORTFOLIO TO
OUTPERFOM THE MARKET?
A. One of the things we saw happening in equity
markets was the reemergence of small-company stocks over large-company stocks.
Since the convertible market is primarily one of small and mid-cap companies,
this shift in market leadership was significant. Within the
convertible-securities market, our Portfolio has a small-cap emphasis, and this
helped it relative to other convertible funds. Our holdings in technology,
health-care and financial services companies added performance.
Q. HOW DOES THE NICHOLAS-APPLEGATE INCOME AND
GROWTH PORTFOLIO'S INVESTMENT STYLE DIFFER FROM THAT OF OTHER MUTUAL FUNDS THAT
INVEST IN CONVERTIBLE SECURITIES?
A. Our firm's tradition and experience investing in
small and mid-sized companies gives us a real advantage. A lot of the other
managers of convertible funds don't manage equity funds or if they do manage
equity funds, they concentrate on larger companies. Our bottom-up approach to
investing in convertibles looks at the fundamentals of the stock price of the
companies. That differs from managers who invest in convertibles solely on the
price of the convertible securities.
Q. THE BOND MARKET WAS CHOPPY DURING THE
PERIOD. DID THESE CONDITIONS CONTRIBUTE TO THE STRONG RETURNS FROM THE
PORTFOLIO? WHAT IS YOUR OUTLOOK FOR BONDS IN THE NEAR FUTURE?
A. The period included spans where the bond
market was rallying and where it wasn't. Bond prices fell and then rose again
pretty quickly and we still had pretty good relative performance. We continue to
expect moderate economic growth environment with modest inflation.
Q. HOW DO YOU DETERMINE WHICH SECTORS AND
INDUSTRIES TO INVEST IN?
A. We're bottom-up investors. We build portfolios
on an individual, company-by-company basis. First we look at the fundamentals of
the company and ask ourselves: "Is this a stock that Nicholas-Applegate would
want to buy?" Then, we look at the security characteristics of the convertible
and ask: "Does it provide the risk-reward profile we're looking for?" The sector
and industry profiles of the Portfolio are really the result of all of our
company-by-company decisions.
Q. DID THE PERIOD'S SPATE OF
MERGER-AND-ACQUISITION ACTIVITY AFFECT THE PERFORMANCE OF THE PORTFOLIO?
A. Yes, over the last nine months we have owned
several securities that have been purchased or that are about to be purchased by
other companies. One of them is First Financial Management, which is being
acquired by First Data Corp. Another company that we own is Riverwood, whose
majority owner is Manville Corp. It's widely known that Manville has Riverwood
up for sale. This has been
- --------------------------------------------------------------------------------
35
<PAGE>
- -------------------------------------------------------------------
positive for the stock prices of these companies. Although we don't seek out
likely acquisition targets as an investment strategy, it has been profitable
when others have recognized the positives we first saw in these companies.
Q. WHAT ARE SOME EXAMPLES OF SECURITIES YOU
HAVE RECENTLY ADDED OR DELETED FROM THE PORTFOLIO?
A. We've purchased convertible securities of retailers
Staples and Federated Department Stores, and we sold our positions in Cemex and
Mid America Apartments. To say Staples has been one of the most successful
retailers this year is also to say it's been one of the only successful
retailers this year. We like it because the company is extremely well run and is
pursuing a very smart expansion plan in its office supplies business. Federated
is benefiting from the consolidation of department-store retailing. It is
growing through acquisitions, and it should reap the benefits that accrue from
being the consolidator. The sale of the Cemex securities was really just a move
to take profits. We bought the security at a depressed price and earned a good
return from it. We wanted to devote the resources to other ideas. We sold Mid
America Apartments because we believe the fundamentals of its apartment markets
are deteriorating.
- --------------------------------------------------------------------------------
36
<PAGE>
INCOME & GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
INCOME & GROWTH INSTITUTIONAL PORTFOLIO WITH THE S&P 500 INDEX.
<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(04/19/93 -- 09/30/95) (10/01/94 -- 09/30/95)
13.79% 17.15%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Income & Growth Institutional Portfolio S&P 500 Index
<S> <C> <C>
4/19/93 250,000 250,000
6/93 273680 252580
9/93 297652 259094
12/93 307601 265114
3/94 300439 255045
6/94 286730 256113
9/94 292804 268640
12/94 284252 268603
3/95 294374 294796
6/95 315173 322923
9/95 343027 348594
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in Income & Growth Institutional Portfolio with the Standard
& Poor's ("S&P") 500 Index from the commencement of operations of the Portfolio
on April 19, 1993 to the end of the Trust's semi-annual period on September 30,
1995, on a cumulative basis. All return calculations reflect the reinvestment of
income dividends and capital gains distributions, if any, as well as all fees
and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been assumed by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no assumption of fees and
expenses in excess of expense limitations.
The S&P 500 Index is an unmanaged index containing 500 industrial,
transportation, utility and financial companies regarded as generally
representative of the U.S. stock market.
The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.
- --------------------------------------------------------------------------------
37
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
INCOME &
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 8.2%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS -- 5.8%
Beacon Properties Corp..................... 70,000 $ 1,496,250
Columbus Realty Trust...................... 26,570 504,830
Equity Inns, Inc........................... 42,500 499,375
Post Properties, Inc....................... 42,100 1,305,100
Reckson Associates Realty Corp............. 49,000 1,298,500
Security Capital Industrial Trust.......... 31,798 516,717
Weeks Corp................................. 16,200 390,825
------------
6,011,597
------------
TELECOMMUNICATIONS EQUIPMENT -- 2.4%
Ericsson (L.M.)Telephone Co. Sponsored ADR
(Sweden)................................. 767,600 2,518,688
MFS Communications Company, Inc.*.......... 1,142 49,963
------------
2,568,651
------------
TOTAL COMMON STOCKS
(Cost $6,845,906)......................................... 8,580,248
------------
- -----------------------------------------------------------------------------
CONVERTIBLE PREFERRED
STOCKS -- 16.9%
- -----------------------------------------------------------------------------
CONTAINERS -- 1.6%
James River Corp., 9.000%.................. 53,700 1,637,850
------------
ELECTRONIC DATA PROCESSING -- 4.9%
Ceridian Corp., 5.500%..................... 24,010 2,328,970
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONIC DATA PROCESSING (CONTINUED)
General Motors Corp., $3.250............... 43,575 $ 2,826,928
------------
5,155,898
------------
INVESTMENT COMPANIES -- 0.9%
Merrill Lynch & Co., Inc. (STRYPES),
6.500%*.................................. 16,800 919,800
------------
LIFE INSURERS -- 1.8%
American General Finance Corp., $3.000..... 33,900 1,872,975
------------
MULTI-LINE INSURERS
-- 1.0%
Allstate Corp., 6.760%..................... 24,210 1,031,951
------------
OIL/GAS PRODUCTION
-- 2.1%
Occidental Petroleum Corp., $3.000......... 37,390 2,201,336
------------
OTHER CONSUMER SERVICES -- 1.0%
SCI Finance LLC, $3.125.................... 15,660 1,094,243
------------
SEMICONDUCTORS/ ELECTRONIC COMPONENTS -- 0.8%
National Semiconductor Corp., $3.250....... 8,290 829,000
------------
TELEPHONE -- 1.0%
MFS Communications Company, Inc., 8.000%... 26,200 1,090,575
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
38
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
CONVERTIBLE PREFERRED
STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
WHOLESALE DISTRIBUTION -- 1.7%
Alco Standard Corp.++ Series AA, $2.375.... 5,720 $ 543,400
Alco Standard Corp. Series BB, $5.040...... 14,360 1,209,830
------------
1,753,230
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $14,740,717)........................................ 17,586,858
------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- -----------------------------------------------------------------------------
CONVERTIBLE CORPORATE
BONDS -- 72.0%
- -----------------------------------------------------------------------------
ADVERTISING -- 2.2%
Omnicom Group, Inc.++ 4.500%, 09/01/00..... $1,950,000 2,340,000
------------
AIR FREIGHT/SHIPPING
-- 0.3%
Air Express International Corp. 6.000%,
01/15/03................................. 260,000 305,500
------------
AIRLINES -- 0.8%
AMR Corp. 6.125%, 11/01/24................. 510,000 521,475
Delta Airlines 3.230%, 06/15/03............ 385,000 351,794
------------
873,269
------------
ALCOHOLIC BEVERAGES
-- 1.9%
Grand Metropolitan PLC 6.500%, 01/31/00.... 1,700,000 1,931,625
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
AUTOMOTIVE EQUIPMENT -- 1.3%
Titan Wheel International, Inc. 4.750%,
12/01/00................................. $ 940,000 $ 1,334,800
------------
BROADCASTING -- 1.4%
Comcast Corp.++ 3.375%, 09/09/05........... 1,430,000 1,458,600
Medusa Corp.
