<PAGE>
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NICHOLAS/APPLEGATE-Registered Trademark- MUTUAL FUNDS
ANNUAL REPORT
DOMESTIC PORTFOLIOS, SERIES A, B AND C MARCH 31, 1996
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EMERGING GROWTH
CORE GROWTH
INCOME & GROWTH
BALANCED GROWTH
GOVERNMENT INCOME
MONEY MARKET
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NICHOLAS-APPLEGATE
When you look ahead, look for growth
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<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
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600 West Broadway
San Diego, California 92101
800-551-8643
TRUSTEES OF NICHOLAS-APPLEGATE MUTUAL FUNDS
Fred C. Applegate, Chairman
Dr. Arthur B. Laffer
Charles E. Young
TRUSTEES OF NICHOLAS-APPLEGATE INVESTMENT TRUST
Arthur E. Nicholas, Chairman
Dann V. Angeloff
Walter A. Auch
Theodore J. Coburn
Darlene T. DeRemer
George F. Keane
OFFICERS
John D. Wylie, President
Peter J. Johnson, Vice President
Ashley T. Rabun, 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............................................................................................... 42
Government Income............................................................................................. 52
Money Market.................................................................................................. 58
The Portfolios'
Financial Highlights.......................................................................................... 60
Statements of Assets and Liabilities.......................................................................... 66
Statements of Operations...................................................................................... 69
Statements of Changes in Net Assets........................................................................... 72
Notes to the Financial Statements............................................................................. 78
Notes to the Funds' Financial Statements........................................................................ 86
Report of Independent Auditors
Nicholas-Applegate Mutual Funds............................................................................... 90
Nicholas-Applegate Investment Trust........................................................................... 91
</TABLE>
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This report is authorized for distribution to shareholders and to others only
when preceded or accompanied by a currently effective prospectus for
Nicholas-Applegate Series A, B and C Domestic Portfolios. Distributor:
Nicholas-Applegate Securities.
<PAGE>
(This page intentionally left blank)
<PAGE>
LETTER TO SHAREHOLDERS
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DEAR FELLOW SHAREHOLDERS,
This past fiscal year has provided us with a vivid example of the power of
disciplined investing to create wealth. We are honored to have been selected to
help you manage your financial assets during this period, and we are pleased to
have participated with you in one of the best years ever in the U.S. stock and
bond markets.
As you review this Annual Report for our Domestic Portfolios, I hope you will
think back to the start of this fiscal year and recall how difficult it may have
been to follow your financial plan and remain invested in stocks and bonds after
the disappointments of 1994. If you took a good, hard look at the superior
long-term returns that have accrued historically to the owners of these
financial assets, and stood by your financial plan, then you are probably well
satisfied today.
Throughout this century, stocks have proven the best means to build wealth
from savings, and bonds have provided excellent sources of income and
diversification, according to studies by Ibbotson Associates. The 1995-96 fiscal
year was no exception. Stock and bond ownership brought investors in these
assets closer to meeting long-term financial goals.
At Nicholas-Applegate, we believe growth-stock investing is the best way to
meet long-term financial goals. This is especially true for working Americans at
all levels of income. We live in an exciting age full of opportunities for
economic and personal enrichment, but we are also subject to great economic
uncertainties. We can no longer expect a lifelong career, a corporate pension, a
government-funded retirement benefit, and affordable college education for our
children.
For many of today's investors, these financial responsibilities hold the
potential to overwhelm existing savings and investment programs, leaving
significant gaps between future needs and resources. Growth stock investing with
Nicholas-Applegate, means making your money work harder, much harder. We call
this approach BRIDGING THE GAP. For more than a decade, Nicholas-Applegate
Capital Management has been helping some of America's most respected
corporations, endowments and institutions provide for their future needs in this
same way. We welcome the opportunity to continue helping you build the financial
resources you need to create the future you desire.
Sincerely,
[SIGNATURE]
John D. Wylie
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 March 31, 1996, 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 Fixed Income Fully Discretionary Institutional x
Short-Intermediate Fixed Income Short-Intermediate Institutional x
</TABLE>
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2
<PAGE>
CAPITAL MARKETS REVIEW
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Investors in U.S. financial markets experienced one of the most exciting and
rewarding periods in history during the fiscal year ended March 31, 1996. Major
stock indexes, such as the Dow Jones Industrial Average, the Standard & Poor's
500 Index (S&P 500), and the NASDAQ Composite, climbed steadily into new
territory, each setting an impressive series of record highs. Bond investors
also enjoyed exceptional returns.
The economic environment was extremely favorable. Slow to moderate economic
growth, coupled with low inflation and interest rates, created ideal conditions
for companies to improve their profit margins. Many companies reported earnings
that exceeded the expectations of investment analysts, and this positive news
buoyed the performance of their stocks.
Overall, the fiscal year was characterized by strong consumer confidence and
investor interest. Supply and demand for domestic equities played a role in
rallying the market. Mutual funds experienced heavy cash inflows during the
period, with much of that new capital designated for U.S. stocks. Individual
investors seemed to accept the responsibility of funding their own retirements.
As a result, many investors opted to invest their savings in the ownership of
companies through mutual funds, rather than purchase low-interest certificates
of deposit or create bank deposits.
The broad market rose sharply over the twelve-month period with the S&P 500
returning 32%. Larger company stocks tended to outperform small and mid-sized
company stocks overall, but in the closing months of the fiscal year small and
mid-sized company stocks added steam and larger-company stocks tapered off.
Healthcare, technology, financial services and capital goods stocks performed
particularly well throughout the period.
Bond prices rose steadily from August through January, with interest rates
falling to their lowest levels in two years. Although some of those gains were
erased in February and March, we believe the outlook for continued low inflation
and moderate domestic growth supports the likelihood of a positive market for
bonds.
With our company-by-company selection process for portfolio building, our
Portfolios benefited strongly from the year's market conditions. We are excited
about the prospects for the many dynamic, growing companies we are finding for
inclusion in our Portfolios. We believe financial markets will continue to
reward the success of America's most innovative companies.
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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>
LARGE COMPANY STOCK SMALL COMPANY STOCK LONG-TERM GOVERNMENT BONDS TREASURY BILLS
<S> <C> <C> <C> <C>
1925 1.000 1.000 1.000 1.000
1926 1.116 1.003 1.078 1.033
1927 1.535 1.224 1.174 1.065
1928 2.204 1.710 1.175 1.103
1929 2.016 0.832 1.215 1.155
1930 1.516 0.515 1.272 1.183
1931 0.859 0.259 1.204 1.196
1932 0.789 0.245 1.407 1.207
1933 1.214 0.594 1.406 1.211
1934 1.197 0.738 1.547 1.213
1935 1.767 1.035 1.624 1.215
1936 2.367 1.705 1.746 1.217
1937 1.538 0.716 1.750 1.221
1938 2.016 0.951 1.847 1.221
1939 2.008 0.954 1.957 1.221
1940 1.812 0.905 2.076 1.221
1941 1.602 0.823 2.096 1.222
1942 1.927 1.190 2.163 1.225
1943 2.427 2.242 2.208 1.229
1944 2.906 3.446 2.270 1.233
1945 3.965 5.983 2.514 1.237
1946 3.645 5.287 2.511 1.242
1947 3.853 5.335 2.445 1.248
1948 4.065 5.223 2.529 1.258
1949 4.829 6.254 2.692 1.272
1950 6.360 8.677 2.693 1.287
1951 7.888 9.355 2.587 1.306
1952 9.336 9.638 2.617 1.328
1953 9.244 9.013 2.713 1.352
1954 14.106 14.473 2.907 1.364
1955 18.561 17.431 2.870 1.385
1956 19.778 18.177 2.710 1.419
1957 17.646 15.529 2.912 1.464
1958 25.298 25.605 2.734 1.486
1959 28.322 29.804 2.673 1.530
1960 28.455 28.823 3.041 1.571
1961 36.106 38.072 3.070 1.604
1962 32.954 33.540 3.282 1.648
1963 40.469 41.444 3.322 1.700
1964 47.139 51.193 3.438 1.760
1965 53.008 72.567 3.463 1.829
1966 47.674 67.479 3.589 1.916
1967 59.104 123.670 3.259 1.997
1968 65.642 168.429 3.251 2.101
1969 60.059 126.233 3.086 2.239
1970 62.465 104.226 3.460 2.385
1971 71.406 121.423 3.917 2.490
1972 84.956 126.807 4.140 2.585
1973 72.500 87.618 4.094 2.764
1974 53.311 70.142 4.272 2.986
1975 73.144 107.189 4.665 3.159
1976 90.584 166.691 5.447 3.319
1977 84.077 211.500 5.410 3.489
1978 89.592 261.120 5.346 3.740
1979 106.113 374.614 5.280 4.128
1980 140.514 523.992 5.071 4.592
1981 133.616 596.717 5.166 5.267
1982 162.223 763.829 7.251 5.822
1983 198.745 1066.828 7.298 6.335
1984 211.199 995.680 8.427 6.959
1985 279.117 1241.234 11.037 7.496
1986 330.671 1326.275 13.745 7.958
1987 347.967 1202.966 13.372 8.393
1988 406.458 1478.135 14.665 8.926
1989 534.455 1628.590 17.322 9.673
1990 517.499 1277.449 18.392 10.429
1991 675.592 1847.629 21.942 11.012
1992 727.412 2279.039 23.709 11.398
1993 800.078 2757.147 28.034 11.728
1994 810.538 2842.773 25.856 12.186
1995 1113.918 3822.398 34.044 12.868
1996 1174.47 4065.16 31.69 13.03
Large Company Stock Small Company Stock Long-Term Government Bonds Treasury Bills
Cumulative 1,174.47 4,064.16 31.69 13.02
The Growth of $1.00 Invested at
Year-end 1925 through March 1996
Source: Ibbotson Associates
<CAPTION>
INFLATION
<S> <C>
1925 1.000
1926 0.985
1927 0.965
1928 0.955
1929 0.957
1930 0.899
1931 0.814
1932 0.730
1933 0.734
1934 0.749
1935 0.771
1936 0.780
1937 0.804
1938 0.782
1939 0.778
1940 0.786
1941 0.862
1942 0.942
1943 0.972
1944 0.993
1945 1.015
1946 1.199
1947 1.307
1948 1.343
1949 1.318
1950 1.395
1951 1.477
1952 1.490
1953 1.499
1954 1.492
1955 1.497
1956 1.540
1957 1.587
1958 1.615
1959 1.639
1960 1.663
1961 1.674
1962 1.695
1963 1.723
1964 1.743
1965 1.777
1966 1.836
1967 1.892
1968 1.981
1969 2.102
1970 2.218
1971 2.292
1972 2.371
1973 2.579
1974 2.894
1975 3.097
1976 3.246
1977 3.465
1978 3.778
1979 4.281
1980 4.812
1981 5.242
1982 5.445
1983 5.652
1984 5.875
1985 6.097
1986 6.166
1987 6.438
1988 6.722
1989 7.034
1990 7.464
1991 7.693
1992 7.916
1993 8.133
1994 8.351
1995 8.563
1996 8.680
Inflation
Cumulative 8.68
The Growth of $1.00 Invested at
Year-end 1925 through March 1996
Source: Ibbotson Associates
</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 generated
impressive returns for the fiscal year that ended March 31, 1996 with
exceptionally strong performance in the summer of 1995 and the winter and spring
of 1996. At the close of the fiscal year, 30% of the Portfolio's holdings were
in technology stocks, with software, telecommunications, computer and office
automation issues comprising the largest positions in this sector. Health-care
services accounted for 22% of the Portfolio, with medical supply companies and
biotechnology concerns leading this group. Consumer service industries such as
broadcasting, entertainment and leisure and gaming were also strongly
represented and contributed significantly to the Portfolio.
Stand-out performers for the period included Dura Pharmaceuticals, Career
Horizons and Veterinary Centers of America. Dura, which develops treatments for
asthma and allergies, is rapidly growing revenues and earnings. One of its most
innovative products is a powder-inhaler drug delivery system that has the
potential for applications beyond Dura's own line of pharmaceuticals. Career
Horizons offers temporary staffing and information technology services to U.S.
companies. It is rapidly improving margins and earnings as a result of growth in
its information technology services business. Veterinary Centers of America is
generating rapid earnings growth through acquisitions and consolidations in an
otherwise fragmented industry.
We are optimistic about the prospects for these and other emerging growth
stocks. Small-cap stocks have outperformed every financial asset class over the
long term, and their relative valuations are attractive. The dollar has
continued to strengthen and typically this has benefited small-company stocks
relative to large-company stocks. While earnings growth at larger companies is
slowing, smaller companies continue to grow earnings at impressive rates.
Finally, from a historical standpoint, we are relatively early in the current
long-term outperformance cycle for small-cap stocks, at six years. Since the
1930s, small-cap outperformance cycles have lasted nine to fourteen years and
have typically delivered the greatest capital appreciation in the second half of
the cycle.
We continue to seek and invest in dynamic, growing companies that are expected
to be the beneficiaries of change. Our holdings tend to be young,
entrepreneurial organizations offering innovative products and solutions,
companies that are developing and commanding lucrative niche markets. Investors
should know that stocks of such companies are subject to greater price
fluctuations than the stocks of larger, more established companies. We believe
that holding ownership interests in these companies through the Emerging Growth
Portfolio is an excellent way to achieve long-term growth of capital.
REPRESENTATIVE HOLDINGS
Dura Pharmaceuticals, Inc.
Ross Stores, Inc.
Fuisz Technologies, Inc.
Envoy Corp.
Veterinary Centers of America, Inc.
Career Horizons, Inc.
Brooktrout Technology, Inc.
Westell Technologies, Inc.
Davox Corp.
West Marine, Inc.
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5
<PAGE>
A CONVERSATION WITH CATHERINE SOMHEGYI
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Catherine Somhegyi
[PHOTO] Portfolio Manager
Emerging Growth Portfolio
Q: CATHERINE, THE EMERGING GROWTH PORTFOLIO
ENJOYED EXCELLENT PERFORMANCE IN THE FISCAL YEAR. WHAT WAS HAPPENING IN THE
MARKET FOR SMALL-CAP STOCKS, AND FOR THE PORTFOLIO IN PARTICULAR, TO ACCOUNT FOR
THIS PERFORMANCE?
A. Remember, this period was one of the best ever
for the U.S. stock market. And the forces that drove market performance -- low
interest rates, little inflationary pressure, and slow-but-steady economic
growth -- are highly conducive to the performance of dynamic smaller companies.
In the small-cap universe the rally has been especially broad. Energy,
technology, health technology, and insurance services are just a few of the
sectors that helped lift small caps throughout the period. These are also some
of the specific industries and sectors where our stock-picking expertise
delivered added return for investors.
Q: ARE YOU OPTIMISTIC ABOUT SMALL-CAP STOCKS FOR
THE COMING YEAR?
A: Yes, I am. We are in an environment where, on a
valuation basis, small-cap stocks are more attractive than large caps. And the
small companies we are encountering are showing strong fundamental qualities,
including excellent earnings growth, innovative products and services and some
very resourceful management teams. Also, we are perhaps less than halfway
through a long-term outperformance cycle for small-cap stocks. Since the 1930s,
small-cap outperformance cycles have lasted nine to fourteen years on average
and have delivered their best returns in the second half of the cycle.
Q: COULD YOU TELL US A LITTLE BIT ABOUT NICHOLAS-
APPLEGATE'S APPROACH TO PICKING SMALL-CAP GROWTH STOCKS?
A: We apply one equity philosophy across all
strategies: We seek to capitalize on the early recognition of positive changes.
We adhere to a bottom-up stock selection process and look for fundamentally
strong companies that demonstrate earnings acceleration. Our experience has
shown that this can lead to increased investor recognition and significant price
appreciation. Our process is very disciplined. Each company in the Portfolio
must satisfy three criteria. It must demonstrate positive change. That change
must be sustainable, and we want to be early in the recognition of that change.
Q: WITH SO MANY SMALL-CAP STOCKS OUT THERE TO BE
FOUND, WHAT RESOURCES DO YOU USE TO IDENTIFY GOOD POTENTIAL INVESTMENTS?
A: I believe this is our greatest strength. Our
investment universe contains more than 7,500 companies. Information about these
companies is inefficiently disseminated. Our competitive advantage lies in our
ability to manage this information. We have developed a broad range of resources
to verify and interpret company news and data. On average, there are two
analysts following each of these small-cap companies vs. 28 analysts per company
following the S&P 500 stocks, so it's very important to know where to go for the
information.
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6
<PAGE>
- -------------------------------------------------------------------
We talk to over a hundred research firms throughout the country on these
individual companies. There are certain analysts who have expertise in certain
industries and regions. This is particularly important in the small-cap area. If
I'm looking at a small retail or restaurant concept in the Southeast, the type
of information I'm going to get from a regional analyst will probably be fresher
than the information I'm going to get out of an office in New York.
Q: IN TERMS OF THE MANAGEMENT STYLE, DO YOU
MANAGE THE EMERGING GROWTH PORTFOLIO PRETTY MUCH ALONE, OR DO YOU SHARE IDEAS
WITH THE OTHER PORTFOLIO MANAGERS AT NICHOLAS-APPLEGATE?
A: If you were to visit our office, you would see
that none of us has a private office. We all sit together. We work together in a
team environment. We also sit with our traders. It's as if there's an investment
meeting going on all day long. We are constantly checking and cross-checking
information.
Q: NICHOLAS-APPLEGATE SPENDS A GREAT DEAL OF
MONEY KEEPING ITS TECHNOLOGY UP-TO-DATE. DO TECHNOLOGICAL RESOURCES PLAY A LARGE
ROLE IN THE WAY THESE PORTFOLIOS ARE MANAGED?
A: Definitely. It enables us to manage information
efficiently. It leverages our time as portfolio managers so that we identify the
best investment opportunities by verifying and interpreting information quickly.
Q: IN MANY CASES, A SMALL-CAP PORTFOLIO IS HEAVILY
WEIGHTED IN TECHNOLOGY STOCKS. DO YOU PAY ATTENTION TO YOUR SECTOR WEIGHTINGS
AND DOES TECHNOLOGY PLAY A LARGE ROLE IN THE PORTFOLIO?
A: Technology currently plays a big role in the
Portfolio, but that's not because we made a top-down decision to invest a
specific percentage in technology. Rather, it is the result of our bottom-up
approach; it reflects where we are finding the best investment opportunities
today. If we find the fundamentals to be the strongest and the valuations to be
the most attractive in technology, then we'll be there. But that's also true of
health care and of retail. We truly seek out growth in any and all industries
and sectors.
Q. WHAT ARE SOME EXAMPLES OF COMPANIES YOU
HAVE RECENTLY ADDED TO OR DELETED FROM THE PORTFOLIO?
A. We added Impath, a company that provides
information and expertise to health-care professionals on the diagnosis,
treatment and care of difficult cancer cases. We purchased shares of Natural
Micro Systems, a company that designs, manufactures and markets
advanced-technology products for business telephone systems. We sold shares of
Utah Medical Products, a manufacturer of disposable health-care supplies. A key
distributor dropped one of Utah Medical's leading products from its line,
negatively affecting the outlook for sales growth. We also recently sold our
position in Microwave Power Devices, a manufacturer of infrastructure equipment
for the cellular telephone industry. The company experienced poor sales growth
because of a slowdown in approvals for new cellular base stations.
- --------------------------------------------------------------------------------
7
<PAGE>
EMERGING GROWTH PORTFOLIO A
- -------------------------------------------------------------------
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> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96
1 YEAR 5 YEARS 10 YEARS
30.27% 15.18% 12.73%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RUSSELL
<S> <C> <C>
Emerging 6/09
Growth Growth
Portfolio A Index
7/31/85 9475 10000
9/85 8929 9134
12/85 10520 10697
3/86 12128 12282
6/86 13274 13086
9/86 10741 10960
12/86 11111 11080
3/87 13526 14093
6/87 13505 13897
9/87 14248 14348
12/87 10606 9919
3/88 12508 11647
6/88 13613 12386
9/88 13304 12045
12/88 13373 11940
3/89 14824 12826
6/89 15463 13656
9/89 17311 14877
12/89 16934 14348
3/90 17203 13967
6/90 18278 14848
9/90 14045 10974
12/90 15404 11850
3/91 20246 15470
6/91 19167 14934
9/91 22112 16545
12/91 23886 17916
3/92 23825 18406
6/92 21140 16195
9/92 22381 16509
12/92 26733 19308
3/93 26523 18962
6/93 27425 19507
9/93 30867 21327
12/93 30185 21887
3/94 28335 20997
6/94 26204 19679
9/94 28921 21514
12/94 28968 21355
3/95 30584 22526
6/95 34026 24761
9/95 38171 27576
12/95 39069 27988
3/31/96 42048 29596
</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, 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. Performance results reflect the total
returns of a predecessor limited partnership and a pooled trust managed by
Nicholas-Applegate Capital Management prior to the effective date of the
Portfolio's registration statement which was 10/1/93. Limited partnership/pooled
trust returns are restated to reflect all fees and expenses applicable to the
Portfolio and share class. If the limited partnership and pooled trust had been
registered as investment companies under the federal securities laws, their
performance might have been adversely affected because of the additional
restrictions applicable to registered investment companies. 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
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> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96
1 YEAR 5 YEARS 10 YEARS
29.61% 14.90% 12.69%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING RUSSELL 2000
<S> <C> <C>
Growth Growth
Portfolio B Index
7/31/85 10000 10000
9/85 9413 9134
12/85 11074 10697
3/86 12746 12282
6/86 13929 13086
9/86 11251 10960
12/86 11619 11080
3/87 14124 14093
6/87 14079 13897
9/87 14830 14348
12/87 11019 9919
3/88 12975 11647
6/88 14099 12386
9/88 13757 12045
12/88 13805 11940
3/89 15279 12826
6/89 15912 13656
9/89 17786 14877
12/89 17370 14348
3/90 17618 13967
6/90 18689 14848
9/90 14335 10974
12/90 15697 11850
3/91 20601 15470
6/91 19471 14934
9/91 22427 16545
12/91 24188 17916
3/92 24087 18406
6/92 21336 16195
9/92 22553 16509
12/92 26897 19308
3/93 26643 18962
6/93 27504 19507
9/93 30908 21327
12/93 30787 21887
3/94 28826 20997
6/94 26600 19679
9/94 29325 21514
12/94 29283 21355
3/95 30887 22526
6/95 34287 24761
9/95 38402 27576
12/95 39210 27988
3/31/96 42139 29596
</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, 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. Performance
results reflect the total returns of a predecessor limited partnership and a
pooled trust managed by Nicholas-Applegate Capital Management prior to the
effective date of the Portfolio's registration statement which was 10/1/93.
Limited partnership/pooled trust returns are restated to reflect all fees and
expenses applicable to the Portfolio and share class. If the limited partnership
and pooled trust had been registered as investment companies under the federal
securities laws, their performance might have been adversely affected because of
the additional restrictions applicable to registered investment companies. The
maximum contingent deferred sales charge is included 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
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> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96
1 YEAR 5 YEARS 10 YEARS
36.64% 15.01% 12.51%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING RUSSELL 2000
<S> <C> <C>
Growth Growth
Portfolio C Index
7/31/85 10000 10000
9/85 9413 9134
12/85 11074 10697
3/86 12746 12282
6/86 13929 13086
9/86 11251 10960
12/86 11619 11080
3/87 14124 14093
6/87 14079 13897
9/87 14830 14348
12/87 11019 9919
3/88 12975 11647
6/88 14099 12386
9/88 13757 12045
12/88 13805 11940
3/89 15279 12826
6/89 15912 13656
9/89 17786 14877
12/89 17370 14348
3/90 17618 13967
6/90 18689 14848
9/90 14335 10974
12/90 15697 11850
3/91 20601 15470
6/91 19471 14934
9/91 22427 16545
12/91 24188 17916
3/92 24087 18406
6/92 21336 16195
9/92 22553 16509
12/92 26897 19308
3/93 26643 18962
6/93 27504 19507
9/93 30908 21327
12/93 30192 21887
3/94 28271 20997
6/94 26116 19679
9/94 28786 21514
12/94 28763 21355
3/95 30356 22526
6/95 33729 24761
9/95 37781 27576
12/95 38606 27988
3/31/96 41478 29596
</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, 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. Performance results reflect the total
returns of a predecessor limited partnership and a pooled trust managed by
Nicholas-Applegate Capital Management prior to the effective date of the
Portfolio's registration statement which was 10/1/93. Limited partnership/pooled
trust returns are restated to reflect all fees and expenses applicable to the
Portfolio and share class. If the limited partnership and pooled trust had been
registered as investment companies under the federal securities laws, their
performance might have been adversely affected because of the additional
restrictions applicable to registered investment companies.
