<PAGE>
COVER OF SEMI-ANNUAL REPORT
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
SEMI-ANNUAL REPORT
DOMESTIC PORTFOLIOS, SERIES A, B AND C SEPTEMBER 30, 1995
EMERGING GROWTH
CORE GROWTH
INCOME & GROWTH
BALANCED GROWTH
GOVERNMENT INCOME
MONEY MARKET
WHEN YOU'RE LOOKING FOR GROWTH,
THINK LONG TERM.
<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
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600 West Broadway
San Diego, California 92101
800-551-8043
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
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<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
Emerging Growth............................................................................................... 5
Core Growth................................................................................................... 23
Income & Growth............................................................................................... 32
Balanced Growth............................................................................................... 43
Government Income............................................................................................. 53
Money Market.................................................................................................. 59
The Portfolios'
Financial Highlights.......................................................................................... 62
Statements of Assets and Liabilities.......................................................................... 68
Statements of Operations...................................................................................... 70
Statements of Changes in Net Assets........................................................................... 72
Notes to the Financial Statements............................................................................. 78
Notes to the Funds' Financial Statements........................................................................ 86
</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
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CAPITAL MARKETS REVIEW
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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.
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3
<PAGE>
LONG-TERM VIEW OF THE U.S. EQUITY AND BOND MARKETS
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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>
EMERGING GROWTH PORTFOLIO
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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.
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5
<PAGE>
A CONVERSATION WITH CATHERINE AVERY SOMHEGYI
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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.
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6
<PAGE>
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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.
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7
<PAGE>
EMERGING GROWTH PORTFOLIO A
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING GROWTH PORTFOLIO A WITH THE RUSSELL 2000 GROWTH INDEX
<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(12/27/93 -- 09/30/95) (10/01/94 -- 09/30/95)
12.78% 25.05%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Emerging Growth Portfolio A Russell 2000 Growth Index
<S> <C> <C>
12/27/93 9475 10000
12/93 9771 10110
3/94 9172 9699
6/94 8482 9090
9/94 9361 9938
12/94 9377 9864
3/95 9900 10405
6/95 11014 11437
9/95 12355 12738
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Emerging Growth Portfolio A (front load) with the
Russell 2000 Growth Index from the commencement of operations of the Portfolio
on December 27, 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 maximum sales
charge is reflected in the total return computation.
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 contains 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 a widely regarded small-cap index of the 2,000 smaller securities in
the Russell 3000 Index which comprises the 3,000 largest U.S. securities as
determined by total market capitalizations. The Russell Indexes are unmanaged.
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.
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8
<PAGE>
EMERGING GROWTH PORTFOLIO B
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING GROWTH PORTFOLIO B WITH THE RUSSELL 2000 GROWTH INDEX
<TABLE>
<S> <C>
TOTAL RETURN SINCE INCEPTION
(05/31/95 -- 09/30/95)
15.60%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Emerging Growth Portfolio B Russell 2000 Growth Index
<S> <C> <C>
5/31/95 10000 10000
6/95 10321 10689
7/95 11309 11522
8/95 11332 11664
9/95 11560 11905
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Emerging Growth Portfolio B (back-end load) with a
similar investment in the Russell 2000 Growth Index from the commencement of
operations of the Portfolio on May 31, 1995 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 maximum contingent deferred sales charge is reflected in the
total return computation.
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 contains 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 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. The Russell Indexes are unmanaged.
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.
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9
<PAGE>
EMERGING GROWTH PORTFOLIO C
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING GROWTH PORTFOLIO C WITH THE RUSSELL 2000 GROWTH INDEX
<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(12/27/93 -- 09/30/95) (10/01/94 -- 09/30/95)
15.60% 31.24%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Emerging Growth Portfolio C Russell 2000 Growth Index
<S> <C> <C>
12/27/93 10000 10000
12/93 10312 10110
3/94 9656 9699
6/94 8920 9090
9/94 9832 9938
12/94 9824 9864
3/95 10368 10405
6/95 11520 11437
9/95 12904 12738
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Emerging Growth Portfolio C (level load) with the
Russell 2000 Growth Index from the commencement of operations of the Portfolio
on December 27, 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 contains 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 a widely regarded small-cap index of the 2,000 smaller securities in
the Russell 3000 Index which comprises the 3,000 largest U.S. securities as
determined by total market capitalization.
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.
- --------------------------------------------------------------------------------
10
<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.
- --------------------------------------------------------------------------------
11
<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.
- --------------------------------------------------------------------------------
12
<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.
- --------------------------------------------------------------------------------
13
<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.
- --------------------------------------------------------------------------------
14
<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.
- --------------------------------------------------------------------------------
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>
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.
- --------------------------------------------------------------------------------
16
<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.
- --------------------------------------------------------------------------------
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>
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.
- --------------------------------------------------------------------------------
18
<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.
- --------------------------------------------------------------------------------
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>
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.
- --------------------------------------------------------------------------------
20
<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.
- --------------------------------------------------------------------------------
21
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
COMMERCIAL PAPER -- 3.1%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
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>
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.
- --------------------------------------------------------------------------------
22
<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.
- --------------------------------------------------------------------------------
23
<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.
- --------------------------------------------------------------------------------
24
<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.
- --------------------------------------------------------------------------------
25
<PAGE>
CORE GROWTH PORTFOLIO A
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE CORE
GROWTH PORTFOLIO A 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)
11.00% 23.27%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Core Growth Portfolio A S&P 500 Index
<S> <C> <C>
4/19/93 9475 10000
6/93 10286 10103
9/93 11082 10364
12/93 10845 10605
3/94 10070 10202
6/94 9477 10245
9/94 9925 10746
12/94 9652 10744
3/95 10336 11792
6/95 11476 12917
9/95 12913 13944
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Core Growth Portfolio A (front load) 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 maximum sales charge is reflected
in the total return computation.
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.
- --------------------------------------------------------------------------------
26
<PAGE>
CORE GROWTH PORTFOLIO B
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE CORE
GROWTH PORTFOLIO B WITH THE S&P 500 INDEX.
TOTAL RETURN
SINCE INCEPTION
(05/31/95 -- 09/30/95)
14.53%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Core Growth Portfolio B S&P 500 Index
<S> <C> <C>
5/31/95 10000 10000
6/95 10192 10232
7/95 11005 10572
8/95 11233 10598
9/95 11453 11045
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Core Growth Portfolio B (back-end load) with the Standard
& Poor's ("S&P") 500 Index from the commencement of operations of the Portfolio
on May 31, 1995 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 maximum contingent deferred sales
charge is reflected in the total return computation.
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 unmanaged and contains 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.
- --------------------------------------------------------------------------------
27
<PAGE>
CORE GROWTH PORTFOLIO C
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE CORE
GROWTH PORTFOLIO C WITH THE S&P 500 INDEX.
<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(4/19/93 -- 09/30/95) (10/01/94 -- 09/30/95)
12.73% 29.34%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Core Growth Portfolio C S&P 500 Index
<S> <C> <C>
4/19/93 10000 10000
6/93 10832 10103
9/93 11648 10364
12/93 11386 10605
3/94 10554 10202
6/94 9913 10245
9/94 10370 10746
12/94 10073 10744
3/95 10770 11792
6/95 11931 12917
9/95 13412 13944
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Core Growth Portfolio C (level load) 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.
- --------------------------------------------------------------------------------
28
<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.
- --------------------------------------------------------------------------------
29
<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.
- --------------------------------------------------------------------------------
30
<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.
- --------------------------------------------------------------------------------
31
<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.
- --------------------------------------------------------------------------------
32
<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
- --------------------------------------------------------------------------------
33
<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.
- --------------------------------------------------------------------------------
34
<PAGE>
INCOME & GROWTH PORTFOLIO A
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
INCOME & GROWTH PORTFOLIO A 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)
10.72% 10.42%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Income & Growth Portfolio A S&P 500 Index
<S> <C> <C>
4/19/93 9475 10000
6/93 10361 10103
9/93 11264 10364
12/93 11623 10605
3/94 11336 10202
6/94 10798 10245
9/94 11011 10746
12/94 10667 10744
3/95 11038 11792
6/95 11804 12917
9/95 12832 13944
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Income & Growth Portfolio A (front load) 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 maximum sales charge is reflected
in the total return computation.
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.
- --------------------------------------------------------------------------------
35
<PAGE>
INCOME & GROWTH PORTFOLIO B
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
INCOME & GROWTH PORTFOLIO B WITH THE S&P 500 INDEX
TOTAL RETURN SINCE INCEPTION
(05/31/95 -- 09/30/95)
6.95%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Income & Growth Portfolio B S&P 500 Index
<S> <C> <C>
6/1/95 10000 10000
6/95 9858 10232
7/95 10308 10572
8/95 10460 10598
9/95 10695 11045
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Income & Growth Portfolio B (back-end load) with the
Standard & Poor's ("S&P") 500 Index from the commencement of operations of the
Portfolio on May 31, 1995 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 maximum
contingent deferred sales charge is reflected in the total return computation.
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 unmanaged and contains 500 industrial, transportation,
utility and financial companies regarded as generally representative of the U.S.
stock markets.
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.
- --------------------------------------------------------------------------------
36
<PAGE>
INCOME & GROWTH PORTFOLIO C
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
INCOME & GROWTH PORTFOLIO C 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)
12.42% 15.77%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Income & Growth Portfolio C S&P 500 Index
<S> <C> <C>
4/19/93 10000 10000
6/93 10906 10103
9/93 11847 10364
12/93 12197 10605
3/94 11876 10202
6/94 11298 10245
9/94 11506 10746
12/94 11130 10744
3/95 11489 11792
6/95 12276 12917
9/95 13320 13944
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Income & Growth Portfolio C (level load) with a similar
investment in 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>
- -------------------------------------------------------------------
INCOME &
GROWTH FUND 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 PORTFOLIO A
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
BALANCED GROWTH PORTFOLIO A WITH A MODEL INDEX CONSISTING OF 60% S&P 500
INDEX/40% LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND 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)
9.91% 16.51%
</TABLE>
<TABLE>
<CAPTION>
60% S&P 500 INDEX/40%
LEHMAN BROTHERS
BALANCED GROWTH GOVERNMENT/ CORPORATE
PORTFOLIO A BOND INDEX
<S> <C> <C>
4/19/93 9475 10000
JUN-93 10464 10168
SEP-93 11059 10461
DEC-93 10737 10589
MAR-94 10361 10215
JUN-94 9746 10192
SEP-94 10250 10511
DEC-94 10061 10528
MAR-95 10694 11342
JUN-95 11682 12286
SEP-95 12605 12964
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Balanced Growth Portfolio A (front load) 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 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 maximum sales
charge is reflected in the total return computation.
