<PAGE>
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SEMI-ANNUAL
REPORT
ADVISORY
PORTFOLIOS
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NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
SEPTEMBER 30, 1996
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NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
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600 West Broadway
San Diego, California 92101
800-551-8033
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
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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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
Portfolio Managers' Roundtable Discussion............................. 6
The Portfolios' Review and Outlook, Performance and the Funds'
Schedules of Investments
Mini Cap Growth..................................................... 9
Emerging Growth..................................................... 14
Core Growth......................................................... 22
Income & Growth..................................................... 26
Balanced Growth..................................................... 31
Government Income................................................... 37
Emerging Countries.................................................. 40
International Growth................................................ 46
Worldwide Growth.................................................... 52
The Portfolios'
Financial Highlights................................................ 60
Statements of Assets and Liabilities................................ 62
Statements of Operations............................................ 64
Statements of Changes in Net Assets................................. 66
Notes to the Financial Statements................................... 70
Notes to the Funds' Financial Statements.............................. 82
</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 Advisory Portfolios. Distributor: Nicholas-Applegate
Securities.
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LETTER TO SHAREHOLDERS
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DEAR FELLOW SHAREHOLDER:
We are in the midst of the longest bull market in this century. U.S. stocks
have been on an uptrend for the past 14 years and 1996 has seen the largest
inflow of capital into mutual funds of any year in history. Investors are doing
an excellent job of educating themselves. More individuals today are taking a
harder look at their financial planning needs than ever before. We're seeing
people in their 20's and early 30's saving more, on a percentage basis, than
previous generations at that stage of life. As our population is aging it is
preparing for a longer life span. There is a compounding awareness that simple
savings rates are insufficient not only for baby boomers heading into prime
earning years, but also for those in semi-retirement or fully retired.
Before we experienced a sharp-but-shortlived market downturn last summer, many
Wall Street experts suggested investors would be lulled into a false sense of
security as the market marched higher. Those investors, conventional wisdom
held, would pull out of the market at the first sign of a setback. What we saw
in July, however, were relatively calm investors who did not rush to sell when
the market dipped or when reports of a likely increase in interest rates rippled
through markets.
In fact, much of the volatile activity last summer was created by larger
institutions, not the retail sector. What we learned from this was that
individual investors are savvy, well educated and more inclined to think and act
long-term with their investing capital.
That's great news to us. At Nicholas-Applegate, our goal is to deliver GROWTH
OVER TIME-REGISTERED TRADEMARK- to our shareholders. Whether it's through our
portfolios of small or large company stocks, government or corporate bonds, or
investments here or abroad, we help you build your portfolio one security at a
time. We welcome a partnership with you that enables you to achieve your goals.
We thank you for selecting Nicholas-Applegate Mutual Funds and look forward to
serving you in the future.
Sincerely,
[SIG]
John D. Wylie
President
Nicholas-Applegate Mutual Funds
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1
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ORGANIZATION
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Nicholas-Applegate Mutual Funds (the "Trust") is organized as a diversified,
open-end management investment company which offers 46 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 15 investment vehicles (the
"Funds"). As of September 30, 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
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<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
Value Value 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
Emerging Countries Emerging Countries A x
Emerging Countries B x
Emerging Countries C x
Emerging Countries Institutional x
Emerging Countries Qualified x
International Growth International Growth A x
International Growth B x
International Growth C x
International Growth Institutional x
International Growth Qualified x
Worldwide Growth Worldwide Growth A x
Worldwide Growth B x
Worldwide Growth C x
Worldwide Growth Institutional x
Worldwide Growth Qualified x
Fully Discretionary Fully Discretionary Institutional x
Short-Intermediate Short-Intermediate Institutional x
Strategic Income Strategic Income Institutional x
High Yield Bond High Yield Bond Institutional x
</TABLE>
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2
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CAPITAL MARKETS REVIEW
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The U.S. stock market continued its broad advance through September 1996, with
large and small company stocks delivering solid returns despite a brief
midsummer dip in prices. In the six-month period from April 1 through September
30, domestic markets favored large company stocks over small company stocks, and
bond market returns trailed those of equities.
The Standard & Poor's 500 Index, a measure of large company stock performance,
returned 7.7% for the period while the Russell 2000 Index, which measures the
returns of smaller companies, returned 5.4%. Energy, technology, capital goods,
and consumer durables stocks were among the best performing domestic issues
during the period. Transportation and utility companies' shares performed poorly
relative to other sectors.
There was lingering uncertainty throughout the period over whether the Federal
Reserve Board would raise interest rates. Bond prices fell and yields rose on
news of continued job creation, a development many analysts saw as adding to
inflationary pressures in the economy. But despite continued economic growth,
prices remained stable and bonds bounced back toward the end of the period.