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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
10
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
- ------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK -- 98.6%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
ADVERTISING -- 0.4%
CKS Group*................................. 65,000 $ 1,657,500
Eagle River Interactive, Inc.*............. 40,000 520,000
------------
2,177,500
------------
AEROSPACE -- 0.5%
Hexcel Corp.*.............................. 43,600 512,300
Rohr Industries, Inc.*..................... 90,000 1,620,000
Tracor, Inc.*.............................. 40,000 697,500
------------
2,829,800
------------
AGRICULTURE -- 0.5%
Dekalb Genetics Corp. Class B.............. 19,500 1,447,875
Delta & Pine Land Co....................... 30,000 1,668,750
------------
3,116,625
------------
AIR FREIGHT/SHIPPING -- 0.3%
Atlas Air, Inc.*........................... 42,600 1,597,500
------------
AIRLINES -- 2.6%
Alaska Air Group, Inc.*.................... 55,200 1,476,600
America West Airlines, Inc.*............... 125,400 2,680,425
Mesa Airlines, Inc.*....................... 225,000 2,418,750
Midwest Express Holdings, Inc.*............ 40,000 1,500,000
Reno Air, Inc.*............................ 20,000 250,000
Trans World Airlines, Inc.*................ 335,000 6,700,000
------------
15,025,775
------------
ALCOHOLIC BEVERAGES -- 0.1%
Mondavi (Robert) Corp.*.................... 21,900 563,925
------------
APPAREL -- 3.3%
Authentic Fitness Corp..................... 59,500 1,539,562
Cole Kenneth Productions, Inc.*............ 106,000 1,894,750
Donnkenny, Inc.*........................... 99,000 1,596,375
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
APPAREL (CONTINUED)
Marisa Christina, Inc.*.................... 40,400 $ 813,050
Nautica Enterprises, Inc.*................. 108,825 5,196,394
Quiksilver, Inc.*.......................... 46,200 1,466,850
St. John Knits, Inc........................ 24,000 1,617,000
Urban Outfitters, Inc.*.................... 20,000 605,000
Vans, Inc.*................................ 60,000 832,500
Wolverine Worldwide, Inc................... 139,800 3,914,400
------------
19,475,881
------------
BIOTECHNOLOGY -- 5.2%
Alteon, Inc.*.............................. 60,000 615,000
Applied Bioscience International, Inc.*.... 80,000 730,000
Arthrocare Corp.*.......................... 27,200 598,400
Biochem Pharma, Inc.*...................... 10,300 422,300
Carrington Laboratories, Inc.*............. 8,500 244,375
Cytel Corp.*............................... 30,000 225,000
Cytyc Corp.*............................... 7,000 117,250
Depotech Corp.*............................ 20,000 490,000
Endovascular Technologies, Inc.*........... 40,000 400,000
Femrx, Inc.*............................... 20,000 195,000
Genome Therapeutics Corp.*................. 37,000 383,875
Gilead Sciences, Inc.*..................... 45,000 1,293,750
IDEXX Laboratories Inc.*................... 29,800 1,251,600
Integra Lifesciences Corp.*................ 23,000 270,250
Interneuron Pharmaceuticals, Inc.*......... 63,400 2,353,725
Martek Biosciences Corp.*.................. 65,800 2,368,800
Matritech, Inc.*........................... 13,000 151,125
Medimmune, Inc.*........................... 55,000 866,250
Mentor Corp................................ 144,200 3,370,675
Neurex Corp.*.............................. 120,000 2,490,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
11
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
BIOTECHNOLOGY (CONTINUED)
Neurogen Corp.*............................ 52,000 $ 1,794,000
Nexstar Pharmaceuticals, Inc.*............. 50,000 987,500
Pharmaceutical Product Development,
Inc.*.................................... 9,000 317,250
Protein Design Laboratories, Inc.*......... 72,000 1,773,000
Quintiles Transnational Corp.*............. 48,600 3,159,000
Regeneron Pharmaceuticals, Inc.*........... 40,000 510,000
Sequana Therapeutics, Inc.*................ 8,000 156,000
Sequus Pharmaceuticals, Inc.*.............. 194,100 2,681,006
Theratech, Inc.*........................... 16,400 348,500
------------
30,563,631
------------
BROADCASTING -- 2.3%
American Radio Systems Corp.*.............. 59,400 2,004,750
Argyle Television, Inc.*................... 22,000 478,500
Chancellor Broadcasting Corp.*............. 45,000 990,000
Data Broadcasting Corp.*................... 60,000 637,500
E Z Communications, Inc.*.................. 10,000 215,000
Emmis Broadcasting Corp.*.................. 35,100 1,351,350
Evergreen Media Corp.*..................... 69,400 2,498,400
Renaissance Communications Corp.*.......... 68,250 1,697,719
Saga Communications, Inc.*................. 40,050 851,062
SFX Broadcasting, Inc.*.................... 12,000 409,500
United Video Satellite Group, Inc.*........ 36,600 768,600
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
BROADCASTING (CONTINUED)
Westwood One, Inc.*........................ 72,200 $ 1,326,675
Young Broadcasting Inc.*................... 11,400 339,150
------------
13,568,206
------------
BUILDING MATERIALS -- 0.2%
NCI Building Systems*...................... 20,000 685,000
Watsco, Inc................................ 10,000 260,000
------------
945,000
------------
CATALOG/OUTLET STORES -- 0.2%
The Sports Authority, Inc.*................ 32,800 897,800
------------
CHEMICALS -- 0.6%
Mississippi Chemical Corp.................. 96,800 1,960,200
OM Group, Inc.............................. 42,000 1,559,250
------------
3,519,450
------------
CLOTHING CHAINS -- 0.7%
Charming Shoppes, Inc.*.................... 310,000 1,598,437
Ross Stores, Inc........................... 98,300 2,469,787
------------
4,068,224
------------
COAL MINING -- 0.1%
Zeigler Coal Holding Company............... 25,000 362,500
------------
COMMERCIAL/INDUSTRIAL SERVICES -- 0.8%
BT Office Products Int'l, Inc.*............ 33,000 556,875
Caribiner International, Inc.*............. 7,000 180,250
Ideon Group, Inc........................... 34,000 378,250
Personnel Group Inc.*...................... 30,000 547,500
Physician Support Systems Inc.*............ 23,000 393,875
Pia Merchandising Services, Inc.*.......... 23,300 433,962
Pre Paid Legal Services, Inc.*............. 55,500 825,563
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
12
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
COMMERCIAL/INDUSTRIAL SERVICES (CONTINUED)
Profit Recovery Group, Inc.*............... 15,000 $ 232,500
Protection One Inc.*....................... 78,000 1,150,500
Superior Services, Inc.*................... 9,000 119,250
------------
4,818,525
------------
COMPUTERS/OFFICE AUTOMATION -- 4.9%
Auspex Systems, Inc.*...................... 140,300 2,507,862
Brooktrout Technology, Inc.*............... 12,000 414,000
Cognex Corp.*.............................. 117,400 3,008,375
Computer Horizons Corp.*................... 96,300 3,635,325
Computervision Corp.*...................... 54,400 564,400
Data General Corp.*........................ 139,700 2,043,112
Eltron International, Inc.*................ 39,150 1,291,950
IDX Systems Corp.*......................... 8,000 232,000
Microcom, Inc.*............................ 119,900 3,582,012
Micros Systems, Inc.*...................... 67,700 1,692,500
Mylex Corp.*............................... 80,000 1,900,000
Network Appliance, Inc.*................... 7,000 222,250
Safeguard Scientifics, Inc.*............... 58,650 3,438,356
Security Dynamics Technology, Inc.*........ 17,500 927,500
Telxon Corp.*.............................. 151,600 3,221,500
Xeikon NV Sponsored ADR*................... 7,500 145,313
------------
28,826,455
------------
CONTAINERS -- 0.2%
Aptargroup, Inc............................ 14,500 601,750
U.S. Can Corp.*............................ 20,000 340,000
------------
941,750
------------
CONTRACT DRILLING -- 1.2%
Global Marine, Inc.*....................... 107,000 1,070,000
Nabors Industries, Inc.*................... 58,300 830,775
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CONTRACT DRILLING (CONTINUED)
Noble Drillings, Corp.*.................... 185,700 $ 2,298,037
Reading & Bates Corp.*..................... 149,100 2,944,725
------------
7,143,537
------------
DEPARTMENT/DISCOUNT STORES -- 0.3%
Carson, Pirie Scott & Co.*................. 34,500 776,250
Proffits, Inc.*............................ 25,200 793,800
------------
1,570,050
------------
DRUGS/PHARMACEUTICALS -- 3.3%
Biovail Corp.*............................. 53,000 1,503,875
Columbia Laboratories, Inc.*............... 30,000 356,250
Curative Technologies, Inc.*............... 80,000 1,480,000
Dura Pharmaceuticals, Inc.*................ 104,500 5,185,812
Fuisz Technologies, Inc.*.................. 85,000 2,295,000
IDEC Pharmaceuticals Corp.*................ 64,000 1,424,000
Jones Medical Industries, Inc.............. 18,750 721,875
Matrix Pharmaceutical, Inc.*............... 40,000 925,000
Nabi, Inc.*................................ 129,600 1,709,100
Noven Pharmaceuticals, Inc.*............... 70,000 1,006,250
Pathogenesis Corp.*........................ 40,000 655,000
Sangstat Medical Corp.*.................... 10,000 161,250
Sepracor, Inc.*............................ 125,000 1,828,125
------------
19,251,537
------------
ELECTRONIC DATA PROCESSING -- 0.5%
Affiliated Computer Services, Inc.*........ 34,800 1,446,375
Envoy Corp.*............................... 63,700 1,496,950
------------
2,943,325
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
13
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 2.6%
Belden, Inc................................ 38,800 $ 1,144,600
Checkpoint Systems, Inc.*.................. 224,800 5,591,900
Coherent, Inc.*............................ 96,300 4,092,750
Cyberoptics Corp.*......................... 48,600 1,397,250
Itron, Inc.*............................... 41,000 1,834,750
Robotic Vision Systems, Inc.*.............. 33,200 535,350
Trident International, Inc.*............... 18,000 342,000
------------
14,938,600
------------
ENTERTAINMENT -- 0.5%
Family Golf Centers, Inc.*................. 20,000 535,000
Hollywood Entertainment Corp.*............. 40,000 530,000
Premiere Radio Network, Inc.*.............. 26,400 495,000
Regal Cinemas, Inc.*....................... 32,925 1,218,225
------------
2,778,225
------------
ENVIRONMENTAL SERVICES -- 1.8%
Allied Waste Industries, Inc.*............. 40,000 365,000
Continental Waste Industries, Inc.*........ 58,333 634,371
Newpark Resources, Inc.*................... 20,585 612,404
Tetra Technologies, Inc.*.................. 42,300 729,675
United Waste Systems, Inc.*................ 86,600 4,330,000
U.S. Filter Corp.*......................... 47,600 1,332,800
U.S.A. Waste Services, Inc.*............... 103,700 2,644,350
------------
10,648,600
------------
FINANCE COMPANIES -- 1.6%
AmeriCredit Corp.*......................... 99,000 1,373,625
CMAC Investment Corp....................... 42,300 2,389,950
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FINANCE COMPANIES (CONTINUED)
First Merchants Acceptance, Inc.*.......... 16,300 $ 360,637
Imperial Credit Industries, Inc.*.......... 91,800 2,249,100
North American Mortgage Co................. 72,200 1,480,100
Resource Bancshares Mortgage Group, Inc.*.. 11,900 185,937
WestCor., Inc.............................. 56,100 1,037,850
------------
9,077,199
------------
FINANCIAL SERVICES -- 0.2%
Cityscape Financial*....................... 25,000 900,000
------------
GAMBLING -- 0.7%
Grand Casinos, Inc.*....................... 98,200 2,946,000
Sodak Gaming, Inc.*........................ 30,000 712,500
WMS Industries, Inc.*...................... 5,400 93,825
------------
3,752,325
------------
HEALTH TECHNOLOGY/SERVICES -- 0.0%
Prime Medical Services, Inc.*.............. 18,000 234,000
------------
HOME FURNISHINGS -- 0.4%
Bush Industries, Inc. Class A.............. 12,000 303,000
Cort Business Services Corp.*.............. 30,000 540,000
Furniture Brands International, Inc.*...... 20,000 185,000
Renters Choice, Inc.*...................... 80,000 1,390,000
------------
2,418,000
------------
HOMEBUILDING -- 1.4%
American Homestar Corp.*................... 10,000 198,750
Beazer Homes USA, Inc.*.................... 12,000 210,000
Champion Enterprises, Inc.*................ 39,700 1,136,413
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
14
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
HOMEBUILDING (CONTINUED)
Hovnanian Enterprises, Inc. Class A*....... 20,000 $ 141,250
Kaufman & Broad Home Corp.................. 80,000 1,280,000
NVR, Inc.*................................. 15,000 143,437
Oakwood Homes Corp......................... 37,400 1,855,975
Redman Industries, Inc.*................... 27,800 562,950
Toll Brothers, Inc.*....................... 65,400 1,128,150
United States Home Corp.*.................. 66,100 1,702,075
------------
8,359,000
------------
HOSPITALS -- 0.3%
Impath, Inc.*.............................. 9,000 132,750
National Surgery Centers, Inc.*............ 37,000 1,193,250
NCS Healthcare*............................ 8,600 210,700
Renal Care Group, Inc.*.................... 7,000 194,250
Vitalcom, Inc.*............................ 10,300 137,765
------------
1,868,715
------------
INDUSTRIAL ENGINEERING/CONSTRUCTION -- 0.5%
Granite Construction, Inc.................. 50,000 1,475,000
Greenwich Air Services, Inc.*.............. 37,000 1,572,500
------------
3,047,500
------------
LIFE INSURERS -- 0.3%
American Travellers Corp.*................. 53,000 1,570,125
------------
LODGING -- 0.8%
Bristol Hotel Company*..................... 40,400 1,100,900
Doubletree Corp.*.......................... 14,300 391,463
Prime Hospitality Corp.*................... 187,500 2,554,688
Studio Plus Hotels, Inc.*.................. 31,500 874,125
------------
4,921,176
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MACHINERY/EQUIPMENT -- 1.3%
Computational Systems, Inc.*............... 20,000 $ 355,000
Digitran Systems, Inc.*.................... 14,500 145
Duriron Company, Inc....................... 61,900 1,702,250
Etec Systems, Inc.*........................ 15,000 210,000
Global Industrial Technologies*............ 10,700 256,800
Greenfield Industries, Inc................. 61,500 2,129,438
JLG Industries, Inc........................ 53,500 2,447,625
Miller Industries, Inc./ Tenn.*............ 14,000 476,000
------------
7,577,258
------------
MANAGED HEALTHCARE/HMO'S/PPO'S -- 1.8%
CRA Managed Care, Inc.*.................... 19,100 682,825
Health Management Systems, Inc.*........... 139,800 3,949,350
Inphynet Medical Management, Inc.*......... 14,200 253,825
Maxicare Health Plans, Inc.*............... 101,000 2,518,687
Medcath, Inc.*............................. 28,200 824,850
OccuSystems, Inc.*......................... 48,800 1,110,200
Orthodontic Centers of America, Inc.*...... 39,200 1,176,000
------------
10,515,737
------------
MEDICAL SPECIALTIES -- 1.0%
Express Scripts, Inc.*..................... 21,600 1,009,800
Visx, Inc.*................................ 134,900 4,923,850
------------
5,933,650
------------
MEDICAL SUPPLIES -- 5.6%
AVECOR Cardiovascular, Inc.*............... 24,100 328,362
Capstone Pharmacy Services*................ 10,000 90,000
Conmed Corp.*.............................. 13,350 327,075
Gulf South Medical Supply, Inc.*........... 51,800 1,955,450
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
15
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL SUPPLIES (CONTINUED)
Hologic, Inc.*............................. 74,100 $ 1,685,775
Invacare Corp.............................. 95,000 2,683,750
Iridex Corp.*.............................. 16,000 164,000
Kensey Nash Corp.*......................... 15,600 222,300
Keravision, Inc.*.......................... 40,000 495,000
Lunar Corp.*............................... 30,000 1,282,500
Metra Biosystems, Inc.*.................... 34,000 484,500
Minimed, Inc.*............................. 20,000 360,000
Nellcor Puritan Bennett, Inc.*............. 14,400 927,000
Neuromedical Systems Inc.*................. 115,000 2,501,250
Omnicare, Inc.............................. 94,600 5,096,575
Oncogene Sciences, Inc.*................... 30,000 273,750
Orthologic Corp.*.......................... 40,000 1,015,000
Osteotech, Inc.*........................... 15,000 112,500
Physio-Controls International Corp.*....... 70,900 1,418,000
Quest Medical, Inc.*....................... 55,000 666,875
ResMed, Inc.*.............................. 20,900 276,925
Serologicals Corp.*........................ 15,000 412,500
Steris Corp.*.............................. 74,000 2,220,000
Target Therapeutics, Inc.*................. 84,100 5,098,563
Uromed Corp.*.............................. 49,500 569,250
Vital Signs, Inc........................... 42,700 1,046,150
Vivus, Inc.*............................... 20,000 620,000
------------
32,333,050
------------
MEDICAL/NURSING/HEALTH SERVICES -- 3.4%
ABR Information Services, Inc.*............ 37,125 1,726,312
Arbor Health Care Co.*..................... 40,000 1,060,000
EmCare Holdings, Inc.*..................... 42,300 1,147,388
Grancare, Inc.*............................ 20,000 360,000
Mariner Health Group, Inc.*................ 110,500 1,823,250
Multicare Companies*....................... 42,600 1,208,775
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL/NURSING/HEALTH SERVICES (CONTINUED)
Pediatric Services of America, Inc.*....... 26,900 $ 682,587
Phycor, Inc.*.............................. 73,025 3,213,100
Physician Sales & Services, Inc.*.......... 80,200 1,984,950
Regency Health Services, Inc.*............. 25,000 281,250
Renal Treatment Centers, Inc.*............. 79,800 1,895,250
Rotech Medical Corp.*...................... 112,300 4,155,100
Sterling Healthcare Group*................. 12,000 171,000
------------
19,708,962
------------
METALS -- 1.3%
Agnico Eagle Mines, Ltd.................... 129,500 2,314,812
Commonwealth Aluminum Corp................. 100,000 1,775,000
Mueller Industries, Inc.*.................. 84,600 2,992,725
Schnitzer Steel Industries, Inc. Class A... 600 15,675
UNR Industries, Inc........................ 46,600 372,800
------------
7,471,012
------------
MILITARY/DEFENSE TECHNOLOGY -- 0.2%
Watkins-Johnson Co......................... 29,300 1,047,475
------------
MULTI-LINE INSURERS -- 0.3%
Penncorp Financial Group, Inc.............. 54,600 1,719,900
------------
OIL/GAS PRODUCTION -- 0.8%
Barrett Resources Corp.*................... 47,900 1,197,500
Brown (Tom), Inc.*......................... 71,000 1,002,875
Global Natural Resources, Inc.*............ 48,800 646,600
Lomak Petroleum, Inc....................... 18,000 211,500
Newfield Exploration Co.*.................. 20,000 610,000
Nuevo Energy Co.*.......................... 10,000 287,500
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
16
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
OIL/GAS PRODUCTION (CONTINUED)
Vintage Petroleum, Inc..................... 31,400 $ 639,775
------------
4,595,750
------------
OILFIELD SERVICES/EQUIPMENT -- 4.2%
BJ Services Co.*........................... 122,300 4,097,050
Camco International, Inc................... 39,700 1,250,550
Dawson Production Services, Inc.*.......... 15,000 168,750
Energy Venture, Inc.*...................... 15,000 399,375
Falcon Drilling, Inc.*..................... 100,000 2,225,000
Global Industries LTD.*.................... 36,000 756,000
Marine Drilling Company, Inc.*............. 375,000 2,953,125
Oceaneering International, Inc.*........... 99,000 1,348,875
Pool Energy Service Co.*................... 20,200 224,725
Pride Petroleum Services, Inc.*............ 78,400 1,107,400
Seacor Holdings, Inc.*..................... 77,100 2,843,063
Smith International, Inc.*................. 75,100 1,896,275
Tuboscope Vetco International, Corp.*...... 80,000 780,000
Varco International, Inc.*................. 99,700 1,208,863
Weatherford Enterra, Inc.*................. 89,500 3,121,313
------------
24,380,364
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 1.7%
Accustaff, Inc.*........................... 38,400 969,600
Copart, Inc.*.............................. 41,100 1,017,225
Corestaff, Inc.*........................... 15,000 457,500
G&K Services, Inc.......................... 16,450 440,038
Learning Tree*............................. 16,000 316,000
Meta Group, Inc.*.......................... 21,000 593,250
National Education Corp.*.................. 110,000 1,292,500
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER COMMERCIAL/ INDUSTRIAL SERVICES
(CONTINUED)
National Wireless Holdings, Inc.*.......... 9,500 $ 147,250
Norrell Corp............................... 21,900 725,437
On Assignment, Inc.*....................... 7,700 292,600
PMT Services, Inc.*........................ 62,100 1,490,400
Robert Half International, Inc.*........... 35,800 1,740,775
Romac International, Inc.*................. 20,000 615,000
------------
10,097,575
------------
OTHER CONSUMER DURABLES -- 0.4%
Sola International, Inc.*.................. 80,000 2,490,000
------------
OTHER CONSUMER NON-DURABLES -- 0.6%
Blyth Industries, Inc.*.................... 54,000 1,795,500
USA Detergents, Inc.*...................... 59,650 1,938,625
------------
3,734,125
------------
OTHER CONSUMER SERVICES -- 1.0%
Amre, Inc.*................................ 50,000 931,250
Apollo Group, Inc. Class A*................ 41,698 1,626,222
Career Horizons, Inc.*..................... 40,000 1,190,000
U.S. Order, Inc.*.......................... 34,000 697,000
Wackenhut Corrections Corp.*............... 28,000 1,092,000
------------
5,536,472
------------
OTHER FINANCIAL SERVICES -- 0.1%
WFS Financial, Inc.*....................... 30,000 562,500
------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 1.3%
Enterprise Systems, Inc.*.................. 7,800 215,475
Horizon Mental Health Management, Inc.*.... 15,600 329,550
Parexel International Corp.*............... 19,400 839,050
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
17
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
OTHER HEALTH TECHNOLOGY/ SERVICES (CONTINUED)
Physician Computer Network, Inc.*.......... 200,000 $ 2,725,000
RTW, Inc.*................................. 29,400 1,087,800
Summit Medical Systems, Inc.*.............. 31,000 604,500
Veterinary Centers America, Inc.*.......... 72,000 1,944,000
------------
7,745,375
------------
OTHER INSURANCE SERVICES -- 0.1%
Fidelity National Financial, Inc........... 24,860 385,330
First American Financial Corp.............. 11,400 327,750
------------
713,080
------------
OTHER PRODUCERS/MANUFACTURING -- 0.7%
BMC Industries, Inc........................ 79,600 1,711,400
Chicago Miniature Lamp, Inc.*.............. 11,400 370,500
Galoob Lewis Toys, Inc.*................... 40,000 810,000
Rexel, Inc.*............................... 30,000 367,500
Wolverine Tube, Inc.*...................... 19,100 775,938
------------
4,035,338
------------
OTHER TECHNOLOGY -- 1.0%
Computer Products, Inc.*................... 86,000 1,161,000
Henry (Jack) & Associates, Inc............. 24,100 587,438
Renaissance Solutions, Inc.*............... 23,100 669,900
Technology Solutions Company*.............. 33,000 895,125
Uniphase Corp.*............................ 30,000 1,162,500
3D Systems Corp.*.......................... 66,900 1,404,900
------------
5,880,863
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER TRANSPORTATION -- 0.1%
United Transnet, Inc.*..................... 20,000 $ 472,500
------------
PROPERTY-CASUALTY INSURERS -- 1.0%
Allied Group, Inc.......................... 23,000 914,250
Capmac Holdings, Inc....................... 40,000 980,000
HCC Insurance Holdings, Inc.*.............. 20,000 1,097,500
LaSalle Re Holdings Ltd.................... 49,300 1,059,950
US Facilities Corp......................... 24,100 451,875
Vesta Insurance Group, Inc................. 34,950 1,140,244
------------
5,643,819
------------
PUBLISHING -- 0.0%
Norwood Promotional Products, Inc.*........ 10,800 224,100
------------
RAILROADS -- 0.1%
Railtex, Inc.*............................. 32,000 820,000
------------
REAL ESTATE BROKERS/SERVICES -- 0.6%
Amresco, Inc............................... 122,900 1,797,412
Insignia Financial Group, Inc. Class A*.... 40,000 975,000
NHP, Inc.*................................. 25,000 462,500
Redwood Trust, Inc......................... 19,000 389,500
------------
3,624,412
------------
REGIONAL BANKS -- 0.1%
Provident Bankshares Corp.................. 22,000 731,500
------------
REAL ESTATE INVESTMENT TRUSTS -- 0.8%
CWM Mortgage Holdings, Inc................. 140,500 2,265,562
FelCor Suite Hotels, Inc................... 19,100 592,100
Shurgard Storage Centers, Inc. Class A..... 25,100 658,875