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 corporate 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
distribution, 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>
BALANCED GROWTH PORTFOLIO B
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
BALANCED GROWTH PORTFOLIO B 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
(05/31/95 -- 09/30/95)
6.91%
</TABLE>
<TABLE>
<CAPTION>
60% S&P 500 INDEX/40%
LEHMAN BROTHERS
BALANCED GROWTH GOVERNMENT/ CORPORATE
PORTFOLIO B BOND INDEX
<S> <C> <C>
5/31/95 10000 10000
6/95 9924 10171
7/95 10555 10358
8/95 10593 10427
9/95 10691 10733
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Balanced Growth Portfolio B (back-end load) 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 May 31, 1995 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 maximum
contingent deferred sales charge is reflected in the total return computation.
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 unmanaged and contains 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 corporate issues 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.
- --------------------------------------------------------------------------------
47
<PAGE>
BALANCED GROWTH PORTFOLIO C
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
BALANCED GROWTH PORTFOLIO C WITH A MODEL INDEX CONSISTING OF 60% S&P 500
INDEX/40% LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND 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)
11.77% 22.29%
</TABLE>
<TABLE>
<CAPTION>
60% S&P 500 INDEX/40%
LEHMAN BROTHERS
BALANCED GROWTH GOVERNMENT/ CORPORATE
PORTFOLIO C BOND INDEX
<S> <C> <C>
4/19/93 10000 10000
6/93 11039 10168
9/93 11661 10461
12/93 11305 10589
3/94 10891 10215
6/94 10229 10192
9/94 10738 10511
12/94 10457 10528
3/95 11161 11342
6/95 12184 12286
9/95 13132 12964
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Balanced Growth Portfolio C (level load) 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 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 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 corporate 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
distribution, 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.
- --------------------------------------------------------------------------------
48
<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.
- --------------------------------------------------------------------------------
49
<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.
- --------------------------------------------------------------------------------
50
<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.
- --------------------------------------------------------------------------------
51
<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.
- --------------------------------------------------------------------------------
52
<PAGE>
GOVERNMENT INCOME PORTFOLIO
- -------------------------------------------------------------------
GOAL: Seeks to maximize current income through investment primarily in
intermediate-term debt securities of the U.S. Government and its agencies and
instrumentalities.*
REVIEW AND OUTLOOK: The Government Income Portfolio earned strong returns from
April through September as choppy but rising U.S. bond market conditions favored
our mix of bond maturities.
It was a period of strong performance for bonds generally, as slow economic
growth and few signs of inflationary pressures brought domestic investors into
the market in full force. Bond buyers' confidence in the economy's stability
encouraged purchases of longer-term securities. This helped the Portfolio, which
held securities at the long end and the short end of its maturity target range.
Foreign central banks also purchased large amounts of U.S. Treasury securities
during the period. The central banks' efforts were intended to shore up the weak
U.S. dollar in hopes that would lift slumping export industries in their home
countries. This heightened bond buying pressure contributed to rising U.S.
government security prices and long-term interest rates that fell to their
lowest levels in more than a year.
As of September 30, 1995, 26.3% of the Portfolio's holdings had maturities of
two years or less; 35.7% matured in two to five years; 1.3% matured in five to
ten years; and the remaining 36.7% had maturities of ten years or more for an
average maturity of 10.75 years and a quality rating of AAA.
- ------------
* The government guarantee of the Fund's portolio securities does not
guarantee the value of the Fund's shares. The Fund's share price will
generally fluctuate with changing interest rates or other market conditions.
- --------------------------------------------------------------------------------
53
<PAGE>
A CONVERSATION WITH JOHN WYLIE
- -------------------------------------------------------------------
John Wylie
[PHOTO] Portfolio Manager
Government Income Portfolio
Q. JOHN, BOND PRICES HAVE RISEN SHARPLY ALL YEAR.
WHAT HAS BEEN HAPPENING IN THE ECONOMY AND THE MARKETS TO CONTRIBUTE TO THIS
ENVIRONMENT?
A. The single factor that has been most important
and crucial for interest rates and bonds this year has been the obvious lack of
inflationary pressures in the economy. While there have been some inflationary
pressures building up in intermediate goods, these have not followed through to
consumer price increases. If this continues on trend, we will have consumer
price inflation below 3% this year. This economic environment has produced a
strong market for longer maturity bonds. As investors have become more
comfortable with low inflation forecasts they have sought out the higher returns
of longer-term bonds. The other real positive has been the political discussion
in Washington, including a willingness to discuss spending at the federal
government level. This has supported the tone for a positive bond market and
investors have rallied around it.
Q. HOW DID THESE MARKET FORCES AFFECT THE
PERFORMANCE OF THE GOVERNMENT INCOME PORTFOLIO?
A. We've seen a strong bond market this year on
average and the Portfolio has benefited from it. We structured the Portfolio
with a combination of long and short maturities. This configuration paid off as
investors bought bonds with longer maturities and drove up the value of the
Portfolio's long-bond holdings.
Q. GIVEN THE SHARP RISE IN DOMESTIC EQUITIES THIS
YEAR, WHY WOULD INVESTORS WANT TO COMMIT A PORTION OF THEIR RESOURCES TO
FIXED-INCOME SECURITIES?
A. It depends on an individual investor's objectives
and willingness to take on risks. Experience has shown that by adding a portion
of fixed-income assets to an all-equity portfolio you can, in fact, increase
overall returns and reduce volatility. So I would recommend that some portion of
every investor's portfolio be allocated to fixed-income assets.
Q. LOOKING AHEAD, WHAT FACTORS DO YOU SEE
HAVING THE GREATEST EFFECT ON INTEREST RATES IN THE NEAR TERM?
A. We don't try to forecast interest rates but we do
monitor what is going on in the economy. The thing that we are monitoring most
closely is domestic consumption, i.e. retail sales, which so far this year have
surprised on the weak side. And we continually monitor inflation.
Q. HOW IS THE PORTFOLIO STRUCTURED TO TAKE
ADVANTAGE OF CURRENT INTEREST-RATE TRENDS?
A. At the end of September we lengthened the
duration of the Portfolio maturities in recognition of the slow growth of the
economy and its attendant low risk of inflation. We continue to use a structure
that combines long and short maturities.
- --------------------------------------------------------------------------------
54
<PAGE>
GOVERNMENT INCOME PORTFOLIO A
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
GOVERNMENT INCOME PORTFOLIO A WITH THE LEHMAN BROTHERS GOVERNMENT BOND INDEX.
<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(4/19/93 -- 09/30/95) (10/01/94 -- 09/30/95)
4.77% 7.67%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Government Income Portfolio A Lehman Brothers Government Bond Index
<S> <C> <C>
4/19/93 9525 10000
6/93 9856 10250
9/93 10254 10582
12/93 10220 10546
3/94 9998 10229
6/94 9913 10112
9/94 9915 10154
12/94 9979 10191
3/95 10374 10670
6/95 11010 11332
9/95 11208 11532
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Government Income Portfolio A (front load) with the
Lehman Brothers Government Bond 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 maximum sales
charge is reflected in the total return computation.
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 Lehman Brothers Government Bond Index is an unmanaged index composed of all
publicly issued, nonconvertible, domestic debt of the U.S. government or any
agency thereof, quasi-federal corporations or corporate debt guaranteed by the
U.S. government.
The Index reflects the reinvestment of interest income 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.
- --------------------------------------------------------------------------------
55
<PAGE>
GOVERNMENT INCOME PORTFOLIO B
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
GOVERNMENT INCOME PORTFOLIO B WITH THE LEHMAN BROTHERS GOVERNMENT BOND INDEX.
<TABLE>
<S> <C>
TOTAL RETURN SINCE INCEPTION
(05/31/95 -- 09/30/95)
-2.53%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Government Income Portfolio B Lehman Brothers Government Bond Index
<S> <C> <C>
5/31/95 10000 10000
6/95 9585 10077
7/95 9578 10040
8/95 9677 10157
9/95 9747 10255
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Government Income Portfolio B (back-end load) with the
Lehman Brothers Government Bond Index from the commencement of operations of the
Portfolio on May 31, 1995 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 maximum
contingent deferred sales charge is reflected in the total return computation.
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 Lehman Brothers Government Bond Index is unmanaged and composed of all
publicly issued, nonconvertible, domestic debt of the U.S. government or any
agency thereof, quasi-federal corporations or corporate debt guaranteed by the
U.S. government.
The Index reflects the reinvestment of interest income 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.
- --------------------------------------------------------------------------------
56
<PAGE>
GOVERNMENT INCOME PORTFOLIO C
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
GOVERNMENT INCOME PORTFOLIO C WITH THE LEHMAN BROTHERS GOVERNMENT BOND 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)
6.13% 12.24%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Government Income Portfolio C Lehman Brothers Government Bond Index
<S> <C> <C>
4/19/93 10000 10000
6/93 10331 10250
9/93 10742 10582
12/93 10690 10546
3/94 10428 10229
6/94 10313 10112
9/94 10307 10154
12/94 10360 10191
3/95 10746 10670
6/95 11386 11332
9/95 11568 11532
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Government Income Portfolio C (level load) with the
Lehman Brothers Government Bond 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 Lehman Brothers Government Bond Index is an unmanaged index composed of all
publicly issued, nonconvertible, domestic debt of the U.S. government or any
agency thereof, quasi-federal corporations or corporate debt guaranteed by the
U.S. government.
The Index reflects the reinvestment of interest income 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.