6.000%, 11/15/03......................... 1,360,000 1,407,600
------------
2,866,200
------------
COMPUTERS/OFFICE AUTOMATION -- 6.3%
Danka Business Systems PLC+ 6.750%,
04/01/02................................. 1,000,000 1,380,000
EMC Corp. 4.250%, 01/01/01................. 1,720,000 1,896,300
Silicon Graphics, Inc.+ 0.000%, 11/02/13... 2,315,000 1,389,000
Synoptics Communications 5.250%, 05/15/03.. 1,780,000 1,877,900
------------
6,543,200
------------
DEPARTMENT/DISCOUNT STORES -- 1.8%
Proffitt's, Inc. 4.750%, 11/01/03.......... 730,000 637,838
Federated Department Stores 5.000%,
10/01/03................................. 1,230,000 1,289,962
------------
1,927,800
------------
DRUGS/PHARMACEUTICALS -- 6.3%
Cetus Corp. 5.250%, 05/21/02............... 950,000 909,625
Chiron Corp. 1.900%, 11/17/00.............. 1,430,000 1,294,150
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
39
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
INCOME &
GROWTH FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CONVERTIBLE CORPORATE
BONDS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
DRUGS/PHARMACEUTICALS (CONTINUED)
Ivax Corp 6.500%, 11/15/01................. $1,260,000 $ 1,433,250
Roche Holdings, Inc.+ 0.00%, 04/20/10...... 5,400,000 2,173,500
Sandoz Capital 2.000%, 10/06/02............ 900,000 759,128
------------
6,569,653
------------
ELECTRONIC DATA PROCESSING -- 2.6%
First Financial Management Corp 5.000%,
12/15/99................................. 1,790,000 2,680,525
------------
ELECTRONIC INSTRUMENTS -- 1.7%
ADT Operations, Inc. 0.00%, 07/06/10....... 1,320,000 580,800
Sanmina Corp.+ 5.500%, 08/15/02............ 1,130,000 1,186,500
------------
1,767,300
------------
ENVIRONMENTAL SERVICES -- 4.2%
U.S. Filter Corp. 5.000%, 10/15/00......... 1,400,000 1,722,000
U.S. Filter Corp. 6.000%, 09/15/05......... 850,000 940,313
WMX Technologies, Inc. 2.000%, 01/24/05.... 2,058,000 1,769,880
------------
4,432,193
------------
HOSPITALS -- 3.5%
Vencor, Inc. 6.000%, 10/01/02.............. 970,000 1,212,500
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
HOSPITALS (CONTINUED)
Healthsouth Corp. 5.000%, 04/01/01......... $1,640,000 $ 2,394,400
------------
3,606,900
------------
MACHINERY/EQUIPMENT -- 3.1%
Thermo Electron Corp. 5.000%, 04/15/01..... 2,080,000 3,187,600
------------
MEDICAL/NURSING/HEALTH SERVICES -- 1.8%
Genesis Health Ventures, Inc. 6.000%,
11/30/03................................. 1,220,000 1,851,350
------------
METALS -- 1.8%
Inco LTD 5.750%, 07/01/04.................. 1,410,000 1,871,775
------------
OIL/GAS PRODUCTION
-- 1.9%
Noble Affiliates, Inc. 4.250%, 11/01/03.... 2,060,000 1,969,875
------------
OTHER COMMERCIAL/ INDUSTRIAL SERVICES
-- 1.9%
Olsten Corp. 4.875%, 05/15/03.............. 1,680,000 1,982,400
------------
OTHER PRODUCTION/ MANUFACTURING
-- 1.2%
ALFA S.A. DE CNVT+ 8.000%, 09/15/00........ 1,300,000 1,287,000
------------
OTHER RETAIL TRADE
-- 0.6%
Fisher Scientific International++ 4.750%,
03/01/03................................. 555,000 596,625
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
40
<PAGE>
- -------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CONVERTIBLE CORPORATE
BONDS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
PAPER -- 2.2%
Riverwood International Corp. 6.750%,
09/15/03................................. $1,360,000 $ 1,785,000
Sappi BVD Finance LTD+ 7.500%, 08/01/02.... 510,000 532,312
------------
2,317,312
------------
PIPELINES -- 2.5%
SFP Pipeline Holdings, Inc.++ 11.160%,
08/15/10................................. 2,000,000 2,560,000
------------
PUBLISHING -- 0.1%
Scholastic Corp.+ 5.000%, 08/15/05......... 150,000 154,875
------------
REGIONAL BANKS
-- 3.1%
Fifth Third Bancorp 4.250%, 01/15/98....... 3,130,000 3,208,250
------------
RESTAURANTS -- 0.6%
Boston Chicken, Inc. 0.000%, 06/01/15...... 2,460,000 645,750
------------
SEMICONDUCTORS/ ELECTRONIC COMPONENTS -- 7.9%
3Com Corp. 10.250%, 11/01/01............... 1,150,000 1,834,250
Altera Corp. 5.750%, 06/15/02.............. 1,320,000 1,861,200
Integrated Device Technology 5.500%,
06/01/02................................. 1,805,000 2,008,062
Emerson Radio 8.500%, 08/15/02............. 1,000,000 970,000
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SEMICONDUCTORS/ ELECTRONIC COMPONENTS
(CONTINUED)
National Semiconductor 6.500%, 10/01/02.... $1,530,000 $ 1,537,650
------------
8,211,162
------------
SPECIALTY CHAINS
-- 0.8%
Staples Inc.+ 4.50%, 10/01/00.............. 800,000 836,000
------------
SOFTWARE -- 1.4%
Sterling Software, Inc. 5.750%, 02/01/03... 570,000 931,950
Spectrum Holobyte 6.500%, 09/15/02......... 550,000 552,750
------------
1,484,700
------------
TELECOMMUNICATIONS EQUIPMENT -- 3.7%
Aspect Telecommunications Corp.+ 5.000%,
10/15/03................................. 1,170,000 1,591,200
Motorola, Inc. 0.000%, 09/27/13............ 2,475,000 2,252,250
------------
3,843,450
------------
TELEPHONE -- 1.8%
LDDS Communications, Inc. 5.000%,
08/15/03................................. 1,860,000 1,922,775
------------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $66,897,498)........................................ 75,107,864
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
41
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
INCOME &
GROWTH FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
COMMERCIAL PAPER -- 3.4%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
Melville Corp. 6.650%, 10/02/95 (Cost
$3,557,685).............................. $3,559,000 $ 3,557,685
------------
TOTAL INVESTMENTS -- 100.5%
(Cost $92,041,806)........................................ 104,834,655
</TABLE>
VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5%).............
$ (484,783)
------------
NET ASSETS -- 100.0%........................................ $104,349,872
------------
</TABLE>
- ------------
* Non-income producing security.
+ Rule 144A restricted security.
++ Variable rate security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
42
<PAGE>
BALANCED GROWTH PORTFOLIO
- -------------------------------------------------------------------
GOAL: Seeks to provide a balance of long-term capital appreciation and current
income by investing approximately 60% of its total assets in equity and
convertible securities of primarily U.S. companies and 40% of its total assets
in debt securities, money market instruments and other short-term investments.
REVIEW AND OUTLOOK: The Balanced Growth Portfolio posted solid gains from
April through September. Both stocks and bonds contributed positively to
performance. The period was an especially good one for the stocks of smaller and
mid-sized companies, and these classes of equities are well represented among
the Portfolio's holdings. Technology issues provided the strongest performance
among the Portfolio's equity holdings, but financial services and energy
companies also made strong contributions. A bond market rally enhanced the
return of the fixed-income portion of the Portfolio.
At the end of September, the stock portion of the Portfolio was weighted 39%
in technology, 25% in producers and manufacturing, 9% in financial services and
8% in energy. Some of the best performing companies in the stock portion of the
Portfolio were Cirrus Logic, Olympic Financial and Reading & Bates. The shares
of Cirrus Logic, a manufacturer of computer logic chips and related equipment,
more than tripled in price during the period on the strengths of the company's
new production capacity and its commanding share of an expanding high-technology
market. Olympic Financial shares also more than tripled as the non-bank lender
continued to expand its national dealer network and to grow its volume of
new-car loans. Shares of Reading & Bates, a leading supplier of offshore oil
equipment, rose nearly 50% as contracts firmed for the company's drilling
equipment.