International company stocks trailed domestic market measures in the period,
as evidenced by returns for Morgan Stanley Capital International's Europe,
Australasia, and Far East Index, or EAFE-Registered Trademark-. Individual
country averages showed signs of strength, especially in Northern Europe and
Latin America. Stocks in Germany, the United Kingdom, and Mexico reached record
highs.
INDEX TOTAL RETURNS*
4/1/96 - 9/30/96
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
S&P 500 Large Company Stocks 7.7
S&P 400 Mid-Size Company Stocks 5.7
Russell 2000 Small Company Stocks 5.4
MSCI EAFE Foreign Stocks 1.3
IFC Investable Developing Countries 2.0
</TABLE>
Stable interest rates, a strong dollar, and good corporate earnings favored
domestic stocks over international stocks through most of the period. Some of
the world's best performing markets were in emerging market countries, including
Mexico, Brazil, Hungary, and other Latin American and Eastern European nations.
However, emerging market performance was irregular and declines in some Asian
markets led to more moderate returns for broad global measures of emerging
country performance, such as the IFC Investable Index.
Increased political stability, advanced communications, and new technologies
are creating a closer global community and economy. This facilitates
international commerce and is creating dynamic new investment opportunities. We
believe this bodes well for investors generally, and for those availing
themselves of our bottom-up style of investing specifically. We continue to seek
and find securities throughout the world that we believe are worthy of your
investment. We are upbeat about the outlook for both domestic and international
markets.
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* Index returns reflect 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 indication of future
performance.
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3
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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
<S> <C> <C> <C>
1925 1.000 1.000 1.000
1926 1.116 1.003 1.078
1927 1.535 1.224 1.174
1928 2.204 1.710 1.175
1929 2.016 0.832 1.215
1930 1.516 0.515 1.272
1931 0.859 0.259 1.204
1932 0.789 0.245 1.407
1933 1.214 0.594 1.406
1934 1.197 0.738 1.547
1935 1.767 1.035 1.624
1936 2.367 1.705 1.746
1937 1.538 0.716 1.750
1938 2.016 0.951 1.847
1939 2.008 0.954 1.957
1940 1.812 0.905 2.076
1941 1.602 0.823 2.096
1942 1.927 1.190 2.163
1943 2.427 2.242 2.208
1944 2.906 3.446 2.270
1945 3.965 5.983 2.514
1946 3.645 5.287 2.511
1947 3.853 5.335 2.445
1948 4.065 5.223 2.529
1949 4.829 6.254 2.692
1950 6.360 8.677 2.693
1951 7.888 9.355 2.587
1952 9.336 9.638 2.617
1953 9.244 9.013 2.713
1954 14.106 14.473 2.907
1955 18.561 17.431 2.870
1956 19.778 18.177 2.710
1957 17.646 15.529 2.912
1958 25.298 25.605 2.734
1959 28.322 29.804 2.673
1960 28.455 28.823 3.041
1961 36.106 38.072 3.070
1962 32.954 33.540 3.282
1963 40.469 41.444 3.322
1964 47.139 51.193 3.438
1965 53.008 72.567 3.463
1966 47.674 67.479 3.589
1967 59.104 123.670 3.259
1968 65.642 168.429 3.251
1969 60.059 126.233 3.086
1970 62.465 104.226 3.460
1971 71.406 121.423 3.917
1972 84.956 126.807 4.140
1973 72.500 87.618 4.094
1974 53.311 70.142 4.272
1975 73.144 107.189 4.665
1976 90.584 166.691 5.447
1977 84.077 211.500 5.410
1978 89.592 261.120 5.346
1979 106.113 374.614 5.280
1980 140.514 523.992 5.071
1981 133.616 596.717 5.166
1982 162.223 763.829 7.251
1983 198.745 1066.828 7.298
1984 211.199 995.680 8.427
1985 279.117 1241.234 11.037
1986 330.671 1326.275 13.745
1987 347.967 1202.966 13.372
1988 406.458 1478.135 14.665
1989 534.455 1628.590 17.322
1990 517.499 1277.449 18.392
1991 675.592 1847.629 21.942
1992 727.412 2279.039 23.709
1993 800.078 2757.147 28.034
1994 810.538 2842.773 25.856
1995 1113.918 3822.398 34.044
1996 1265.04 4359.05 32.14
Large Company Stock Small Company Stock Long-Term Government Bonds
Cumulative 1,265.04 4,359.05 32.14
The Growth of $1.00 Invested at
Year-end 1925 through September 1996
Source: Ibbotson Associates
<CAPTION>
TREASURY BILLS INFLATION
<S> <C> <C>
1925 1.000 1.000
1926 1.033 0.985
1927 1.065 0.965
1928 1.103 0.955
1929 1.155 0.957
1930 1.183 0.899
1931 1.196 0.814
1932 1.207 0.730
1933 1.211 0.734
1934 1.213 0.749
1935 1.215 0.771
1936 1.217 0.780
1937 1.221 0.804
1938 1.221 0.782
1939 1.221 0.778
1940 1.221 0.786
1941 1.222 0.862
1942 1.225 0.942
1943 1.229 0.972
1944 1.233 0.993
1945 1.237 1.015