Storage USA, Inc........................... 24,300 835,313
------------
4,351,850
------------
RESTAURANTS -- 1.5%
Apple South, Inc........................... 77,000 1,886,500
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
18
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
RESTAURANTS (CONTINUED)
CKE Restaurants, Inc....................... 67,500 $ 1,130,625
Foodmaker, Inc.*........................... 190,000 1,330,000
Longhorn Steaks, Inc.*..................... 30,500 701,500
Manhattan Bagel Company, Inc.*............. 32,300 750,975
Papa John's International, Inc.*........... 18,300 816,637
Quality Dining, Inc.*...................... 16,900 498,550
Rainforest Cafe, Inc.*..................... 20,000 630,000
Showbiz Pizza Time, Inc.*.................. 60,000 1,155,000
------------
8,899,787
------------
RETAIL/TRADE -- 0.0%
Genesco Inc.*.............................. 19,000 90,250
Madden Steven, Ltd.*....................... 4,900 31,850
------------
122,100
------------
RETAIL/FOOD DISTRIBUTION -- 0.5%
Performance Food Group Co.*................ 17,000 416,500
Richfood Holdings, Inc..................... 98,000 2,762,375
------------
3,178,875
------------
SAVINGS & LOAN ASSOCIATIONS -- 0.8%
Coast Savings Financial, Inc.*............. 90,200 2,818,750
Commercial Federal Corp.................... 43,000 1,671,625
------------
4,490,375
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 3.0%
C.P. Clare Corp.*.......................... 5,700 111,150
Emerson Radio Corp.*....................... 33,600 86,100
Epic Design Technology, Inc.*.............. 84,600 2,585,587
Flextronics International, LTD.*........... 89,800 2,738,900
IMP, Inc.*................................. 53,000 371,000
Intermagnetics General Corp.*.............. 67,400 1,145,800
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SEMICONDUCTORS/ELECTRONIC COMPONENTS
(CONTINUED)
Kent Electronics Corp.*.................... 30,000 $ 1,061,250
Level One Communications, Inc.*............ 52,000 1,443,000
NU Horizons Electronics Corp.*............. 20,000 272,500
Radisys Corp.*............................. 9,000 144,000
Sanmina Corp.*............................. 140,000 4,165,000
SDL, Inc.*................................. 55,600 1,668,000
Smart Modular Technologies, Inc.*.......... 26,000 406,250
Wyle Electronics, Inc...................... 40,000 1,385,000
------------
17,583,537
------------
SOFTWARE -- 13.0%
Applied Microsystems Corp.*................ 13,000 121,875
Applix, Inc.*.............................. 65,400 2,289,000
Aspen Technology, Inc.*.................... 40,000 1,720,000
Astea International, Inc.*................. 35,000 1,032,500
Atria Software, Inc.*...................... 47,200 2,584,200
Bachman Information Systems*............... 40,000 335,000
BDM International, Inc.*................... 35,000 1,338,750
Borland International, Inc.*............... 154,000 2,772,000
Business Objects SA Sponsored ADR*......... 58,400 4,964,000
CBT Group PLC Sponsored ADR*............... 40,800 2,998,800
Ciber, Inc.*............................... 16,600 543,650
Clarify, Inc.*............................. 20,000 785,000
Cognos, Inc.*.............................. 76,100 4,318,675
Comshare, Inc.*............................ 20,000 460,000
Continuum, Inc.*........................... 19,600 815,850
Cooper & Chyan Technology, Inc.*........... 35,000 490,000
Cylink Corp.*.............................. 9,000 159,750
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
19
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SOFTWARE (CONTINUED)
Datastream Systems, Inc.*.................. 21,600 $ 469,800
Dataworks Corp.*........................... 35,000 446,250
Dendrite International, Inc.*.............. 31,500 689,063
Engineering Animation, Inc.*............... 8,000 167,000
Fulcrum Technologies, Inc.*................ 12,300 461,250
Harbinger Corp.*........................... 70,500 1,251,375
HCIA, Inc.*................................ 20,000 940,000
Health Systems Design Corp.*............... 7,000 96,250
HNC Software, Inc.*........................ 60,400 4,107,200
IKOS Systems, Inc.*........................ 41,600 696,800
Imnet Systems, Inc.*....................... 30,000 907,500
Indus Group, Inc.*......................... 20,500 399,750
Inference Corp. Class A*................... 4,000 74,000
Integrated Systems, Inc.*.................. 36,400 1,756,300
JDA Software Group, Inc.*.................. 45,000 534,375
Lernout & Hauspie Speech Products NV*...... 35,000 1,128,750
Maxis, Inc.*............................... 23,600 584,100
McAfee Associates, Inc.*................... 42,400 2,321,400
MDL Information Systems, Inc.*............. 24,100 507,606
Mecon, Inc.*............................... 19,000 375,250
Medic Computer Systems, Inc.*.............. 19,100 1,446,825
Meta Tools, Inc.*.......................... 30,000 562,500
Meta-Software, Inc.*....................... 40,000 670,000
National Instruments Corp.*................ 61,000 1,281,000
Novadigm, Inc.*............................ 26,000 393,250
Perceptron, Inc.*.......................... 35,700 923,738
Powercerv Corp.*........................... 42,400 631,362
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SOFTWARE (CONTINUED)
Premenos Technology Corp.*................. 80,200 $ 1,443,600
Prism Solutions, Inc.*..................... 4,800 127,200
Pure Software, Inc.*....................... 25,000 862,500
Quality Systems, Inc.*..................... 15,000 330,000
Quick Response Services, Inc.*............. 15,000 386,250
Rational Software Corp.*................... 71,800 2,836,100
Saville Systems PLC Sponsored ADR*......... 24,800 468,100
Scopus Technology, Inc.*................... 39,000 585,000
Segue Software*............................ 8,000 168,000
SQA, Inc.*................................. 25,000 681,250
Sterling Software, Inc.*................... 51,500 3,630,750
Structural Dynamics Research Corp.*........ 168,700 5,693,625
TCSI Corp.*................................ 37,700 1,149,850
Techforce Corp.*........................... 20,000 210,000
Triple PNV*................................ 30,000 337,500
Veritas Software Co.*...................... 12,300 398,213
Verity, Inc.*.............................. 40,000 1,350,000
Viasoft, Inc.*............................. 54,900 1,544,063
Visio Corp.*............................... 5,400 151,200
Wind River Systems, Inc.*.................. 20,800 639,600
Workgroup Technology Corp.*................ 26,500 573,063
Zoran Corp.*............................... 38,600 858,850
7th Level, Inc.*........................... 11,500 116,438
------------
76,092,896
------------
SPECIALTY CHAINS -- 2.7%
Duty Free International, Inc............... 56,400 747,300
Garden Ridge Corp.*........................ 12,500 571,875
Inacom Corp.*.............................. 60,000 1,027,500
Just for Feet, Inc.*....................... 72,800 3,030,300
Men's Warehouse, Inc.*..................... 77,700 2,447,550
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
20
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SPECIALTY CHAINS (CONTINUED)
Orchard Supply Hardware Stores Corp.*...... 40,000 $ 945,000
Party City Corp.*.......................... 8,000 116,000
Petco Animal Supplies, Inc.*............... 21,100 944,225
Pier 1 Imports, Inc........................ 192,700 2,432,837
Regis Corp................................. 14,500 445,875
West Marine, Inc.*......................... 5,000 232,500
Williams-Sonoma, Inc.*..................... 134,200 3,053,050
------------
15,994,012
------------
SPECIALTY INSURERS -- 0.2%
Amerin Corp.*.............................. 25,000 681,250
United Dental Care, Inc.*.................. 17,300 670,375
------------
1,351,625
------------
TELECOMMUNICATIONS EQUIPMENT -- 5.8%
Aspect Telecommunications Corp.*........... 169,100 7,736,325
Broadband Technologies, Inc.*.............. 20,000 510,000
Cable Design Technologies, Inc.*........... 58,500 2,149,875
California Amplifier, Inc.*................ 50,800 1,358,900
Coherent Communications Systems Corp.*..... 38,400 797,400
Comverse Technology, Inc.*................. 40,000 965,000
Davox Corp.*............................... 10,000 177,500
Gilat Satellite Networks Ltd.*............. 64,200 1,556,850
Inter-Tel, Inc.*........................... 35,700 647,062
Intercel, Inc.*............................ 89,400 2,011,500
IPC Information Systems, Inc.*............. 22,200 521,700
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT (CONTINUED)
Microwave Power Devices, Inc.*............. 2,200 $ 18,150
Natural Microsystems Corp.*................ 40,000 1,200,000
Network Equipment Technologies, Inc.*...... 132,900 4,036,837
Nice-Systems Ltd. Sponsored ADR*........... 26,000 338,000
P Com, Inc.*............................... 51,400 1,034,425
Pairgain Technologies, Inc.*............... 86,100 5,574,975
Premiere Technologies, Inc.*............... 12,000 279,000
Teltrend, Inc.*............................ 33,200 1,510,600
Trescom International, Inc.*............... 64,800 955,800
Westell Technologies, Inc.*................ 20,000 740,000
------------
34,119,899
------------
TELEPHONE -- 0.2%
Intermedia Communications of Florida,
Inc.*.................................... 49,800 915,075
Pricellular Corp. Class A*................. 6,375 85,266
------------
1,000,341
------------
TOBACCO PRODUCTS -- 0.3%
Mafco Consolidated Group, Inc.*............ 98,800 1,531,400
------------
TRANSPORTATION -- 0.1%
Avondale Industries, Inc.*................. 35,000 608,125
------------
TRUCKING -- 0.3%
Landstar System, Inc.*..................... 73,700 1,842,500
Swift Transportation Co.*.................. 10,000 177,500
------------
2,020,000
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
21
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
WHOLESALE DISTRIBUTION -- 1.4%
Anicom, Inc.*.............................. 9,000 $ 121,500
Central Garden & Pet Co.*.................. 43,000 408,500
Daisytek International Corp.*.............. 3,800 125,400
GEAC Computer Corp. LTD*................... 41,200 645,638
Tech Data Corp.*........................... 256,000 4,288,000
U.S. Office Products Co.*.................. 81,700 2,532,700
------------
8,121,738
------------
TOTAL COMMON STOCKS
(Cost $415,151,661)...................................... 575,781,838
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<CAPTION>
COMMERCIAL PAPER -- 2.4%
<S> <C> <C>
- ------------------------------------------
Associates
Corporation of
America
5.43%,
04/01/96 (Cost
$14,134,735).. $14,139,000 $14,134,735
----------
TOTAL INVESTMENTS -- 101.0%
(Cost $429,286,396)......... $589,916,573
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (1.0%)............ (5,830,191)
----------
NET ASSETS -- 100.0%.......... $584,086,382
----------
<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 experienced steady overall
growth during the fiscal year ending March 31, 1996, outperforming the Standard
& Poor's indexes for large and mid-sized companies. The Portfolio experienced
particularly strong growth in the summer of 1995 and the winter months of 1995
and 1996.
Technology stocks contributed strongly to the overall performance of the
Portfolio. Health-technology and retail-trade stocks also made solid returns. At
the end of the fiscal year, technology stocks also accounted for the heaviest
sector weighting of the Portfolio. Health technology and consumer services
stocks were also among the Portfolio's largest sector weightings.
Some of the fiscal year's strongest performers in the Core Growth Portfolio
were: Accustaff, a temporary staffing agency for skilled professionals such as
attorneys, engineers, technicians, accountants, and computer experts; Ascend
Communications, a fast-growing developer of high-speed telecommunications
products that will allow people to exchange data, voice and video through wide
area networks; and Corrections Corporation of America, a company that builds and
operates prisons and jails for federal, state and local governments.
We select our growth stocks on the basis of three key characteristics: strong
signs of positive change, sustainable growth and recognition of the stock by
investors. We also distinguish between a good company and a good stock,
selecting the latter on the well-researched expectation of strong market
performance. Early recognition of these stocks has permitted us to capture
growth and to benefit from rapid share price appreciation. It enabled us to
deliver strong returns this past year.
We continue to find many exciting and dynamic medium-sized and large companies
that exhibit the sustainable earnings growth and market recognition we seek. We
believe these companies and the Core Growth Portfolio merit your continued
investment.
REPRESENTATIVE HOLDINGS
Cadence Design System, Inc.
Accustaff, Inc.
Gucci Group (ADR)
HFS, Inc.
Safeway, Inc.
Worldcom, Inc.
Nike, Inc.
Omnicare, Inc.
Infinity Broadcasting Corp.
Tidewater, Inc.
- --------------------------------------------------------------------------------
23
<PAGE>
A CONVERSATION WITH JACK MARSHALL
- -------------------------------------------------------------------
Jack Marshall
[PHOTO] Portfolio Manager
Core Growth Portfolio
Q. JACK, WOULD YOU DESCRIBE THE OVERALL
INVESTMENT PHILOSOPHY OF THE CORE GROWTH PORTFOLIO?
A. We want to own companies that are making
things happen in positive ways. We actively seek out companies that are
accelerating their own growth rates through positive fundamental change. We
don't set "hurdle" rates for the growth we seek. We're more focused on finding
acceleration in the growth curves of these companies, and we've designed our
entire process to find these kinds of companies.
Q. WHAT TYPE OF INVESTOR WOULD BE SUITABLE FOR
THIS APPROACH?
A. It would be suitable for any investor who wants
to benefit from owning companies that are among the best investments in America.
We build the Portfolio on a company-by-company basis. We'll own between 80 and
100 companies, and in our opinion, they are among the best companies out there.
We're not trying to predict what is going to happen with the economy in 1997 or
1998 and buy companies that are likely to do well under those conditions.
Instead, we're buying companies that are thriving today.
Q: THE PORTFOLIO CAN CONTAIN BOTH MID-SIZED AND
LARGE COMPANY STOCKS BUT, OVERALL, IT TENDS TO INVEST MOSTLY IN MID-SIZED
COMPANIES. WHY DO THESE COMPANIES OFFER THE STRONGEST OPPORTUNITIES FOR
LONG-TERM CAPITAL APPRECIATION?
A. With the Core Growth Portfolio, we invest in
companies where the total outstanding stock -- also known as the market
capitalization -- is worth more than $500 million. That represents about 1,700
companies out there in the marketplace. That's about 75 percent of the total
market capitalization of the U.S. stock market.
We cover the broad spectrum of companies, with our focus on finding positive
fundamental change and accelerating growth within our market-capitalization
range. We tend to have a mid-cap focus now because that's where we currently are
finding the exciting growth opportunities. Investors should know that mid-sized
companies have displayed more market price fluctuation than large company
stocks. For the most part, the companies we own in this portfolio are past their
entrepreneurial risk. They've been in business awhile, they're seasoned to some
degree, and yet they're growing faster right now than many of the larger
companies. This places us in the middle of this market, and to me it means we're
getting the best of both worlds.
Q. TYPICALLY IN AGGRESSIVE GROWTH FUNDS, YOU
WOULD FIND A FAIRLY STRONG COMMITMENT TO TECHNOLOGY STOCKS. WHAT IS YOUR
APPROACH TO TECHNOLOGY, AND HOW ARE YOU LOOKING AT THAT BROAD SECTOR?
A. Let me start by explaining how each of our
technology holdings ended up in the Portfolio. Every one of the 1,700 companies
I just mentioned competes for a right to get into the Portfolio. We are fully
invested managers. We do not hold cash or engage in any type of market timing.
We strive
- --------------------------------------------------------------------------------
24
<PAGE>
- -------------------------------------------------------------------
continually to own the best growth companies. Bringing in a new company means
that one that is not as strong is pushed out of the Portfolio.
This approach caused the percentage of our holdings in technology to be slightly
lower at the end of the fiscal year than at the beginning. About 22% of assets
are invested in technology companies. We were as high as 35% or 36% a year ago.
One of the technology companies we own is Cisco Systems, a manufacturer of
computer networking equipment. It manufactures routers and bridges that enable
computers to communicate with each other. We also own Cadence Design, which is
an electronic design automation software company. Cadence provides a lot of
unique software for engineers, architects, and other designers. These companies
are doing some exciting and innovative things, and that's what has earned them a
place in the Portfolio.
Q: LAST SUMMER YOU SOLD MANY COMPUTER-CHIP
COMPANY STOCKS. WHAT CAUSES YOU TO SELL A STOCK? WHAT DO YOU SEE THAT TRIGGERS
THAT DECISION?
A. We don't set any price targets when we buy a
company's stock. We are going to continue to own that company for as long as its
earnings growth is accelerating and is sustainable. If that begins to change, we
are going to sell it and move on to a company where we are earlier on in the
recognition of change. This happened with the computer-chip, or semiconductor,
group.
Last year, we started to see a couple of second- and third-tier companies in
this arena starting to have trouble. Then we saw all of the top-tier
semiconductor and semiconductor equipment companies coming to market with
secondary stock offerings, mainly to bring on more capacity. When you get all of
the competitors out there bringing more capacity to the marketplace, it causes
pressure on pricing. Obviously, this is something you don't want to be involved
in when you have margins at record highs and earnings at record highs. That's
really what caused us to move out of the semiconductor area. If we see a
negative change at the margin on a sustainable basis, we are going to sell the
company and purchase a more attractive stock.
Q: YOU'RE TALKING ABOUT THE FUNDAMENTAL
INDICATORS THAT HELP YOU SELL A STOCK. DO YOU USE ANY TECHNICAL ANALYSIS AT ALL?
A: The only technical indicator we use is relative
strength. It's one of our three purchase criteria. We want to see the stock
doing well on a relative basis. On the flip side, if a stock begins to
underperform in the marketplace, that's going to trigger us to perform thorough
research to ensure that the company's fundamental strengths are intact.
Q: WHAT ARE SOME RECENT EXAMPLES OF STOCKS YOU
HAVE ADDED OR DELETED?
A. We recently bought Harley Davidson, the
motorcycle manufacturer. The company sold its recreational vehicle business and
is concentrating on what it does best, produce high-quality motorcycles under
one of the most desired brand names in transportation. We added MCI
Communications to the Portfolio because we believe the company's added focus on
satellite communications will help fuel earnings growth. We sold fertilizer
company IMC Global as a result of a buildup of potash inventories globally that
we believe could reduce earnings growth. We also sold shares of Oak Technology
because we believe the company's high-technology products no longer command the
potential to ignite rapid sales and 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> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96
1 YEAR 5 YEARS 10 YEARS
27.98% 15.02% 15.25%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE
<S> <C> <C>
Growth S&P 500
Portfolio A Index
09/30/85 9475 10000
12/85 11802 11714
3/86 14679 13365
6/86 16512 14150
9/86 14646 13163
12/86 15588 13898
3/87 19117 16860
6/87 19630 17704
9/87 21364 18869
12/87 16051 14630
3/88 16430 15465
6/88 18232 16486
9/88 17814 16543
12/88 17977 17050
3/89 18914 18266
6/89 20094 19864
9/89 23614 21985
12/89 23935 22441
3/90 24203 21782
6/90 27782 23137
9/90 22758 19976
12/90 23965 21758
3/91 30160 24916
6/91 28767 24859
9/91 32423 26189
12/91 37056 28384
3/92 36025 27667
6/92 33478 28192
9/92 35078 29083
12/92 41829 30548
3/93 44453 31883
6/93 47239 32034
9/93 50894 32860
12/93 49805 33624
3/94 46245 32347
6/94 43522 32482
9/94 45582 34071
12/94 44328 34067
3/95 47469 37389
6/95 52705 40956
9/95 59302 44212
12/95 61012 46874
03/31/96 64119 49388
</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, 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. Performance results reflect the total returns of
a predecessor limited partnership managed by Nicholas-Applegate Capital
Management prior to the effective date of the Portfolio's registration statement
which was 4/19/93. Limited partnership returns are restated to reflect all fees
and expenses applicable to the Portfolio and share class. If the limited
partnership had been registered as an investment company under the federal
securities laws, its performance might have been adversely affected because of
the additional restrictions applicable to registered investment companies. 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
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.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96
1 YEAR 5 YEARS 10 YEARS
27.54% 15.07% 15.14%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE
<S> <C> <C>
Growth S&P 500
Portfolio B Index
09/30/85 10000 10000
12/85 12438 11714
3/86 15446 13365
6/86 17347 14150
9/86 15361 13163
12/86 16323 13898
3/87 19988 16860
6/87 20490 17704
9/87 22266 18869
12/87 16698 14630
3/88 17064 15465
6/88 18906 16486
9/88 18443 16543
12/88 18582 17050
3/89 19518 18266
6/89 20703 19864
9/89 24293 21985
12/89 24583 22441
3/90 24818 21782
6/90 28444 23137
9/90 23259 19976
12/90 24455 21758
3/91 30730 24916
6/91 29262 24859
9/91 32929 26189
12/91 37576 28384
3/92 36470 27667
6/92 33835 28192
9/92 35395 29083
12/92 42143 30548
3/93 44715 31883
6/93 47478 32034
9/93 51061 32860
12/93 49879 33624
3/94 46220 32347
6/94 43421 32482
9/94 45424 34071
12/94 44073 34067
3/95 47152 37389
6/95 52241 40956
9/95 58708 44212
12/95 60344 46874
03/31/96 63305 49388
</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, 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. Performance results reflect the total
returns of a predecessor limited partnership managed by Nicholas-Applegate
Capital Management prior to the effective date of the Portfolio's registration
statement which was 4/19/93. Limited partnership returns are restated to reflect
all fees and expenses applicable to the Portfolio and share class. If the
limited partnership had been registered as an investment company under the
federal securities laws, its performance might have been adversely affected
because of the additional restrictions applicable to registered investment
companies. The maximum contingent deferred sales charge is included 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
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> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96
1 YEAR 5 YEARS 10 YEARS
34.28% 15.52% 15.13%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE
<S> <C> <C>
Growth S&P 500
Portfolio C Index
09/30/85 10000 10000
12/85 12438 11714
3/86 15446 13365
6/86 17347 14150
9/86 15361 13163
12/86 16323 13898
3/87 19988 16860
6/87 20490 17704
9/87 22266 18869
12/87 16698 14630
3/88 17064 15465
6/88 18906 16486
9/88 18443 16543
12/88 18582 17050
3/89 19518 18266
6/89 20703 19864
9/89 24293 21985
12/89 24583 22441
3/90 24818 21782
6/90 28444 23137
9/90 23259 19976
12/90 24455 21758
3/91 30730 24916
6/91 29262 24859
9/91 32929 26189
12/91 37576 28384
3/92 36470 27667
6/92 33835 28192
9/92 35395 29083
12/92 42143 30548
3/93 44715 31883
6/93 47398 32034
9/93 50969 32860
12/93 49824 33624
3/94 46180 32347
6/94 43377 32482
9/94 45374 34071
12/94 44078 34067
3/95 47127 37389
6/95 52207 40956
9/95 58689 44212
12/95 60301 46874
03/31/96 63279 49388
</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, 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. Performance results reflect the total returns of
a predecessor limited partnership managed by Nicholas-Applegate Capital
Management prior to the effective date of the Portfolio's registration statement
which was 4/19/93. Limited partnership returns are restated to reflect all fees
and expenses applicable to the Portfolio and share class. If the limited
partnership had been registered as an investment company under the federal
securities laws, its performance might have been adversely affected because of
the additional restrictions applicable to registered investment companies.