- --------------------------------------------------------------------------------
57
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
GOVERNMENT
INCOME FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
U.S. TREASURY AND
AGENCY OBLIGATIONS -- 78.9%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
U.S. TREASURY BONDS
-- 15.5%
9.125%, 05/15/18........................... $ 470,000 $ 605,026
----------
U.S. TREASURY BONDS, STRIPPED -- 1.4%
0.000%, 05/15/14*.......................... 195,000 55,942
----------
U.S. TREASURY NOTES
-- 25.9%
6.750%, 02/28/97........................... 1,000,000 1,012,840
----------
FEDERAL HOME LOAN MORTGAGE CORP.
-- 36.1%
8.080%, 02/09/98
(Cost $1,402,095).......................... 1,400,000 1,408,428
----------
TOTAL U. S. TREASURY AND
AGENCY OBLIGATIONS
(Cost $2,993,062)......................................... 3,082,236
----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CORPORATE BONDS -- 22.4%
- ---------------------------------------------------------------------------
CIGNA CORPORATION
-- 12.4%
7.650%, 03/01/23........................... $ 500,000 $ 485,625
UNITED AIR LINES
-- 10.0%
9.750%, 08/15/21........................... 350,000 389,812
----------
TOTAL CORPORATE BONDS
(Cost $778,627)........................................... 875,437
----------
TOTAL INVESTMENTS -- 101.30%
(Cost $3,771,689)......................................... 3,957,673
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.30%)............
(50,998)
----------
NET ASSETS -- 100.00%....................................... $3,906,675
----------
</TABLE>
- ------------
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
58
<PAGE>
MONEY MARKET PORTFOLIO
- -------------------------------------------------------------------
GOAL: Seeks to achieve a high level of current income consistent with
preservation of capital and maintenance of liquidity through investment grade
securities with an average maturity of 90 days.*
REVIEW AND OUTLOOK: The Money Market Portfolio invests in U.S. Treasury and
agency securities and in high quality commercial paper. The Portfolio's maturity
is generally lengthened in anticipation of stable or declining short-term
interest rates and is shortened when short-term interest rates are expected to
rise.
- ------------
* The Money Market Portfolio is neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that the Money Market Portfolio
will be able to maintain a stable net asset value of $1.00 per share.
- --------------------------------------------------------------------------------
59
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
MONEY
MARKET FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
AGENCY OBLIGATIONS -- 84.1%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
FEDERAL HOME LOAN BANK DISCOUNT NOTES --
17.5%
5.650%, 10/02/95........................... $ 300,000 $ 299,953
5.620%, 10/06/95........................... 330,000 329,742
----------
629,695
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION
DISCOUNT NOTES -- 34.7%
5.540%, 10/12/95........................... 250,000 249,577
5.620%, 10/24/95........................... 255,000 254,084
5.630%, 10/24/95........................... 250,000 249,101
5.600%, 11/08/95........................... 500,000 497,044
----------
1,249,806
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES -- 31.9%
5.640%, 10/20/95........................... 300,000 299,108
5.610%, 11/08/95........................... 500,000 497,039
5.600%, 11/28/95........................... 355,000 351,797
----------
1,147,944
----------
TOTAL AGENCY OBLIGATIONS
(Cost $3,027,445)........................................ 3,027,445
----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
REPURCHASE AGREEMENT -- 16.7%
- --------------------------------------------------------------------------
Morgan J.P. & Co. $602,000 at 6.200%
(Agreement dated 09/30/95, to be
repurchased at $602,311 on 10/02/95;
collateralized by $478,000 U.S. Treasury
Notes 10.000%, due 05/15/10) (Value
$632,785) (Cost $602,000)................ $ 602,000 $ 602,000
----------
TOTAL INVESTMENTS -- 100.8%
(Cost $3,629,445)........................................ 3,629,445
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (0.8%)................................... (29,748)
----------
NET ASSETS -- 100.0%....................................... $3,599,697
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
60
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
61
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
SERIES A 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>
- -----------------------------------------------------------------------
EMERGING GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... $13.06 $(0.10) $3.34
Portfolio A (For the year
ended 03/31/95)........... 12.10 (0.16) 1.12
Portfolio A (For the period
ended 03/31/94)........... 12.50 (0.04) (0.36)
CORE GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 13.61 (0.08) 3.46
Portfolio A (For the year
ended 03/31/95)........... 13.25 (0.10) 0.46
Portfolio A (For the period
ended 03/31/94)........... 12.50 (0.07) 0.86
INCOME & GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 12.86 0.25 1.83
Portfolio A (For the year
ended 03/31/95)........... 14.16 0.49 (0.89)
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.32 2.15
BALANCED GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 13.74 0.18 2.27
Portfolio A (For the year
ended 03/31/95)........... 13.52 0.21 0.22
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.15 1.02
GOVERNMENT INCOME
Portfolio A (For the period
ended 09/30/95)#.......... 12.29 0.42 0.58
Portfolio A (For the year
ended 03/31/95)........... 12.51 0.63 (0.19)
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.29 0.34
MONEY MARKET
Portfolio (For the period
ended 09/30/95)#.......... 1.00 0.03 --
Portfolio (For the year
ended 03/31/95)........... 1.00 0.05 --
Portfolio (For the period
ended 03/31/94)........... 1.00 0.01 --
</TABLE>
- ------------
*The Portfolio's maximum sales charge is not included in the total return
computation.
**Annualized.
+Net of expense reimbursement (advisor recoupment) equivalent to 0.00%,
(0.02%), 0.07%, 0.01%, 0.04%, 0.14%, 0.14%, 0.16%, 0.24%, 0.97%, 1.18%, 1.69%,
5.54%, 7.30%, 19.18%, 1.95%, 2.18% and 322.70% of average net assets,
respectively.
++Including expenses allocated from the Master Trust Emerging Growth Fund, Core
Growth Fund, Income & Growth Fund, Balanced Growth Fund, Government Income
Fund and Money Market Fund of 1.11%, 1.12%, 1.12%, 0.90%, 0.89%, 0.92%,
0.95%, 0.93%, 0.94%, 0.95%, 0.95%, 0.94%, 0.66%, 0.80%, 0.80%, 0.45%, 0.31%
and 0.24%, net of expense reimbursement (advisor recoupment) equivalent to
0.00%, (0.01%), 0.04%, 0.00%, 0.00%, 0.00%, (0.01%), 0.02%, 0.03%, 0.40%,
0.38%, 0.43%, 2.05%, 1.41%, 2.00%, 2.60%, 2.92% and 150.78% of average net
assets of the Funds, respectively.
#Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
62
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
FROM NET NET ASSET
INVESTMENT DISTRIBUTIONS VALUES AT NET ASSETS AT
INCOME FROM CAPITAL GAINS END OF PERIOD TOTAL RETURN* END OF PERIOD
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... $ -- $ -- $16.30 24.81% $ 127,943,564
Portfolio A (For the year
ended 03/31/95)........... -- -- 13.06 7.93% 106,725,077
Portfolio A (For the period
ended 03/31/94)........... -- -- 12.10 (3.20%) 104,838,285
CORE GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... -- -- 16.99 24.93% 71,472,815
Portfolio A (For the year
ended 03/31/95)........... -- -- 13.61 2.72% 65,291,541
Portfolio A (For the period
ended 03/31/94)........... -- (0.04) 13.25 6.27% 70,512,167
INCOME & GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... (0.25) -- 14.69 16.26% 30,960,964
Portfolio A (For the year
ended 03/31/95)........... (0.49) (0.41) 12.86 (2.64%) 31,150,481
Portfolio A (For the period
ended 03/31/94)........... (0.32) (0.49) 14.16 19.65% 30,447,446
BALANCED GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... (0.18) -- 16.01 17.87% 5,662,167
Portfolio A (For the year
ended 03/31/95)........... (0.21) -- 13.74 3.22% 4,979,593
Portfolio A (For the period
ended 03/31/94)........... (0.15) -- 13.52 9.35% 6,445,901
GOVERNMENT INCOME
Portfolio A (For the period
ended 09/30/95)#.......... (0.42) -- 12.87 8.04% 1,109,250
Portfolio A (For the year
ended 03/31/95)........... (0.63) (0.03) 12.29 3.68% 925,074
Portfolio A (For the period
ended 03/31/94)........... (0.29) (0.33) 12.51 4.97% 819,919
MONEY MARKET
Portfolio (For the period
ended 09/30/95)#.......... (0.03) -- 1.00 2.78% 3,557,057
Portfolio (For the year
ended 03/31/95)........... (0.05) -- 1.00 4.58% 2,995,847
Portfolio (For the period
ended 03/31/94)........... (0.01) -- 1.00 1.72% 47,975
<CAPTION>
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE NET (DEFICIT) TO AVERAGE
ASSETS+++ NET ASSETS+++
<S> <C> <C>
- ------------------------------
EMERGING GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 1.80%** (1.24%)**
Portfolio A (For the year
ended 03/31/95)........... 1.86% (1.27%)
Portfolio A (For the period
ended 03/31/94)........... 1.73%** (1.44%)**
CORE GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 1.59%** (0.83%)**
Portfolio A (For the year
ended 03/31/95)........... 1.59% (0.66%)
Portfolio A (For the period
ended 03/31/94)........... 1.57%** (0.68%)**
INCOME & GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 1.60%** 3.52%**
Portfolio A (For the year
ended 03/31/95)........... 1.60% 3.71%
Portfolio A (For the period
ended 03/31/94)........... 1.59%** 2.83%**
BALANCED GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 1.60%** 2.36%**
Portfolio A (For the year
ended 03/31/95)........... 1.60% 1.44%
Portfolio A (For the period
ended 03/31/94)........... 1.59%** 1.30%**
GOVERNMENT INCOME
Portfolio A (For the period
ended 09/30/95)#.......... 0.96%** 6.56%**
Portfolio A (For the year
ended 03/31/95)........... 1.10% 5.18%
Portfolio A (For the period
ended 03/31/94)........... 1.10%** 3.07%**
MONEY MARKET
Portfolio (For the period
ended 09/30/95)#.......... 0.45%** 5.49%**
Portfolio (For the year
ended 03/31/95)........... 0.31% 4.60%
Portfolio (For the period
ended 03/31/94)........... 0.54%** 1.85%**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
63
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS (UNAUDITED)
- -------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
NET
ASSET
VALUES
AT NET NET REALIZED
BEGINNING INVESTMENT AND UNREALIZED
OF INCOME GAINS ON
PERIOD (DEFICIT) INVESTMENTS
<S> <C> <C> <C>
- -----------------------------------------------------------------------
EMERGING GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... $12.50 $(0.05) $2.76
CORE GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 12.50 (0.04) 2.61
INCOME & GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 12.50 0.10 1.47
BALANCED GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 12.50 0.04 1.53
GOVERNMENT INCOME
Portfolio B (For the period
ended 09/30/95)*.......... 12.50 0.23 0.09
</TABLE>
- ------------
*All Series B Portfolios commenced operation on May 31, 1995.