1946 1.242 1.199
1947 1.248 1.307
1948 1.258 1.343
1949 1.272 1.318
1950 1.287 1.395
1951 1.306 1.477
1952 1.328 1.490
1953 1.352 1.499
1954 1.364 1.492
1955 1.385 1.497
1956 1.419 1.540
1957 1.464 1.587
1958 1.486 1.615
1959 1.530 1.639
1960 1.571 1.663
1961 1.604 1.674
1962 1.648 1.695
1963 1.700 1.723
1964 1.760 1.743
1965 1.829 1.777
1966 1.916 1.836
1967 1.997 1.892
1968 2.101 1.981
1969 2.239 2.102
1970 2.385 2.218
1971 2.490 2.292
1972 2.585 2.371
1973 2.764 2.579
1974 2.986 2.894
1975 3.159 3.097
1976 3.319 3.246
1977 3.489 3.465
1978 3.740 3.778
1979 4.128 4.281
1980 4.592 4.812
1981 5.267 5.242
1982 5.822 5.445
1983 6.335 5.652
1984 6.959 5.875
1985 7.496 6.097
1986 7.958 6.166
1987 8.393 6.438
1988 8.926 6.722
1989 9.673 7.034
1990 10.429 7.464
1991 11.012 7.693
1992 11.398 7.916
1993 11.728 8.133
1994 12.186 8.351
1995 12.868 8.563
1996 13.36 8.790
Treasury Bills Inflation
Cumulative 13.36 8.79
The Growth of $1.00 Invested at
Year-end 1925 through September 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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5
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PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION
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<TABLE>
<S> <C> <C> <C>
[PHOTO] [PHOTO] [PHOTO] [PHOTO]
Catherine Somhegyi Larry Speidell CFA Fred Robertson Doug Forsyth, CFA,
Partner, Chief Investment Partner, Director of Partner, Chief Investment Portfolio Manager,
Officer, Global Equity Global Systematic Officer, Fixed Income Fixed Income Investments
Management Portfolio Management
Management and Research
</TABLE>
Nicholas-Applegate brought together the panel of investment professionals
above to review this year's activities in the world's capital markets and in the
Nicholas-Applegate Mutual Funds.
Q: CATHERINE, U.S. STOCKS HAVE CONTINUED TO DELIVER SOLID RETURNS IN 1996 AND
MANY FOREIGN STOCKS SEEM TO BE JOINING THE RALLY. WHAT FORCES HAVE BEEN DRIVING
THE MARKET HERE AND ABROAD?
A: CATHERINE: Strong fundamentals in U.S. stocks and a benign interest rate
environment are two of the major factors contributing to the strong performance
of domestic stocks. The markets experienced strong capital flows into mutual
funds. For international stocks, a friendly interest rate environment, and lower
inflation rates in some of the larger developed markets, such as Germany and
Northern Europe, have contributed to a favorable environment for both stock and
bond markets. We're positive on Australia, Canada, The Netherlands, Norway and
New Zealand. Latin America is offering strong companies with solid fundamentals.
In the Asian markets, even though a few countries have underperformed, we are
positive about Malaysia, Indonesia and Hong Kong -- which have proven to be
strong.
Q: WHERE ARE YOU FINDING YOUR GREATEST BUYING OPPORTUNITIES?
A: LARRY: Well, bear in mind that we pick stocks, not markets or sectors. We
look for companies that are benefiting from positive change that is both timely
and sustainable. Because of this, we can and do find success in many industries
and sectors and we can sometimes earn gains in markets that are declining. In
our Emerging Countries Portfolios, for example, we delivered impressive gains
from the Fund's investments in Thailand from April through September even though
that market fell during the period. In our International Growth and Worldwide
Growth Fund we are finding many exciting opportunities in Europe, especially
Northern European markets.
A: CATHERINE: In our domestic funds we were especially successful with our
stock picks in the technology, retail, and consumer services areas. We found
some excellent growing companies among software developers and specialty
retailers. But I want to reinforce what Larry said. We are constantly looking
for healthy, growing companies in all
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6
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PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION -- CONTINUED
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<TABLE>
<S> <C>
[PHOTO] [PHOTO]
Pedro Marcal Maren Lindstrom
Portfolio Manager, Portfolio Manager,
Emerging Countries Fund Income & Growth Fund
</TABLE>
industries and sectors. And we base our buying and selling decisions on the
merits of the individual companies not on the economic outlook.
Q: WHY SHOULD INVESTORS DIVERSIFY THEIR PORTFOLIO INTO FOREIGN STOCKS WHEN
DOMESTIC ISSUES HAVE DONE SO WELL IN RECENT YEARS?