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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
28
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
- ------------------------------------------------------------------------
CORE
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 95.0%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
AIRLINES -- 2.0%
Comair Holdings, Inc....................... 101,550 $ 3,528,862
Southwest Airlines Co...................... 160,000 4,740,000
-----------
8,268,862
-----------
ALCOHOLIC BEVERAGES -- 1.2%
Panamerican Beverages, Inc. Class B........ 125,000 5,046,875
-----------
APPAREL -- 4.5%
Gucci Group NV*............................ 170,000 8,160,000
Nike, Inc. Class B......................... 72,300 5,874,375
Tommy Hilfiger Corp.*...................... 110,000 5,046,250
-----------
19,080,625
-----------
AUTOMOBILES -- 1.2%
Chrysler Corp.............................. 79,500 4,948,875
-----------
BIOTECHNOLOGY -- 5.5%
Amgen, Inc.*............................... 93,800 5,452,125
Biochem Pharma, Inc.*...................... 159,500 6,539,500
Biogen, Inc.*.............................. 63,300 3,766,350
Genetics Institute, Inc.*.................. 70,000 4,567,500
IDEXX Laboratories, Inc.*.................. 72,000 3,024,000
-----------
23,349,475
-----------
BROADCASTING -- 3.6%
British Sky Broadcasting Sponsored ADR
(United Kingdom)......................... 77,200 3,097,650
Infinity Broadcasting Corp. Class A*....... 108,150 4,691,006
Tele-Communications, Inc. Class A* Liberty
Media Group.............................. 101,100 2,666,513
Tele-Communications, Inc. Class A* TCI
Group.................................... 249,900 4,638,769
-----------
15,093,938
-----------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CATALOG/OUTLET STORES -- 1.1%
Viking Office Products, Inc.*.............. 85,000 $ 4,728,125
-----------
COMPUTERS/OFFICE AUTOMATION -- 7.8%
Ceridian Corp.*............................ 156,300 6,720,900
Cisco Systems, Inc.*....................... 128,000 5,936,000
Computer Sciences Corp.*................... 74,600 5,249,975
Newbridge Networks Corp.*.................. 85,800 4,826,250
Solectron Corp.*........................... 95,000 4,180,000
Sun Microsystems, Inc.*.................... 84,700 3,705,625
3 Com Corp.*............................... 58,400 2,328,700
-----------
32,947,450
-----------
DEPARTMENT/DISCOUNT STORES -- 1.3%
Kohls Corp.*............................... 85,000 5,386,875
-----------
DRUGS/PHARMACEUTICALS -- 1.4%
Elan Corp. PLC ADR*........................ 28,200 1,811,850
Genzyme Corp. -- General Division*......... 14,400 792,000
Watson Pharmaceuticals, Inc.*.............. 77,600 3,104,000
-----------
5,707,850
-----------
ELECTRONIC DATA PROCESSING -- 1.1%
First Data Corp............................ 66,977 4,721,879
-----------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 1.4%
Fore Systems, Inc.*........................ 80,000 5,720,000
-----------
ENTERTAINMENT -- 0.9%
Viacom, Inc. Class B*...................... 86,500 3,643,813
-----------
FINANCE COMPANIES -- 0.5%
Green Tree Financial Corp.................. 61,000 2,096,875
-----------
FINANCIAL SERVICES -- 0.1%
Advanta Corp............................... 10,600 551,200
-----------
FOOD CHAINS -- 1.8%
Safeway, Inc.*............................. 258,400 7,364,400
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
29
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
CORE
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
GAMBLING -- 4.2%
International Game Technology.............. 350,000 $ 4,768,750
ITT Corp.*................................. 131,200 7,872,000
Mirage Resorts, Inc.*...................... 111,200 4,878,900
-----------
17,519,650
-----------
HOMEBUILDING -- 0.6%
Pulte Corp................................. 89,800 2,413,375
-----------
HOSPITALS -- 2.5%
Columbia HCA Healthcare Corp............... 98,000 5,659,500
Tenet Healthcare Corp.*.................... 225,000 4,725,000
-----------
10,384,500
-----------
LODGING -- 3.4%
HFS, Inc.*................................. 156,400 7,604,950
Host Marriott Corp.*....................... 237,700 3,208,950
Renaissance Hotel Group*................... 166,000 3,569,000
-----------
14,382,900
-----------
MANAGED HEALTH CARE/HMO'S/PPO'S -- 2.6%
Healthsource, Inc.*........................ 160,000 6,200,000
United Healthcare Corp.*................... 74,300 4,569,450
-----------
10,769,450
-----------
MEDICAL SUPPLIES -- 4.1%
Boston Scientific Corp.*................... 122,700 5,644,200
Medtronic, Inc............................. 34,600 2,063,025
Nellcor Puritan Bennett, Inc.*............. 76,000 4,883,000
Omnicare, Inc.............................. 90,000 4,848,750
-----------
17,438,975
-----------
OIL/GAS PRODUCTION -- 2.3%
Enron Oil & Gas Co......................... 120,000 3,165,000
Mitchell Energy & Development Class B...... 98,700 1,702,575
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OIL/GAS PRODUCTION (CONTINUED)
Triton Energy Corp.*....................... 85,000 $ 4,738,750
-----------
9,606,325
-----------
OILFIELD SERVICES/EQUIPMENT -- 4.2%
BJ Services Co.*........................... 145,000 4,857,500
Ensco International, Inc.*................. 140,000 3,902,500
Tidewater, Inc............................. 92,400 3,511,200
Western Atlas, Inc.*....................... 89,300 5,358,000
-----------
17,629,200
-----------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 5.6%
Accustaff, Inc.*........................... 330,000 8,332,500
Corrections Corp. of America*.............. 115,000 6,555,000
CUC International, Inc.*................... 117,662 3,441,613
MFS Communications, Inc.*.................. 87,000 5,415,750
-----------
23,744,863
-----------
OTHER CONSUMER SERVICES -- 1.0%
America Online, Inc.*...................... 74,400 4,166,400
-----------
OTHER FINANCIAL SERVICES -- 2.6%
Equifax, Inc............................... 232,600 4,681,075
Sunamerica, Inc............................ 127,650 6,430,369
-----------
11,111,444
-----------
PROPERTY -- CASUALTY INSURERS -- 1.3%
Allstate Corp.............................. 127,700 5,379,362
-----------
RECREATION PRODUCTS -- 1.3%
Harley-Davidson, Inc....................... 140,000 5,442,500
-----------
SOFTWARE -- 6.9%
Baan Co. NV*............................... 96,000 5,532,000
Cadence Design Systems, Inc.*.............. 200,250 8,836,031
Informix Corp.*............................ 140,000 3,692,500
Oracle Corp.*.............................. 47,050 2,217,231
Parametric Technology Corp.*............... 117,000 4,577,625
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
30
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SOFTWARE (CONTINUED)
Synopsys, Inc.*............................ 146,100 $ 4,675,200
-----------
29,530,587
-----------
SPECIALTY CHAINS -- 5.7%
Autozone, Inc.*............................ 160,000 5,420,000
Borders Group, Inc.*....................... 182,600 5,204,100
Gap, Inc................................... 100,000 5,537,500
Micro Warehouse,
Inc.*.................................... 37,000 1,535,500
Staples, Inc.*............................. 323,100 6,583,163
-----------
24,280,263
-----------
SPECIALTY INSURERS -- 0.7%
MGIC Investment Corp. ..................... 51,300 2,795,850
-----------
TELECOMMUNICATIONS EQUIPMENT -- 4.0%
Ascend Communications, Inc.*............... 100,000 5,387,500
Aspect Telecommunications Corp.*........... 125,000 5,718,750
ECI Telecommunications Limited............. 140,000 3,132,500
Glenayre Technologies, Inc.*............... 66,875 2,557,969
-----------
16,796,719
-----------
TELEPHONE -- 5.3%
LCI International, Inc.*................... 250,400 6,134,800
MCI Communications Corp.................... 160,000 4,840,000
Paging Network, Inc.*...................... 175,300 4,382,500
WorldCom, Inc.*............................ 147,300 6,775,800
-----------
22,133,100
-----------
WHOLESALE DISTRIBUTION -- 1.3%
Danka Business Systems PLC Sponsored ADR
(Argentina).............................. 131,300 5,547,425
-----------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TOTAL COMMON STOCKS
(Cost $310,976,331)........................................
$399,730,005
-----------
PRINCIPAL
AMOUNT
- -----------------------------------------------------------------------------
COMMERCIAL PAPER -- 4.1%
- -----------------------------------------------------------------------------
Associates Corporation of America
5.43%, 04/01/96.......................... $ 2,995,000 2,994,097
UBS Finance Delaware, Inc.
5.43%, 04/01/96.......................... 14,267,000 14,262,695
-----------
TOTAL COMMERCIAL PAPER
(Cost $17,256,792).........................................
17,256,792
-----------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.9%
- -----------------------------------------------------------------------------
J.P. Morgan & Co., Inc. $7,835,000 at
5.35%, (Agreement dated 03/29/96; to be
repurchased at $7,838,493 on 04/01/96;
collateralized by $5,615,000 U. S.
Treasury Notes, 7.50% due 11/15/16)
(Cost $7,835,000)........................ $ 7,835,000 7,835,000
-----------
TOTAL INVESTMENTS -- 101.0%
(Cost $336,068,123)........................................
$424,821,797
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.0%)..............
(4,279,194)
-----------
NET ASSETS -- 100.0%.........................................
$420,542,603
-----------
<FN>
- ------------
* Non-income producing security.
</TABLE>
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 earned solid returns over
the past fiscal year on the strength of advancing issues in the basic materials,
consumer cyclicals and industrial manufacturing sectors.
The Portfolio invests in companies that have issued bonds or other securities
convertible into common stocks. These instruments provide investors an
opportunity to participate in the growth of rapidly developing companies while
receiving income, reducing risk, and benefiting from diversification. The
Portfolio also invests directly in common stocks and commercial paper.
At the end of the fiscal year, the largest convertible bond positions in the
Portfolio were in the technology and healthcare services sectors. Computer and
office automation products companies and telecommunications equipment companies
are among the Portfolio's largest technology holdings. Pharmaceutical companies
led the healthcare sector, with convertible bonds for managed healthcare also
representing large Portfolio holdings.
Good securities selection combined with strength in oil and gas sectors
boosted the Portfolio's performance in the closing weeks of the fiscal year.
Securities such as Starbucks, General Motors, Pride Petroleum Services, Career
Horizons, a staffing services company, and Youth Services International, a
provider of educational and vocational training for troubled youth contributed
to solid gains in the Portfolio's fiscal year performance.
With both stock and bond markets performing well over the past year, the
Portfolio succeeded in capturing both yield and growth of capital. We remain
fully invested and well diversified among asset classes, and believe that
convertible securities continue to offer opportunities for excellent
performance.
REPRESENTATIVE HOLDINGS
Omnicom Group, Inc.
First Financial Management Corp.
SCI Financial LLC
Alco Standard Corp.
Ericsson L M Tel Co.
Staples, Inc.
Starbucks Corp.
Analog Devices, Inc.
Fifth Third Bancorp.
ADT Operations, Inc.
- --------------------------------------------------------------------------------
32
<PAGE>
A CONVERSATION WITH JOHN WYLIE
- -------------------------------------------------------------------
John Wylie
[PHOTO] Portfolio Manager
Income and Growth Porfolio
Q: JOHN, THIS WAS A GREAT YEAR FOR CONVERTIBLE
SECURITIES AND THE NICHOLAS-APPLEGATE INCOME AND GROWTH PORTFOLIO. WHAT HAPPENED
IN THE MARKET TO BRING ABOUT SUCH STRONG RESULTS?
A. In 1995, what led to a good year in stocks and
bonds was the realization that we were in a period of moderate economic growth
with very low inflation. That created a strong market because earnings continued
to be very positive at the same time that fears of inflation were dissipating.
The positive performance of both stocks and bonds contributed to the great year
for convertibles.
Q: WHAT SECTORS AND INDUSTRIES ARE YOU FINDING
THE GREATEST OPPORTUNITIES IN RIGHT NOW?
A. We are bottom-up oriented in our stock
selection, which means that we build our portfolios company by company. As a
result, we have investments in many technology companies, particularly in
companies like MFS Communications, which provides high-quality phone services to
companies, and 3COM, a leading computer networking company. We also have a
significant percentage of assets invested in healthcare companies. We own
companies such as Vencor, Healthsource and Healthsouth Rehabilitation, operators
of nursing homes, hospitals and other healthcare facilities.
Really, though, in looking at companies, I'm searching for the best growth
companies I can find, whether it's a company in the funeral home business, like
SCI Financial, or a company like Sanifill, which manages landfills.
Q: TECHNOLOGY WAS THE SECTOR IN THE SPOTLIGHT FOR
THE LAST YEAR, YET RECENTLY ITS PERFORMANCE FELL OFF A BIT. WHAT'S YOUR OUTLOOK
FOR TECHNOLOGY NOW?
A. In the last fifteen months we've really seen highs
and lows in technology. We still have a large exposure although the Portfolio's
individual investments in technology have changed dramatically over the last
nine months. While we were more heavily invested in some computer-chip companies
last year in the first and second quarters, we began lightening up in this arena
in the third and fourth quarters.
We're still very positive, however, on the fundamentals of individual
technology companies. The dramatic changes that are occurring in our lives are
largely due to technology, and it will continue to be a very important part of
those changes. As a result, we are seeking the companies that will be able to
succeed in a very competitive technological environment.
Q: WHAT IS YOUR OUTLOOK FOR CONVERTIBLE SECURITIES
FOR THE COMING YEAR?
A. I'm really excited about the performance of
growth companies. One reason is that as earnings estimates for the market as a
whole decelerate, the growth that we find from growth companies looks more and
more attractive. Also, I'm excited about smaller and mid-cap companies because I
think that in a slower-economic growth environment, those are the companies that
can compete more effectively, whether it's because of a new product or a new
environment, a new marketing philosophy or new technologies. Those are the types
of companies that historically have issued convertibles. They do it to
- --------------------------------------------------------------------------------
33
<PAGE>
- -------------------------------------------------------------------
raise financing to expand their growth, open new stores, or to fund research and
technology. I think this is an environment that will be very positive for the
convertible market as a whole.
Q: WHAT ARE SOME EXAMPLES OF SECURITIES THAT
YOU'VE RECENTLY BOUGHT AND SOLD FOR THE PORTFOLIO?
A. We've recently added Checkpoint Systems, a
manufacturer of anti-shoplifting devices for retailers. We're looking for
earnings growth of 25% a year if it continues to take market share away from
Sensormatic, its primary competitor. It's a really exciting story. We've also
added Elan Pharmaceuticals, a company that's involved in absorption technologies
for alternative drug delivery systems, such as transdermal patches. We're
looking for 30% earnings growth in Elan. We're also looking for 40% earnings
growth out of Starbucks as it continually expands the number of retail outlets
and as it expands the number of ways to obtain the product, through mail order,
or specialty arrangements with restaurants or even airlines.
We recently sold our interest in specialty computer chip maker Altera, after
one of the Company's competitors announced a softening of new orders that would
ultimately reach Altera and cause its estimated earnings and share price to
weaken. We also sold our interest in Riverwood International a paper and
packaging company that was purchased by the Clayton, Dubilier and Rice Group a
privately held company.
- --------------------------------------------------------------------------------
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 AND THE CS FIRST BOSTON
CONVERTIBLE INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96 INCEPTION TO
1 YEAR 5 YEARS DATE
19.39% 13.38% 13.37%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME & FIRST BOSTON
<S> <C> <C> <C>
Growth S&P 500 Convertible
Portfolio A Index Index
12/31/86 9475 10000 10000
3/87 10697 12132 11278
6/87 10707 12739 11550
9/87 11281 13577 12082
12/87 9124 10527 9978
3/88 9660 11127 10690
6/88 10432 11862 11219
9/88 10389 11903 11101
12/88 10873 12268 11316
3/89 12152 13143 11975
6/89 12810 14293 12537
9/89 13560 15819 13065
12/89 13878 16147 12873
3/90 14513 15673 12715
6/90 15328 16648 13019
9/90 13545 14373 11629
12/90 14049 15656 11986
3/91 16140 17928 13598
6/91 16402 17887 13747
9/91 18158 18844 14775
12/91 19325 20424 15476
3/92 19429 19908 16212
6/92 18694 20286 16615
9/92 19403 20926 17260
12/92 21100 21981 18197
3/93 21933 22941 19529
6/93 23789 23050 20053
9/93 25862 23644 21050
12/93 26687 24194 21572
3/94 26028 23275 20947
6/94 24791 23372 20378
9/94 25280 24516 20987
12/94 24491 24512 20554
3/95 25342 26903 21758
6/95 27102 29469 23743
9/95 29462 31812 25214
12/95 29799 33728 25429
3/31/96 31932 35537 26915
</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 and the CS First Boston Convertible ("First Boston
Convertible") Index, 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. Performance results reflect the total returns of
a predecessor limited partnership managed by Nicholas-Applegate Capital
Management prior to the effective date of the Portfolio's registration statement
which was 4/19/93. Limited partnership returns are restated to reflect all fees
and expenses applicable to the Portfolio and share class. If the limited
partnership had been registered as an investment company under the federal
securities laws, its performance might have been adversely affected because of
the additional restrictions applicable to registered investment companies. 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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 First Boston Convertible Index is an unmanaged market weighted index
representing the universe of convertible securities whether they are convertible
preferred stocks or convertible bonds.
In future annual reports, Nicholas-Applegate will compare the Income & Growth
Portfolio only to the broader First Boston Convertible Index for the purpose of
showing annualized total returns. We believe this shift in benchmark measures is
appropriate since the composition of the Portfolio more closely matches the
composition of the First Boston Convertible Index.
The Indexes reflect the reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
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 AND THE CS FIRST BOSTON
CONVERTIBLE INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96 INCEPTION TO
1 YEAR 5 YEARS DATE
19.18% 13.43% 13.31%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME & FIRST BOSTON
<S> <C> <C> <C>
Growth S&P 500 Convertible
Portfolio B Index Index
12/31/86 10000 10000 10000
3/87 11272 12132 11278
6/87 11264 12739 11550
9/87 11849 13577 12082
12/87 9567 10527 9978
3/88 10113 11127 10690
6/88 10904 11862 11219
9/88 10841 11903 11101
12/88 11328 12268 11316
3/89 12640 13143 11975
6/89 13304 14293 12537
9/89 14060 15819 13065
12/89 14367 16147 12873
3/90 15000 15673 12715
6/90 15817 16648 13019
9/90 13954 14373 11629
12/90 14450 15656 11986
3/91 16574 17928 13598
6/91 16816 17887 13747
9/91 18587 18844 14775
12/91 19750 20424 15476
3/92 19824 19908 16212
6/92 19043 20286 16615
9/92 19734 20926 17260
12/92 21425 21981 18197
3/93 22235 22941 19529
6/93 24046 23050 20053
9/93 26120 23644 21050
12/93 26892 24194 21572
3/94 26183 23275 20947
6/94 24909 23372 20378
9/94 25369 24516 20987
12/94 24540 24512 20554
3/95 25329 26903 21758
6/95 27070 29469 23743
9/95 29369 31812 25214
12/95 29672 33728 25429
3/31/96 31775 35537 26915
</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 and the CS First Boston Convertible ("First
Boston Convertible") Index, 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. Performance results reflect the total
returns of a predecessor limited partnership managed by Nicholas-Applegate
Capital Management prior to the effective date of the Portfolio's registration
statement which was 4/19/93. Limited partnership returns are restated to reflect
all fees and expenses applicable to the Portfolio and share class. If the
limited partnership had been registered as an investment company under the
federal securities laws, its performance might have been adversely affected
because of the additional restrictions applicable to registered investment
companies. The maximum contingent deferred sales charge is included 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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 First Boston Convertible Index is an unmanaged market weighted index
representing the universe of convertible securities whether they are convertible
preferred stocks or convertible bonds.
In future annual reports, Nicholas-Applegate will compare the Income & Growth
Portfolio only to the broader First Boston Convertible Index for the purpose of
showing annualized total returns. We believe this shift in benchmark measures is
appropriate since the composition of the Portfolio more closely matches the
composition of the First Boston Convertible Index.
The Indexes reflect the reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
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 AND THE CS FIRST BOSTON
CONVERTIBLE INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96 INCEPTION TO
1 YEAR 5 YEARS DATE
25.32% 13.86% 13.29%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Income & First Boston
Growth S&P 500 Convertible
Portfolio C Index Index
12/31/86 10000 10000 10000
3/87 11272 12132 11278
6/87 11264 12739 11550
9/87 11849 13577 12082
12/87 9567 10527 9978
3/88 10113 11127 10690
6/88 10904 11862 11219
9/88 10841 11903 11101
12/88 11328 12268 11316
3/89 12640 13143 11975
6/89 13304 14293 12537
9/89 14060 15819 13065
12/89 14367 16147 12873
3/90 15000 15673 12715
6/90 15817 16648 13019
9/90 13954 14373 11629
12/90 14450 15656 11986
3/91 16574 17928 13598
6/91 16816 17887 13747
9/91 18587 18844 14775
12/91 19750 20424 15476
3/92 19824 19908 16212
6/92 19043 20286 16615
9/92 19734 20926 17260
12/92 21425 21981 18197
3/93 22235 22941 19529
6/93 24046 23050 20053
9/93 26120 23644 21050
12/93 26892 24194 21572
3/94 26183 23275 20947
6/94 24909 23372 20378
9/94 25369 24516 20987
12/94 24540 24512 20554
3/95 25329 26903 21758
6/95 27065 29469 23743
9/95 29368 31812 25214
12/95 29651 33728 25429
3/31/96 31743 35537 26915
</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 and the CS First Boston
Convertible ("First Boston Convertible") Index, 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. Performance
results reflect the total returns of a predecessor limited partnership managed
by Nicholas-Applegate Capital Management prior to the effective date of the
Portfolio's registration statement which was 4/19/93. Limited partnership
returns are restated to reflect all fees and expenses applicable to the
Portfolio and share class. If the limited partnership had been registered as an
investment company under the federal securities laws, its performance might have
been adversely affected because of the additional restrictions applicable to
registered investment companies.
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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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 First Boston Convertible Index is an unmanaged market weighted index
representing the universe of convertible securities whether they are convertible
preferred stocks or convertible bonds.
In future annual reports, Nicholas-Applegate will compare the Income & Growth
Portfolio only to the broader First Boston Convertible Index for the purposes of
showing annualized total returns. We believe this shift in benchmark measures is
appropriate since the composition of the Portfolio more closely matches the
composition of the First Boston Convertible Index.
The Indexes reflect the reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
37
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
- ------------------------------------------------------------------------
INCOME &
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 11.7%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
COMPUTER/OFFICE AUTOMATION -- 3.8%
General Motors Corp. Class E............... 63,048 $ 3,593,736
Seagate
Technology, Inc.*........................ 13,029 713,338
------------
4,307,074
------------
HOSPITALS -- 0.0%
Vencor, Inc.*.............................. 384 13,248
------------
MANAGED HEALTHCARE -- 0.1%
FHP International Corp..................... 2,510 70,280
------------
OTHER CONSUMER DURABLE -- 0.2%
AJL Peps Trust............................. 8,610 191,573
------------
PIPELINES -- 1.3%
Enron Corp................................. 56,105 1,423,664
------------
REAL ESTATE INVESTMENT TRUSTS -- 3.0%
Cali Realty Co............................. 39,920 893,210
Equity Inns, Inc........................... 43,700 557,175
Reckson Associates Realty Corp............. 49,530 1,516,856
Weeks Corp................................. 16,820 420,500
------------
3,387,741
------------
TELECOMMUNICATIONS -- 2.1%
Ericsson Telephone Co. ADR................. 788,900 2,342,047
MFS
Communications, Inc.*.................... 473 29,444
------------
2,371,491
------------
TELEPHONE -- 1.2%
Nortel Inversora SA*....................... 31,200 1,310,400
TOTAL COMMON STOCKS
(Cost $10,302,111)........................................ 13,075,471
------------
- -----------------------------------------------------------------------------
CONVERTIBLE PREFERRED
STOCKS -- 12.6%
- -----------------------------------------------------------------------------
ELECTRONIC DATA PROCESSING -- 1.0%
Ceridian Corp., 5.50%...................... 11,195 1,080,318
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT COMPANIES -- 1.3%
Merrill Lynch & Co., Inc. (STRYPES),
6.50%.................................... 27,930 $ 1,487,273
------------
MEDICAL SUPPLIES -- 0.3%
United States Surgical Corp. Series A,
$2.20.................................... 10,920 356,265
------------
MULTI-LINE INSURERS -- 0.3%
Allstate Corp., 6.75%...................... 9,720 379,080
------------
OIL/GAS PRODUCTION -- 2.9%
Occidental Petroleum Corp., $3.00.......... 23,800 1,490,475
Williams Co................................ 20,595 1,683,641
------------
3,174,116
------------
OTHER CONSUMER SERVICES -- 2.6%
SCI Finance LLC, $3.125.................... 35,270 2,953,863
------------
TELECOMMUNICATIONS -- 1.7%
MFS Communications Company, Inc., 8.0%*.... 34,980 1,928,272
------------
WHOLESALE DISTRIBUTION -- 2.5%
Alco Standard Corp. Series BB, $5.04....... 30,040 2,823,760
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $11,712,396)........................................ 14,182,947
------------
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
CONVERTIBLE CORPORATE
BONDS -- 70.5%
- -----------------------------------------------------------------------------
ADVERTISING -- 2.9%
Omnicom Group,++
4.50%, 09/01/00.......................... $1,995,000 3,192,000
------------
BROADCASTING -- 0.5%
Comcast Corp.++
3.375%, 09/09/05......................... 560,000 526,400
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
38
<PAGE>
- -------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CONVERTIBLE CORPORATE
BONDS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
COMPUTERS/OFFICE AUTOMATION -- 8.2%
Applied Magnetics Corp.