**Annualized.
***The Portfolio's maximum sales charge is not included in the total return
computation.
+Net of expense reimbursement equivalent to 4.12%, 5.78%, 14.55%, 23.88%, and
166.85% of average net assets, respectively.
++Including expenses allocated from the Master Trust Emerging Growth Fund,
Core Growth Fund, Income & Growth Fund, Balanced Growth Fund and Government
Income Fund of 1.11%, 0.90%, 0.95%, 0.95%, and 0.66%, net of expense
reimbursement (advisor recoupment) equivalent to 0.00%, 0.00%, (0.01)%,
0.40%, and 2.05% of average net assets of the Funds, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
64
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
FROM NET NET ASSET
INVESTMENT DISTRIBUTIONS VALUES AT NET ASSETS AT
INCOME FROM CAPITAL GAINS END OF PERIOD TOTAL RETURN*** END OF PERIOD
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... $ -- $ -- $15.21 21.68% $5,570,849
CORE GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... -- -- 15.07 20.56% 2,875,388
INCOME & GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... (0.10) -- 13.97 12.58% 634,500
BALANCED GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... (0.04) -- 14.03 12.54% 355,264
GOVERNMENT INCOME
Portfolio B (For the period
ended 09/30/95)*.......... (0.23) -- 12.59 2.60% 26,083
<CAPTION>
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE NET (DEFICIT) TO AVERAGE
ASSETS+++ NET ASSETS+++
<S> <C> <C>
- ------------------------------
EMERGING GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 2.59%** (2.12%)**
CORE GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 2.21%** (1.53%)**
INCOME & GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 2.25%** 3.37%**
BALANCED GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 2.25%** 1.78%**
GOVERNMENT INCOME
Portfolio B (For the period
ended 09/30/95)*.......... 1.38%** 6.21%**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
65
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
SERIES C 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>
- -----------------------------------------------------------------------
EMERGING GROWTH
Portfolio C (For the period
ended 09/03/95)#.......... $12.96 $(0.13) $3.30
Portfolio C (For the year
ended 03/31/95)........... 12.07 (0.22) 1.11
Portfolio C (For the period
ended 03/31/94)........... 12.50 (0.06) (0.37)
CORE GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 13.45 (0.13) 3.33
Portfolio C (For the year
ended 03/31/95)........... 13.18 (0.17) 0.44
Portfolio C (For the period
ended 03/31/94)........... 12.50 (0.11) 0.80
INCOME & GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 13.03 0.21 1.86
Portfolio C (For the year
ended 03/31/95)........... 14.28 0.41 (0.89)
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.24 2.11
BALANCED GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 13.76 0.14 2.29
Portfolio C (For the year
ended 03/31/95)........... 13.54 0.11 0.22
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.08 1.04
GOVERNMENT INCOME
Portfolio C (For the period
ended 09/30/95)#.......... 12.27 0.46 0.49
Portfolio C (For the year
ended 03/31/95)........... 12.56 0.63 (0.28)
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.25 0.29
</TABLE>
- ------------
*The Portfolio's maximum sales charge is not included in the total return
computation.
**Annualized.
+Net of expense reimbursement equivalent to 0.00%, 0.00%, 0.00%, 0.00%, 0.00%,
0.00%, 0.07%, 0.04%, 0.01%, 0.31%, 0.35%, 0.49%, 2.05%, 1.17% and 2.36% of
average net assets, respectively.
++Including expenses allocated from the Master Trust Emerging Growth Fund, Core
Growth Fund, Income & Growth Fund, Balanced Growth Fund and Government Income
Fund of 1.11%, 1.12%, 1.12%, 0.90%, 0.89%, 0.92%, 0.95%, 0.93%, 0.94%, 0.95%,
0.95%, 0.94%, 0.66%, 0.80% and 0.80%, net of expense reimbursement (advisor
recoupment) equivalent to 0.00%, (0.01%), 0.04%, 0.00%, 0.00%, 0.00%,
(0.01)%, 0.02%, 0.03%, 0.40%, 0.38%, 0.43%, 2.05%, 1.41% and 2.00% of average
net assets of the Funds, respectively.
#Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
66
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
FROM NET NET ASSET
INVESTMENT DISTRIBUTIONS VALUES AT END NET ASSETS AT
INCOME FROM CAPITAL GAINS OF PERIOD TOTAL RETURN* END OF PERIOD
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio C (For the period
ended 09/03/95)#.......... $ -- $ -- $16.13 24.46% $ 191,524,239
Portfolio C (For the year
ended 03/31/95)........... -- -- 12.96 7.37% 157,292,246
Portfolio C (For the period
ended 03/31/94)........... -- -- 12.07 (3.44%) 142,874,310
CORE GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... -- -- 16.75 24.54% 168,938,791
Portfolio C (For the year
ended 03/31/95)........... -- -- 13.45 2.05% 143,389,656
Portfolio C (For the period
ended 03/31/94)........... -- (0.01) 13.18 5.54% 141,488,561
INCOME & GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... (0.21) -- 14.89 15.94% 59,913,561
Portfolio C (For the year
ended 03/31/95)........... (0.41) (0.36) 13.03 (3.26%) 61,791,573
Portfolio C (For the period
ended 03/31/94)........... (0.24) (0.33) 14.28 18.76% 69,264,807
BALANCED GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... (0.14) -- 16.05 17.66% 16,387,129
Portfolio C (For the year
ended 03/31/95)........... (0.11) -- 13.76 2.47% 16,469,510
Portfolio C (For the period
ended 03/31/94)........... (0.08) -- 13.54 8.91% 16,248,130
GOVERNMENT INCOME
Portfolio C (For the period
ended 09/30/95)#.......... (0.46) -- 12.76 7.66% 2,686,878
Portfolio C (For the year
ended 03/31/95)........... (0.63) (0.01) 12.27 2.96% 4,278,140
Portfolio C (For the period
ended 03/31/94)........... (0.25) (0.23) 12.56 4.28% 7,345,300
<CAPTION>
RATIO OF EXPENSES TO INVESTMENT INCOME
AVERAGE NET (DEFICIT) TO AVERAGE
ASSETS+++ NET ASSETS+++
<S> <C> <C>
- ------------------------------
EMERGING GROWTH
Portfolio C (For the period
ended 09/03/95)#.......... 2.41%** (1.86%)**
Portfolio C (For the year
ended 03/31/95)........... 2.44% (1.85%)
Portfolio C (For the period
ended 03/31/94)........... 2.34%** (2.04%)**
CORE GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 2.23%** (1.46%)**
Portfolio C (For the year
ended 03/31/95)........... 2.24% (1.30%)
Portfolio C (For the period
ended 03/31/94)........... 2.17%** (1.30%)**
INCOME & GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 2.25%** 2.86%**
Portfolio C (For the year
ended 03/31/95)........... 2.25% 3.05%
Portfolio C (For the period
ended 03/31/94)........... 2.22%** 2.28%**
BALANCED GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 2.25%** 1.72%**
Portfolio C (For the year
ended 03/31/95)........... 2.25% 0.83%
Portfolio C (For the period
ended 03/31/94)........... 2.24%** 0.61%**
GOVERNMENT INCOME
Portfolio C (For the period
ended 09/30/95)#.......... 1.36%** 6.04%**
Portfolio C (For the year
ended 03/31/95)........... 1.50% 4.58%
Portfolio C (For the period
ended 03/31/94)........... 1.50%** 2.70%**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
67
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1995
(UNAUDITED)
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING GROWTH CORE GROWTH
---------------------------------------- ---------------------------------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C PORTFOLIO A PORTFOLIO B PORTFOLIO C
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
ASSETS
Investment in Master Trust Fund, at value
(Cost $99,748,492,$5,355,067,
$149,530,998, $55,793,867, $2,711,575,
$135,817,175, $25,304,141, $613,870,
$49,962,305, $4,592,267, $348,773,
$13,261,072, $1,009,243, $28,236,
$2,281,991, $3,572,396, respectively).... $128,079,762 $ 5,601,762 $191,815,471 $71,508,163 $ 2,893,825 $169,200,319
Receivable for shares of beneficial
interest sold............................ 144,087 193,860 219,406 36,797 163,216 260,371
Receivable for investment sold in Master
Trust Fund............................... 208,405 60 120,788 165,534 -- 161,109
Due from advisor........................... -- 6,395 -- -- 7,748 --
Deferred organization costs................ 7,074 943 7,074 22,746 942 22,998
Other assets............................... -- 9,609 -- -- 8,698 --
---------------------------------------------------------------------------------
Total assets......................... 128,439,328 5,812,629 192,162,739 71,733,240 3,074,429 169,644,797
---------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased in Master
Trust Fund............................... 144,087 195,333 219,406 36,797 163,778 260,371
Payable for shares of beneficial interest
repurchased.............................. 208,405 60 120,788 165,534 -- 161,109
Dividend payable........................... -- -- -- -- -- --
Due to advisor............................. -- -- -- 13,418 -- 11,821
Accrued expenses........................... 143,272 46,387 298,306 44,676 35,263 272,705
---------------------------------------------------------------------------------
Total liabilities.................... 495,764 241,780 638,500 260,425 199,041 706,006
---------------------------------------------------------------------------------
NET ASSETS................................... $127,943,564 $ 5,570,849 $191,524,239 $71,472,815 $ 2,875,388 $168,938,791
---------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid in capital............................ 100,915,940 5,336,107 152,658,472 56,977,838 2,698,948 139,728,947
Accumulated undistributed net investment
income (deficit)......................... (2,364,565) (17,106) (4,923,492) (1,062,192) (6,772) (4,119,688)
Accumulated undistributed net realized gain
(loss)................................... (661,042) 36,289 (349,518) (2,625,092) 8,815 (7,626,062)
Net unrealized appreciation on
investments.............................. 30,053,231 215,559 44,138,777 18,182,261 174,397 40,955,594
---------------------------------------------------------------------------------
Net assets........................... $127,943,564 $ 5,570,849 $191,524,239 $71,472,815 $ 2,875,388 $168,938,791
---------------------------------------------------------------------------------
Shares of beneficial interest, no par value,
issued and outstanding (unlimited shares
authorized)................................ 7,849,363 366,286 11,876,916 4,206,739 190,763 10,087,775
---------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of beneficial
interest (Net assets/Outstanding shares
of beneficial interest).................. $16.30 $15.21 $16.13 $16.99 $15.07 $16.75
---------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE OF PORTFOLIO
A($16.30/94.75%, $16.99/94.75%,
$14.69/94.75%, $16.01/94.75%, and
$12.87/95.25, respectively.)............... $17.20 -- -- $17.93 -- --
---------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
68
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & GROWTH BALANCED GROWTH
-------------------------------------- ---------------------------------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C PORTFOLIO A PORTFOLIO B PORTFOLIO C
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
ASSETS
Investment in Master Trust Fund, at value
(Cost $99,748,492,$5,355,067,