A: LARRY: One reason
to invest internationally is precisely because domestic markets have done so
well relative to international markets in recent years. Historically, domestic
and international markets have been subject to cycles of outperformance. For a
period of years, domestic investments would outperform international investments
and then the pattern would be reversed. Asset allocation plans attempt to take
advantage of these cycles. Over the last 25 years, for example, disciplined
investors who diversified investments between domestic and foreign stocks
generally enjoyed higher returns with less fluctuation in their portfolios than
purely domestic investors. Of course international investing carries certain
risks not found in domestic investing, such as those posed by political and
currency issues, and these risks are intensified in emerging markets.
Another reason to diversify into international investing is to gain exposure
to more of the world's opportunities and to some of its fastest growing markets
and companies. Rather than asking themselves why they should venture into
international investing, I recommend that investors ask why they should limit
themselves to domestic investments. Instead, why not strive to own more of the
best companies in the world?
Q: THE EMERGING COUNTRIES PORTFOLIOS HAVE DONE ESPECIALLY WELL. WHAT FACTORS
CONTRIBUTED TO THIS SUPERIOR PERFORMANCE?
A: PEDRO: Excellent stock selection has been the major factor contributing to
the success of our Emerging Countries Fund. It continues to benefit from some of
the world's most dynamic companies located in Asia, Eastern Europe, Latin
America, Africa and the Middle East. Because rapid changes are taking place in
these regions and countries, we believe the best investments are in those
companies that are able to take advantage of the opportunities the growth
provides. Some of our successful investments were in Israeli technology,
Brazilian retail, and Chinese consumer companies. We have also added value
through our stock selection decisions in countries where the market has
underperformed, such as Thailand. Some of the world's most dynamic companies --
those that are adapting to and managing change -- are based in emerging
countries, which are among the fastest growing in the world economy.
Q: NICHOLAS-APPLEGATE STATES THAT IT MANAGES PORTFOLIOS BY MANAGING INFORMATION.
WHAT TYPE OF INFORMATION ARE YOU LOOKING FOR, HOW DO YOU FIND IT, AND HOW DO YOU
ANALYZE IT?
A: CATHERINE: We are constantly researching companies that are poised for rapid
growth. To support our fundamental research, we have established a worldwide
network of experienced research analysts that provide us with timely information
and
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7
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PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION -- CONCLUDED
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insight. We draw from powerful internal research tools, including a
sophisticated database and computer system that evaluate and rank companies
worldwide. Our investment teams draw from these resources and from each other.
Team members work in close proximity, creating an environment that provides a
constant flow and exchange of information so we are able to make well-timed
decisions. These resources, coupled with our highly-disciplined technology,
enable us to search worldwide for companies that meet our stringent criteria.
A: MAREN: The information we look for in managing the Income & Growth Fund is
the same as in our stock portfolios except that we are focusing on investments
in convertible securities, mostly corporate bonds or preferred stocks that can
be converted to common stocks.
Just as in our stock portfolios, we use a bottom-up approach to investing in
convertibles. We look at the fundamentals of the companies, building our
portfolios on company-by-company basis.
Our objective is to deliver superior risk-adjusted returns. Once we find
companies that meet our underlying equity criteria, we look to invest in
convertible securities of companies that we believe will provide 80% to 100% of
the upside performance of the stock, with only 40 to 50% of the downside
performance. In managing the portfolio, we leverage information from our
domestic and international equity teams, our high-yield bond team, and our
systematic team to deliver a lower risk approach to small- and mid-cap equity
investing.
Q: WHAT FORCES HAVE BEEN BEHIND THIS YEAR'S RATHER SLUGGISH BOND MARKET AND HOW
HAVE YOU ADJUSTED THE GOVERNMENT INCOME AND BALANCED GROWTH FUNDS IN RESPONSE?
WHAT IS YOUR TEAM'S OUTLOOK FOR THESE AREAS OF THE BOND MARKET?
A: DOUG: Fixed income investors realized early in 1996 that the economic
contraction witnessed in 1995 was unlikely to continue into the second quarter.
Surprisingly strong employment reports shook the bond market, sending interest
rates higher and bond prices down. In the second quarter Gross Domestic Product
or GDP, the primary measure of the economy's output, rose to 4.7% and the
outlook for a Federal Reserve interest rate hike was likely. Our portfolios were
positioned to perform well in a moderate growth-low inflationary environment by
maintaining a duration slightly longer than the Lehman Brothers
Government/Corporate Index. Although this strategy proved untimely in the second
quarter, it proved beneficial in the third quarter, when the economy returned to
a slower growth trend (2.2% GDP) and rates fell. In the Balanced Growth Fund, we
included corporate bonds to add diversification and yield in this historically
low market interest rate environment.
A: FRED: In the fourth quarter we expect to see continuation of moderate
economic growth and by that we mean continued low inflation is likely. Consumer
behavior will be the major factor over the coming months as the ability to spend
will be tested. Continued low inflation is a long term positive for the bond
market.