7.00%, 03/15/06.......................... $ 650,000 $ 689,000
Conner Peripherals, Inc.
6.50%, 03/01/02.......................... 670,000 759,613
Conner Peripherals, Inc.
6.75%, 03/01/01.......................... 245,000 258,781
Danka Business Systems PLC+
6.75%, 04/01/02.......................... 1,500,000 2,405,625
EMC Corp.
4.25%, 01/01/01.......................... 1,800,000 2,153,250
Safeguard Scientifics
6.00%, 02/15/03.......................... 1,635,000 1,851,638
Telxon Corp.
5.75%, 01/01/03.......................... 1,000,000 1,035,000
------------
9,152,907
------------
DEPARTMENT/DISCOUNT STORES -- 1.1%
Proffitt's, Inc.
4.75%, 11/01/03.......................... 1,315,000 1,268,975
------------
DRUGS/PHARMACEUTICALS -- 10.9%
Cetus Corp.
5.25%, 05/21/02.......................... 1,375,000 1,400,781
Elan International Finance*
0.00%, 10/16/12.......................... 2,485,000 1,727,075
Ivax Corp.
6.50%, 11/15/01.......................... 2,095,000 2,168,325
Nabi, Inc.
6.50%, 02/01/03.......................... 1,020,000 1,155,150
Roche Holdings, Inc.*+ (LYONS)
0.00%, 04/20/10.......................... 2,460,000 1,113,150
Sandoz Capital
2.00%, 10/06/02.......................... 2,370,000 2,642,550
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
DRUGS/PHARMACEUTICALS (CONTINUED)
Sepracor, Inc.+
7.00%, 12/01/02.......................... $ 850,000 $ 869,125
Smithkline Beecham++
0.00%, 12/31/01.......................... 1,400,000 1,107,750
------------
12,183,906
------------
ELECTRONIC DATA PROCESSING -- 3.8%
First Financial Management Corp.
5.00%, 12/15/99.......................... 1,835,000 3,130,969
Automatic Data*
0.00%, 02/20/12.......................... 2,065,000 1,104,775
------------
4,235,744
------------
ELECTRONIC INSTRUMENTS -- 2.7%
ADT Operations, Inc.* (LYONS)
0.00%, 07/06/10.......................... 1,550,000 813,750
Checkpoint Systems
5.25%, 11/01/05.......................... 1,145,000 1,668,981
Checkpoint Systems Euro
5.25%, 11/01/05.......................... 395,000 577,688
------------
3,060,419
------------
ENVIRONMENTAL SERVICES -- 2.7%
U.S. Filter Corp.
6.00%, 09/15/05.......................... 2,150,000 2,620,312
Sanifill, Inc.
5.00%, 03/01/06.......................... 420,000 413,175
------------
3,033,487
------------
FOOD CHAINS -- 2.0%
Starbucks Corp.
4.25%, 11/01/02.......................... 1,975,000 2,184,844
------------
HOME BUILDING -- 1.1%
Continental Homes
6.875%, 11/01/02......................... 1,060,000 1,208,400
------------
HOSPITALS -- 1.6%
Healthsouth Corp.
5.00%, 04/01/01.......................... 435,000 835,200
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
39
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
INCOME &
GROWTH FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CONVERTIBLE CORPORATE
BONDS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
HOSPITALS (CONTINUED)
PHP Healthcare
6.50%, 12/15/02.......................... $ 900,000 $ 983,250
------------
1,818,450
------------
INSURANCE SERVICES -- 2.3%
American Travellers
6.50%, 10/01/05.......................... 1,065,000 1,566,881
Mutual Risk Management*
0.00%, 10/30/15.......................... 2,560,000 1,036,800
------------
2,603,681
------------
INVESTMENTS -- 0.7%
Aames Financial Corp.
5.50%, 03/15/06.......................... 780,000 810,225
------------
LODGING -- 0.5%
Marriott International*
0.00%, 03/25/11.......................... 1,100,000 583,000
------------
MACHINERY/EQUIPMENT -- 2.9%
Thermo Electron Corp.
4.25%, 01/01/03.......................... 2,605,000 3,242,300
MANAGED HEALTHCARE -- 2.8%
Tenet Healthcare Corp.
6.00%, 12/01/05.......................... 1,305,000 1,448,550
Healthsource, Inc.+
5.00%, 03/01/03.......................... 1,610,000 1,666,350
------------
3,114,900
------------
MEDICAL/NURSING/HEALTH SERVICES -- 1.5%
Phycor, Inc.
4.50%, 02/15/03.......................... 1,640,000 1,640,000
------------
OIL/GAS PRODUCTION -- 2.6%
Noble Affiliates, Inc.
4.25%, 11/01/03.......................... 2,120,000 2,183,600
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OIL/GAS PRODUCTION (CONTINUED)
Pride Petroleum
Services, Inc.
6.25%, 02/15/06.......................... $ 520,000 $ 676,000
------------
2,859,600
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 3.1%
Career Horizons+
7.00%, 11/01/02.......................... 520,000 949,650
Olsten Corp.
4.875%, 05/15/03......................... 880,000 1,218,800
Youth Services International
7.00%, 02/01/06.......................... 1,000,000 1,330,000
------------
3,498,450
------------
OTHER PRODUCTION/MANUFACTURING -- 1.2%
ALFA S.A. Convertible Debenture+
8.00%, 09/15/00.......................... 1,400,000 1,394,750
------------
PIPELINES -- 0.9%
SFP Pipeline Holdings, Inc.*++
0.00%, 08/15/10.......................... 740,000 984,200
------------
PUBLISHING -- 2.3%
News America Holdings* 0.00%, 03/11/13..... 5,270,000 2,575,712
------------
REGIONAL BANKS -- 1.9%
Fifth Third Bancorp
4.25%, 01/15/98.......................... 1,550,000 2,123,500
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 2.8%
3Com Corp.
10.25%, 11/01/01......................... 955,000 1,353,713
Analog Devices
3.50%, 12/01/00.......................... 1,260,000 1,499,400
Emerson Radio
8.50%, 08/15/02.......................... 284,000 238,560
------------
3,091,673
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
40
<PAGE>
- -------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CONVERTIBLE CORPORATE
BONDS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SPECIALTY CHAINS -- 2.1%
Staples Inc.+
4.50%, 10/01/00.......................... $2,099,000 $ 2,329,890
------------
SOAPS/COSMETICS -- 0.6%
Alberto Culver Corp.
5.50%, 06/30/05.......................... 215,000 267,675
Alberto Culver Corp., Euro.
5.50%, 06/30/05.......................... 285,000 362,663
------------
630,338
------------
TELECOMMUNICATIONS EQUIPMENT -- 1.7%
Motorola, Inc.* (LYONS)
0.00%, 09/27/13.......................... 2,555,000 1,897,087
------------
TELEPHONE -- 2.6%
LDDS
Communications, Inc.
5.00%, 08/15/03.......................... 1,435,000 1,793,750
U.S. West, Inc.*
0.00%, 06/25/11.......................... 3,255,000 1,131,112
------------
2,924,862
------------
WHOLESALE DISTRIBUTION -- 0.5%
U.S. Office Products
5.50%, 02/01/01.......................... 480,000 588,000
------------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $69,736,419)........................................ 78,757,700
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
COMMERCIAL PAPER -- 4.9%
- -----------------------------------------------------------------------------
Associates Corporation of America
5.43%, 04/01/96
(Cost $5,466,350)........................ $5,468,000 $ 5,466,350
------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.1%
- -----------------------------------------------------------------------------
J.P. Morgan & Co., Inc.....................
$100,000 at 5.35%, (Agreement dated
03/29/96, to be repurchased at $100,045
on 04/01/96; collateralized by $73,000
U.S. Treasury Notes, 10.625% due
08/15/15)
(Cost $100,000)............................ 100,000 100,000
------------
TOTAL INVESTMENTS -- 99.8%
(Cost $97,317,276)........................................ $111,582,468
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%...............
175,468
------------
NET ASSETS -- 100.0%........................................ $111,757,936
------------
</TABLE>
- ------------
* Non-income producing security.
+ Rule 144A restricted security.
++ Variable rate security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
41
<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 returns through
the fiscal year as moderate economic growth and low inflation proved favorable
to the Portfolio's mix of growth stocks and high-quality bonds. In late 1995,
optimism prevailed among investors that Congress would enact a budget with
significant cuts in deficit spending. This accelerated the bond market's rise
during that period. In the first quarter of 1996, however, a budget resolution
was not reached and bonds gave back some of their gains. Market participants
seemed to conclude that many economic benefits from such an accord would be
delayed and this also seemed to influence the recent sell-off in bonds.
Among the Portfolio's stock holdings, financial services, energy, and
technology issues generated the strongest returns. At the end of March, the
Portfolio was weighted 21.9% in technology, 8.1% in financial services, and 7.4%
in healthcare services. Portfolio performance was bolstered by exceptional
returns from companies like Ascend Communications, a telecommunications company
specializing in Internet infrastructure equipment; Atmel Corp., a leading
manufacturer of memory chips used in cars and appliances; and Altera Corp., a
developer of programmable logic devices used in communications, industrial and
computer applications.
The bond portion of the Portfolio earned strong returns for the period. Weak
retail sales, combined with slow economic growth outside the United States, and
strong buying from foreign central banks contributed to unusually strong
performance for U.S. government bonds. Weakness in the Japanese and Mexican
economies and slow growth in Europe attracted investors to U.S. government bond
markets throughout 1995. Although the bond market experienced a sell-off in
early 1996, we believe the economy's moderate growth environment, coupled with
low inflation, provides a positive environment for our bond portfolio.
We are optimistic that the dynamic growth companies and high-quality
government securities* in the Balanced Portfolio will continue to provide
investors with robust growth of capital. We remain actively engaged in
identifying and investing in companies whose innovative products, management and
ideas make such rapid growth possible. By maintaining our disciplined approach
to managing the Portfolio, we believe we offer investors an appealing way to
achieve long-term financial objectives.
REPRESENTATIVE HOLDINGS
U.S. Treasury Note, 7.500%, 11/15/01
Tennessee Valley Authority, Debenture,
6.375%, 6/15/05
U.S. Treasury Note, 6.250%, 8/31/00
U.S. Treasury Bond, 8.125%, 8/15/21
Ascend Communications, Inc.
Corrections Corp. of America
Health Management Associates, Inc.
America Online, Inc.
Bear Stearns Co.
McAfee Associations, Inc.
- ------------
* The government guarantee of the Fund's portfolio 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.
- --------------------------------------------------------------------------------
42
<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: LAST YEAR, BONDS AND STOCKS MOVED TOGETHER IN
THE MARKET. RECENTLY, HOWEVER, BONDS FELL OFF WHILE STOCKS CONTINUED TO MOVE
UPWARD. HOW MIGHT THIS AFFECT THE NICHOLAS-APPLEGATE BALANCED GROWTH PORTFOLIO?
JOHN: Stocks and bonds haven't move together all of
the time historically. This is the reason we have both stocks and bonds in the
Portfolio. It's called a balanced portfolio just for that reason, to balance out
the performance and the risk in the Portfolio.
Q: THE BALANCED GROWTH PORTFOLIO SHOWED
ESPECIALLY STRONG PERFORMANCE FROM MARCH TO JULY OF LAST YEAR. WHAT MARKET
CONDITIONS CREATED SUCH A FAVORABLE ENVIRONMENT?
LARRY:The moderate growth of the economy and
low inflation created a favorable environment for both stocks and bonds through
much of last year. It's difficult to identify why prices rose for any one short
period of time, but markets tend to advance at irregular rates over short
periods. That underscores the importance of our philosophy of staying fully
invested at all times. We don't want our investors to miss out on any of the
markets' best days. We believe that over the long term, market timing strategies
can cost investors dearly.
Q: WITH SO MANY STOCKS AVAILABLE IN THE DOMESTIC
MARKETS, HOW DO YOU DECIDE WHICH ONES TO SELECT FOR THE PORTFOLIO?
LARRY:Each company must pass a set of established
criteria. We're looking for companies where there is some sort of change that
will lead to earnings acceleration. Then we look for evidence that these
earnings accelerations are sustainable. Finally, we want to know that the
investment is timely; we want to be early on in the identification of change
that has the potential to lead to earnings growth. If the stock passes that
test, then we will put it in the Portfolio. We are constantly managing the
Portfolio so it is fully invested in the best set of growth companies we can
find.
Q: GROWTH STOCKS AND GOVERNMENT BONDS SEEM TO
BE AN UNUSUAL MIX OF SECURITIES. WHY HAVE YOU COMBINED THESE TWO CLASSES OF
ASSETS FOR THE BALANCED GROWTH PORTFOLIO?
JOHN: The objective of the Balanced Growth
Portfolio is to provide capital appreciation and current income with lower
volatility than an all-equity portfolio. We are able to achieve that objective
through the diversification with different asset classes. Stocks and bonds have
historically had low correlations, meaning they have tended to move in different
directions. In a balanced fund like ours, that can smooth out the ride for
investors.
- --------------------------------------------------------------------------------
43
<PAGE>
- -------------------------------------------------------------------
Q: WHAT ARE SOME OF EXAMPLES OF SECURITIES YOU
HAVE RECENTLY BOUGHT OR SOLD FOR THE PORTFOLIO?
LARRY:We recently added Ascend Communications, a
company that makes high-speed digital network access products. Another
interesting company is Corrections Corp. of America, a company that builds and
operates jails and prisons. One of the recurring economic themes of recent years
is the concept of outsourcing by corporations or privatizing by government
agencies. Corrections Corp. has been a prime beneficiary of that trend as
governments have contracted for the construction and management of correctional
institutions. A third company we recently added to the Portfolio is America
Online, an Internet-access and online-services company. Everybody has heard
about what's going on with the Internet and its great potential. This is a
company that is benefiting today from the dynamic growth of that industry.
We sold shares of Carpenter Technology, a manufacturer of specialty steels and
ceramics, because of pricing weakness for metals and because of slowing earnings
growth. We moved out of S3, a leading manufacturer of graphics systems for
personal computers, because of our concern that slowing sales of PCs could
dampen earnings growth.
- --------------------------------------------------------------------------------
44
<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 -- 03/31/96) (04/01/95 -- 03/31/96)
8.87% 13.85%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
60% S&P 500
<S> <C> <C>
Index/40%
Lehman
Brothers
Govern-
ment/Cor-
porate
Balanced
Growth Bond
Portfolio
A Index
04/19/93 9475 10000
6/93 10464 10168
9/93 11058 10461
12/93 10737 10594
3/94 10361 10220
6/94 9746 10196
9/94 10250 10516
12/94 10061 10533
3/95 10694 11358
6/95 11682 12303
9/95 12605 12982
12/95 12419 13695
03/31/96 12850 14001
</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, 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
45
<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.
TOTAL RETURN SINCE INCEPTION
(05/31/95 -- 03/31/96)
8.73%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
60% S&P 500
<S> <C> <C>
Index/40%
Lehman Brothers
Government/Corporate
Balanced Growth Bond
Portfolio B Index
5/31/95 10000 10000
6/95 10446 10171
9/95 11254 10733
12/95 11065 11322
3/31/96 10873 11575
</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, 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
46
<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 -- 03/31/96) (04/01/95 -- 03/31/96)
10.28% 19.58%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C>
60% S&P 500
Index/40%
Lehman Brothers
Government/Corporate
Balanced Growth Bond
Portfolio C Index
4/19/93 10000 10000
6/93 11039 10168
9/93 11661 10461
12/93 11305 10594
3/94 10891 10220
6/94 10228 10196
9/94 10738 10516
12/94 10522 10533
3/95 11161 11358
6/95 12184 12303
9/95 13132 12982
12/95 12920 13695
3/31/96 13346 14001
</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, 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
47
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
- ------------------------------------------------------------------------
BALANCED
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 57.4%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
AIRLINES -- 0.7%
Continental Airlines Holding,
Inc.*............................ 3,100 $ 174,762
-----------
BIOTECHNOLOGY -- 1.3%
Liposome Co., Inc.*................ 7,300 152,387
Medtronic, Inc..................... 2,500 149,062
-----------
301,449
-----------
BUILDING MATERIALS -- 0.7%
Texas Industries, Inc.............. 2,600 165,425
-----------
COMMERCIAL/INDUSTRIAL SERVICES -- 2.2%
Corrections Corp. of America*...... 3,400 193,800
Primark Corp.*..................... 4,000 148,000
Quintiles Transnational Corp.*..... 2,800 182,000
-----------
523,800
-----------
COMPUTERS/OFFICE AUTOMATION -- 3.8%
Adaptec, Inc.*..................... 3,400 164,050
Bay Networks, Inc.*................ 3,150 96,862
Cabletron Systems, Inc.*........... 1,200 79,500
HBO & Company...................... 1,800 169,650
Iomega Corp.*...................... 11,700 299,812
Komag, Inc.*....................... 4,400 106,700
-----------
916,574
-----------
CONSUMER SERVICES -- 0.4%
Robert Half International, Inc.*... 2,100 102,113
-----------
CONTRACT DRILLING -- 2.0%
Reading & Bates Corp.*............. 13,600 268,600
Sonat Offshore Drilling Co......... 3,900 198,900
-----------
467,500
-----------
DEPARTMENT/DISCOUNT STORES -- 0.7%
Ross Stores, Inc................... 7,200 180,900
-----------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
DRUG CHAINS -- 0.2%
Longs Drug Store Corp.............. 900 $ 42,525
-----------
DRUGS/PHARMACEUTICALS
-- 0.8%
Gilead Sciences, Inc.*............. 2,200 63,250
Watson Pharmaceuticals, Inc.*...... 3,300 132,000
-----------
195,250
-----------
ELECTRONIC DATA PROCESSING
-- 0.7%
Seagate Technology, Inc.*.......... 3,000 164,250
-----------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 2.3%
BMC Industries, Inc................ 6,500 139,750
C-Cube Microsystems, Inc.*......... 2,300 120,750
Cognex Corp.*...................... 4,400 112,750
Electroglas, Inc.*................. 4,000 61,500
Macromedia, Inc.*.................. 3,000 128,250
-----------
563,000
-----------
ENTERTAINMENT -- 1.2%
Gtech Holding*..................... 4,500 139,500
Regal Cinemas, Inc.*............... 4,100 151,700
-----------
291,200
-----------
FINANCIAL COMPANIES
-- 1.3%
Green Tree Financial Corp.......... 4,700 161,562
Salomon, Inc....................... 4,000 150,000
-----------
311,562
-----------
GAMBLING -- 0.5%
Grand Casinos, Inc.*............... 3,750 112,500
-----------
INSURANCE AGENTS/BROKERS -- 0.7%
Conseco, Inc....................... 2,200 159,225
-----------
INVESTMENT COMPANIES -- 3.8%
Bear Stearns Co.................... 6,100 150,975
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
48
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT COMPANIES (CONTINUED)
Lehman Brothers Holdings, Inc...... 5,200 $ 139,100
The Money Store, Inc............... 6,500 181,188
Morgan Stanley Group, Inc.......... 2,800 144,900
Student Loan Marketing
Association...................... 1,800 137,700
Sunamerica, Inc.................... 2,900 146,088
-----------
899,951
-----------
LIFE INSURERS -- 1.2%
Penncorp Financial................. 4,000 126,000
Reinsurance Group of America....... 4,300 157,488
-----------
283,488
-----------
LODGING -- 1.3%
HFS, Inc.*......................... 3,400 165,325
Hilton Hotels Corp................. 1,500 141,000
-----------
306,325
-----------
MANAGED HEALTHCARE -- 0.7%
Health Management Associates,
Inc.*............................ 4,600 161,000
-----------
MEDICAL SUPPLIES -- 3.1%
Boston Scientific Corp.*........... 3,900 179,400
IDEXX Laboratories, Inc.*.......... 2,800 117,600
Mentor Corp........................ 5,100 119,212
Nellcor Puritan Bennett, Inc.*..... 2,700 173,475
Target Therapeutics, Inc.*......... 2,700 163,688
-----------
753,375
-----------
MILITARY/DEFENSE TECHNOLOGY -- 0.4%
Harsco Corp........................ 1,400 92,750
-----------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MONEY-CENTER BANKS -- 0.4%
North Fork Bancorporation, Inc..... 4,100 $ 97,888
-----------
MULTI-LINE INSURERS -- 1.7%
Fremont General Corp............... 5,350 126,394
Loews Corp......................... 1,800 136,125
Old Republic International Corp.... 4,200 136,500
-----------
399,019
-----------
OILFIELD SERVICES/EQUIPMENT -- 2.1%
Camco International, Inc........... 4,700 148,050
Chesapeake Energy Corp.*........... 3,300 152,625
Tidewater, Inc..................... 5,000 190,000
-----------
490,675
-----------
OIL/GAS PRODUCTION -- 1.8%
Noram Energy Corp.................. 15,400 142,450
Valero Energy Corp................. 5,100 125,588
Williams Companies, Inc............ 3,200 161,200
-----------
429,238
-----------
OTHER FINANCIAL SERVICES -- 1.2%
First USA, Inc..................... 2,600 147,225
MBNA Corp.......................... 4,800 142,200
-----------
289,425
-----------
PUBLISHING -- 1.1%
Gartner Group, Inc.*............... 2,600 158,600
Meredith Corp...................... 2,500 103,125
-----------
261,725
-----------
SAVINGS & LOAN ASSOCIATIONS -- 1.3%
Charter One Financial, Inc......... 4,600 155,250
TCF Financial Corp................. 4,400 159,500
-----------
314,750
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
49
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED
GROWTH FUND NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 5.9%
Altera Corp.*...................... 9,400 $ 525,225
Applied Materials,
Inc.*............................ 2,600 90,675
Atmel Corp.*....................... 11,000 280,500
Kent Electronics Corp.*............ 5,000 176,875
Lattice Semiconductor Corp.*....... 2,400 68,100
Maxim Integrated Products, Inc.*... 3,800 117,800
S3, Inc.*.......................... 2,100 25,069
Xilinx, Inc.*...................... 3,600 114,300
-----------
1,398,544
-----------
SOFTWARE -- 5.3%
American Online, Inc.*............. 2,600 145,600
Cadence Design Systems, Inc.*...... 3,400 150,025
Cisco Systems, Inc.*............... 3,200 148,400
Computer Associates International,
Inc.............................. 1,900 136,088
McAfee Associates, Inc.*........... 2,800 153,300
Pairgain Technologies, Inc.*....... 2,700 174,825
Peoplesoft, Inc.*.................. 2,700 155,250
Structural Dynamics Research
Corp.*........................... 5,800 195,750
-----------
1,259,238
-----------
SPECIALTY CHAINS -- 0.6%
Staples, Inc.*..................... 7,200 146,700
-----------
TELECOMMUNICATIONS EQUIPMENT -- 6.0%
Ascend Communications, Inc.*....... 13,600 732,700
Aspect
Telecommunications, Inc.*........ 3,700 169,275
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT
(CONTINUED)
Cascade Communications, Inc.*...... 1,700 $ 152,575
Picturetel Corp.*.................. 3,300 102,300
U.S. Robotics Corp.*............... 2,200 284,350
-----------
1,441,200
-----------
TOTAL COMMON STOCKS
(Cost $10,831,736)................................ 13,697,326
-----------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- --------------------------------------------------------------------
CORPORATE BONDS -- 18.3%
- --------------------------------------------------------------------
CLOTHING CHAINS -- 4.2%
TJX Companies, Inc.
6.625%, 06/15/00................. $1,000,000 990,038
-----------
COMMERCIAL/INDUSTRIAL SERVICES -- 0.8%
Foodmaker, Inc.
9.25%, 03/01/99.................. 200,000 196,506
-----------
ELECTRIC UTILITIES -- 5.2%
Tennessee Valley Authority Note
6.375%, 06/15/05................. 1,250,000 1,234,375
-----------
FINANCIAL SERVICES -- 2.8%
Penncorp Financial Group
9.250%, 12/15/03................. 650,000 656,500
-----------
GAMBLING -- 0.6%
Bally's Grand, Inc.