$149,530,998, $55,793,867, $2,711,575,
$135,817,175, $25,304,141, $613,870,
$49,962,305, $4,592,267, $348,773,
$13,261,072, $1,009,243, $28,236,
$2,281,991, $3,572,396, respectively).... $31,199,861 $638,104 $60,360,842 $ 5,666,334 $356,472 $16,441,019
Receivable for shares of beneficial
interest sold............................ -- -- 33,843 9,477 13,987 69,592
Receivable for investment sold in Master
Trust Fund............................... 134,279 -- 112,199 2,809 -- 26,120
Due from advisor........................... 3,514 4,111 2,204 5,047 3,431 4,005
Deferred organization costs................ 18,247 943 18,419 16,412 943 16,789
Other assets............................... -- 16,962 -- 5,846 15,448 --
-------------------------------------------------------------------------------
Total assets......................... 31,355,901 660,120 60,527,507 5,705,925 390,281 16,557,525
-------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased in Master
Trust Fund............................... -- 187 33,843 9,477 13,987 69,592
Payable for shares of beneficial interest
repurchased.............................. 134,279 -- 112,199 2,809 -- 26,120
Dividend payable........................... 244,483 2,635 382,341 31,472 734 65,352
Due to advisor............................. -- -- -- -- -- --
Accrued expenses........................... 16,175 22,798 85,563 -- 20,296 9,332
-------------------------------------------------------------------------------
Total liabilities.................... 394,937 25,620 613,946 43,758 35,017 170,396
-------------------------------------------------------------------------------
NET ASSETS................................... $30,960,964 $634,500 $59,913,561 $ 5,662,167 $355,264 $16,387,129
-------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid in capital............................ 29,690,302 614,322 58,054,471 4,877,118 348,924 14,007,863
Accumulated undistributed net investment
income (deficit)......................... 4,455 50 5,359 463 29 986
Accumulated undistributed net realized gain
(loss)................................... (2,484,026) 2,658 (5,573,448) (173,633) 751 (534,720)
Net unrealized appreciation on
investments.............................. 3,750,233 17,470 7,427,179 958,219 5,560 2,913,000
-------------------------------------------------------------------------------
Net assets........................... $30,960,964 $634,500 $59,913,561 $ 5,662,167 $355,264 $16,387,129
-------------------------------------------------------------------------------
Shares of beneficial interest, no par value,
issued and outstanding (unlimited shares
authorized)................................ 2,107,610 45,405 4,024,648 353,613 25,324 1,021,134
-------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of beneficial
interest (Net assets/Outstanding shares
of beneficial interest).................. $14.69 $13.97 $14.89 $16.01 $14.03 $16.05
-------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE OF PORTFOLIO
A($16.30/94.75%, $16.99/94.75%,
$14.69/94.75%, $16.01/94.75%, and
$12.87/95.25, respectively.)............... $15.50 -- -- $16.90 -- --
-------------------------------------------------------------------------------
<CAPTION>
GOVERNMENT INCOME MONEY MARKET
--------------------------------------- ------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C PORTFOLIO
<S> <C> <C> <C> <C>
ASSETS
Investment in Master Trust Fund, at value
(Cost $99,748,492,$5,355,067,
$149,530,998, $55,793,867, $2,711,575,
$135,817,175, $25,304,141, $613,870,
$49,962,305, $4,592,267, $348,773,
$13,261,072, $1,009,243, $28,236,
$2,281,991, $3,572,396, respectively).... $ 1,132,818 $28,744 $ 2,744,105 $3,588,849
Receivable for shares of beneficial
interest sold............................ -- -- 10,326 --
Receivable for investment sold in Master
Trust Fund............................... -- -- -- 6,280
Due from advisor........................... 5,598 3,407 7,219 13,369
Deferred organization costs................ 15,800 943 16,008 --
Other assets............................... -- 12,072 -- --
Total assets......................... 1,154,216 45,166 2,777,658 3,608,498
LIABILITIES
Payable for investments purchased in Master
Trust Fund............................... -- -- 10,326 --
Payable for shares of beneficial interest
repurchased.............................. -- -- -- --
Dividend payable........................... 18,190 356 53,682 15,982
Due to advisor............................. -- -- -- --
Accrued expenses........................... 26,776 18,727 26,772 35,460
Total liabilities.................... 44,966 19,083 90,780 51,442
NET ASSETS................................... $ 1,109,250 $26,083 $ 2,686,878 $3,557,056
COMPOSITION OF NET ASSETS
Paid in capital............................ 1,096,059 25,979 2,824,565 3,557,064
Accumulated undistributed net investment
income (deficit)......................... (3) (1) 50 --
Accumulated undistributed net realized gain
(loss)................................... (21,230) 42 (289,232) (8)
Net unrealized appreciation on
investments.............................. 34,424 63 151,495 --
Net assets........................... $ 1,109,250 $26,083 $ 2,686,878 $3,557,056
Shares of beneficial interest, no par value,
issued and outstanding (unlimited shares
authorized)................................ 86,207 2,071 210,519 3,557,064
COMPUTATION OF
Net asset value per share of beneficial
interest (Net assets/Outstanding shares
of beneficial interest).................. $12.87 $12.59 $12.76 $1.00
MAXIMUM OFFERING PRICE PER SHARE OF PORTFOLIO
A($16.30/94.75%, $16.99/94.75%,
$14.69/94.75%, $16.01/94.75%, and
$12.87/95.25, respectively.)............... $13.51 -- -- --
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
69
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1995
(UNAUDITED)
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING GROWTH CORE GROWTH
---------------------------------------- ---------------------------------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C PORTFOLIO A PORTFOLIO B PORTFOLIO C
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ (320,013) $ (5,153) $ (473,940) $ (46,420) $ (962) $ (106,201)
---------------------------------------------------------------------------------
EXPENSES
Accounting fees........... 15,600 780 15,600 15,600 780 15,600
Administration fees....... 2,501 1,653 2,501 3,743 47 8,516
Audit fees................ 6,297 2,236 4,709 3,955 2,406 5,077
Distribution fees......... 145,037 6,057 643,625 84,622 3,312 577,593
Insurance................. 669 6 985 408 3 902
Legal..................... 22,545 130 34,551 12,592 68 28,621
Miscellaneous............. 2,960 2,594 2,953 1,173 1,464 2,656
Organization costs........ 1,072 70 1,072 4,551 71 4,512
Registration fees......... 11,646 4,364 17,882 6,828 4,364 15,490
Shareholder reporting..... 47,632 24,373 58,650 17,890 16,788 37,588
Shareholder servicing
fees.................... 58,015 2,019 214,542 33,849 1,104 192,531
Transfer agent fees....... 82,904 219 115,291 49,653 192 127,525
Trustees' fees............ 2,419 718 3,577 1,413 718 3,213
---------------------------------------------------------------------------------
Total expenses.......... 399,297 45,219 1,115,938 236,277 31,317 1,019,824
Less: Reimbursement from
advisor................. -- (33,266) -- (3,469) (25,507) --
---------------------------------------------------------------------------------
Net expenses............ 399,297 11,953 1,115,938 232,808 5,810 1,019,824
---------------------------------------------------------------------------------
Net investment income
(deficit)........... (719,310) (17,106) (1,589,878) (279,228) (6,772) (1,126,025)
---------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
security transactions..... 12,279,029 36,289 17,891,533 5,300,383 8,815 11,688,551
Change in net unrealized
appreciation of
investments............... 13,916,566 215,559 20,811,348 9,933,810 174,397 23,024,664
---------------------------------------------------------------------------------
Net gain (loss) on
investments........... 26,195,595 251,848 38,702,881 15,234,193 183,212 34,713,215
---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 25,476,285 $ 234,742 $ 37,113,003 $14,954,965 $ 176,440 $ 33,587,190
---------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
70
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & GROWTH BALANCED GROWTH
-------------------------------------- ---------------------------------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C PORTFOLIO A PORTFOLIO B PORTFOLIO C
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ 641,467 $ 4,106 $ 1,266,659 $ 81,635 $ 1,388 $ 245,258
-------------------------------------------------------------------------------
EXPENSES
Accounting fees........... 15,600 780 15,600 7,800 780 7,800
Administration fees....... 4,267 26 8,426 3,590 63 10,666
Audit fees................ 3,674 2,544 3,929 3,458 2,653 3,554
Distribution fees......... 38,497 644 228,248 6,790 339 60,913
Insurance................. 189 2 372 31 -- 99
Legal..................... 5,743 14 11,358 1,010 8 3,029
Miscellaneous............. 535 338 1,064 94 172 282
Organization costs........ 3,583 70 3,618 3,221 70 3,298
Registration fees......... 3,362 4,364 6,183 547 4,364 1,650
Shareholder reporting..... 5,759 4,047 11,998 1,714 1,924 4,659
Shareholder servicing
fees.................... 15,399 220 76,083 2,716 113 20,304
Transfer agent fees....... 24,755 163 48,775 12,832 162 14,035
Trustees' fees............ 645 718 1,274 113 718 340
-------------------------------------------------------------------------------
Total expenses.......... 122,008 13,930 416,928 43,916 11,366 130,629
Less: Reimbursement from
advisor................. (21,916) (12,787) (21,297) (26,263) (10,781) (25,047)
-------------------------------------------------------------------------------
Net expenses............ 100,092 1,143 395,631 17,653 585 105,582
-------------------------------------------------------------------------------
Net investment income
(deficit)........... 541,375 2,963 871,028 63,982 803 139,676
-------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
security transactions..... 1,380,681 2,658 2,751,152 342,873 751 1,056,189
Change in net unrealized
appreciation of
investments............... 2,702,583 17,470 5,350,194 482,849 5,560 1,409,637
-------------------------------------------------------------------------------
Net gain (loss) on
investments........... 4,083,264 20,128 8,101,346 825,722 6,311 2,465,826
-------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 4,624,639 $ 23,091 $ 8,972,374 $ 889,704 $ 7,114 $ 2,605,502
-------------------------------------------------------------------------------
<CAPTION>
GOVERNMENT INCOME MONEY MARKET
--------------------------------------- ------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C PORTFOLIO
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ 34,450 $ 403 $ 128,925 $ 104,360
EXPENSES
Accounting fees........... 7,800 780 7,800 7,800
Administration fees....... 2,567 36 9,484 2,501
Audit fees................ 3,424 2,670 3,452 3,441