Like the stock market, the 1995 bond market has shaped up as one of the best
on record. Rising bond prices caused interest rates to fall to their lowest
levels in more than a year and enhanced the returns of the Portfolio's
fixed-income holdings. Although we adopted a somewhat conservative posture in
our selection of bonds, the return for the bond portion of the Portfolio
remained competitive.
The rapid advance of stocks during this period was great news for investors.
While we do not promise or expect returns of this magnitude every six months, we
continue to identify and invest in the kinds of exciting, dynamic companies that
make returns of this scale possible. Under our growth style, we seek companies
that are using economic and social changes to their benefit and are growing
earnings as a result. We believe current market conditions will continue to
favor our growth-style of investing and we remain confident that over the long
term, the Balanced Growth Portfolio's disciplined mix of growth stocks and
high-quality U.S. government bonds offers an attractive way for investors to
meet financial goals.
REPRESENTATIVE HOLDINGS
Altera Corp.
Micron Technology, Inc.
Federal Paper Board, Inc.
Grand Casinos, Inc.
IBP, Inc.
Olympic Financial Ltd.
Fed. Home Loan Mortgage Corp., 8.080%, 2/9/98
U.S. Treasury Bond, 9.125%, 5/15/18
U.S. Treasury Note, 6.125%, 7/31/96
U.S. Treasury Note, 6.500%, 9/30/96
- --------------------------------------------------------------------------------
43
<PAGE>
A CONVERSATION WITH LARRY SPEIDELL AND JOHN WYLIE
- -------------------------------------------------------------------
Larry Speidell
[PHOTO] Portfolio Co-Manager
Balanced Growth Portfolio
John Wylie
[PHOTO] Portfolio Co-Manager
Balanced Growth Portfolio
Q. RETURNS FROM THE BALANCED GROWTH PORTFOLIO
WERE QUITE STRONG FROM APRIL THROUGH SEPTEMBER. WHAT WERE SOME OF THE MARKET
CONDITIONS THAT PROPELLED THE PORTFOLIO'S STOCK AND BOND HOLDINGS?
JOHN: The factors behind the phenomenal returns of
stocks and bonds this year are intertwined. First, the bond rally that started
last fall continued through summer. Reduced fears of inflation really brought
out domestic bond buyers in the period. Foreign governments also purchased
relatively large amounts of U.S. government securities as they tried to boost
the dollar relative to their currencies. Together, these demand-side forces sent
bond prices up and brought interest rates down.
LARRY:While the higher bond prices helped the
fixed-income side of the Portfolio, the resulting decline in interest rates
helped the stocks side. Lower interest rates helped improve the earnings outlook
for the small and mid-sized growth companies in the Portfolio. Higher earnings
and higher earnings projections were quickly translated into higher stock prices
in the advancing market. That explains why the market rose sharply during the
period. The primary reason that the Portfolio's performance exceeded the
market's is that we made good, informed security selections on both the stock
and the bond sides of the Portfolio. This is our specialty as investment
managers, and it paid off very well.
Q. THERE ARE A LOT OF STOCK CHOICES OUT THERE. HOW
DO YOU DECIDE WHICH SECTORS, INDUSTRIES AND INDIVIDUAL COMPANIES TO BUY FOR THE
EQUITY PORTION?
LARRY:Well, the last part of that question is really
the most important one because that's what we concentrate on -- individual
companies. Our investment decisions are based on the fundamental strengths and
weaknesses of individual companies. Our company-by-company investment decisions
are what determine the sectors and industries that are represented in the
Portfolio. We focus on the changes occurring within and around these companies
and we believe that sets us apart from other investment managers. Our view is if
you know what a company looks like today, you'll know whether it's a good
company. But if you know how that company is changing, then you'll know whether
it's a good investment.
- --------------------------------------------------------------------------------
44
<PAGE>
- -------------------------------------------------------------------
Q. WHAT DO YOU EXPECT OF INTEREST RATES AND THE
BOND MARKET INTO 1996?
JOHN: Even though consumer confidence has been
high, there has been surprising weakness in consumer spending this year and that
has contributed to the lack of inflationary pressures. We're expecting a
moderately growing economy with modest inflationary pressure. We expect interest
rates to remain low and to reward fixed-income investors through continued high
bond prices.
Q. HOW HAS YOUR VIEW OF INTEREST RATES AFFECTED
THE NATURE OF THE PORTFOLIO'S BOND HOLDINGS?
JOHN: We extended the duration of the bond portion
of the Portfolio in late September to reflect the moderate growth of the economy
and the lack of inflationary pressures.
Q. WHAT ARE SOME EXAMPLES OF SECURITIES YOU
HAVE RECENTLY BOUGHT OR SOLD FOR THE PORTFOLIO?
LARRY:We recently bought shares of investment
banker Morgan Stanley and insurer Loews Corp. Earnings projections for Morgan
Stanley have risen rapidly in recent weeks based on the strength of the
company's global investing business. Loews has shown exceptionally strong cash
flows of late and that is a fundamental strength that we believe translates into
higher earnings and share prices. We recently sold shares of Ball Corp. The
container company has seen its profit margins deteriorate due to rising aluminum
prices. We lightened our positions in some semiconductor manufacturers without
eliminating any of the companies from the Portfolio. We remain optimistic about
these companies, which account for about 16% of the Portfolio's equity assets.
- --------------------------------------------------------------------------------
45
<PAGE>
BALANCED GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
BALANCED GROWTH INSTITUTIONAL PORTFOLIO WITH A MODEL INDEX CONSISTING OF 60% S&P
500 INDEX/40% LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
<TABLE>
<S> <C>
TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(10/01/93 -- 09/30/95) (10/01/94 -- 09/30/95)
8.22% 24.33%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Balanced Growth
Institutional 60% S&P 500 Index/40% Lehman Brothers
Portfolio Government/Corporate Bond Index
<S> <C> <C>
10/1/93 250000 250000
12/93 242780 253068
3/94 235858 244138
6/94 224276 243573
9/94 235450 251209
12/94 231595 251614
3/95 246606 271068
6/95 270815 293616
9/95 292724 309835
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Balanced Growth Institutional Portfolio with a model
index consisting of 60% Standard & Poor's ("S&P") 500 Index and 40% Lehman
Brothers Government/Corporate Bond Index from the commencement of operations of
the Portfolio on October 1, 1993 to the end of the Trust's semi-annual period on
September 30, 1995, on a cumulative basis. All return calculations reflect the
reinvestment of income dividends and capital gains distributions, if any, as
well as all fees and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been assumed by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no assumption of fees and
expenses in excess of expense limitations.
The S&P 500 Index is an unmanaged index containing 500 industrial,
transportation, utility and financial companies regarded as generally
representative of the U.S. stock market.
The Lehman Brothers Government/Corporate Bond Index is an unmanaged
market-weighted index consisting of all public obligations of the U.S.
Government, its agencies and instrumentalities and all corporation issuers of
fixed rate, non-convertible, investment grade U.S. dollar denominated bonds
having maturities of greater than one year. It is generally regarded as
representative of the market for domestic bonds.
Each index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.