Q: HOW DO YOU DETERMINE WHAT PERCENTAGE OF THE PORTFOLIOS TO INVEST IN
INDIVIDUAL COUNTRIES AND INDUSTRIES? AND WHY DO YOU SELECT A DIFFERENT
PERCENTAGE FROM THE BENCHMARK INDEXES?
A: LARRY: Basically, we let the stocks tell us where to invest around the
world. Most of our currency exposures are based on our bottom-up stock picking
approach, but we do consider changes in the economic and political environment
in each country. If we do not find attractive stocks, we will not own companies
located in a country; whereas in countries where attractive stocks are
plentiful, they are overweighted. We look for growing companies in the U.S. and
abroad that offer excellent investment opportunities.
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8
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MINI CAP GROWTH FUND
ADVISORY PORTFOLIO
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MANAGEMENT TEAM
Catherine Somhegyi
Partner, Chief Investment Officer
Global Equity Management
John C. McCraw
Portfolio Manager
Thomas E. Bleakley
Portfolio Manager
Ronald J. Krystyniak
Investment Analyst
GOAL: The Nicholas-Applegate Mini Cap Growth Fund seeks to maximize long-term
capital appreciation by investing for growth primarily in companies with less
than $100 million in market capitalization.
REVIEW AND OUTLOOK: The Mini Cap Growth Fund delivered solid returns from
April through September 1996 despite volatile market conditions. After a great
start to the fiscal year, performance was briefly marred by a sharp midsummer
dip in the broad equities market that was felt most acutely in the technology
sector. Smaller companies recovered in August and the Fund rallied to a strong
close. The Fund's Advisory Portfolio Shares returned 13.4% for the period, well
ahead of the 4.9% return of the Russell 2000 Growth Index, a measure of small
company growth stock performance.
The Fund benefited from excellent stock selection within the technology,
retail, and financial services sectors, with especially strong returns from
specialty chains, telecommunications companies and firms in the semiconductor
and electronics industries. Marks Brothers Jewelers, the sixth largest jewelry
chain in the country, contributed to the Fund's strong performance. The company
has been growing earnings as it has been expanding its store base by
approximately 12% to 15% annually. Among financial services company stocks,
shares of Sirrom Capital, an investment company that lends to small, privately
owned companies, performed well. Sirrom benefited during the period by acquiring
a company that specializes in merger-and-acquisition services. Sirrom has also
increased its number of lenders. As of September 30, technology companies
accounted for 27% of the Fund's assets, including 11% in software and 5% in
telecommunications. Consumer services totaled 10% and health care comprised
another 15% of the holdings. We sold our positions in Manhattan Bagel Co. and
Nuco2, a supplier of carbonation for soda fountains. Manhattan Bagel recently
showed lower earnings due to higher than expected costs. The earnings outlook
for Nuco2 could be troubled, as a leading supplier's entry into the soft-drink
carbonation business is expected to add to competitive pressures affecting
Nuco2's pricing.
We remain upbeat about the prospects for smaller companies and continue to
discover new, exciting companies for inclusion in the Mini Cap Growth Fund. We
believe the current economic and market conditions offer the potential of
continued strong performance to our investors.
REPRESENTATIVE HOLDINGS
Sirrom Capital Corp.
Ultrak, Inc.
Pomeroy Computer Resources, Inc.
Marks Brothers Jewelers, Inc.
Vans, Inc.
Sangstat Medical Corp.
Leasing Solutions, Inc.
Physician Support Systems, Inc.
Miller Industries, Inc.
Knight Transportation, Inc.
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9
<PAGE>
MINI CAP GROWTH ADVISORY PORTFOLIO
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE MINI
CAP GROWTH ADVISORY PORTFOLIO WITH THE RUSSELL 2000 GROWTH INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
30.48% As of 09/30/96 34.68%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MINI CAP GROWTH
<S> <C> <C>
Advisory Portfolio Russell 2000 Growth Index
7/12/95 $ 10,000 $ 10,000
9/30/95 11,024 10,730
12/31/95 11,480 10,890
3/31/96 12,680 11,515
6/30/96 14,864 12,188
9/30/96 14,384 12,084
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Mini Cap Growth Advisory Portfolio with the Russell
2000 Growth Index, on a cumulative and average annual total return basis. All
return calculations reflect the reinvestment of income dividends and capital
gains distributions, if any, as well as all fees and expenses.
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 is an unmanaged index containing those securities
in the Russell 2000 Index with a greater-than-average growth orientation.
Companies in this index generally have higher price-to-book and price-earnings
ratios. The Russell 2000 Index is an unmanaged index and is a widely regarded
small-cap index of the 2,000 smallest securities in the Russell 3000 Index which
comprises the 3,000 largest U.S. securities as determined by total market
capitalization.