10.375%, 12/15/03................ 150,000 153,755
-----------
OIL/GAS PRODUCTION -- 0.8%
Mesa Capitol Corp.+
0.000%, 06/30/98................. 200,000 196,010
-----------
RETAIL/FOOD DISTRIBUTION -- 0.9%
Doskocil Cos., Inc.
9.75%, 07/15/00.................. 200,000 207,760
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
50
<PAGE>
- -------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CORPORATE BONDS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SOAPS/COSMETICS -- 0.6%
Revlon Consumer Products Corp.
10.500%, 02/15/03................ $ 150,000 $ 152,438
-----------
SPECIALTY CHAINS -- 1.2%
CompUSA, Inc.
9.500%, 06/15/00................. 150,000 149,629
Orchard Supply Hardware, Inc.
9.375%, 02/15/02................. 150,000 145,880
-----------
295,509
-----------
TELECOMMUNICATIONS -- 1.2%
Telemundo Group, Inc.
7.000%, 02/15/06................. 75,000 68,159
Winstar Communications*+
0.000%, 10/15/05................. 375,000 216,950
-----------
285,109
-----------
TOTAL CORPORATE BONDS
(Cost $4,359,289)................................. 4,368,000
-----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 18.7%
- --------------------------------------------------------------------
U.S. TREASURY BONDS
8.125%, 08/15/21................. $ 690,000 $ 792,327
-----------
U.S. TREASURY NOTES
6.250%, 08/31/00................. 1,000,000 1,004,900
7.500%, 11/15/01................. 1,500,000 1,592,685
7.500%, 05/15/02................. 1,000,000 1,065,290
-----------
3,662,875
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $4,584,907)................................. 4,455,202
-----------
- --------------------------------------------------------------------
COMMERCIAL PAPER -- 3.6%
- --------------------------------------------------------------------
Associates Corporation of America
5.43%, 04/01/96
(Cost $853,742).................. 854,000 853,742
-----------
TOTAL INVESTMENTS -- 98.0%
(Cost $20,629,674)................................ $23,374,270
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.0%.......
470,281
-----------
NET ASSETS -- 100.0%................................ $23,844,551
-----------
<FN>
- ------------
* Non-income producing security.
+ Variable rate security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
51
<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
intrumentalities.*
REVIEW AND OUTLOOK: The Government Income Portfolio earned strong returns for
the fiscal year ending March 31, 1996. Weak retail sales combined with slow
economic growth and little inflationary pressure to produce an economic
environment especially conducive to fixed-income securities.
Weakness in the Japanese and Mexican economies and slow growth in Europe
attracted investors to U.S. government bond markets throughout 1995. Foreign
central banks also stepped up their purchases of U.S. government securities,
adding to the rally. In September, we lengthened the Portfolio's duration, a
measure of its responsiveness to changes in interest rates, to slightly longer
than market average in anticipation of continued improvement in the market
conditions affecting fixed-income investments. This strategy worked well: Bond
prices continued to rise, pushing interest rates to a two-year low of 5.9% in
December.
The market retraced some of these gains in early 1996 as a sell-off occurred
in domestic bond markets, prompted by isolated signs of higher economic growth
and rising employment. However, we believe the current moderate-growth economic
environment, coupled with low inflation, will maintain a positive environment
for the performance of high-quality U.S. government bonds.
On March 31, 1996, at the close of the fiscal year, 55.9% of the Portfolio's
holdings had maturities of five to ten years, 26.1% matured in three to five
years, and 18% had maturities over ten years. The average maturity of the
Portfolio was 9.6 years and the average quality of securities was AAA.
- ------------
* The government guarantee of the Fund's portfolio 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.
- --------------------------------------------------------------------------------
52
<PAGE>
A CONVERSATION WITH JOHN WYLIE
- -------------------------------------------------------------------
John Wylie
[PHOTO] Portfolio Manager
Government Income Portfolio
Q. WHAT ECONOMIC TRENDS YOU DO SEE UNFOLDING IN
THE NEAR TERM THAT MIGHT AFFECT THE GOVERNMENT BOND MARKET?
A. During the first quarter of 1996, there were
some fears of increased economic activity in the United States, which could lead
to inflation, but that has been balanced by decreased economic activity
throughout the world. So we see a continuation of moderate economic growth, as
well as low inflation, which we monitor very closely.
Q. BOND PRICES FELL TOWARD THE END OF THE FISCAL
YEAR AFTER HAVING ONE OF THE BEST YEARS ON RECORD. DO YOU THINK THIS TREND WILL
CONTINUE OR DO YOU BELIEVE BOND PRICES MAY RISE AGAIN?
A. I think bond prices began to fall for two reasons:
First a budget agreement was not going to be reached in 1995 and, because of
that, deficit reduction wouldn't be in our country's immediate future. Second,
there were some fears late in 1995 and early in 1996 of economic expansion in
the United States. We don't think these trends will continue. Ultimately, we
believe that a budget agreement WILL be made, and that we will remain in an
environment of moderate economic growth with low inflation, which will be
positive for the bond market.
Q. U.S. STOCKS HAVE PERFORMED VERY STRONGLY OVER
THE PAST FISCAL YEAR. IN LIGHT OF THIS, WHAT WOULD COMPEL INVESTORS TO COMMIT
SOME OF THEIR ASSETS TO THE NICHOLAS-APPLEGATE GOVERNMENT INCOME PORTFOLIO?
A. The objectives of our Government Income
Portfolio are: (1) the preservation of principal; and (2) current income. All
investors are different but there is probably a place for both objectives in
every investor's portfolio. Of course there can be no guarantee that the
Portfolio will meet its investment objective. We don't expect all investors to
place all of their assets in the Government Income Portfolio, but for most
people, it's appropriate for some of their assets.
Q. INTEREST RATES HAVE BEEN MOVING UP AND BOND
PRICES HAVE BEEN FALLING. WHAT'S YOUR OUTLOOK FOR THE GOVERNMENT INCOME
PORTFOLIO?
A. We expect moderate economic growth with low
inflation, and we think that's going to be positive for the bond market. Bonds
should do well over the remainder of the year.
- --------------------------------------------------------------------------------
53
<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 -- 03/31/96) (04/01/95 -- 03/31/96)
4.48% 4.50%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GOVERNMENT LEHMAN BROTHERS
<S> <C> <C>
Income Government Bond
Portfolio A Index
4/19/93 9525 10000
6/93 9856 10250
9/93 10253 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
12/95 11742 12059
3/31/96 11381 11785
</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, 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
54
<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 -- 03/31/96)
-1.05%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C>
Government Lehman Brothers
Income Government Bond
Portfolio B Index
05/31/95 10000 10000
6/95 10090 10077
9/95 10260 10255
12/95 10768 10723
03/31/96 9895 10480
</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, 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
55
<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 -- 03/31/96) (04/01/95 -- 03/31/96)
5.57% 9.20%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C>
Government Lehman Brothers
Income Government Bond
Portfolio C Index
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
12/95 12116 12059
3/31/96 11734 11785
</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, 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral 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. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
56
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
- ------------------------------------------------------------------------
GOVERNMENT
INCOME FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 65.6%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
U.S. TREASURY NOTES
6.250%, 08/31/00........................... $1,100,000 $1,105,390
7.500%, 11/15/01........................... 1,100,000 1,167,969
7.500%, 05/15/02........................... 620,000 660,480
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,011,192)......................................... 2,933,839
----------
- ---------------------------------------------------------------------------
CORPORATE BONDS -- 16.7%
- ---------------------------------------------------------------------------
CIGNA CORPORATION -- 7.5%
7.650%, 03/01/23......................... 350,000 337,313
TELECOMMUNICATIONS -- 9.2%
10.125%, 04/15/22........................ 350,000 409,937
----------
TOTAL CORPORATE BONDS
(Cost $719,205)........................................... 747,250
----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
AGENCY OBLIGATIONS -- 11.0%
- ---------------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY
6.375%, 06/15/05
(Cost $518,200)............................ $ 500,000 $ 493,750
----------
- ---------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.9%
- ---------------------------------------------------------------------------
ASSOCIATES CORPORATION OF AMERICA
5.43%, 04/01/96
(Cost $132,000)............................ 132,000 132,000
----------
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.2%
- ---------------------------------------------------------------------------
J.P. MORGAN & CO., INC.
$100,000 at 5.35%,
(Agreement dated 3/29/96; to be repurchased at $100,045 on
4/1/96; collateralized by $73,000 U.S. Treasury Note,
10.625% due 08/15/15)
(Cost $100,000)............................ 100,000 100,000
----------
TOTAL INVESTMENTS -- 98.4%..................................
(Cost $4,480,597).......................... $4,406,839
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.60%..............
71,155
----------
NET ASSETS -- 100.00% $4,477,994
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
57
<PAGE>
MONEY MARKET PORTFOLIO
- -------------------------------------------------------------------
GOAL: Seeks to achieve a high level of current income consistent with the
preservation of capital and maintenance of liquidity though 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.
- --------------------------------------------------------------------------------
58
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
- ------------------------------------------------------------------------
MONEY
MARKET FUND PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
AGENCY OBLIGATIONS -- 41.7%
- ----------------------------------------------
<TABLE>
<S> <C> <C>
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- 31.7%
5.48%, 06/13/96............................ $ 150,000 $ 148,333
5.32%, 07/03/96............................ 100,000 98,626
5.38%, 07/03/96............................ 250,000 246,525
5.41%, 07/12/96............................ 100,000 98,467
5.29%, 07/26/96............................ 125,000 122,869
4.91%, 08/28/96............................ 100,000 97,968
5.14%, 10/25/96............................ 100,000 97,045
5.12%, 12/17/96............................ 100,000 96,302
----------
1,006,135
----------
FEDERAL FARM CREDIT BANK DISCOUNT NOTES -- 10.0%
5.17%, 09/03/96............................ 150,000 146,661
5.08%, 09/11/96............................ 100,000 97,709
5.20%, 11/15/96............................ 75,000 72,530
----------
316,900
----------
TOTAL AGENCY OBLIGATIONS
(Cost $1,323,035)........................................ 1,323,035
----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
REPURCHASE AGREEMENT -- 58.8%
- --------------------------------------------------------------------------
J. P. Morgan & Co. $1,865,000 at 5.35%
(Agreement dated 03/29/96, to be
repurchased) at $1,865,831
on 04/01/96; collateralized by $1,381,000
U. S. Treasury Notes 11.625% due
11/15/04) (Cost $1,865,000).............. $1,865,000 $1,865,000
----------
TOTAL INVESTMENTS -- 100.5%
(Cost $3,188,035)........................................ $3,188,035
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (0.5%)................................... (14,188)
----------
NET ASSETS -- 100.0%....................................... $3,173,847
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
59
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
SERIES A PORTFOLIOS+
<TABLE>
<CAPTION>
NET
ASSET
VALUES
AT NET NET REALIZED DISTRIBUTIONS
BEGINNING INVESTMENT AND UNREALIZED FROM NET
OF INCOME GAINS (LOSSES) INVESTMENT
PERIOD (DEFICIT) ON INVESTMENTS INCOME
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio A (For the year
ended 03/31/96)........... $13.06 $(0.20) $5.09 --
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 year
ended 03/31/96)........... 13.61 (0.18) 4.94 --
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 year
ended 03/31/96)........... 12.86 0.48 2.82 $(0.48)
Portfolio A (For the year
ended 03/31/95)........... 14.16 0.49 (0.89) (0.49)
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.32 2.15 (0.32)
BALANCED GROWTH
Portfolio A (For the year
ended 03/31/96)........... 13.74 0.34 2.42 (0.34)
Portfolio A (For the year
ended 03/31/95)........... 13.52 0.21 0.22 (0.21)
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.15 1.02 (0.15)
GOVERNMENT INCOME
Portfolio A (For the year
ended 03/31/96)........... 12.29 0.75 0.45 (0.75)
Portfolio A (For the year
ended 03/31/95)........... 12.51 0.63 (0.19) (0.63)
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.29 0.34 (0.29)
MONEY MARKET
Portfolio (For the year
ended 03/31/96)........... 1.00 0.05 -- (0.05)
Portfolio (For the year
ended 03/31/95)........... 1.00 0.05 -- (0.05)
Portfolio (For the period
ended 03/31/94)........... 1.00 0.01 -- (0.01)
</TABLE>
- ------------
+All Series A Portfolios commenced operations on April 19, 1993, except
Emerging Growth Portflio A which commenced operations on December 27, 1993.
++Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
*The Portfolio's maximum sales charge is not included in the total return
computation.
**Annualized.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
60
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO
AVERAGE NET ASSETS,
DISTRIBUTIONS NET ASSET AFTER EXPENSE
FROM VALUES AT NET ASSETS AT REIMBURSEMENT
CAPITAL GAINS END OF PERIOD TOTAL RETURN* END OF PERIOD (RECOUPMENT)++
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio A (For the year
ended 03/31/96)........... $(0.02) $17.93 37.48% $ 138,155,390 1.74%
Portfolio A (For the year
ended 03/31/95)........... -- 13.06 7.93% 106,725,077 1.86%
Portfolio A (For the period
ended 03/31/94)........... -- 12.10 (3.20%) 104,838,285 1.73%**
CORE GROWTH
Portfolio A (For the year
ended 03/31/96)........... -- 18.37 35.07% 77,275,060 1.58%
Portfolio A (For the year
ended 03/31/95)........... -- 13.61 2.72% 65,291,541 1.59%
Portfolio A (For the period
ended 03/31/94)........... (0.04) 13.25 6.27% 70,512,167 1.57%**
INCOME & GROWTH
Portfolio A (For the year
ended 03/31/96)........... -- 15.68 26.00% 31,712,051 1.60%
Portfolio A (For the year
ended 03/31/95)........... (0.41) 12.86 (2.64%) 31,150,481 1.60%
Portfolio A (For the period
ended 03/31/94)........... (0.49) 14.16 19.65% 30,447,446 1.59%**
BALANCED GROWTH
Portfolio A (For the year
ended 03/31/96)........... -- 16.16 20.16% 5,902,210 1.60%
Portfolio A (For the year
ended 03/31/95)........... -- 13.74 3.22% 4,979,593 1.60%
Portfolio A (For the period
ended 03/31/94)........... -- 13.52 9.35% 6,445,901 1.59%**
GOVERNMENT INCOME
Portfolio A (For the year
ended 03/31/96)........... -- 12.74 9.71% 1,297,458 0.93%
Portfolio A (For the year
ended 03/31/95)........... (0.03) 12.29 3.68% 925,074 1.10%
Portfolio A (For the period
ended 03/31/94)........... (0.33) 12.51 4.97% 819,919 1.10%**
MONEY MARKET
Portfolio (For the year
ended 03/31/96)........... -- 1.00 5.47% 3,129,223 0.45%
Portfolio (For the year
ended 03/31/95)........... -- 1.00 4.58% 2,995,847 0.31%
Portfolio (For the period
ended 03/31/94)........... -- 1.00 1.72% 47,975 0.54%**
<CAPTION>
RATIO OF NET RATIO OF NET
AVERAGE NET ASSETS, NET ASSETS, AFTER NET ASSETS, BEFORE
BEFORE EXPENSE EXPENSE EXPENSE
REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
(RECOUPMENT)++ (RECOUPMENT)++ (RECOUPMENT)++
<S> <C> <C> <C>
- ------------------------------
EMERGING GROWTH
Portfolio A (For the year
ended 03/31/96)........... 1.74% (1.20%) (1.20%)
Portfolio A (For the year
ended 03/31/95)........... 1.84% (1.27%) (1.25%)
Portfolio A (For the period
ended 03/31/94)........... 1.80%** (1.44%)** (1.51%)**
CORE GROWTH
Portfolio A (For the year
ended 03/31/96)........... 1.56% (0.91%) (0.89%)
Portfolio A (For the year
ended 03/31/95)........... 1.63% (0.66%) (0.70%)
Portfolio A (For the period
ended 03/31/94)........... 1.71%** (0.68%)** (0.82%)**
INCOME & GROWTH
Portfolio A (For the year
ended 03/31/96)........... 1.76% 3.29% 3.12%
Portfolio A (For the year
ended 03/31/95)........... 1.76% 3.71% 3.55%
Portfolio A (For the period
ended 03/31/94)........... 1.83%** 2.83%** 2.59%**
BALANCED GROWTH
Portfolio A (For the year
ended 03/31/96)........... 3.30% 2.16% 0.88%
Portfolio A (For the year
ended 03/31/95)........... 2.78% 1.44% 0.26%
Portfolio A (For the period
ended 03/31/94)........... 3.28%** 1.30%** (0.39%)**
GOVERNMENT INCOME
Portfolio A (For the year
ended 03/31/96)........... 9.58% 5.78% (0.75%)
Portfolio A (For the year
ended 03/31/95)........... 8.40% 5.18% (2.12%)
Portfolio A (For the period
ended 03/31/94)........... 20.28%** 3.07%** (16.11%)**
MONEY MARKET
Portfolio (For the year
ended 03/31/96)........... 5.78% 5.35% 2.77%
Portfolio (For the year
ended 03/31/95)........... 2.49% 4.60% 2.42%
Portfolio (For the period
ended 03/31/94)........... 323.24%** 1.85%** (320.85%)**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
61
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
SERIES B PORTFOLIOS+
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUES AT INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS
BEGINNING INCOME GAINS ON INVESTMENT FROM CAPITAL
OF PERIOD (DEFICIT) INVESTMENTS INCOME GAINS
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio B (For the period
ended 03/31/96)........... $12.50 $(0.14) $4.33 -- --
CORE GROWTH
Portfolio B (For the period
ended 03/31/96)........... 12.50 (0.09) 3.84 -- --
INCOME & GROWTH
Portfolio B (For the period
ended 03/31/96)........... 12.50 0.24 2.46 $(0.24) --
BALANCED GROWTH
Portfolio B (For the period
ended 03/31/96)........... 12.50 0.12 1.68 (0.12) --
GOVERNMENT INCOME
Portfolio B (For the period
ended 03/31/96)........... 12.50 0.48 0.04 (0.48) $(0.01)
</TABLE>
- ------------
+All Series B Portfolios commenced operations on May 31, 1995.
++Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
*The Portfolio's maximum sales charge is not included in the total return
computation.
**Annualized
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
62
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF
EXPENSES TO EXPENSES TO
NET ASSET AVERAGE NET AVERAGE NET
VALUES AT NET ASSETS AT ASSETS, AFTER ASSETS, BEFORE
END OF TOTAL END OF EXPENSE EXPENSE
PERIOD RETURN* PERIOD REIMBURSEMENT++ REIMBURSEMENT++
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio B (For the period
ended 03/31/96)........... $16.69 33.52% $ 13,625,738 2.58%** 3.26%**
CORE GROWTH
Portfolio B (For the period
ended 03/31/96)........... 16.25 30.00% 11,185,978 2.22%** 3.39%**
INCOME & GROWTH
Portfolio B (For the period
ended 03/31/96)........... 14.96 21.72% 2,125,077 2.25%** 7.08%**
BALANCED GROWTH
Portfolio B (For the period
ended 03/31/96)........... 14.18 14.45% 672,934 2.25%** 13.05%**
GOVERNMENT INCOME
Portfolio B (For the period
ended 03/31/96)........... 12.53 4.16% 127,528 1.33%** 86.12%**
<CAPTION>
RATIO OF NET RATIO OF NET
INCOME (DEFICIT) TO (DEFICIT) TO
AVERAGE NET AVERAGE NET
ASSETS, AFTER ASSETS, BEFORE
EXPENSE EXPENSE
REIMBURSEMENT++ REIMBURSEMENT++
<S> <C> <C>
- ------------------------------
EMERGING GROWTH
Portfolio B (For the period
ended 03/31/96)........... (2.09%)** (2.76%)**
CORE GROWTH
Portfolio B (For the period
ended 03/31/96)........... (1.61%)** (2.77%)**
INCOME & GROWTH
Portfolio B (For the period
ended 03/31/96)........... 2.59%** (2.22%)**
BALANCED GROWTH
Portfolio B (For the period
ended 03/31/96)........... 1.38%** (8.86%)**
GOVERNMENT INCOME
Portfolio B (For the period
ended 03/31/96)........... 5.14%** (67.73%)**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
63
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
SERIES C PORTFOLIOS+
<TABLE>
<CAPTION>
NET REALIZED
AND
NET ASSET NET UNREALIZED DISTRIBUTIONS
VALUES AT INVESTMENT GAINS (LOSSES) FROM NET DISTRIBUTIONS
BEGINNING INCOME ON INVESTMENT FROM CAPITAL
OF PERIOD (DEFICIT) INVESTMENTS INCOME GAINS
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio C (For the year
ended 03/31/96)........... $12.96 $(0.29) $5.03 -- $(0.08)
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 year
ended 03/31/96)........... 13.45 (0.27) 4.88 -- --
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 -- (0.01)
INCOME & GROWTH
Portfolio C (For the year
ended 03/31/96)........... 13.03 0.40 2.86 $(0.40) --
Portfolio C (For the year
ended 03/31/95)........... 14.28 0.41 (0.89) (0.41) (0.36)
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.24 2.11 (0.24) (0.33)
BALANCED GROWTH
Portfolio C (For the year
ended 03/31/96)........... 13.76 0.24 2.44 (0.24) --
Portfolio C (For the year
ended 03/31/95)........... 13.54 0.11 0.22 (0.11) --
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.08 1.04 (0.08) --
GOVERNMENT INCOME
Portfolio C (For the year
ended 03/31/96)........... 12.27 0.77 0.36 (0.77) --
Portfolio C (For the year
ended 03/31/95)........... 12.56 0.63 (0.28) (0.63) (0.01)
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.25 0.29 (0.25) (0.23)
</TABLE>
- ------------
+All Series C Portfolios commenced operations on April 19, 1993 except for
Emerging Growth which commenced operations on December 27, 1993.
++Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
*The Portfolio's maximum sales charge is not included in the total return
computation.