- --------------------------------------------------------------------------------
46
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
BALANCED
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 54.0%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
AGRICULTURE -- 0.4%
Potash Corporation of Saskatchewan, Inc.... 1,600 $ 99,600
-----------
CHEMICALS -- 2.6%
Cabot Corp................................. 2,400 127,500
Cytec Industries, Inc.*.................... 2,600 150,475
Lyondell Petrochemical Co.................. 7,500 194,062
Wellman, Inc............................... 4,600 112,700
-----------
584,737
-----------
COMPUTERS/OFFICE
AUTOMATION -- 2.1%
Adaptec, Inc.*............................. 3,400 140,250
Cabletron Systems, Inc.*................... 1,700 111,987
Read-Rite Corp.*........................... 6,400 233,600
-----------
485,837
-----------
CONTAINERS -- 0.5%
Gaylord Container Corp. Class A*........... 13,100 123,631
-----------
CONTRACT DRILLING
-- 1.3%
Reading Bates Corp......................... 13,600 163,200
Sonat Offshore Drilling Co................. 3,900 127,237
-----------
290,437
-----------
ELECTRONIC INSTRUMENTS/ DIVERSIFIED -- 3.8%
Tencor Instruments, Corp.*................. 3,000 132,750
Teradyne, Inc.*............................ 11,800 424,800
Varian Associates, Inc..................... 5,800 307,400
-----------
864,950
-----------
ENTERTAINMENT -- 0.4%
King World Productions, Inc.*.............. 2,700 98,887
-----------
FINANCE COMPANIES
-- 0.6%
Olympic Financial LTD*..................... 5,100 139,613
-----------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
GAMBLING -- 0.7%
Grand Casinos, Inc.*....................... 3,700 $ 150,312
-----------
GROCERY PRODUCTS
-- 0.7%
IBP........................................ 3,100 165,462
-----------
INVESTMENT COMPANIES
-- 1.8%
Alex Brown, Inc............................ 2,700 157,612
Bear Stearns Co............................ 6,100 131,150
Lehman Brothers Holdings, Inc.............. 5,200 120,250
-----------
409,012
-----------
LIFE INSURERS -- 0.7%
Reinsurance Group of America............... 4,300 151,575
-----------
MACHINERY/EQUIPMENT
-- 1.8%
Applied Material, Inc.*.................... 1,300 132,925
Kennametal, Inc............................ 3,600 130,500
Kulicke & Soffa Industries, Inc............ 3,800 138,700
Presstek, Inc.*............................ 200 10,650
-----------
412,775
-----------
MEDICAL/NURSING/HEALTH SERVICES -- 0.7%
Apria Healthcare Group, Inc.*.............. 2,600 64,350
Lincare Holdings, Inc.*.................... 4,000 103,000
-----------
167,350
-----------
MEDICAL SUPPLIES
-- 1.3%
Boston Scientific Corp.*................... 3,900 166,237
Nellcor Puritan Bennett, Inc.*............. 2,700 134,325
-----------
300,562
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
47
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
METALS -- 2.2%
Asarco, Inc................................ 7,200 $ 226,800
J. L. Specialty Steel, Inc................. 6,600 138,600
Reynolds Metals Co......................... 2,200 127,050
-----------
492,450
-----------
MILITARY/DEFENSE TECHNOLOGY -- 4.1%
FMC Corp................................... 3,400 258,400
Harsco Corp................................ 2,100 116,812
McDonnell Douglas Corp..................... 4,700 388,925
Olin Corp.................................. 2,400 165,000
-----------
929,137
-----------
MONEY-CENTER BANKS
-- 1.2%
Bank of Boston Corp........................ 3,300 157,163
North Fork Bancorporation, Inc............. 6,100 126,575
-----------
283,738
-----------
MULTI-LINE INSURERS
-- 1.3%
American Financial Group, Inc.............. 5,300 159,000
Alexander & Alexander Services, Inc........ 4,500 109,125
-----------
268,125
-----------
OILFIELD SERVICES/ EQUIPMENT -- 0.5%
Camco International, Inc................... 4,700 115,150
-----------
OIL/GAS PRODUCTION
-- 2.1%
Imperial Oil Limited....................... 3,700 137,825
Louisiana Land Exploration Co.............. 2,500 89,063
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OIL/GAS PRODUCTION
(CONTINUED)
USX-Marathon Group......................... 6,500 $ 128,375
Williams Companies, Inc.................... 3,300 128,700
-----------
483,963
-----------
OTHER CONSUMER SERVICES
-- 0.5%
Robert Half International, Inc.*........... 3,600 122,850
-----------
OTHER ENERGY -- 0.6%
Tidewater Inc.............................. 5,000 140,625
-----------
OTHER PRODUCERS/ MANUFACTURING
-- 0.6%
Danaher Corp............................... 4,200 137,550
-----------
PAPER -- 5.6%
Boise Cascade Corp......................... 3,100 125,163
Bowater, Inc............................... 2,800 130,550
Federal Paper Board Co..................... 6,600 253,275
Glatfelter (P. H.) Co...................... 5,900 132,750
Rayonier, Inc.............................. 3,700 144,763
Smurfit (Jefferson) Corp.*................. 6,300 96,075
Union Camp Corp............................ 2,200 126,775
Westvaco Corp.............................. 2,700 123,188
Williamette Industries, Inc................ 2,200 146,850
-----------
1,279,389
-----------
PROPERTY - CASUALTY INSURERS -- 1.2%
Ace LTD.................................... 4,300 147,813
Allmerica Property & Casualty Companies,
Inc...................................... 5,300 126,538
-----------
274,351
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
48
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
RECREATIONAL PRODUCTS
-- 0.5%
Cobra Golf, Inc.*.......................... 4,100 $ 122,488
-----------
REGIONAL BANKS -- 0.5%
Cullen/Frost Bankers, Inc.................. 2,700 125,550
-----------
RETAIL/FOOD DISTRUBUTION
-- 0.5%
Fleming Companies, Inc..................... 4,600 110,400
-----------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 8.7%
Altera Corp.*.............................. 9,400 586,325
Atmel Corp................................. 11,000 371,250
KLA Instruments Corp.*..................... 5,800 465,450
Micron Technology, Inc..................... 5,100 405,450
Xilinx, Inc.*.............................. 3,600 173,250
-----------
2,001,725
-----------
SPECIALTY CHAINS
-- 0.8%
Compusa, Inc.*............................. 4,100 176,300
-----------
TELECOMMUNICATIONS EQUIPMENT -- 2.6%
Ascend Communications, Inc.*............... 5,200 416,000
U.S. Robotics Corp.*....................... 2,200 187,550
-----------
603,550
-----------
TOBACCO PRODUCTS -- 1.1%
Dimon, Inc................................. 7,900 118,500
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TOBACCO PRODUCTS (CONTINUED)
Loew's Corp................................ 900 $ 130,950
-----------
249,450
-----------
TOTAL COMMON STOCKS
(Cost $8,747,399)......................................... 12,361,531
-----------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ----------------------------------------------------------------------------
CORPORATE BONDS -- 14.9%
- ----------------------------------------------------------------------------
BROADCASTING -- 0.7%
SCI Television, Inc.
11.000%, 06/30/05........................ $ 150,000 159,563
-----------
ENTERTAINMENT -- 5.7%
Time Warner Inc.
9.150%, 02/01/23......................... 1,200,000 1,308,000
-----------
FINANCE COMPANIES
-- 1.0%
Olympic Financial LTD
13.000%, 05/01/00........................ 200,000 217,750
-----------
FOOD CHAINS -- 0.9%
Pathmark Stores, Inc.
12.625%, 06/15/02........................ 200,000 215,750
-----------
GAMBLING -- 0.5%
Bally's Grand, Inc.
10.375%, 12/15/03........................ 150,000 148,125
-----------
LODGING -- 0.7%
Motels of America
12.000%, 04/15/04........................ 150,000 151,500
-----------
MILITARY/DEFENSE TECHNOLOGY -- 0.1%
IMO Industries, Inc.
12.000%, 11/01/01........................ 25,000 25,344
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
49
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED
GROWTH FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CORPORATE BONDS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
OIL/GAS PRODUCTION
-- 3.5%
Louisiana Land & Exploration
7.65%, 12/01/23.......................... $ 800,000 $ 790,000
-----------
OTHER PRODUCERS/ MANUFACTURING
-- 0.7%
Figgie International, Inc.
9.875%, 10/01/99......................... 150,000 150,000
-----------
SPECIALTY CHAINS
-- 0.7%
Compusa, Inc.
9.500%, 06/15/00......................... 150,000 150,000
-----------
TELECOMMUNICATIONS
-- 0.4%
Mobile Telecomm
13.500%, 12/15/02........................ 100,000 112,375
-----------
TOTAL CORPORATE BONDS
(Cost $3,316,340)......................................... 3,428,407
-----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
U.S. TREASURY AND AGENCY OBLIGATIONS -- 23.3%
- ----------------------------------------------------------------------------
U.S. TREASURY BONDS
-- 5.4%
9.125%, 09/15/18......................... $ 953,000 $ 1,226,787
-----------
U.S. TREASURY NOTES
-- 9.3%
6.125%, 07/15/96......................... 1,120,000 1,123,517
6.500%, 09/30/96......................... 1,000,000 1,007,620
-----------
2,131,137
-----------
Federal Home Loan Mortgage Corp.
-- 8.6%
8.080%, 02/09/98......................... 1,950,000 1,961,739
-----------
TOTAL U.S. TREASURY AND AGENCY OBLIGATIONS
(Cost $5,112,270)......................................... 5,319,663
-----------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 6.0%
- ----------------------------------------------------------------------------
J.P. Morgan
6.500%, 10/02/95......................... 251,000 250,909
-----------
Melville Corp.