Index returns reflect the reinvestment of income dividends and capital gains
distributions, if any, but 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.
- --------------------------------------------------------------------------------
10
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------
MINI CAP GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 95.0%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
AIRLINES -- 0.7%
Atlantic Coast Airlines, Inc.*............. 6,800 $ 79,900
Mesaba Holdings, Inc.*..................... 11,700 127,237
------------
207,137
------------
APPAREL -- 5.8%
Cole Kenneth Productions, Inc.*............ 8,400 158,550
Deckers Outdoor Corp.*..................... 12,900 116,100
Donnkenny, Inc.*........................... 8,900 152,413
Genesco, Inc.*............................. 27,700 259,688
Movado Group, Inc.......................... 6,900 174,225
Pacific Sunwear of California, Inc.*....... 8,600 282,725
Paul Harris Stores, Inc.*.................. 19,800 198,000
Sport - Haley, Inc.*....................... 12,000 150,000
Vans, Inc.*................................ 12,700 242,887
------------
1,734,588
------------
BIOTECHNOLOGY -- 2.2%
Cryolife, Inc.*............................ 11,200 142,800
Guilford Pharmaceuticals*.................. 10,600 291,500
Matritech, Inc.*........................... 20,000 258,750
------------
693,050
------------
BROADCASTING - 1.9%
Argyle Television, Inc.*................... 6,700 188,438
Granite Broadcasting*...................... 11,700 166,725
United Video Satellite G Class A*.......... 11,400 230,850
------------
586,013
------------
BUILDING MATERIALS -- 1.0%
Shaw Group, Inc.*.......................... 8,300 288,425
------------
CLOTHING CHAINS -- 1.3%
Baker J, Inc.*............................. 17,400 106,303
Buckle, Inc.*.............................. 10,100 320,675
------------
426,978
------------
COMPUTER/OFFICE AUTOMATION -- 2.8%
Brooktrout Technology, Inc.*............... 11,200 408,800
CHS Electronics, Inc.*..................... 11,700 159,413
Pomeroy Computer Resources*................ 8,000 262,000
------------
830,213
------------
CONTAINERS -- 0.8%
Seda Specialty*............................ 12,000 231,000
------------
CONTRACTING DRILLING -- 0.3%
Unit Corp.*................................ 16,000 94,000
------------
DRUGS/PHARMACEUTICALS -- 1.7%
Curative Technologies,Inc.*................ 13,900 267,575
Inhale Therapeutic Systems*................ 4,200 54,075
Sangstat Medical Corp.*.................... 8,000 204,000
------------
525,650
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 3.5%
Checkmate Electronics, Inc.*............... 12,800 $ 192,000
Lecroy Corp.*.............................. 12,000 312,000
Powell Industries, Inc.*................... 12,500 115,625
Printrak Intl.*............................ 10,900 106,275
Ultrak Inc.*............................... 11,600 319,000
------------
1,044,900
------------
ENTERTAINMENT -- 0.5%
Cinar Films, Inc.*......................... 5,400 140,738
------------
ENVIRONMENTAL SERVICES -- 0.4%
American Disposal Services, Inc.*.......... 6,000 108,750
------------
FINANCE COMPANIES -- 1.7%
Central Financial*......................... 8,900 171,881
Sirrom Capital Corp........................ 10,900 329,725
------------
501,606
------------
GROCERY PRODUCTS -- 0.7%
Worthington Foods, Inc..................... 8,300 207,500
------------
HOME FURNISHINGS -- 1.2%
Bush Industries, Inc. Class A.............. 13,050 239,794
O'Sullivan Industries*..................... 14,500 128,687
------------
368,481
------------
HOMEBUILDING -- 1.0%
Cavalier Homes, Inc........................ 16,400 303,400
------------
INDUSTRIAL ENGINEER/CONSTRUCTION -- 1.6%
Greenwich Air Services, Inc. Class A....... 6,300 176,400
Greenwich Air Services, Inc. Class B*...... 9,400 195,050
Starrett Corp.............................. 8,900 97,900
------------
469,350
------------
LEISURE/GAMING -- 2.6%
Acres Gaming, Inc.*........................ 14,900 203,013
Mikohn Gaming Corp.*....................... 18,800 166,850
Penn National Gaming, Inc.*................ 13,500 418,500
------------
788,363
------------
LIFE INSURERS -- 0.5%
Provident American Corp.*.................. 9,500 136,562
------------
LODGING -- 0.5%
Studio Plus Hotels, Inc.*.................. 9,850 162,525
------------
MACHINERY/EQUIPMENT -- 2.4%
Ballantyne Omaha, Inc.*.................... 11,400 156,750
Gardner Denver*............................ 4,800 146,400
LSI Industries, Inc........................ 10,900 174,400
Miller Industries, Inc./Tenn.*............. 3,800 150,100
Thermatrix , Inc.*......................... 11,200 93,800
------------
721,450