Distribution fees......... 1,256 29 9,555 2,853
Insurance................. 6 -- 25 19
Legal..................... 186 2 718 706
Miscellaneous............. 26 46 120 292
Organization costs........ 3,104 70 3,142 2,649
Registration fees......... 100 4,364 394 3,583
Shareholder reporting..... 498 850 1,602 1,530
Shareholder servicing
fees.................... 502 15 4,777 1,902
Transfer agent fees....... 9,832 162 11,437 9,810
Trustees' fees............ 21 718 80 79
Total expenses.......... 29,322 9,742 52,586 37,165
Less: Reimbursement from
advisor................. (27,807) (9,700) (39,156) (37,165)
Net expenses............ 1,515 42 13,430 --
Net investment income
(deficit)........... 32,935 361 115,495 104,360
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
security transactions..... 24,142 42 113,326 (8)
Change in net unrealized
appreciation of
investments............... 17,745 63 66,508 --
Net gain (loss) on
investments........... 41,887 105 179,834 (8)
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 74,822 $ 466 $ 295,329 $ 104,352
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
71
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING GROWTH CORE 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)...................... $ (719,310) $ (1,291,902) $ (279,228) $ (435,825)
Net realized gain (loss) from security
transactions....................................... 12,279,029 (11,872,619) 5,300,383 (6,523,988)
Change in net unrealized appreciation (depreciation)
on investments..................................... 13,916,566 20,925,147 9,933,810 8,438,977
----------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations.................................. 25,476,285 7,760,626 14,954,965 1,479,164
----------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL INTEREST
Net investment income+............................... -- -- -- --
Capital gains+....................................... -- -- -- (3,970)
----------------------------------------------------------
Total distributions................................ -- -- -- (3,970)
----------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold............................ 17,255,247 16,517,684 5,387,033 12,693,979
Proceeds from shares issued for distribution
reinvestment....................................... -- -- -- 754
Cost of shares repurchased........................... (21,513,045) (22,391,518) (14,160,724) (19,390,553)
----------------------------------------------------------
Increase (decrease) in net assets from transactions
in shares of beneficial interest................. (4,257,798) (5,873,834) (8,773,691) (6,695,820)
----------------------------------------------------------
Total increase (decrease) in net assets............ 21,218,487 1,886,792 6,181,274 (5,220,626)
NET ASSETS:
BEGINNING OF PERIOD.................................... 106,725,077 104,838,285 65,291,541 70,512,167
----------------------------------------------------------
END OF PERIOD.......................................... $ 127,943,564 $106,725,077 $ 71,472,815 $ 65,291,541
----------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL
INTEREST
Beginning balance...................................... 8,170,194 8,663,565 4,798,906 5,321,920
Shares sold............................................ 1,134,972 1,361,724 358,372 982,603
Shares issued for distributions reinvested............. -- -- -- 61
Shares repurchased..................................... (1,455,803) (1,855,095) (950,539) (1,505,678)
----------------------------------------------------------
Ending Balance......................................... 7,849,363 8,170,194 4,206,739 4,798,906
----------------------------------------------------------
</TABLE>
- -------------
+See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
72
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & GROWTH BALANCED 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)...................... $ 541,375 $ 1,230,002 $ 63,982 $ 80,682
Net realized gain (loss) from security
transactions....................................... 1,380,681 (3,633,409) 342,873 (335,149)
Change in net unrealized appreciation (depreciation)
on investments..................................... 2,702,583 1,492,224 482,849 380,701
--------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations.................................. 4,624,639 (911,183) 889,704 126,234
--------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL INTEREST
Net investment income+............................... (537,679) (1,220,486) (63,565) (81,141)
Capital gains+....................................... -- (1,018,388) -- --
--------------------------------------------------------
Total distributions................................ (537,679) (2,238,874) (63,565) (81,141)
--------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold............................ 955,748 12,490,722 525,270 368,105
Proceeds from shares issued for distribution
reinvestment....................................... 92,247 593,046 4,261 6,923
Cost of shares repurchased........................... (5,324,472) (9,230,676) (673,096) (1,886,429)
--------------------------------------------------------
Increase (decrease) in net assets from transactions
in shares of beneficial interest................. (4,276,477) 3,853,092 (143,565) (1,511,401)
--------------------------------------------------------
Total increase (decrease) in net assets............ (189,517) 703,035 682,574 (1,466,308)
NET ASSETS:
BEGINNING OF PERIOD.................................... 31,150,481 30,447,446 4,979,593 6,445,901
--------------------------------------------------------
END OF PERIOD.......................................... $30,960,964 $31,150,481 $5,662,167 $ 4,979,593
--------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL
INTEREST
Beginning balance...................................... 2,422,113 2,150,922 362,417 476,861
Shares sold............................................ 68,977 922,272 35,972 27,968
Shares issued for distributions reinvested............. 6,773 46,302 286 525
Shares repurchased..................................... (390,253) (697,383) (45,062) (142,937)
--------------------------------------------------------
Ending Balance......................................... 2,107,610 2,422,113 353,613 362,417
--------------------------------------------------------
<CAPTION>
GOVERNMENT INCOME MONEY MARKET
-------------------------- ----------------------------
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)...................... $ 32,935 $ 43,458 $ 104,360 $ 178,235
Net realized gain (loss) from security
transactions....................................... 24,142 (45,372) (8) 7
Change in net unrealized appreciation (depreciation)
on investments..................................... 17,745 39,593 -- --
Net increase (decrease) in net assets resulting
from operations.................................. 74,822 37,679 104,352 178,242
DISTRIBUTIONS TO SHARES OF BENEFICIAL INTEREST
Net investment income+............................... (32,976) (43,822) (104,360) (178,235)
Capital gains+....................................... -- (1,870) -- --
Total distributions................................ (32,976) (45,692) (104,360) (178,235)
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold............................ 415,125 813,445 11,453,230 13,194,354
Proceeds from shares issued for distribution
reinvestment....................................... 2,742 5,789 80,081 170,364
Cost of shares repurchased........................... (275,537) (706,066) (10,972,094) (10,416,853)
Increase (decrease) in net assets from transactions
in shares of beneficial interest................. 142,330 113,168 561,217 2,947,865
Total increase (decrease) in net assets............ 184,176 105,155 561,209 2,947,872
NET ASSETS:
BEGINNING OF PERIOD.................................... 925,074 819,919 2,995,847 47,975
END OF PERIOD.......................................... $1,109,250 $ 925,074 $ 3,557,056 $ 2,995,847
CHANGES IN SHARES OF BENEFICIAL
INTEREST
Beginning balance...................................... 75,262 65,520 2,995,847 47,982
Shares sold............................................ 32,319 66,518 11,453,230 13,194,354
Shares issued for distributions reinvested............. 213 475 80,081 170,364
Shares repurchased..................................... (21,587) (57,251) (10,972,094) (10,416,853)
Ending Balance......................................... 86,207 75,262 3,557,064 2,995,847
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
73
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME & BALANCED GOVERNMENT
GROWTH GROWTH GROWTH GROWTH INCOME
------------- ------------- ------------- ------------- -------------
FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995* 1995* 1995* 1995* 1995*
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS OPERATIONS
Net investment income (deficit)............... $ (17,106) $ (6,772) $ 2,963 $ 803 $ 361
Net realized gain from security
transactions................................ 36,289 8,815 2,658 751 42
Change in net unrealized appreciation on
investments................................. 215,559 174,397 17,470 5,560 63
-------------------------------------------------------------------------
Net increase in net assets resulting from
operations................................ 234,742 176,440 23,091 7,114 466
-------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL INTEREST
Net investment income+........................ -- -- (2,913 ) (774 ) (362 )
-------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from shares sold..................... 5,361,843 3,037,516 614,294 348,928 76,719
Proceeds from shares issued for distribution
reinvestment................................ -- -- 29 -- 5
Cost of shares repurchased.................... (25,736 ) (338,568 ) (1 ) (4 ) (50,745 )
-------------------------------------------------------------------------
Increase in net assets from transactions in
shares of beneficial interest............. 5,336,107 2,698,948 614,322 348,924 25,979
-------------------------------------------------------------------------
Total increase in net assets................ 5,570,849 2,875,388 634,500 355,264 26,083
NET ASSETS:
BEGINNING OF PERIOD........................... -- -- -- -- --
-------------------------------------------------------------------------
END OF PERIOD................................. $ 5,570,849 $ 2,875,388 $ 634,500 $ 355,264 $ 26,083
-------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance............................. -- -- -- -- --
Shares sold................................... 368,005 213,032 45,403 25,324 6,067
Shares issued for distributions reinvested.... -- -- 2 -- --
Shares repurchased............................ (1,719 ) (22,269 ) -- -- (3,996 )
-------------------------------------------------------------------------
Ending Balance................................ 366,286 190,763 45,405 25,324 2,071
-------------------------------------------------------------------------
</TABLE>
- ---------------
*Commenced operations on May 31, 1995.