6.650%, 10/02/95......................... 1,126,000 1,125,584
-----------
TOTAL COMMERCIAL PAPER
(Cost $1,376,493)......................................... 1,376,493
-----------
TOTAL INVESTMENTS -- 98.2%
(Cost $18,552,502)........................................ 22,486,094
OTHER ASSETS LESS LIABILITIES -- 1.8%.......................
403,961
-----------
NET ASSETS -- 100.0%........................................ $22,890,055
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
50
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
51
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
NET
ASSET
VALUES
AT NET NET REALIZED
BEGINNING INVESTMENT AND UNREALIZED
OF INCOME GAINS (LOSSES)
PERIOD (DEFICIT) ON INVESTMENTS
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
MINI-CAP GROWTH
Institutional (For the period ended
09/30/95)*#................................... $12.50 $(0.01) $1.29
EMERGING GROWTH
Institutional (For the period ended
09/30/95)#.................................... 11.58 (0.06) 2.98
Institutional (For the year ended 03/31/95)..... 11.38 (0.05) 0.95
Institutional (For the period ended
03/31/94)*.................................... 12.50 (0.04) (0.69)
CORE GROWTH
Institutional (For the period ended
09/30/95)#.................................... 12.62 (0.01) 3.20
Institutional (For the year ended 03/31/95)..... 12.68 (0.01) 0.38
Institutional (For the period ended
03/31/94)*.................................... 12.50 (0.01) 0.92
INCOME & GROWTH
Institutional (For the period ended
09/30/95)#.................................... 11.86 0.28 1.67
Institutional (For the year ended 03/31/95)..... 13.39 0.54 (0.85)
Institutional (For the period ended
03/31/94)*.................................... 12.50 0.42 2.12
BALANCED GROWTH
Institutional (For the period ended
09/30/95)#.................................... 12.01 0.20 2.04
Institutional (For the year ended 03/31/95)..... 11.71 0.22 0.30
Institutional (For the period ended
03/31/94)*.................................... 12.50 0.08 (0.79)
</TABLE>
- ------------
*Mini-Cap Growth Institutional Portfolio commenced operations on July 12, 1995.
Emerging Growth and Balanced Growth Institutional Portfolios commenced
operations on October 1, 1993, and Core Growth and Income & Growth
Institutional Growth Institutional Portfolios commenced operations on April
19, 1993.
**Annualized
+Net of expense reimbursement equivalent to 0.35%, 0.05%, 0.06%, 0.01%, 0.07%,
0.08%, 0.17%, 0.51%, 0.48%, 0.51%, 10.35%, 19.66% and 42.71% of average net
assets, respectively.
++Including expenses allocated from the Master Trust Mini-Cap Growth Fund,
Emerging Growth Fund, Core Growth Fund, Income & Growth Fund and Balanced
Growth Fund of 1.51%, 1.11%, 1.12%, 1.12%, 0.90%, 0.89%, 0.92%, 0.95%, 0.93%,
0.94%, 0.95%, 0.95% and 0.94%, net of expense reimbursement (advisor
recoupment) equivalent to 0.43%, 0.00%, 0.00%, (0.01%), 0.04%, 0.00%, 0.00%,
(0.01%), 0.02%, 0.03%, 0.40%, 0.38% and 0.43% of average net assets of the
Funds, respectively.
#Unaudited
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
52
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
FROM NET NET ASSET
INVESTMENT DISTRIBUTIONS VALUES AT
INCOME FROM CAPITAL GAINS END OF PERIOD TOTAL RETURN
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
MINI-CAP GROWTH
Institutional (For the period ended
09/30/95)*#................................... $ -- $ -- $13.78 10.24%
EMERGING GROWTH
Institutional (For the period ended
09/30/95)#.................................... -- -- 14.50 25.22%
Institutional (For the year ended 03/31/95)..... -- (0.70) 11.58 8.69%
Institutional (For the period ended
03/31/94)*.................................... -- (0.39) 11.38 (6.08%)
CORE GROWTH
Institutional (For the period ended
09/30/95)#.................................... -- -- 15.81 25.28%
Institutional (For the year ended 03/31/95)..... -- (0.43) 12.62 3.30%
Institutional (For the period ended
03/31/94)*.................................... -- (0.73) 12.68 6.84%
INCOME & GROWTH
Institutional (For the period ended
09/30/95)#.................................... (0.28) -- 13.53 16.53%
Institutional (For the year ended 03/31/95)..... (0.54) (0.68) 11.86 (2.02%)
Institutional (For the period ended
03/31/94)*.................................... (0.42) (1.23) 13.39 20.18%
BALANCED GROWTH
Institutional (For the period ended
09/30/95)#.................................... (0.20) -- 14.05 18.70%
Institutional (For the year ended 03/31/95)..... (0.22) -- 12.01 4.56%
Institutional (For the period ended
03/31/94)*.................................... (0.08) -- 11.71 (5.66%)
<CAPTION>
RATIO OF EXPENSES TO (DEFICIT) TO
NET ASSETS AT AVERAGE NET AVERAGE NET
END OF PERIOD ASSETS+++ ASSETS+++
<S> <C> <C> <C>
- --------------------------------------------------
MINI-CAP GROWTH
Institutional (For the period ended
09/30/95)*#................................... $ 8,635,724 1.55%** (0.69%)**
EMERGING GROWTH
Institutional (For the period ended
09/30/95)#.................................... 212,955,554 1.16%** (0.62%)**
Institutional (For the year ended 03/31/95)..... 206,695,605 1.18% (0.58%)
Institutional (For the period ended
03/31/94)*.................................... 165,939,862 1.17%** (0.83%)**
CORE GROWTH
Institutional (For the period ended
09/30/95)#.................................... 99,844,326 0.99%** (0.23%)**
Institutional (For the year ended 03/31/95)..... 72,825,771 0.99% (0.06%)
Institutional (For the period ended
03/31/94)*.................................... 77,947,252 0.97%** (0.07%)**
INCOME & GROWTH
Institutional (For the period ended
09/30/95)#.................................... 12,044,655 1.00%** 4.10%**
Institutional (For the year ended 03/31/95)..... 12,506,203 1.00% 4.28%
Institutional (For the period ended
03/31/94)*.................................... 18,331,546 0.99%** 3.36%**
BALANCED GROWTH
Institutional (For the period ended
09/30/95)#.................................... 424,811 1.00%** 2.99%**
Institutional (For the year ended 03/31/95)..... 283,586 1.00% 2.06%
Institutional (For the period ended
03/31/94)*.................................... 142,745 0.99%** 1.59%**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
53
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1995
(UNAUDITED)
- -------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
MINI-CAP EMERGING CORE INCOME & BALANCED
GROWTH GROWTH GROWTH GROWTH GROWTH
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------
ASSETS
Investment in Master Trust Fund,
at value
(Cost $8,160,114, $161,341,594,
$74,799,591, $8,663,602,
$358,210, respectively......... $8,638,304 $213,012,797 $99,856,240 $12,150,041 $425,219
Receivable:
Shares of beneficial interest
sold......................... -- 800 -- -- --
Due from advisor............... 1,838 7,133 -- 5,741 3,640
Deferred organizational costs.... 2,622 6,970 34,421 19,208 --
------------------------------------------------------------
Total assets................. 8,642,764 213,027,700 99,890,661 12,174,990 428,859
------------------------------------------------------------
LIABILITIES
Payable:
Investment purchased in Master
Trust Fund................... -- 800 -- -- --
Due to advisor................. -- -- 8,847 -- --
Dividend payable............... -- -- -- 124,626 2,994
Accrued expenses................. 7,040 71,346 37,488 5,709 1,054
------------------------------------------------------------
Total liabilities............ 7,040 72,146 46,335 130,335 4,048
------------------------------------------------------------
NET ASSETS......................... $8,635,724 $212,955,554 $99,844,326 $12,044,655 $424,811
------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid in capital.................. $8,158,120 $176,177,232 $81,242,375 $11,869,003 $369,228
Accumulated undistributed net
investment income (deficit).... (7,505) (2,239,795) (189,338) 1,646 (131)
Accumulated undistributed net
realized gains (losses)........ 32,746 (8,685,809) (4,467,198) (1,423,943) (1,091)
Net unrealized appreciation on
investments.................... 452,363 47,703,926 23,258,487 1,597,949 56,805
------------------------------------------------------------
Net assets................... $8,635,724 $212,955,554 $99,844,326 $12,044,655 $424,811
------------------------------------------------------------
Shares of beneficial interest, no
par value, issued and
outstanding (unlimited shares
authorized).................... 626,633 14,684,981 6,314,821 890,186 30,239
------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/ Outstanding shares of
beneficial interest)........... $13.78 $14.50 $15.81 $13.53 $14.05
------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
54
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1995 (UNAUDITED)
- -------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
MINI-CAP EMERGING CORE INCOME & BALANCED
GROWTH GROWTH GROWTH GROWTH GROWTH
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from Master Trust
Fund............................................... $ (6,919) $ (570,816) $ (60,175) $ 269,690 $ 5,420
-------------------------------------------------------------
EXPENSES
Accounting fees.................................... 260 15,600 15,600 15,600 7,800
Administration fees................................ 1,359 2,500 4,829 1,806 237