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
11
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
MINI CAP GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL SPECIALTIES -- 0.2%
Impath, Inc.*.............................. 4,500 $ 55,125
------------
MEDICAL SUPPLIES -- 3.2%
Capstone Pharmaceutical Corp.*............. 21,000 259,875
Meridian Diagnostics, Inc.................. 21,000 280,875
Merit Medical Systems, Inc.*............... 14,000 108,500
Minimed, Inc.*............................. 12,800 321,600
------------
970,850
------------
MEDICAL/NURSING/HEALTH SERVICES -- 3.1%
Diagnostic Health Services, Inc.*.......... 15,700 131,488
Pediatric Services of America*............. 9,300 172,050
PMR Corp.*................................. 7,600 219,450
Prime Medical Services, Inc.*.............. 13,200 174,900
Raytel Medical Corp.*...................... 12,000 162,000
Sterling Healthcare Group*................. 3,500 75,687
------------
935,575
------------
MILITARY/DEFENSE TECHNOLOGY -- 0.5%
Tracor, Inc.*.............................. 7,200 148,500
------------
MULTI-LINE INSURERS -- 0.8%
Delphi Financial Group, Inc.Class A*....... 8,760 245,280
------------
OIL/GAS PRODUCTION -- 0.8%
Coho Energy, Inc.*......................... 12,100 86,213
Lomak Pete, Inc.*.......................... 12,800 168,000
------------
254,213
------------
OILFIELD SERVICES/EQUIPMENT -- 0.6%
Maverick Tube Corp.*....................... 12,000 168,000
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 5.5%
Abacus Direct Corp.*....................... 12,000 252,000
Computer Learning Centers*................. 5,400 151,200
ICTS Holland P*............................ 11,900 145,775
National Wireless Holdings*................ 7,800 124,800
Nobel Ed Dynamics, Inc.*................... 5,900 82,600
Professional Staff*........................ 19,100 202,937
Remedytemp, Inc. Class A*.................. 8,900 189,125
Right Management Consultants, Inc.*........ 4,600 111,550
Techforce Corp.*........................... 11,500 84,812
Wackenhut Corp. Class A.................... 5,400 99,225
Wackenhut Corp. Class B.................... 2,600 40,625
Youth Services International, Inc.*........ 12,000 166,500
------------
1,651,149
------------
OTHER CONSUMER NON-DURABLES -- 0.6%
Amrion, Inc.*.............................. 8,900 190,238
------------
OTHER CONSUMER SERVICES -- 1.5%
Amre, Inc.*................................ 11,700 162,338
Childrens Comprehensive Services*.......... 8,400 149,100
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER CONSUMER SERVICES (CONTINUED)
Warrantech Corp.*.......................... 15,700 $ 153,075
------------
464,513
------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 4.9%
Horizon Mental Health MG*.................. 9,700 240,075
Medquist, Inc.*............................ 17,100 346,275
National Dentex Corp.*..................... 5,900 112,837
Physician Support Systems, Inc.*........... 7,400 179,450
Proxymed Pharmacy, Inc.*................... 11,700 117,000
Res - Care, Inc.*.......................... 7,950 135,150
Sterile Recoveries, Inc.*.................. 9,000 130,500
Veterinary Centers of America, Inc.*....... 9,300 204,018
------------
1,465,305
------------
OTHER PRODUCERS/MANUFACTURING -- 0.5%
Northwest Pipe Co.*........................ 7,500 142,500
------------
OTHER TECHNOLOGY -- 1.4%
Computer Products, Inc.*................... 7,700 168,438
Renaissance Solutions, Inc.*............... 5,800 245,775
------------
414,213
------------
REAL ESTATE BROKERS/SERVICES -- 1.2%
Redwood Trust, Inc......................... 11,200 358,400
------------
RECREATIONAL PRODUCTS -- 1.8%
Galoob Lewis Toys, Inc.*................... 8,900 260,325
Tyco Toys, Inc.*........................... 48,800 280,600
------------
540,925
------------
RENTAL/LEASING COMPANIES -- 2.0%
Alrenco, Inc.*............................. 9,200 193,200
Leasing Solutions, Inc.*................... 5,900 169,625
Rent Way, Inc.*............................ 20,000 252,500
------------
615,325
------------
RESTAURANTS -- 3.4%
Cooker Restaurant Corp..................... 19,500 231,563
Logans Roadhouse, Inc.*.................... 10,100 203,263
Rainforest Cafe, Inc.*..................... 13,850 429,350
Schlotzsky's, Inc.*........................ 11,300 127,125
Taco Cabana, Inc.*......................... 4,700 27,025
------------
1,018,326
------------
RETAIL/DISCOUNT -- 0.9%
Tuesday Morning Corp.*..................... 14,100 259,087
------------
RETAIL/ELECTRONICS -- 0.4%
Creative Computers, Inc.*.................. 13,100 124,450
------------
SEMICONDUCTORS/ELECTRONIC
COMPONENTS -- 2.6%
Intevac, Inc.*............................. 5,100 86,700