**Annualized
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
64
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF
EXPENSES TO EXPENSES TO
NET ASSET AVERAGE NET AVERAGE NET
VALUES AT NET ASSETS AT ASSETS, AFTER ASSETS, BEFORE
END OF TOTAL END OF EXPENSE EXPENSE
PERIOD RETURN* PERIOD REIMBURSEMENT++ REIMBURSEMENT++
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH
Portfolio C (For the year
ended 03/31/96)........... $17.62 37.18% $ 207,332,005 2.35% 2.35%
Portfolio C (For the year
ended 03/31/95)........... 12.96 7.37% 157,292,246 2.44% 2.44%
Portfolio C (For the period
ended 03/31/94)........... 12.07 (3.44)% 142,874,310 2.34%** 2.34%**
CORE GROWTH
Portfolio C (For the year
ended 03/31/96)........... 18.06 34.28% 177,461,331 2.14% 2.14%
Portfolio C (For the year
ended 03/31/95)........... 13.45 2.05% 143,389,656 2.24% 2.24%
Portfolio C (For the period
ended 03/31/94)........... 13.18 5.54% 141,488,561 2.17%** 2.17%**
INCOME & GROWTH
Portfolio C (For the year
ended 03/31/96)........... 15.89 25.24% 58,997,309 2.25% 2.28%
Portfolio C (For the year
ended 03/31/95)........... 13.03 (3.26)% 61,791,573 2.25% 2.29%
Portfolio C (For the period
ended 03/31/94)........... 14.28 18.76% 69,264,807 2.22%** 2.23%**
BALANCED GROWTH
Portfolio C (For the year
ended 03/31/96)........... 16.20 19.58% 16,586,339 2.25% 3.01%
Portfolio C (For the year
ended 03/31/95)........... 13.76 2.47% 16,469,510 2.25% 2.60%
Portfolio C (For the period
ended 03/31/94)........... 13.54 8.91% 16,248,130 2.24%** 2.73%**
GOVERNMENT INCOME
Portfolio C (For the year
ended 03/31/96)........... 12.63 9.20% 2,986,287 1.33% 5.77%
Portfolio C (For the year
ended 03/31/95)........... 12.27 2.96% 4,278,140 1.50% 2.67%
Portfolio C (For the period
ended 03/31/94)........... 12.56 4.28% 7,345,300 1.50%** 3.86%**
<CAPTION>
RATIO OF NET RATIO OF NET
INCOME (DEFICIT) TO INCOME (DEFICIT) TO
AVERAGE NET AVERAGE NET
ASSETS, AFTER ASSETS, BEFORE
EXPENSE EXPENSE
REIMBURSEMENT++ REIMBURSEMENT++
<S> <C> <C>
- ------------------------------
EMERGING GROWTH
Portfolio C (For the year
ended 03/31/96)........... (1.81)% (1.81)%
Portfolio C (For the year
ended 03/31/95)........... (1.85)% (1.85)%
Portfolio C (For the period
ended 03/31/94)........... (2.04)%** (2.04)%**
CORE GROWTH
Portfolio C (For the year
ended 03/31/96)........... (1.47)% (1.47)%
Portfolio C (For the year
ended 03/31/95)........... (1.30)% (1.30)%
Portfolio C (For the period
ended 03/31/94)........... (1.30)%** (1.30)%**
INCOME & GROWTH
Portfolio C (For the year
ended 03/31/96)........... 2.64% 2.61%
Portfolio C (For the year
ended 03/31/95)........... 3.05% 3.01%
Portfolio C (For the period
ended 03/31/94)........... 2.28%** 2.27%**
BALANCED GROWTH
Portfolio C (For the year
ended 03/31/96)........... 1.53% 1.19%
Portfolio C (For the year
ended 03/31/95)........... 0.83% 0.48%
Portfolio C (For the period
ended 03/31/94)........... 0.61%** 0.12%**
GOVERNMENT INCOME
Portfolio C (For the year
ended 03/31/96)........... 5.46% 3.13%
Portfolio C (For the year
ended 03/31/95)........... 4.58% 3.41%
Portfolio C (For the period
ended 03/31/94)........... 2.70%** 0.34%**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
65
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1996
- -------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME & BALANCED GOVERNMENT MONEY
GROWTH GROWTH GROWTH GROWTH INCOME MARKET
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at
value*................................... $138,309,702 $77,352,893 $31,859,932 $ 5,901,076 $1,314,695 $3,144,925
Receivable for shares of beneficial
interest sold............................ 148,265 173,138 114,825 33,566 9,347 --
Receivable for investments sold in Master
Trust Fund............................... 1,196,737 56,843 33,308 7,558 -- --
Due from advisor........................... -- -- 16,277 23,984 23,418 33,283
Deferred organization costs................ 6,002 18,195 14,663 13,192 12,697 10,720
Prepaid expenses and other assets.......... 2,225 1,216 490 93 25 --
--------------------------------------------------------------------------------
Total assets......................... 139,662,931 77,602,285 32,039,495 5,979,469 1,360,182 3,188,928
--------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased in Master
Trust Fund............................... 148,265 173,138 114,825 33,566 9,347 --
Payable for shares of beneficial interest
repurchased.............................. 1,196,737 56,843 33,308 7,558 -- --
Due to advisor............................. -- 17,866 -- -- 30,779 26,503
Dividend payable........................... -- -- 138,498 21,298 9,867 29
Accrued expenses........................... 162,539 79,378 40,813 14,837 12,731 33,173
--------------------------------------------------------------------------------
Total liabilities.................... 1,507,541 327,225 327,444 77,259 62,724 59,705
--------------------------------------------------------------------------------
NET ASSETS................................... $138,155,390 $77,275,060 $31,712,051 $ 5,902,210 $1,297,458 $3,129,223
--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............................ $ 98,525,638 $57,080,513 $28,423,536 $ 5,066,357 $1,296,810 $3,129,545
Accumulated undistributed net investment
income (deficit)......................... (3,112,256) (1,424,921) 3,709 95 36 --
Accumulated undistributed net realized gain
(loss) from security transactions........ 4,037,859 3,337,028 (839,611) 171,818 28,677 (322)
Net unrealized appreciation (depreciation)
of investments........................... 38,704,149 18,282,440 4,124,417 663,940 (28,065) --
--------------------------------------------------------------------------------
Net assets........................... $138,155,390 $77,275,060 $31,712,051 $ 5,902,210 $1,297,458 $3,129,223
--------------------------------------------------------------------------------
Shares of beneficial interest, no par value,
issued and outstanding (unlimited shares
authorized)................................. 7,704,965 4,207,526 2,022,208 365,215 101,818 3,129,545
--------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of beneficial
interest (Net assets/Outstanding shares
of beneficial interest).................. $ 17.93 $ 18.37 $ 15.68 $ 16.16 $ 12.74 $ 1.00
--------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE OF
($17.93/94.75%, $18.37/94.75%,
$15.68/94.75%, $16.16/94.75, $12.74/95.25%,
respectively)............................... $ 18.92 $ 19.39 $ 16.55 $ 17.06 $ 13.38 --
--------------------------------------------------------------------------------
* Cost of investments in the Master Trust
Fund........................................ $ 96,823,088 $55,681,366 $23,372,328 $ 4,701,250 $1,168,997 $3,146,027
--------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
66
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1996
- -------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME & BALANCED GOVERNMENT
GROWTH GROWTH GROWTH GROWTH INCOME
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at value*...... $ 13,683,832 $ 11,235,687 $ 2,136,994 $ 681,464 $ 130,376
Receivable for shares of beneficial interest
sold........................................... 173,363 336,639 18,587 10,312 --
Receivable for investments sold in Master Trust
Fund........................................... 15,087 82 105 -- --
Due from advisor................................. -- -- 4,159 7,931 6,675
Deferred organization costs...................... 836 837 836 836 837
Prepaid expenses and other assets................ 2,032 690 4,863 11,789 16,524
-------------------------------------------------------------------------
Total assets................................... 13,875,150 11,573,935 2,165,544 712,332 154,412
-------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased in Master Trust
Fund........................................... 174,836 337,201 18,774 10,312 --
Payable for shares of beneficial interest
repurchased.................................... 15,087 82 105 -- --
Due to advisor................................... 22,396 18,349 1,013 1,013 1,013
Dividend payable................................. -- -- 2,626 728 299
Accrued expenses................................. 37,093 32,325 17,949 27,345 25,572
-------------------------------------------------------------------------
Total liabilities.............................. 249,412 387,957 40,467 39,398 26,884
-------------------------------------------------------------------------
NET ASSETS......................................... $ 13,625,738 $ 11,185,978 $ 2,125,077 $ 672,934 $ 127,528
-------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital.................................. $ 12,186,164 $ 10,390,057 $ 1,995,872 $ 654,775 $ 129,499
Accumulated undistributed net investment income
(deficit)...................................... (112,312) (58,827) 221 (4) 8
Accumulated undistributed net realized gain
(loss) from security transactions.............. (229,159) (1,452) (5,589) (7,072) 402
Net unrealized appreciation (depreciation) of
investments.................................... 1,781,045 856,200 134,573 25,235 (2,381)
-------------------------------------------------------------------------
Net assets..................................... $ 13,625,738 $ 11,185,978 $ 2,125,077 $ 672,934 $ 127,528
-------------------------------------------------------------------------
Shares of beneficial interest, no par value, issued
and outstanding (unlimited shares authorized).... 816,643 688,351 142,019 47,473 10,174
-------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of beneficial interest
(Net assets/Outstanding shares of beneficial
interest)...................................... $ 16.69 $ 16.25 $ 14.96 $ 14.18 $ 12.53
-------------------------------------------------------------------------
*Cost of investments in the Master Trust Fund.... $ 12,164,983 $ 10,391,068 $ 1,979,663 $ 654,050 $ 129,930
-------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
67
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1996
- -------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME & BALANCED GOVERNMENT
GROWTH GROWTH GROWTH GROWTH INCOME
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at
value*................................. $207,662,300 $177,710,673 $59,446,236 1$6,630,097 $ 3,031,701
Receivable for shares of beneficial
interest sold.......................... 519,190 556,115 299,719 61,328 21,484
Receivable for investments sold in Master
Trust Fund............................. 161,565 244,731 98,033 22,712 22,974
Due from advisor......................... -- -- -- 14,125 14,290
Deferred organization costs.............. 6,001 18,485 14,801 13,491 12,866
Prepaid expenses and other assets........ 3,528 2,901 925 262 62
--------------------------------------------------------------------------
Total assets........................... 208,352,584 178,532,905 59,859,714 16,742,015 3,103,377
--------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased in
Master Trust Fund...................... 519,190 556,115 299,719 61,328 21,484
Payable for shares of beneficial interest
repurchased............................ 161,565 244,731 98,033 22,712 22,974
Due to advisor........................... -- -- 12,771 -- 30,779
Dividend payable......................... -- -- 355,360 44,148 28,129
Accrued expenses......................... 339,824 270,728 96,522 27,488 13,724
--------------------------------------------------------------------------
Total liabilities...................... 1,020,579 1,071,574 862,405 155,676 117,090
--------------------------------------------------------------------------
NET ASSETS................................. $207,332,005 $177,461,331 $58,997,309 1$6,586,339 $ 2,986,287
--------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital.......................... $151,068,590 $135,377,702 $53,333,289 1$4,051,077 $ 3,143,149
Accumulated undistributed net investment
income (deficit)....................... (6,611,327) (5,364,729) 3,671 63 102
Accumulated undistributed net realized
gain (loss) from security
transactions........................... 5,849,312 5,761,613 (2,279,239) 526,055 (113,683)
Net unrealized appreciation
(depreciation) of investments.......... 57,025,430 41,686,745 7,939,588 2,009,144 (43,281)
--------------------------------------------------------------------------
Net assets........................... $207,332,005 $177,461,331 $58,997,309 1$6,586,339 $ 2,986,287
--------------------------------------------------------------------------
Shares of beneficial interest, no par
value, issued and outstanding
(unlimited shares authorized).......... 11,765,386 9,825,753 3,712,379 1,023,861 236,490
--------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of beneficial
interest (Net assets/Outstanding shares
of beneficial interest)................ $ 17.62 $ 18.06 $ 15.89 $ 16.20 $ 12.63
--------------------------------------------------------------------------
*Cost of investments in the Master Trust
Fund................................... $145,910,114 $130,452,734 $44,154,297 1$3,077,045 $ 2,497,597
--------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
68
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1996
- -------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME & BALANCED GOVERNMENT MONEY
GROWTH GROWTH GROWTH GROWTH INCOME MARKET
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from
Master Trust Fund................... $ (693,570) $ (151,488) $ 1,214,752 $ 156,222 $ 69,155 $ 199,306
--------------------------------------------------------------------------------------
EXPENSES
Accounting fees..................... 31,200 31,099 31,200 15,600 15,600 15,600
Administration fees................. 5,001 7,339 8,947 7,504 6,146 5,001
Audit & tax services................ 9,503 7,503 9,067 7,503 7,503 7,501
Distribution fees................... 305,011 175,655 77,118 13,884 2,846 5,585
Insurance........................... 1,892 1,099 486 86 17 --
Legal fees.......................... 9,138 7,192 3,122 428 393 1,301
Miscellaneous....................... 4,120 3,295 816 143 1,680 1,735
Organization costs.................. 2,145 9,102 7,167 6,442 6,207 5,298
Registration fees................... 22,326 12,906 9,322 12,101 5,593 8,909
Shareholder reporting fees.......... 102,389 39,930 17,684 3,048 982 2,548
Shareholder servicing fees.......... 122,004 70,262 30,847 5,553 1,138 3,723
Transfer agent fees................. 153,887 107,981 56,625 34,684 29,578 38,944
Trustees' fee....................... 4,815 2,777 1,224 220 45 148
--------------------------------------------------------------------------------------
Total expenses.................... 773,431 476,140 253,625 107,196 77,728 96,293
Reimbursement to (from) advisor..... -- 14,329 (53,119) (71,101) (74,313) (96,293)
--------------------------------------------------------------------------------------
Net expenses...................... 773,431 490,469 200,506 36,095 3,415 --
--------------------------------------------------------------------------------------
Net investment income
(deficit)..................... (1,467,001) (641,957) 1,014,246 120,127 65,740 199,306
--------------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from security
transactions........................ 17,157,012 11,262,503 3,025,096 688,324 74,049 (322)
Change in net unrealized appreciation
(depreciation) of investments....... 22,567,484 10,033,989 3,076,767 188,570 (44,744) --
--------------------------------------------------------------------------------------
Net gain (loss) on investments.... 39,724,496 21,296,492 6,101,863 876,894 29,305 (322)
--------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 38,257,495 $ 20,654,535 $ 7,116,109 $ 997,021 $ 95,045 $ 198,984
--------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
69
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 1996
- -------------------------------------------------------------------
SERIES B PORTFOLIOS*
<TABLE>
<CAPTION>
EMERGING CORE INCOME & BALANCED GOVERNMENT
GROWTH GROWTH GROWTH GROWTH INCOME
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from Master Trust
Fund.................................................. $ (33,037) $ (10,129) $ 28,347 $ 9,251 $ 2,382
--------------------------------------------------------------------
EXPENSES
Accounting fees....................................... 9,360 9,360 9,360 9,360 9,360
Administration fees................................... 4,152 355 219 476 234
Audit & tax services.................................. 6,150 6,321 5,660 6,367 6,384
Distribution fees..................................... 40,174 27,248 5,372 2,587 205
Insurance............................................. 96 68 14 6 --
Legal fees............................................ 467 296 84 17 13
Miscellaneous......................................... 6,128 3,829 829 417 72
Organization costs.................................... 177 176 177 177 176
Registration fees..................................... 16,625 15,729 13,240 12,913 12,713
Shareholder reporting fees............................ 2,685 2,289 572 89 125
Shareholder servicing fees............................ 13,391 9,083 1,820 862 102
Transfer agent fees................................... 14,302 14,668 5,439 5,061 1,152
Trustees' fee......................................... 1,803 1,803 1,803 1,802 1,803
--------------------------------------------------------------------
Total expenses...................................... 115,510 91,225 44,589 40,134 32,339
--------------------------------------------------------------------
Less: Reimbursement from advisor...................... (36,235) (42,527) (35,125) (35,650) (32,053)
--------------------------------------------------------------------
Net expenses........................................ 79,275 48,698 9,464 4,484 286
--------------------------------------------------------------------
Net investment income (deficit)................... (112,312) (58,827) 18,883 4,767 2,096
--------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from security transactions..... (229,159) (1,452) (5,589) (7,072) 445
Change in net unrealized appreciation (depreciation) of
investments........................................... 1,781,045 856,200 134,573 25,235 (2,381)
--------------------------------------------------------------------
Net gain (loss) on investments...................... 1,551,886 854,748 128,984 18,163 (1,936)
--------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...... $ 1,439,574 $ 795,921 $ 147,867 $ 22,930 $ 160
--------------------------------------------------------------------
</TABLE>
- ------------
*Commenced operations on May 31, 1995.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
70
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1996
- -------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME & BALANCED GOVERNMENT
GROWTH GROWTH GROWTH GROWTH INCOME
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from Master
Trust Fund.................................. $ (1,026,482) $ (350,232) $ 2,353,443 $ 461,444 $ 220,142
--------------------------------------------------------------------------
EXPENSES
Accounting fees............................. 31,200 31,200 31,200 15,600 15,600
Administration fees......................... 5,001 16,855 17,298 21,946 18,830
Audit & tax services........................ 7,502 9,637 8,964 7,503 8,783
Distribution fees........................... 1,354,501 1,210,723 447,785 122,238 17,881
Insurance................................... 2,570 2,502 933 256 56
Legal fees.................................. 13,892 17,899 5,965 1,189 261
Miscellaneous............................... 4,972 4,189 1,594 1,652 99
Organization costs.......................... 2,145 9,025 7,236 6,595 6,284
Registration fees........................... 23,692 19,585 11,080 13,017 12,979
Shareholder reporting fees.................. 149,694 102,204 34,061 9,148 2,251
Shareholder servicing fees.................. 451,500 403,574 149,262 40,746 8,941
Transfer agent fees......................... 197,436 187,066 77,509 26,903 16,007
Trustees' fee............................... 7,126 6,375 2,372 647 143
--------------------------------------------------------------------------
Total expenses............................ 2,251,231 2,020,834 795,259 267,440 108,115
Less: Reimbursement from advisor............ -- -- (19,099) (55,561) (83,080)
--------------------------------------------------------------------------
Net expenses.............................. 2,251,231 2,020,834 776,160 211,879 25,035
--------------------------------------------------------------------------
Net investment income (deficit)......... (3,277,713) (2,371,066) 1,577,283 249,565 195,107
--------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain from security transactions.. 25,025,135 25,076,226 6,045,361 2,116,964 288,875
Change in net unrealized appreciation
(depreciation) of investments............... 33,698,001 23,755,815 5,862,603 505,781 (128,268)
--------------------------------------------------------------------------
Net gain on investments................... 58,723,136 48,832,041 11,907,964 2,622,745 160,607
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................... $ 55,445,423 $ 46,460,975 $ 13,485,247 $2,872,310 $ 355,714
--------------------------------------------------------------------------
</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 FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
--------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ (1,467,001) $ (1,291,902) $ (641,957) $ (435,825)
Net realized gain (loss)
from security
transactions............ 17,157,012 (11,872,619) 11,262,503 (6,523,988)
Change in net unrealized
appreciation
(depreciation) of
investments............. 22,567,484 20,925,147 10,033,989 8,438,977
--------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 38,257,495 7,760,626 20,654,535 1,479,164
--------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*.... -- -- -- --
Capital gain*............. (179,082) -- -- (3,970)
--------------------------------------------------------
Total distributions..... (179,082) -- -- (3,970)
--------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold.................... 37,959,926 16,517,684 13,279,964 12,693,979
Proceeds from shares
issued for distribution
reinvestment............ 28,673 -- -- 754
Cost of shares
repurchased............. (44,636,699) (22,391,518) (21,950,980) (19,390,553)
--------------------------------------------------------
Increase (decrease) in
net assets derived
from transactions in
shares of beneficial
interest.............. (6,648,100) (5,873,834) (8,671,016) (6,695,820)
--------------------------------------------------------
Total increase
(decrease) in net
assets................ 31,430,313 1,886,792 11,983,519 (5,220,626)
NET ASSETS:
BEGINNING OF PERIOD......... 106,725,077 104,838,285 65,291,541 70,512,167
--------------------------------------------------------
END OF PERIOD............... $ 138,155,390 $ 106,725,077 $ 77,275,060 $ 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................. 2,374,005 1,361,724 812,501 982,603
Shares issued for
distributions
reinvested................ 1,774 -- -- 61
Shares repurchased.......... (2,841,008) (1,855,095) (1,403,881) (1,505,678)
--------------------------------------------------------
Ending balance.............. 7,704,965 8,170,194 4,207,526 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 GOVERNMENT INCOME MONEY MARKET
-------------------------- ------------------------ -------------------------- ------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995 1996 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ 1,014,246 $ 1,230,002 $ 120,127 $ 80,682 $ 65,740 $ 43,458 $ 199,306
Net realized gain (loss)
from security
transactions............ 3,025,096 (3,633,409) 688,324 (335,149) 74,049 (45,372) (322)
Change in net unrealized
appreciation
(depreciation) of
investments............. 3,076,767 1,492,224 188,570 380,701 (44,744) 39,593 --
----------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 7,116,109 (911,183) 997,021 126,234 95,045 37,679 198,984
----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*.... (1,011,296) (1,220,486) (120,078) (81,141) (65,742) (43,822) (199,306)
Capital gain*............. -- (1,018,388) -- -- -- (1,870) --
----------------------------------------------------------------------------------------------
Total distributions..... (1,011,296) (2,238,874) (120,078) (81,141) (65,742) (45,692) (199,306)
----------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold.................... 3,034,140 12,490,722 1,158,459 368,105 789,251 813,445 22,041,605
Proceeds from shares
issued for distribution
reinvestment............ 359,472 593,046 19,024 6,923 21,274 5,789 180,368
Cost of shares
repurchased............. (8,936,855) (9,230,676) (1,131,809) (1,886,429) (467,444) (706,066) (22,088,275)
----------------------------------------------------------------------------------------------
Increase (decrease) in
net assets derived
from transactions in
shares of beneficial
interest.............. (5,543,243) 3,853,092 45,674 (1,511,401) 343,081 113,168 133,698
----------------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 561,570 703,035 922,617 (1,466,308) 372,384 105,155 133,376
NET ASSETS:
BEGINNING OF PERIOD......... 31,150,481 30,447,446 4,979,593 6,445,901 925,074 819,919 2,995,847
----------------------------------------------------------------------------------------------
END OF PERIOD............... $ 31,712,051 $ 31,150,481 $ 5,902,210 $ 4,979,593 $ 1,297,458 $ 925,074 $ 3,129,223
----------------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 2,422,113 2,150,922 362,417 476,861 75,262 65,520 2,995,847
Shares sold................. 209,464 922,272 75,429 27,968 60,991 66,518 22,041,605
Shares issued for
distributions
reinvested................ 24,649 46,302 1,215 525 1,648 475 180,368
Shares repurchased.......... (634,018) (697,383) (73,846) (142,937) (36,083) (57,251) (22,088,275)
----------------------------------------------------------------------------------------------
Ending balance.............. 2,022,208 2,422,113 365,215 362,417 101,818 75,262 3,129,545
----------------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
MARCH 31,
1995
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS
Net investment income
(deficit)............... $ 178,235
Net realized gain (loss)
from security
transactions............ 7
Change in net unrealized
appreciation
(depreciation) of
investments............. --
Net increase (decrease)
in net assets
resulting from
operations............ 178,242
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*.... (178,235)
Capital gain*............. --
Total distributions..... (178,235)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold.................... 13,194,354
Proceeds from shares
issued for distribution
reinvestment............ 170,364
Cost of shares
repurchased............. (10,416,853)
Increase (decrease) in
net assets derived
from transactions in
shares of beneficial
interest.............. 2,947,865
Total increase
(decrease) in net
assets................ 2,947,872
NET ASSETS:
BEGINNING OF PERIOD......... 47,975
END OF PERIOD............... $ 2,995,847
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 47,982
Shares sold................. 13,194,354
Shares issued for
distributions
reinvested................ 170,364
Shares repurchased.......... (10,416,853)
Ending balance.............. 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>
CORE
EMERGING GROWTH GROWTH INCOME & GROWTH BALANCED GROWTH
--------------- --------------- --------------- ---------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
ENDED MARCH 31, ENDED MARCH 31, ENDED MARCH 31, ENDED MARCH 31,
1996 1996 1996 1996
<S> <C> <C> <C> <C>
---------------------------------------------------------------------
INCREASE IN NET ASSETS
OPERATIONS
Net investment income (deficit)..................... $ (112,312) $ (58,827) $ 18,883 $ 4,767
Net realized gain (loss) from security
transactions...................................... (229,159) (1,452) (5,589) (7,072)
Change in net unrealized appreciation (depreciation)
of investments.................................... 1,781,045 856,200 134,573 25,235
---------------------------------------------------------------------
Net increase in net assets resulting from
operations...................................... 1,439,574 795,921 147,867 22,930
---------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL INTEREST
Net investment income*.............................. -- -- (18,662) (4,771)
Capital gain*....................................... -- -- -- --
---------------------------------------------------------------------
Total distributions............................... -- -- (18,662) (4,771)
---------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from sales................................. 12,483,997 11,229,429 1,989,445 701,091
Proceeds from shares issued for distribution
reinvestment...................................... -- -- 13,947 2,978
Cost of shares repurchased.......................... (298,833) (840,372) (8,520) (50,294)
---------------------------------------------------------------------
Increase in net assets derived from transactions in
shares of beneficial interest..................... 12,185,164 10,389,057 1,994,872 653,775
---------------------------------------------------------------------
Total increase in net assets...................... 13,624,738 11,184,978 2,124,077 671,934
NET ASSETS:
BEGINNING OF PERIOD................................... 1,000 1,000 1,000 1,000
---------------------------------------------------------------------
END OF PERIOD......................................... $ 13,625,738 $ 11,185,978 $ 2,125,077 $ 672,934
---------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................................... 80 80 80 80
Shares sold........................................... 835,910 743,523 141,568 50,735
Shares issued for distributions reinvested............ -- -- 963 215
Shares repurchased.................................... (19,347) (55,252) (592) (3,557)
---------------------------------------------------------------------
Ending Balance........................................ 816,643 688,351 142,019 47,473
---------------------------------------------------------------------
<CAPTION>
GOVERNMENT
INCOME
---------------
FOR THE PERIOD
ENDED MARCH 31,
1996
<S> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net investment income (deficit)..................... $ 2,096
Net realized gain (loss) from security
transactions...................................... 445
Change in net unrealized appreciation (depreciation)
of investments.................................... (2,381)
Net increase in net assets resulting from
operations...................................... 160
DISTRIBUTIONS TO SHARES OF BENEFICIAL INTEREST
Net investment income*.............................. (2,088)
Capital gain*....................................... (43)
Total distributions............................... (2,131)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from sales................................. 186,853
Proceeds from shares issued for distribution
reinvestment...................................... 1,394
Cost of shares repurchased.......................... (59,748)
Increase in net assets derived from transactions in
shares of beneficial interest..................... 128,499
Total increase in net assets...................... 126,528
NET ASSETS:
BEGINNING OF PERIOD................................... 1,000
END OF PERIOD......................................... $ 127,528
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................................... 80
Shares sold........................................... 14,683
Shares issued for distributions reinvested............ 110
Shares repurchased.................................... (4,699)
Ending Balance........................................ 10,174
</TABLE>
- -------------
*See Financial Highlights for per share distribution amounts.