Audit fees......................................... 1,231 5,130 4,031 3,520 3,418
Insurance.......................................... 11 1,263 488 77 1
Legal fees......................................... 242 38,767 16,197 2,422 66
Miscellaneous...................................... 14 3,619 1,501 226 8
Organization costs................................. 48 1,167 6,760 3,772 --
Registration fees.................................. 30 22,813 8,709 1,313 90
Shareholder reporting.............................. 53 3,382 3,846 2,298 476
Transfer agent fees................................ 790 6,019 5,561 5,217 6,421
Trustees' fees..................................... 380 4,350 1,819 272 7
-------------------------------------------------------------
Total expenses................................... 4,418 104,610 69,341 36,523 18,524
Less: Reimbursement from advisor................... (3,832) (52,628) (31,259) (33,274) (18,433)
-------------------------------------------------------------
Net expenses..................................... 586 51,982 38,082 3,249 91
-------------------------------------------------------------
Net investment income (deficit)................ (7,505) (622,798) (98,257) 266,441 5,329
-------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN ON INVESTMENTS
Net realized gain on security transactions........... 32,746 29,297,253 6,465,820 570,299 18,777
Change in net unrealized appreciation of
investments........................................ 452,363 18,173,559 13,512,642 1,189,733 32,952
-------------------------------------------------------------
Net gain on investments.......................... 485,109 47,470,812 19,978,462 1,760,032 51,729
-------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... $ 477,604 $ 46,848,014 $ 19,880,205 $ 2,026,473 $ 57,058
-------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
55
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
MINI-CAP
GROWTH
----------- EMERGING GROWTH
FOR THE -------------------------------
PERIOD FOR THE
ENDED PERIOD ENDED
SEPTEMBER SEPTEMBER 30, FOR THE
30, 1995 1995 YEAR ENDED
(UNAUDITED) (UNAUDITED) MARCH 31, 1995
<S> <C> <C> <C>
--------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ (7,505 ) $ (622,798) $ (1,022,432)
Net realized gain (loss)
from security
transactions............ 32,746 29,297,253 (19,724,608)
Change in net unrealized
appreciation
of investments.......... 452,363 18,173,559 37,319,272
--------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 477,604 46,848,014 16,572,232
--------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income+.... -- -- --
Capital gains+............ -- -- (10,693,053)
--------------------------------------------
Total distributions..... -- -- (10,693,053)
--------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold.................... 8,158,120 7,412,780 30,585,831
Proceeds from shares
issued for distribution
reinvestment............ -- -- 10,692,951
Cost of shares
repurchased............. -- (48,000,845) (6,402,218)
--------------------------------------------
Increase (decrease) in
net assets from
transactions in shares
of beneficial
interest.............. 8,158,120 (40,588,065) 34,876,564
--------------------------------------------
Total increase
(decrease) in net
assets................ 8,635,724 6,259,949 40,755,743
NET ASSETS:
BEGINNING OF PERIOD......... -- 206,695,605 165,939,862
--------------------------------------------
END OF PERIOD............... $8,635,724 $ 212,955,554 $ 206,695,605
--------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... -- 17,845,788 14,576,639
Shares sold................. 626,633 587,514 2,887,314
Shares issued for
distributions
reinvested................ -- -- 1,037,144
Shares repurchased.......... -- (3,748,321) (655,309)
--------------------------------------------
Ending Balance.............. 626,633 14,684,981 17,845,788
--------------------------------------------
</TABLE>
- -------------
*Commenced operations on July 12, 1995.
+See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
56
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH INCOME & GROWTH BALANCED GROWTH
------------------------------ --------------------------- ------------------------
FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED PERIOD ENDED FOR THE PERIOD ENDED YEAR
SEPTEMBER FOR THE SEPTEMBER YEAR ENDED SEPTEMBER ENDED
30, 1995 YEAR ENDED 30, 1995 MARCH 31, 30, 1995 MARCH 31,
(UNAUDITED) MARCH 31, 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ (98,257 ) $ (44,410) $ 266,441 $ 683,017 $ 5,329 $ 4,775
Net realized gain (loss)
from security
transactions............ 6,465,820 (4,872,966) 570,299 (1,779,392) 18,777 (12,200 )
Change in net unrealized
appreciation
of investments.......... 13,512,642 7,244,252 1,189,733 597,254 32,952 24,548
-------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 19,880,205 2,326,876 2,026,473 (499,121) 57,058 17,123
-------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income+.... -- -- (265,832 ) (683,134) (5,479) (4,767 )
Capital gains+............ -- (2,544,491) -- (768,642) -- --
-------------------------------------------------------------------------------------------
Total distributions..... -- (2,544,491) (265,832 ) (1,451,776) (5,479) (4,767 )
-------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold.................... 15,385,899 23,632,447 234,934 1,552,115 105,030 162,027
Proceeds from shares
issued for distribution
reinvestment............ 2,432,896 137,995 1,424,207 2,485 4,766
Cost of shares
repurchased............. (8,247,549 ) (30,969,209) (2,595,118 ) (6,850,768) (17,869) (38,308 )
-------------------------------------------------------------------------------------------
Increase (decrease) in
net assets from
transactions in shares
of beneficial
interest.............. 7,138,350 (4,903,866) (2,222,189 ) (3,874,446) 89,646 128,485
-------------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 27,018,555 (5,121,481) (461,548 ) (5,825,343) 141,225 140,841
NET ASSETS:
BEGINNING OF PERIOD......... 72,825,771 77,947,252 12,506,203 18,331,546 283,586 142,745
-------------------------------------------------------------------------------------------
END OF PERIOD............... $99,844,326 $ 72,825,771 $12,044,655 $ 12,506,203 $ 424,811 $283,586
-------------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 5,768,800 6,145,675 1,054,784 1,369,540 23,604 12,194
Shares sold................. 1,100,196 1,934,559 18,425 124,529 7,749 14,309
Shares issued for
distributions
reinvested................ -- 213,787 10,987 119,942 190 414
Shares repurchased.......... (554,175 ) (2,525,221) (194,010 ) (559,227) (1,304) (3,313 )
-------------------------------------------------------------------------------------------
Ending Balance.............. 6,314,821 5,768,800 890,186 1,054,784 30,239 23,604
-------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
57
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
- -------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Nicholas-Applegate Mutual Funds (the "Trust") is organized as a diversified,
open-end management investment company which offers 43 separate series comprised
of Portfolios A, with an initial sales charge, B, with a back-end sales charge,
C, with a level asset based sales charge, Institutional, with no load, and
Qualified, with no load (each a "Portfolio" and collectively the "Portfolios").
The Portfolios of the Trust seek to achieve their respective investment
objectives by investing all of their assets in corresponding series of
Nicholas-Applegate Investment Trust (the "Master Trust"), a diversified open-end
management investment company offering twelve investment vehicles (the "Funds").
Pursuant to Rule 24f-2 under the Investment Company Act, the Trust has elected
to register an indefinite number of shares. The Trust commenced operations on
April 19, 1993.
INVESTMENT INCOME
Each Portfolio accrues income, net of expenses, daily on its investment in the
applicable Fund. All of the net investment income (deficit) and realized and
unrealized gains and losses from the security transactions of the Fund are
allocated pro rata among the investors in the Fund at the time of such
determination.
FEDERAL INCOME TAXES
It is the Portfolios' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their taxable income to their shareholders. Accordingly, no
federal income tax provisions are required if the Portfolios continue to comply
with such requirements.
The Funds are treated as partnerships for federal income tax purposes. Any
interest, dividends and gains or losses of the Funds will be deemed to have been
"passed through" to the Portfolios.
Net investment income and net realized gains for the year, (or period where
appropriate), differ for financial statement and tax purposes primarily because
of one or all of the following: deferral of wash-sale losses, passive foreign
investments, unrealized appreciation/depreciation, and capital loss
carryforwards.
The character of distributions made during the year (or period where
appropriate), from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes due to book/tax
differences in the character of income and expense recognition.