+See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
74
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
75
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING GROWTH CORE 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)............... $ (1,589,878) $ (2,660,776) $ (1,126,025) $ (1,850,408)
Net realized gain (loss)
from security
transactions............ 17,891,533 (16,791,698) 11,688,551 (16,113,442)
Change in net unrealized
appreciation
(depreciation) of
investments............. 20,811,348 30,128,531 23,024,664 20,447,382
----------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 37,113,003 10,676,057 33,587,190 2,483,532
----------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income+.... -- -- -- --
Capital gains+............ -- -- -- (1,143)
----------------------------------------------------------
Total distributions..... -- -- -- (1,143)
----------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold.................... 18,052,811 29,972,562 13,577,170 38,072,250
Proceeds from shares
issued for distribution
reinvestment............ -- -- -- 86
Cost of shares
repurchased............. (20,933,821) (26,230,683) (21,615,225) (38,653,630)
----------------------------------------------------------
Increase (decrease) in
net assets from
transactions in shares
of beneficial
interest.............. (2,881,010) 3,741,879 (8,038,055) (581,294)
----------------------------------------------------------
Total increase
(decrease) in net
assets................ 34,231,993 14,417,936 25,549,135 1,901,095
NET ASSETS
BEGINNING OF PERIOD......... 157,292,246 142,874,310 143,389,656 141,488,561
----------------------------------------------------------
END OF PERIOD............... $ 191,524,239 $ 157,292,246 $ 168,938,791 $ 143,389,656
----------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 12,138,614 11,833,669 10,660,454 10,734,930
Shares sold................. 1,220,884 2,481,536 895,723 2,957,715
Shares issued for
distributions
reinvested................ -- -- -- 7
Shares repurchased.......... (1,482,582) (2,176,591) (1,468,402) (3,032,198)
----------------------------------------------------------
Ending balance.............. 11,876,916 12,138,614 10,087,775 10,660,454
----------------------------------------------------------
</TABLE>
- -------------
+See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
76
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & GROWTH BALANCED GROWTH GOVERNMENT INCOME
--------------------------- --------------------------- ---------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1995 MARCH 31, 1995 MARCH 31, 1995 MARCH 31,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ 871,028 $ 2,068,036 $ 139,676 $ 138,191 $ 115,495 $ 276,768
Net realized gain (loss)
from security
transactions............ 2,751,152 (7,995,881) 1,056,189 (1,152,920) 113,326 (402,558)
Change in net unrealized
appreciation
(depreciation) of
investments............. 5,350,194 3,449,941 1,409,637 1,445,409 66,508 266,100
-------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 8,972,374 (2,477,904) 2,605,502 430,680 295,329 140,310
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income+.... (871,081) (2,043,337) (139,870) (137,938) (115,756) (279,201)
Capital gains+............ -- (1,728,932) -- -- -- (5,572)
-------------------------------------------------------------------------------------
Total distributions..... (871,081) (3,772,269) (139,870) (137,938) (115,756) (284,773)
-------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold.................... 2,476,606 18,579,532 824,914 3,960,592 659,072 8,959,128
Proceeds from shares
issued for distribution
reinvestment............ 33,413 182,394 8,847 12,834 10,116 21,658
Cost of shares
repurchased............. (12,489,324) (19,984,987) (3,381,774) (4,044,788) (2,440,023) (11,903,483)
-------------------------------------------------------------------------------------
Increase (decrease) in
net assets from
transactions in shares
of beneficial
interest.............. (9,979,305) (1,223,061) (2,548,013) (71,362) (1,770,835) (2,922,697)
-------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ (1,878,012) (7,473,234) (82,381) 221,380 (1,591,262) (3,067,160)
NET ASSETS
BEGINNING OF PERIOD......... 61,791,573 69,264,807 16,469,510 16,248,130 4,278,140 7,345,300
-------------------------------------------------------------------------------------
END OF PERIOD............... $59,913,561 $ 61,791,573 $16,387,129 $ 16,469,510 $ 2,686,878 $ 4,278,140
-------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 4,741,312 4,848,929 1,196,550 1,199,882 348,596 584,908
Shares sold................. 178,920 1,369,144 53,289 301,100 51,636 724,947
Shares issued for
distributions
reinvested................ 2,419 14,100 592 961 790 1,774
Shares repurchased.......... (898,003) (1,490,861) (229,297) (305,393) (190,503) (963,033)
-------------------------------------------------------------------------------------
Ending balance.............. 4,024,648 4,741,312 1,021,134 1,196,550 210,519 348,596
-------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
77
<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.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1994 balances to conform to
1995 presentation.
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.
OTHER ASSETS
Other Assets for the Money Market Portfolio consists of cash received from the
adviser for expense reimbursements.
- --------------------------------------------------------------------------------
78
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) -- Continued
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENTS
The investment adviser to the Master Trust is Nicholas-Applegate Capital
Management ("Nicholas-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.
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
The Trust has approved a distribution plan whereby Nicholas Applegate
Securities (the "Distributor"), an affiliate of Nicholas-Applegate, is
compensated for distribution-related expenses at an annual rate, payable
monthly, of 0.25%, 0.75% and 0.75% of Series A, B and C Portfolios average daily
net assets, respectively.
The Money Market Portfolio compensates the Distributor at the rate of .15% of
average daily net assets.
Under a distribution agreement, the Distributor who is the principal
underwriter for the sale of shares of the Portfolios, retains a portion of any
contingent deferred sales load on redemptions for the Portfolios, and retains a
portion of the initial sales load imposes on purchases of shares of the Series A
Portfolios. This agreement may be terminated by either party upon 60 days'
written notice.
The Trust has approved a shareholder service plan under which the Distributor
is also compensated for non-distribution related expenses as follows: .10%, .25%
and .25% of the daily net asset value of the Series A (including Money Market
Portfolio), Series B, and Series C Portfolios, respectively.
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 A B C
- ---------------------------- --------- --------- ---------
<S> <C> <C> <C>
Emerging Growth
Portfolios................ 1.95% 2.60% 2.60%
Core Growth Portfolios...... 1.60% 2.25% 2.25%
Income & Growth
Portfolios................ 1.60% 2.25% 2.25%
Balanced Growth
Portfolios................ 1.60% 2.25% 2.25%
Government Income
Portfolios................ 0.90% 1.30% 1.30%
Money Market Portfolio...... 1.10% -- --
</TABLE>
During the period from November 22, 1993 to September 30, 1995,
Nicholas-Applegate, at its discretion, paid for all of the Money Market
Portfolio expenses. Nicholas-Applegate may continue to make such additional
payments for expenses within the lmitation at its discretion.
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,
- --------------------------------------------------------------------------------
79
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) -- Continued
- --------------------------------------------------------------------------------
1995, the following Portfolios have amounts due to Nicholas-Applegate for
organizational costs advanced.:
<TABLE>
<S> <C>
Emerging Growth Portfolio B.......... $ 1,013
Core Growth Portfolio B.............. 1,013
Income & Growth Portfolio B.......... 1,013
Balanced Growth Portfolio B.......... 1,013
Government Income Portfolio A........ 30,779
Government Income Portfolio B........ 1,013
Government Income Portfolio C........ 30,779
Money Market Portfolio............... 26,503
</TABLE>
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>
Emerging Growth Portfolio A....... $ 17,255 $ 21,856
Emerging Growth Portfolio B....... 5,389 34
Emerging Growth Portfolio C....... 18,053 21,961
Core Growth Portfolio A........... 5,408 14,392
Core Growth Portfolio B........... 3,055 344
Core Growth Portfolio C........... 13,589 22,565
Income & Growth Portfolio A....... 981 5,866
Income & Growth Portfolio B....... 614 --
Income & Growth Portfolio C....... 2,527 13,751
Balanced Growth Portfolio A....... 548 794
Balanced Growth Portfolio B....... 349 --
Balanced Growth Portfolio C....... 853 3,640
Government Income Portfolio A..... 437 361
Government Income Portfolio B..... 79 51
Government Income Portfolio C..... 692 2,610
Money Market Portfolio............ 11,456 10,978
</TABLE>
- --------------------------------------------------------------------------------
80
<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>
EMERGING CORE INCOME & BALANCED GOVERNMENT MONEY
GROWTH GROWTH GROWTH GROWTH INCOME MARKET
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
ASSETS
Investments at value
(Cost $407,407,237, $261,616,236,
$92,041,806, $18,552,502, $3,771,689,
$3,629,445, respectively.)............ $ 529,521,399 $ 344,826,834 $ 104,834,655 $ 22,486,094 $3,957,673 $ 3,629,445
Cash...................................... -- 14,577 2,249 14,611 -- 791
Receivables:
Dividends............................... 48,375 141,126 211,144 10,438 -- --
Interest................................ 6,264 4,526 753,967 196,020 47,200 207
Investment securities sold.............. 11,517,890 3,021,224 2,195,241 775,064 -- --
Interests sold.......................... 558,153 485,384 98,858 93,056 10,326 --
Due from advisor........................ -- -- -- -- 6,564 7,393
Deferred organization costs............... 27,232 39,676 19,677 14,037 12,911 11,960
Other assets.............................. 1,474 562 411 -- -- 87
-----------------------------------------------------------------------------------
Total assets.......................... 541,680,787 348,533,909 108,116,202 23,589,320 4,034,674 3,649,883
-----------------------------------------------------------------------------------
LIABILITIES
Payables:
Investment securities purchased......... 2,241,399 1,520,875 3,411,881 650,542 -- --
Interests repurchased................... 329,253 326,643 246,478 28,929 -- --
Dividend................................ -- -- -- -- -- 16,015
Accrued expenses........................ 560,703 310,520 107,971 19,794 38,323 34,171
Other liabilities......................... 16,027 -- -- -- 89,676 --
-----------------------------------------------------------------------------------
Total liabilities..................... 3,147,382 2,158,038 3,766,330 699,265 127,999 50,186
-----------------------------------------------------------------------------------
NET ASSETS.................................. $ 538,533,405 $ 346,375,871 $ 104,349,872 $ 22,890,055 $3,906,675 $ 3,599,697