+Commenced operations on May 31, 1995.
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 FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)............... $ (3,277,713) $ (2,660,776) $ (2,371,066) $ (1,850,408)
Net realized gain (loss)
from security
transactions............ 25,025,135 (16,791,698) 25,076,226 (16,113,442)
Change in net unrealized
appreciation
(depreciation) of
investments............. 33,698,001 30,128,531 23,755,815 20,447,382
-----------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 55,445,423 10,676,057 46,460,975 2,483,532
-----------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*.... -- -- -- --
Capital gain*............. (934,772) -- -- (1,143)
-----------------------------------------------------------------
Total distributions..... (934,772) -- -- (1,143)
-----------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from sales....... 34,428,228 29,972,562 28,016,055 38,072,250
Proceeds from shares
issued for distribution
reinvestment............ 70,462 -- -- 86
Cost of shares
repurchased............. (38,969,582) (26,230,683) (40,405,355) (38,653,630)
-----------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ (4,470,892) 3,741,879 (12,389,300) (581,294)
-----------------------------------------------------------------
Total increase
(decrease) in net
assets................ 50,039,759 14,417,936 34,071,675 1,901,095
NET ASSETS:
BEGINNING OF PERIOD......... 157,292,246 142,874,310 143,389,656 141,488,561
-----------------------------------------------------------------
END OF PERIOD............... $ 207,332,005 $ 157,292,246 $ 177,461,331 $ 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................. 2,229,275 2,481,536 1,736,793 2,957,715
Shares issued for
distributions
reinvested................ 4,429 -- -- 7
Shares repurchased.......... (2,606,932) (2,176,591) (2,571,494) (3,032,198)
-----------------------------------------------------------------
Ending Balance.............. 11,765,386 12,138,614 9,825,753 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 FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)............... $ 1,577,283 $ 2,068,036 $ 249,565 $ 138,191 $ 195,107 $ 276,768
Net realized gain (loss)
from security
transactions............ 6,045,361 (7,995,881) 2,116,964 (1,152,920) 288,875 (402,558)
Change in net unrealized
appreciation
(depreciation) of
investments............. 5,862,603 3,449,941 505,781 1,445,409 (128,268) 266,100
---------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 13,485,247 (2,477,904) 2,872,310 430,680 355,714 140,310
---------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*.... (1,579,024) (2,043,337) (250,682) (137,938) (195,316) (279,201)
Capital gain*............. -- (1,728,932) -- -- -- (5,572)
---------------------------------------------------------------------------------------------------
Total distributions..... (1,579,024) (3,772,269) (250,682) (137,938) (195,316) (284,773)
---------------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from sales....... 5,125,006 18,579,532 2,569,236 3,960,592 2,475,860 8,959,128
Proceeds from shares
issued for distribution
reinvestment............ 118,288 182,394 28,551 12,834 37,183 21,658
Cost of shares
repurchased............. (19,943,781) (19,984,987) (5,102,586) (4,044,788) (3,965,294) (11,903,483)
---------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ (14,700,487) (1,223,061) (2,504,799) (71,362) (1,452,251) (2,922,697)
---------------------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ (2,794,264) (7,473,234) 116,829 221,380 (1,291,853) (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............... $ 58,997,309 $ 61,791,573 $ 16,586,339 $ 16,469,510 $ 2,986,287 $ 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................. 353,167 1,369,144 163,082 301,100 192,231 724,947
Shares issued for
distributions
reinvested................ 8,002 14,100 1,833 961 2,908 1,774
Shares repurchased.......... (1,390,102) (1,490,861) (337,604) (305,393) (307,245) (963,033)
---------------------------------------------------------------------------------------------------
Ending Balance.............. 3,712,379 4,741,312 1,023,861 1,196,550 236,490 348,596
---------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
77
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS
- -------------------------------------------------------------------
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"). For a description of the investment objectives of each Fund, see Note
A to the accompanying Funds' financial statements.
Pursuant to Rule 24f-2 under the Investment Company Act, the Trust has elected
to register an indefinite number of shares. The Trust commenced operations on
April 19, 1993.
INVESTMENT INCOME
Each Portfolio accrues income, net of expenses, daily on its investment in the
applicable Fund. All of the net investment income (deficit) and realized and
unrealized gains and losses from the security transactions and foreign currency
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 Portfolio's 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 Balanced Growth Portfolio B and Government Income
Portfolio B include cash received from the investment adviser for expense
reimbursements.
- --------------------------------------------------------------------------------
78
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
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, except for Government Income B and C Portfolios, which
is 0.50% and 0.50%, 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 imposed on purchases of shares of the Series A
Portfolios. This agreement may be terminated by either party upon 60 days'
written notice. For the fiscal year ended March 31, 1996, the Distributor earned
$1,277,246 from sales loads.
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 average 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 Portfolios'
expenses to the following annual levels through March 31, 1997. 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>
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% n/a n/a
</TABLE>
During the period from November 22, 1993 to March 31, 1996,
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 limitation at its discretion.
- --------------------------------------------------------------------------------
79
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
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.
The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Portfolios, during the period from inception (respectively) to March 31,
1996, are as follows:
<TABLE>
<CAPTION>
A B C
----------- --------- -----------
<S> <C> <C> <C>
Emerging Growth
Portfolios........ -- $ 36,235 --
Core Growth
Portfolios........ $ 80,878 42,527 --
Income & Growth
Portfolios........ 150,040 35,125 $ 50,448
Balanced Growth
Portfolios........ 216,288 35,650 164,684
Government Income
Portfolios........ 211,656 32,053 213,083
Money Market
Portfolio......... 246,529 n/a n/a
</TABLE>
Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of March 31, 1996, 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>
RELATED PARTIES
Certain officers of the Trust and the Master Trust are also officers of the
Investment Adviser and the Distributor.
3. INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the respective Master Trust
Funds for the fiscal year ended March 31, 1996 were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
--------- -----------
<S> <C> <C>
Emerging Growth Portfolio A....... $ 37,960 $ 45,486
Emerging Growth Portfolio B....... 12,537 372
Emerging Growth Portfolio C....... 34,428 41,958
Core Growth Portfolio A........... 13,287 22,384
Core Growth Portfolio B........... 11,290 899
Core Growth Portfolio C........... 28,016 42,356
Income & Growth Portfolio A....... 3,085 9,902
Income & Growth Portfolio B....... 1,990 11
Income & Growth Portfolio C....... 5,195 22,227
Balanced Growth Portfolio A....... 1,215 1,352
Balanced Growth Portfolio B....... 706 51
Balanced Growth Portfolio C....... 2,623 5,594
Government Income Portfolio A..... 840 604
Government Income Portfolio B..... 190 60
Government Income Portfolio C..... 2,546 4,248
Money Market Portfolio............ 22,051 22,108
</TABLE>
- --------------------------------------------------------------------------------
80
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
AS OF MARCH 31, 1996
<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*.................... $ 589,916,573 $ 424,821,797 $ 111,582,468 $ 23,374,270 $4,406,839 $ 3,188,035
Cash...................................... 6,624 104,687 1,068,976 1,215 804 925
Receivable for investment securities
sold.................................... 8,892,675 6,485,822 1,054,430 232,027 -- --
Receivable for interests sold............. 1,781,237 1,065,892 435,420 105,206 30,831 --
Dividends receivable...................... 79,939 63,712 111,346 3,164 -- --
Interest receivable....................... 4,265 8,701 799,241 177,304 82,891 831
Due from advisor.......................... -- -- -- -- 16,215 18,467
Deferred organization costs............... 22,962 31,883 15,812 11,280 10,375 9,491
Other assets.............................. 8,958 2,990 730 48 -- 120
-----------------------------------------------------------------------------------
Total assets.......................... 600,713,233 432,585,484 115,068,423 23,904,514 4,547,955 3,217,869
-----------------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities
purchased............................... 4,605,614 11,360,399 3,052,126 -- -- --
Payable for interests repurchased......... 11,374,104 303,649 131,446 30,270 22,974 --
Due to advisor............................ -- -- 192 -- 24,688 24,688
Accrued expenses.......................... 647,133 378,833 126,723 29,693 22,299 19,334
-----------------------------------------------------------------------------------
Total liabilities..................... 16,626,851 12,042,881 3,310,487 59,963 69,961 44,022
-----------------------------------------------------------------------------------
NET ASSETS.................................. $ 584,086,382 $ 420,542,603 $ 111,757,936 $ 23,844,551 $4,477,994 $ 3,173,847
-----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital........................... $ 405,315,616 $ 313,544,763 $ 82,905,884 $ 18,981,131 $3,797,724 $ 3,174,172
Accumulated net investment income
(deficit)............................... (6,202,213) (683,173) 11,637,836 1,409,039 755,564 --
Accumulated net realized gain (loss)...... 24,342,802 18,927,339 2,949,024 709,785 (1,536) (325)
Net unrealized appreciation (depreciation)
of investments.......................... 160,630,177 88,753,674 14,265,192 2,744,596 (73,758) --
-----------------------------------------------------------------------------------
Net assets............................ $ 584,086,382 $ 420,542,603 $ 111,757,936 $ 23,844,551 $4,477,994 $ 3,173,847
-----------------------------------------------------------------------------------
*Investments, at cost....................... $ 429,286,396 $ 336,068,123 $ 97,317,276 $ 20,629,674 $4,480,597 $ 3,188,035
-----------------------------------------------------------------------------------
</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 YEAR ENDED MARCH 31, 1996
<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............................... $ 1,179,992 $ 1,114,996 $ 1,152,827 $ 112,176 $ -- $ --
Interest................................ 1,620,601 1,157,351 3,989,027 741,327 321,658 217,637
-------------------------------------------------------------------------------
Total income.......................... 2,800,593 2,272,347 5,141,854 853,503 321,658 217,637
-------------------------------------------------------------------------------
Expenses:
Advisory fee............................ 5,190,853 2,563,061 789,222 169,416 20,408 9,402
Accounting fee.......................... 172,731 138,472 76,569 75,000 75,000 75,000
Administration fee...................... 35,001 118,532 36,632 7,859 1,663 1,311
Audit & tax services.................... 136,316 93,588 26,856 6,295 1,207 8,421
Custodian fee........................... 151,066 64,667 31,624 27,384 15,220 16,346
Insurance............................... 9,983 9,416 2,796 681 158 105
Legal fee............................... 8,636 8,990 2,913 617 135 954
Miscellaneous........................... 24,391 3,943 10,451 7,746 3,773 4,924
Organization costs...................... 8,539 15,585 7,730 5,516 5,073 111
Trustees' fee........................... 8,450 8,450 8,450 8,450 8,451 3,673
-------------------------------------------------------------------------------
Total expenses........................ 5,745,966 3,024,704 993,243 308,964 131,088 120,247
Less: Reimbursement to (from)
advisor............................. -- -- 6,439 (94,370) (101,143) (103,377)
-------------------------------------------------------------------------------
Net expenses.......................... 5,745,966 3,024,704 999,682 214,594 29,945 16,870
-------------------------------------------------------------------------------
Net investment income (deficit)....... (2,945,373) (752,357) 4,142,172 638,909 291,713 200,767
-------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) from security
transactions............................ 78,797,996 50,587,998 10,319,301 2,837,068 363,388 (325)
Change in net unrealized appreciation
(depreciation) of investments........... 91,635,716 52,583,826 10,732,341 742,010 (175,424) --
-------------------------------------------------------------------------------
Net gain (loss) on investments.......... 170,433,712 103,171,824 21,051,642 3,579,078 187,964 (325)
-------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................ $ 167,488,339 $ 102,419,467 $ 25,193,814 $ 4,217,987 $ 479,677 $ 200,442
-------------------------------------------------------------------------------
</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 FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1996 MARCH 31, 1995 MARCH 31, 1996 MARCH 31, 1995
<S> <C> <C> <C> <C>
---------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income
(deficit)............... $ (2,945,373) $ (2,224,592) $ (752,357) $ 136,431
Net realized gain (loss)
from security
transactions............ 78,797,996 (48,388,925) 50,587,998 (27,617,865)
Change in net unrealized
appreciation
(depreciation) of
investments............. 91,635,716 88,372,950 52,583,826 36,375,233
---------------------------------------------------------------------
Net increase (decrease)
in net assets from
operations............ 167,488,339 37,759,433 102,419,467 8,893,799
---------------------------------------------------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income..... -- -- -- --
---------------------------------------------------------------------
TRANSACTIONS IN INTERESTS:
Contributions by
partners................ 107,044,506 77,212,401 113,757,799 76,785,761
Withdrawals by partners... (161,495,614) (57,696,150) (79,489,585) (91,624,360)
---------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in
interests............. (54,451,108) 19,516,251 34,268,214 (14,838,599)
---------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 113,037,231 57,275,684 136,687,681 (5,944,800)
NET ASSETS:
BEGINNING OF PERIOD......... 471,049,151 413,773,467 283,854,922 289,799,722
---------------------------------------------------------------------
END OF PERIOD............... $ 584,086,382 $ 471,049,151 $ 420,542,603 $ 283,854,922
---------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
84
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & GROWTH BALANCED GROWTH
--------------------------------- ---------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1996 MARCH 31, 1995 MARCH 31, 1996 MARCH 31, 1995
<S> <C> <C> <C> <C>
---------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income
(deficit)............... $ 4,142,172 $ 5,103,250 $ 638,909 $ 477,083
Net realized gain (loss)
from security
transactions............ 10,319,301 (13,408,682) 2,837,068 (1,500,269)
Change in net unrealized
appreciation
(depreciation) of
investments............. 10,732,341 5,539,419 742,010 1,850,658
---------------------------------------------------------------------
Net increase (decrease)
in net assets from
operations............ 25,193,814 (2,766,013) 4,217,987 827,472
---------------------------------------------------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income..... -- -- -- --
---------------------------------------------------------------------
TRANSACTIONS IN INTERESTS:
Contributions by
partners................ 15,608,507 32,875,977 4,914,004 4,819,959
Withdrawals by partners... (35,130,807) (42,582,471) (7,102,941) (6,527,607)
---------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in
interests............. (19,522,300) (9,706,494) (2,188,937) (1,707,648)
---------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 5,671,514 (12,472,507) 2,029,050 (880,176)
NET ASSETS:
BEGINNING OF PERIOD......... 106,086,422 118,558,929 21,815,501 22,695,677
---------------------------------------------------------------------
END OF PERIOD............... $ 111,757,936 $ 106,086,422 $ 23,844,551 $ 21,815,501
---------------------------------------------------------------------
<CAPTION>
GOVERNMENT INCOME MONEY MARKET
--------------------------------- ---------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 1996 MARCH 31, 1995 MARCH 31, 1996 MARCH 31, 1995
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income
(deficit)............... $ 291,713 $ 365,015 $ 200,767 $ 179,428
Net realized gain (loss)
from security
transactions............ 363,388 (447,930) (325) 17
Change in net unrealized
appreciation
(depreciation) of
investments............. (175,424) 305,693 -- --
Net increase (decrease)
in net assets from
operations............ 479,677 222,778 200,442 179,445
DISTRIBUTIONS TO PARTNERS
Net investment income..... -- -- (200,767) (179,428)
TRANSACTIONS IN INTERESTS:
Contributions by
partners................ 3,577,045 10,057,391 22,251,491 13,398,906
Withdrawals by partners... (4,912,231) (13,048,663) (22,108,039) (10,440,597)
Net increase (decrease)
in net assets from
transactions in
interests............. (1,335,186) (2,991,272) 143,452 2,958,309
Total increase
(decrease) in net
assets................ (855,509) (2,768,494) 143,127 2,958,326
NET ASSETS:
BEGINNING OF PERIOD......... 5,333,503 8,101,997 3,030,720 72,394
END OF PERIOD............... $ 4,477,994 $ 5,333,503 $ 3,173,847 $ 3,030,720
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
85
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS
- -------------------------------------------------------------------
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 March 31, 1996. Each Fund has up to five Portfolios which have
invested in the respective series of the Master Trust to achieve their
investment objective.
The investment objectives of the Funds are as follows:
Emerging Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in equity securities of U.S. companies with less than $500
million in market capitalization.
Core Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in U.S. companies, generally over $500 million in total
stock market value.
Income & Growth Fund seeks to maximize total return through investment
primarily in convertible and equity securities of U.S. companies.
Balanced Growth Fund 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.
Government Income Fund seeks to maximize current income through investment
primarily in intermediate-term debt securities of the U.S. government and its
agencies and instrumentalities.
Money Market Fund seeks to achieve a high level of current income consistent
with preservation of capital and maintenance of liquidity through investment in
investment grade securities with an average maturity of 90 days.
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 and securities held in the Money Market Fund 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.
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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles
- --------------------------------------------------------------------------------
86
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
B. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENTS
The investment adviser to the Master Trust is Nicholas-Applegate Capital
Management ("Nicholas-Applegate"). The advisory fee is computed daily for the
Funds based upon the following percentages of each Fund's average daily net
assets:
<TABLE>
<CAPTION>
FIRST EXCESS OF
$500 NEXT $500 $1
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 Growth Fund.......... .75% .675% .65%
Government Income Fund........ .40% .55% .55%
Money Market Fund............. .25% .2275% .2275%
</TABLE>
EXPENSE LIMITATIONS
Nicholas-Applegate and the Master Trust have undertaken to limit the Funds'
expenses to certain annual levels through March 31, 1997. In subsequent years,
overall operating expenses for each Fund will not fall below the 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 Fund will reimburse the Investment Adviser in subsequent years when
operating expenses (before reimbursement) are less than the applicable
percentage limitation.
The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Funds, during the period from inception (respectively) to March 31, 1996,
are as follows:
<TABLE>
<S> <C>
Income & Growth Fund................ $ 37,500
Balanced Growth Fund................ 244,871
Government Income Fund.............. 255,677
Money Market Fund................... 281,901
</TABLE>
Nicholas-Applegate advanced certain organization costs discussed in Note A. As
of March 31, 1996, the following Funds have amounts due to Nicholas-Applegate
for organizational costs advanced:
<TABLE>
<S> <C>
Government Income Fund.............. $ 24,688
Money Market Fund................... 24,688
</TABLE>
C. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investment securities, other than
short-term obligations, for the fiscal year ended March 31, 1996, were as
follows (in 000's):
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Emerging Growth Fund............ $ 641,224 $ 681,706
Core Growth Fund................ 396,795 369,702
Income & Growth Fund............ 147,316 166,406
Balanced Growth Fund............ 42,668 41,675
Government Income Fund.......... 8,677 9,831
</TABLE>
- --------------------------------------------------------------------------------
87
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
At March 31, 1996, the net unrealized appreciation (depreciation) based on the
cost of investments for Federal income tax purposes was as follows (in 000's):
<TABLE>
<CAPTION>
NET
TAX GROSS GROSS UNREALIZED
COST OF UNREALIZED UNREALIZED APPRECIATION
INVESTMENTS APPRECIATION DEPRECIATION (DEPRECIATION)
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
EMERGING
GROWTH FUND. $ 429,278 $ 170,460 $ 9,901 $ 160,559
CORE GROWTH
FUND........ 336,068 92,929 4,175 88,754
INCOME &
GROWTH FUND. 97,318 14,508 244 14,264
BALANCED
GROWTH FUND. 20,630 3,296 552 2,744
GOVERNMENT
INCOME FUND. 4,481 38 112 (74)
MONEY MARKET
FUND........ 3,188 -- 1 (1)
</TABLE>
- --------------------------------------------------------------------------------
88
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
D. SELECTED RATIO DATA
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT RATIO OF NET
EXPENSES TO EXPENSES TO INCOME INVESTMENT
AVERAGE NET AVERAGE NET (DEFICIT) TO INCOME (DEFICIT)
ASSETS, ASSETS, AVERAGE NET TO AVERAGE NET
AFTER BEFORE ASSETS, AFTER ASSETS, BEFORE
EXPENSE EXPENSE EXPENSE EXPENSE BROKER
REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS PORTFOLIO COMMISSIONS
(RECOUPMENT) (RECOUPMENT) (RECOUPMENT) (RECOUPMENT) TURNOVER RATE PER SHARE
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH*
For the year ended
03/31/96.................. 1.11% 1.11% (0.57%) (0.57%) 129.59% $ 0.0523
For the year ended
03/31/95.................. 1.12% 1.11% (0.53%) (0.52%) 100.46% --
For the period ended
03/31/94+................. 1.12% 1.16% (0.80%) (0.84%) 50.51% --
CORE GROWTH*
For the year ended
03/31/96.................. 0.89% 0.89% (0.22%) (0.22%) 114.48% $ 0.0593
For the year ended
03/31/95.................. 0.89% 0.89% 0.05% 0.05% 98.09% --
For the period ended
03/31/94+................. 0.92% 0.92% (0.03%) (0.03%) 84.84% --
INCOME & GROWTH*
For the year ended
03/31/96.................. 0.95% 0.94% 3.94% 3.94% 144.97% $ 0.0597
For the year ended
03/31/95.................. 0.93% 0.95% 4.37% 4.35% 125.51% --
For the period ended
03/31/94+................. 0.94% 0.97% 3.51% 3.48% 177.52% --
BALANCED GROWTH*
For the year ended
03/31/96.................. 0.95% 1.37% 2.83% 2.37% 197.19% $ 0.0594
For the year ended
03/31/95.................. 0.95% 1.33% 2.13% 1.75% 110.40% --
For the period ended
03/31/94+................. 0.94% 1.37% 1.93% 1.50% 85.43% --
GOVERNMENT INCOME*
For the year ended
03/31/96.................. 0.60% 2.75% 6.12% 4.00% 190.47% --
For the year ended
03/31/95.................. 0.80% 2.21% 5.32% 3.91% 258.72% --
For the period ended
03/31/94+................. 0.80% 2.80% 3.43% 1.43% 159.17% --
MONEY MARKET*
For the year ended
03/31/96.................. 0.45% 3.20% 5.34% 2.59% n/a --
For the year ended
03/31/95.................. 0.31% 3.23% 4.61% 1.69% n/a --
For the period ended
03/31/94+................. 0.24% 151.02% 2.12% (148.66%) n/a --
</TABLE>
- -------------
*All Funds commenced operations on April 19, 1993, except Emerging Growth Fund
which commenced operations on October 1, 1993.
+Annualized.
- --------------------------------------------------------------------------------
89
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- -------------------------------------------------------------------
ERNST & YOUNG LLP
515 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
PHONE: 213 977 3200
To the Shareholders and Board of Trustees of
Nicholas-Applegate Mutual Funds
We have audited the accompanying statements of assets and liabilities of the
following portfolios of Nicholas-Applegate Mutual Funds: Emerging Growth A, B &
C Portfolios, Core Growth A, B & C Portfolios, Income & Growth A, B & C
Portfolios, Balanced Growth A, B & C Portfolios, Government Income A, B & C
Portfolios, and Money Market Portfolio (hereinafter the "Portfolios"), as of
March 31, 1996, and the related statements of operations and changes in net
assets and the financial highlights for the fiscal year then ended. These
financial statements and financial highlights are the responsibility of the
Portfolios' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The
statements of changes in net assets and the financial highlights of the A & C
Portfolios for the fiscal year ended March 31, 1995 and the financial highlights
for the fiscal year ended March 31, 1994 were audited by other auditors whose
report dated May 12, 1995 expressed an unqualified opinion on those financial
statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the 1996 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial positions of
the Portfolios as of March 31, 1996, and the results of their operations,
changes in their net assets and the financial highlights for the fiscal year
then ended, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
May 10, 1996
- --------------------------------------------------------------------------------
90
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- -------------------------------------------------------------------
ERNST & YOUNG LLP
515 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
PHONE: 213 977 3200
To the Shareholders and Board of Trustees of
Nicholas-Applegate Investment Trust
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the following series of Nicholas-Applegate
Investment Trust: Emerging Growth Fund, Core Growth Fund, Income & Growth Fund,
Balanced Growth Fund, Government Income Fund, and Money Market Fund (hereinafter
the "Funds"), as of March 31, 1996, and the related statements of operations and
changes in net assets for the fiscal year then ended. These financial statements
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements based on our audits. The
statements of changes in net assets of the Funds for the fiscal year ended March
31, 1995 were audited by other auditors whose report dated May 12, 1995
expressed an unqualified opinion on those financial statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of March 31, 1996, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the 1996 financial statements referred to above present fairly,
in all material respects, the financial positions of the Funds as of March 31,
1996, and the results of their operations and changes in their net assets for
the fiscal year then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
May 10, 1996
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NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
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