DEFERRED ORGANIZATION COSTS
Organization Costs incurred by the Trust have been allocated to certain
Portfolios based upon management's best estimate of the costs applicable to each
Portfolio. These costs have been deferred and will be amortized over a period of
60 months from the date the Portfolios commenced operations.
In the event that any of the initial shares are redeemed by the holder during
the period of amortization of the Portfolios' organization costs, the redemption
proceeds will be reduced by any such unamortized organization costs in the same
proportion as the number of initial shares being redeemed bears to the number of
those shares outstanding at the time of redemption.
2. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENTS
The investment adviser to the Master Trust is Nicholas-Applegate Capital
Management ("Nicholas-
- --------------------------------------------------------------------------------
58
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
Applegate" or "Investment Adviser"). The advisory fee is computed daily for the
Funds based upon the percentage of each Fund's average daily net assets.
EXPENSE LIMITATIONS
Nicholas-Applegate and the Trust have undertaken to limit the Portfolio's
expenses to the following annual levels through March 31, 1996. In subsequent
years, overall operating expenses for each Portfolio will not fall below the
applicable percentage limitation until the Investment Adviser has been fully
reimbursed for fees foregone or expenses paid by the Investment Adviser under
this agreement, as each Portfolio will reimburse the Investment Adviser in
subsequent years when operating expenses (before reimbursement) are less than
the applicable percentage limitation.
<TABLE>
<CAPTION>
FUND
- ------------------------------------------------
<S> <C>
Mini-Cap Growth Institutional Portfolio......... 1.56%
Emerging Growth Institutional Portfolio......... 1.17%
Core Growth Institutional Portfolio............. 1.00%
Income & Growth Institutional Portfolio......... 1.00%
Balanced Growth Institutional Portfolio......... 1.00%
</TABLE>
These percentages are based on the average net assets of the Portfolios,
exclusive of interest, taxes, brokerage commissions and other costs incurred in
connection with portfolio securities transactions, capital expenditures, and
extraordinary expenses.
Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of September 30, 1995, the Mini-Cap Growth Institutional Portfolio had $2,670
due to Nicholas-Applegate for organizational costs advanced.
3. INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the respective Master Trust
Funds for the period ended September 30, 1995 were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
--------- -----------
<S> <C> <C>
Mini-Cap Growth Institutional
Portfolio....................... $ 8,160 $ --
Emerging Growth Institutional
Portfolio....................... 7,458 48,095
Core Growth Institutional
Portfolio....................... 15,426 8,334
Income & Growth Institutional
Portfolio....................... 262 2,652
Balanced Growth Institutional
Portfolio....................... 120 45
</TABLE>
- --------------------------------------------------------------------------------
59
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MINI-CAP EMERGING CORE INCOME & BALANCED
GROWTH GROWTH GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------
ASSETS
Investments at value
(Cost $8,121,099, $407,407,237,
$261,616,236, $92,041,806, $18,552,502,
respectively.).......................... $ 8,575,255 $ 529,521,399 $ 344,826,834 $ 104,834,655 $ 22,486,094
Cash........................................ 1,087 -- 14,577 2,249 14,611
Receivables:
Dividends................................. 1,056 48,375 141,126 211,144 10,438
Interest.................................. 42 6,264 4,526 753,967 196,020
Investment securities sold................ 130,110 11,517,890 3,021,224 2,195,241 775,064
Interests sold............................ -- 558,153 485,384 98,858 93,056
Due from advisor.......................... 2,128 -- -- -- --
Deferred organization costs................. -- 27,232 39,676 19,677 14,037
Other assets................................ -- 1,474 562 411 --
----------------------------------------------------------------------
Total assets............................ 8,709,678 541,680,787 348,533,909 108,116,202 23,589,320
----------------------------------------------------------------------
LIABILITIES
Payables:
Investment securities purchased........... 30,681 2,241,399 1,520,875 3,411,881 650,542
Interests repurchased..................... -- 329,253 326,643 246,478 28,929
Accrued expenses............................ 18,641 576,730 310,520 107,971 19,794
----------------------------------------------------------------------
Total liabilities....................... 49,322 3,147,382 2,158,038 3,766,330 699,265
----------------------------------------------------------------------
NET ASSETS.................................... $ 8,660,356 $ 538,533,405 $ 346,375,871 $ 104,349,872 $ 22,890,055
----------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid in capital............................... $ 8,180,114 $ 416,000,159 $ 271,338,458 $ 84,544,918 $ 18,561,322
Accumulated net investment income (deficit)... (6,951) (4,626,766) (146,339) 9,677,590 1,103,834
Accumulated net realized gains (losses)....... 33,037 5,048,911 (8,026,846) (2,665,485) (708,693)
Net unrealized appreciation on investments.... 454,156 122,111,101 83,210,598 12,792,849 3,933,592
----------------------------------------------------------------------
Net assets.............................. $ 8,660,356 $ 538,533,405 $ 346,375,871 $ 104,349,872 $ 22,890,055
----------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
60
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
FOR THE PERIOD ENDED SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MINI-CAP EMERGING CORE INCOME & BALANCED
GROWTH GROWTH GROWTH GROWTH GROWTH
FUND* FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends...................................... $ 1,603 $ 571,643 $ 665,155 $ 617,514 $ 65,495
Interest....................................... 7,959 825,525 529,888 2,062,681 373,142
-----------------------------------------------------------------
Total income................................. 9,562 1,397,168 1,195,043 2,680,195 438,637
-----------------------------------------------------------------
EXPENSES
Accounting fees................................ 625 84,557 66,320 38,235 37,500
Administration fees............................ 382 17,500 55,823 18,760 3,949
Advisory fees.................................. 13,701 2,487,855 1,172,190 393,370 82,842
Audit fees..................................... 490 55,340 37,168 11,030 2,330
Custodian fees................................. 4,090 72,748 34,055 15,862 12,591
Insurance...................................... 22 2,828 4,686 1,430 373
Legal fees..................................... 29 13,007 10,508 2,204 462
Miscellaneous.................................. 110 24,104 15,138 5,081 1,070
Organization costs............................. -- 4,269 7,792 3,865 2,758
Trustees' fees................................. 1,818 4,886 6,886 4,886 4,886
-----------------------------------------------------------------
Total expenses............................... 21,267 2,767,094 1,410,566 494,723 148,761
Reimbursement (recoupment) from (due to)
advisor.................................... (4,754) -- -- 3,546 (43,828)
-----------------------------------------------------------------
Net expenses................................. 16,513 2,767,094 1,410,566 498,269 104,933
-----------------------------------------------------------------
Net investment income (deficit)............ (6,951) (1,369,926) (215,523) 2,181,926 333,704
-----------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN ON INVESTMENTS
Net realized gain on security transactions....... 33,037 59,504,105 23,633,813 4,704,792 1,418,590
Change in net unrealized appreciation of
investments.................................... 454,156 53,116,640 47,040,750 9,259,998 1,931,006
-----------------------------------------------------------------
Net gain on investments...................... 487,193 112,620,745 70,674,563 13,964,790 3,349,596
-----------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $ 480,242 $ 111,250,819 $ 70,459,040 $ 16,146,716 $ 3,683,300
-----------------------------------------------------------------
</TABLE>
- -------------
*Commenced operations on July 12, 1995.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
61
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
MINI-CAP GROWTH EMERGING GROWTH
--------------- ---------------------------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED FOR THE
SEPTEMBER 30, SEPTEMBER 30, YEAR ENDED
1995* 1995 MARCH 31,
(UNAUDITED) (UNAUDITED) 1995
<S> <C> <C> <C>
---------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)............... $ (6,951) $ (1,369,926) $ (2,224,592)
Net realized gain (loss) from security
transactions................................ 33,037 59,504,105 (48,388,925)
Change in net unrealized appreciation of
investments................................. 454,156 53,116,640 88,372,950
---------------------------------------------------
Net increase (decrease) in net assets
resulting from operations................. 480,242 111,250,819 37,759,433
---------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners..................... 8,180,114 48,179,055 77,212,401
Withdrawals by partners....................... -- (91,945,620) (57,696,150)
---------------------------------------------------
Net increase (decrease) in net assets from
transactions in interests................. 8,180,114 (43,766,565) 19,516,251
---------------------------------------------------
Total increase (decrease) in net assets..... 8,660,356 67,484,254 57,275,684
NET ASSETS:
BEGINNING OF PERIOD............................. -- 471,049,151 413,773,467
---------------------------------------------------
END OF PERIOD................................... $ 8,660,356 $ 538,533,405 $ 471,049,151
---------------------------------------------------
</TABLE>
- -------------
*Commenced operations on July 12, 1995.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
62
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH INCOME & GROWTH
--------------------------------- ---------------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1995 MARCH 31, 1995 MARCH 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C>
---------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)............... $ (215,523) $ 136,431 $ 2,181,926 $ 5,103,250
Net realized gain (loss) from security
transactions................................ 23,633,813 (27,617,865) 4,704,792 (13,408,682)
Change in net unrealized appreciation of
investments................................. 47,040,750 36,375,233 9,259,998 5,539,419
---------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations................. 70,459,040 8,893,799 16,146,716 (2,766,013)
---------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners..................... 37,852,862 76,785,761 4,386,197 32,875,977
Withdrawals by partners....................... (45,790,953) (91,624,360) (22,269,463) (42,582,471)
---------------------------------------------------------------------
Net increase (decrease) in net assets from
transactions in interests................. (7,938,091) (14,838,599) (17,883,266) (9,706,494)
---------------------------------------------------------------------
Total increase (decrease) in net assets..... 62,520,949 (5,944,800) (1,736,550) (12,472,507)
NET ASSETS:
BEGINNING OF PERIOD............................. 283,854,922 289,799,722 106,086,422 118,558,929
---------------------------------------------------------------------
END OF PERIOD................................... $ 346,375,871 $ 283,854,922 $ 104,349,872 $ 106,086,422
---------------------------------------------------------------------
<CAPTION>
BALANCED GROWTH
---------------------------------
FOR THE
PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED
1995 MARCH 31,
(UNAUDITED) 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)............... $ 333,704 $ 477,083
Net realized gain (loss) from security
transactions................................ 1,418,590 (1,500,269)
Change in net unrealized appreciation of
investments................................. 1,931,006 1,850,658
Net increase (decrease) in net assets
resulting from operations................. 3,683,300 827,472
TRANSACTIONS IN INTERESTS
Contributions by partners..................... 1,870,851 4,819,959
Withdrawals by partners....................... (4,479,597) (6,527,607)
Net increase (decrease) in net assets from
transactions in interests................. (2,608,746) (1,707,648)
Total increase (decrease) in net assets..... 1,074,554 (880,176)
NET ASSETS:
BEGINNING OF PERIOD............................. 21,815,501 22,695,677
END OF PERIOD................................... $ 22,890,055 $ 21,815,501
</TABLE>
See Accompanying Notes to Financial Statements.