-----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid in capital........................... $ 416,000,159 $ 271,338,458 $ 84,544,918 $ 18,561,322 $3,320,470 $ 3,599,705
Accumulated net investment income
(deficit)............................... (4,626,766) (146,339) 9,677,590 1,103,834 627,635 (8)
Accumulated net realized gains (losses)... 5,048,911 (8,026,846) (2,665,485) (708,693) (227,414) --
Net unrealized appreciation on
investments............................. 122,111,101 83,210,598 12,792,849 3,933,592 185,984 --
-----------------------------------------------------------------------------------
Net assets............................ $ 538,533,405 $ 346,375,871 $ 104,349,872 $ 22,890,055 $3,906,675 $ 3,599,697
-----------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
81
<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>
EMERGING CORE INCOME & BALANCED GOVERNMENT MONEY
GROWTH GROWTH GROWTH GROWTH INCOME MARKET
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends................................. $ 571,643 $ 665,155 $ 617,514 $ 65,495 $ -- $ --
Interest.................................. 825,525 529,888 2,062,681 373,142 179,756 113,733
------------------------------------------------------------------------------
Total income............................ 1,397,168 1,195,043 2,680,195 438,637 179,756 113,733
------------------------------------------------------------------------------
EXPENSES
Accounting fees........................... 84,557 66,320 38,235 37,500 37,500 37,500
Administration fees....................... 17,500 55,823 18,760 3,949 870 685
Advisory fees............................. 2,487,855 1,172,190 393,370 82,842 11,049 4,799
Audit fees................................ 55,340 37,168 11,030 2,330 503 397
Custodian fees............................ 72,748 34,055 15,862 12,591 7,760 7,462
Insurance................................. 2,828 4,686 1,430 373 177 62
Legal fees................................ 13,007 10,508 2,204 462 103 80
Miscellaneous............................. 24,104 15,138 5,081 1,070 297 184
Organization costs........................ 4,269 7,792 3,865 2,758 2,537 2,456
Trustees' fees............................ 4,886 6,886 4,886 4,886 4,886 4,858
------------------------------------------------------------------------------
Total expenses.......................... 2,767,094 1,410,566 494,723 148,761 65,682 58,483
Reimbursement (recoupment) from
(due to) advisor...................... -- -- 3,546 (43,828) (49,710) (49,853)
------------------------------------------------------------------------------
Net expenses............................ 2,767,094 1,410,566 498,269 104,933 15,972 8,630
------------------------------------------------------------------------------
Net investment income (deficit)......... (1,369,926) (215,523) 2,181,926 333,704 163,784 105,103
------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from security
transactions.............................. 59,504,105 23,633,813 4,704,792 1,418,590 137,510 (8)
Change in net unrealized appreciation of
investments............................... 53,116,640 47,040,750 9,259,998 1,931,006 84,318 --
------------------------------------------------------------------------------
Net gain (loss) on investments............ 112,620,745 70,674,563 13,964,790 3,349,596 221,828 (8)
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $ 111,250,819 $ 70,459,040 $ 16,146,716 $ 3,683,300 $ 385,612 $ 105,095
------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
82
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
83
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
EMERGING GROWTH CORE GROWTH
--------------------------------- ---------------------------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, FOR THE SEPTEMBER 30, FOR THE
1995 YEAR ENDED 1995 YEAR ENDED
(UNAUDITED) MARCH 31, 1995 (UNAUDITED) MARCH 31, 1995
<S> <C> <C> <C> <C>
---------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ (1,369,926) $ (2,224,592) $ (215,523) $ 136,431
Net realized gain (loss)
from security
transactions............ 59,504,105 (48,388,925) 23,633,813 (27,617,865)
Change in net unrealized
appreciation of
investments............. 53,116,640 88,372,950 47,040,750 36,375,233
---------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 111,250,819 37,759,433 70,459,040 8,893,799
---------------------------------------------------------------------
DISTRIBUTION TO PARTNERS
Net investment income..... -- -- -- --
---------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by
partners................ 48,179,055 77,212,401 37,852,862 76,785,761
Withdrawals by partners... (91,945,620) (57,696,150) (45,790,953) (91,624,360)
---------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in
interests............. (43,766,565) 19,516,251 (7,938,091) (14,838,599)
---------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 67,484,254 57,275,684 62,520,949 (5,944,800)
NET ASSETS:
BEGINNING OF PERIOD......... 471,049,151 413,773,467 283,854,922 289,799,722
---------------------------------------------------------------------
END OF PERIOD............... $ 538,533,405 $ 471,049,151 $ 346,375,871 $ 283,854,922
---------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
84
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & GROWTH BALANCED GROWTH
--------------------------------- ---------------------------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, FOR THE SEPTEMBER 30, FOR THE
1995 YEAR ENDED 1995 YEAR ENDED
(UNAUDITED) MARCH 31, 1995 (UNAUDITED) MARCH 31, 1995
<S> <C> <C> <C> <C>
---------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ 2,181,926 $ 5,103,250 $ 333,704 $ 477,083
Net realized gain (loss)
from security
transactions............ 4,704,792 (13,408,682) 1,418,590 (1,500,269)
Change in net unrealized
appreciation of
investments............. 9,259,998 5,539,419 1,931,006 1,850,658
---------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 16,146,716 (2,766,013) 3,683,300 827,472
---------------------------------------------------------------------
DISTRIBUTION TO PARTNERS
Net investment income..... -- -- -- --
---------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by
partners................ 4,386,197 32,875,977 1,870,851 4,819,959
Withdrawals by partners... (22,269,463) (42,582,471) (4,479,597) (6,527,607)
---------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in
interests............. (17,883,266) (9,706,494) (2,608,746) (1,707,648)
---------------------------------------------------------------------
Total increase
(decrease) in net
assets................ (1,736,550) (12,472,507) 1,074,554 (880,176)
NET ASSETS:
BEGINNING OF PERIOD......... 106,086,422 118,558,929 21,815,501 22,695,677
---------------------------------------------------------------------
END OF PERIOD............... $ 104,349,872 $ 106,086,422 $ 22,890,055 $ 21,815,501
---------------------------------------------------------------------
<CAPTION>
GOVERNMENT INCOME MONEY MARKET
--------------------------------- ---------------------------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, FOR THE SEPTEMBER 30, FOR THE
1995 YEAR ENDED 1995 YEAR ENDED
(UNAUDITED) MARCH 31, 1995 (UNAUDITED) MARCH 31, 1995
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ 163,784 $ 365,015 $ 105,103 $ 179,428
Net realized gain (loss)
from security
transactions............ 137,510 (447,930) (8) 17
Change in net unrealized
appreciation of
investments............. 84,318 305,693 -- --
Net increase (decrease)
in net assets
resulting from
operations............ 385,612 222,778 105,095 179,445
DISTRIBUTION TO PARTNERS
Net investment income..... -- -- (105,103) (179,428)
TRANSACTIONS IN INTERESTS
Contributions by
partners................ 1,209,328 10,057,391 11,546,556 13,398,906
Withdrawals by partners... (3,021,768) (13,048,663) (10,977,571) (10,440,597)
Net increase (decrease)
in net assets from
transactions in
interests............. (1,812,440) (2,991,272) 568,985 2,958,309
Total increase
(decrease) in net
assets................ (1,426,828) (2,768,494) 568,977 2,958,326
NET ASSETS:
BEGINNING OF PERIOD......... 5,333,503 8,101,997 3,030,720 72,394
END OF PERIOD............... $ 3,906,675 $ 5,333,503 $ 3,599,697 $ 3,030,720
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
85
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
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>
EXCESS OF
FIRST $500 NEXT $500 $1
FUND MILLION MILLION BILLION
- ---------------------------- ----------- ----------- ---------
<S> <C> <C> <C>
Emerging Growth Fund........ 1.00% 1.00% 1.00%
Core Growth Fund............ .75% .675% .65%
Income & Growth Fund........ .75% .675% .65%
Balanced Gowth Fund......... .75% .675% .65%
Government Income Fund...... .40% .55% .55%
Money Market Fund........... .25% .2275% .2275%
</TABLE>
Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of September 30, 1995, the following Funds have amounts due to
Nicholas-Applegate for organizational costs advanced:
<TABLE>
<S> <C>
Government Income Fund............... $ 24,688
Money Market Fund.................... 24,668
</TABLE>
- --------------------------------------------------------------------------------
86
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FUNDS' FINANCIAL STATEMENTS (UNAUDITED) -- Continued
- --------------------------------------------------------------------------------
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>
PURCHASES SALES
FUND (000S) (000S)
- -------------------------------- ----------- -----------
<S> <C> <C>
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
Government Income Fund.......... 3,282 4,701
</TABLE>
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>
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
Government
Income
Fund..... 3,772 187 (1) 186
Money
Market
Fund..... 3,629 -- -- --
</TABLE>
- --------------------------------------------------------------------------------
87
<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>
- -------------------------------------------------------------------------------------------------------------------------
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%* 85.43%
GOVERNMENT INCOME
For the period ended 09/30/95**..................................... 0.66%* 6.74%* 46.81%
For the year ended 03/31/95......................................... 0.80% 5.32% 258.72%
For the period ended 03/31/94++..................................... 0.80%* 3.43%* 159.17%
MONEY MARKET
For the period ended 09/30/95**..................................... 0.45%* 5.48%* N/A
For the year ended 03/31/95......................................... 0.31% 4.61% N/A
For the period ended 03/31/94++..................................... 0.24%* 2.12%* N/A
</TABLE>
- ------------
*Annualized.
**Unaudited.
+Net of expense reimbursement (advisor recoupment) equivalent to 0.00%,
(0.01%), 0.04%, 0.00%, 0.00%, 0.00%, (0.01%), 0.02%, 0.03%, 0.40%, 0.38%,
0.43%, 2.05%, 1.41%, 2.00%, 2.60%, 2.92% and 150.78% of average net assets,
respectively.
++Emerging Growth Fund commenced operations on October 1, 1993. Core Growth
Fund, Income & Growth Fund, Balanced Growth Fund, Government Income Fund and
Money Market Fund commenced operations on April 19, 1993.
- --------------------------------------------------------------------------------
88
<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
- -----------------------------------------------------------------------
600 West Broadway
San Diego, California 92101
800-551-8043