- --------------------------------------------------------------------------------
63
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS (UNAUDITED)
- -------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Nicholas-Applegate Investment Trust (the "Master Trust"), a diversified,
open-end management investment company organized as a Delaware business trust,
is comprised of twelve investment vehicles (each a "Fund" and collectively the
"Funds") as of September 30, 1995. Each Fund has up to five Portfolios which
have invested in the respective series of the Master Trust to achieve their
investment objective. The Trust commenced operations on April 19, 1993.
SECURITIES TRANSACTIONS
Equity securities are valued at the last sale price (for exchange-listed
securities) or the mean between the last bid and asked price (if lacking any
sales and for over-the-counter securities). Debt securities generally are valued
at the mean between the last bid and asked prices. Securities with 60 days or
less remaining to maturity are valued on an amortized cost basis which
approximates market value.
Securities for which market quotations are not readily available are valued at
fair value determined in good faith by or under the direction of the Master
Trust's Board of Trustees.
Securities transactions are recognized on the trade date. Realized gains and
losses from securities transactions are calculated using the first-in, first-out
method. Dividend income is recognized on the ex-dividend date, and interest
income is recorded on the accrual basis. Discounts and premiums on securities
purchased are amortized over the life of the respective securities. The
prospectus for the Nicholas-Applegate Mutual Funds describes each Fund's
policies with respect to declaration and payment of dividends and distribution
of capital gains.
FEDERAL INCOME TAXES
The Funds are treated as partnerships for federal income tax purposes. Any
interest, dividends and gains or losses of a Fund will be deemed to have been
"passed through" to the Portfolios.
DEFERRED ORGANIZATION COSTS
Organization costs incurred by the Master Trust have been allocated to the
various Funds based upon management's best estimate of the costs applicable to
each Fund. These costs have been deferred and will be amortized over a period of
60 months from the date the Funds commenced operations.
B. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENTS
The investment adviser to the Master Trust is Nicholas-Applegate Capital
Management ("Nicholas-Applegate"). The advisory fee is computed daily for the
Funds based upon the following percentages of each Fund's average daily net
assets:
<TABLE>
<CAPTION>
FIRST $500 NEXT $500 EXCESS OF
FUND MILLION MILLION $1 BILLION
- ---------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Mini-Cap Growth Fund........ 1.25% 1.25% 1.25%
Emerging Growth Fund........ 1.00% 1.00% 1.00%
Core Growth Fund............ 0.75% .675% .65%
Income & Growth Fund........ 0.75% .675% .65%
Balanced Gowth Fund......... 0.75% .675% .65%
</TABLE>
C. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investment securities, other than
short-term obligations, for the period ended September 30, 1995, were as
follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- -------------------------------- ----------- -----------
<S> <C> <C>
Mini-Cap Growth Fund............ $ 9,852 $ 1,993
Emerging Growth Fund............ 316,804 371,892
Core Growth Fund................ 154,019 174,393
Income & Growth Fund............ 54,755 71,219
Balanced Growth Fund............ 11,075 14,106
</TABLE>
- --------------------------------------------------------------------------------
64
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS (UNAUDITED) -- Continued
- --------------------------------------------------------------------------------
At September 30, 1995, the net unrealized appreciation (depreciation) based on
the cost of investments for Federal income tax purposes was as follows (in
000's):
<TABLE>
<CAPTION>
TAX GROSS GROSS NET
COST OF UNREALIZED UNREALIZED UNREALIZED
FUND INVESTMENTS APPRECIATION (DEPRECIATION) APPRECIATION
- ----------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Mini-Cap
Growth
Fund..... $ 8,121 $ 702 $ (248) $ 454
Emerging
Growth
Fund..... 407,357 130,053 (7,889) 122,164
Core Growth
Fund..... 261,581 86,051 (2,805) 83,246
Income &
Growth
Fund..... 92,042 13,424 (631) 12,793
Balanced
Growth
Fund..... 18,552 4,111 (177) 3,934
</TABLE>
- --------------------------------------------------------------------------------
65
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
D. SELECTED RATIO DATA
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
OPERATING INCOME
EXPENSES TO (DEFICIT) TO
AVERAGE NET AVERAGE NET PORTFOLIO
ASSETS+ ASSETS+ TURNOVER RATE
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
MINI-CAP GROWTH
For the period ended 09/30/95**..................................... 1.51%* (0.63%)* 41.72%
EMERGING GROWTH
For the period ended 09/30/95**..................................... 1.11%* (0.55%)* 67.84%
For the year ended 03/31/95......................................... 1.12% (0.53%) 100.46%
For the period ended 03/31/94++..................................... 1.12%* (0.80%)* 50.51%
CORE GROWTH
For the period ended 09/30/95**..................................... 0.90%* (0.14%)* 52.44%
For the year ended 03/31/95......................................... 0.89% 0.05% 98.09%
For the period ended 03/31/94++..................................... 0.92%* (0.03%)* 84.84%
INCOME & GROWTH
For the period ended 09/30/95**..................................... 0.95%* 4.16%* 53.41%
For the year ended 03/31/95......................................... 0.93% 4.37% 125.51%
For the period ended 03/31/94++..................................... 0.94%* 3.51%* 177.52%
BALANCED GROWTH
For the period ended 09/30/95**..................................... 0.95%* 3.02%* 51.94%
For the year ended 03/31/95......................................... 0.95% 2.13% 110.40%
For the period ended 03/31/94++..................................... 0.94%* 1.93%* 85.45%
</TABLE>
- ------------
*Annualized
**Unaudited
+Net of expense reimbursement (advisor recoupment) equivalent to 0.43%, 0.00%,
(0.01%), 0.04%, 0.00%, 0.00%, 0.00%, (0.01%), 0.02%, 0.03%, 0.40%, 0.38% and
0.43% of average net assets, respectively.
++Mini-Cap Growth Fund commenced operations on July 12, 1995. Emerging Growth
Fund commenced operations on October 1, 1993. Core Growth Fund, Income &
Growth Fund, and Balanced Growth Fund commenced operations on April 19, 1993.
- --------------------------------------------------------------------------------
66
<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
- -----------------------------------------------------------------------
600 West Broadway
San Diego, California 92101