JPM Company*............................... 14,100 132,188
M Systems Flash Disk Pioneer*.............. 13,800 122,475
Qlogic Corp.*.............................. 600 7,725
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
12
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SEMICONDUCTORS/ELECTRONIC (CONTINUED)
Radisys Corp.*............................. 6,200 $ 306,900
Tower Semiconductor Ltd.*.................. 16,700 121,075
------------
777,063
------------
SOAPS/COSMETICS -- 0.2%
Chattem , Inc.*............................ 6,500 65,813
------------
SOFTWARE -- 10.6%
Aladdin Knowledge Systems*................. 6,600 66,000
Axent Technologies, Inc.*.................. 14,400 338,400
Ciber, Inc.*............................... 8,500 323,000
Cotelligent Group, Inc.*................... 10,900 171,675
Datastream Systems, Inc.*.................. 7,500 226,875
Document Sciences Corp.*................... 1,400 17,675
IKOS Systems, Inc.*........................ 14,300 286,894
Intelligroup, Inc.*........................ 5,400 74,925
MDL Information Systems, Inc.*............. 12,000 379,500
Mechanical Dynamics, Inc.*................. 11,900 210,481
Mecon, Inc.*............................... 7,000 175,000
Perceptron, Inc.*.......................... 9,100 229,775
Tecnomatix Technologies, LTD*.............. 9,300 161,587
Unison Software*........................... 11,600 298,700
Versant Object Technology Corp.*........... 7,500 178,125
4Front Software International*............. 9,200 36,800
------------
3,175,412
------------
SPECIALTY CHAINS -- 3.6%
Finish Line, Inc., Class A*................ 7,700 365,750
Insight Enterprises, Inc.*................. 13,100 489,612
Marks Brothers Jewelers, Inc.*............. 8,600 232,200
------------
1,087,562
------------
TELECOMMUNICATIONS EQUIPMENT -- 5.1%
Aml Communications*........................ 8,900 144,625
Celeritek, Inc.*........................... 14,400 176,400
Davox Corp.*............................... 9,300 351,075
Performance Technologies, Inc.*............ 12,000 145,500
Remec, Inc.*............................... 11,300 159,612
Teledata Communications, LTD*.............. 17,900 328,912
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT (CONTINUED)
Tessco Technologies, Inc.*................. 5,800 $ 242,150
------------
1,548,274
------------
TELEPHONE -- 0.5%
Pricellular Corp. Class A*................. 9,950 143,031
------------
TRUCKING -- 0.8%
Knight Transportation, Inc.*............... 6,100 133,438
U S Xpress Enterprises, Inc. Class A*...... 10,800 98,550
------------
231,988
------------
WHOLESALE DISTRIBUTION -- 3.2%
Anicom, Inc.*.............................. 13,700 243,175
Central Garden & Pet Co.*.................. 15,200 305,900
Daisytek International Corp.*.............. 5,900 255,175
Fresh America Corp.*....................... 8,100 156,431
------------
960,681
------------
TOTAL COMMON STOCKS
(Cost $22,742,696)..................................... $ 28,582,477
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
COMMERCIAL PAPER -- 6.4%
- -----------------------------------------------------------------------
Associates Corp. -- 1.4%
5.80% ,10/01/96.......................... $ 413,000 413,000
Merrill Lynch & Co. -- 5.0%
5.85% ,10/01/96.......................... 1,495,000 1,495,000
---------- ------------
TOTAL COMMERCIAL PAPER
(Cost $1,908,000).......................... 1,908,000 $ 1,908,000
---------- ------------
TOTAL INVESTMENTS -- 101.4%
(Cost $24,650,696)..................................... $ 30,490,477
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.4%).......... (407,516)
------------
NET ASSETS -- 100.0%..................................... $ 30,082,961
------------
<FN>
- ---------------
* Non-Income Producing Security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
13
<PAGE>
EMERGING GROWTH FUND
ADVISORY PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi
Partner, Chief Investment Officer
Global Equity Management
John C. McCraw
Portfolio Manager
Thomas E. Bleakley
Portfolio Manager
Ronald J. Krystyniak
Investment Analyst
GOAL: The Nicholas-Applegate Emerging Countries Fund seeks to provide
long-term capital appreciation through investment in companies in developing
countries around the world.
REVIEW AND OUTLOOK: The Emerging Growth Advisory Portfolio delivered
substantial returns to shareholders over the period, from April 1 through
September 30, 1996. Excellent stock selection decisions in the technology and
commercial/industrial services sectors contributed to the Fund's advance. For
example, Advisory Portfolio Shares returned 12.7% for the period, more than
twice the 4.9% gain of the benchmark Russell 2000 Growth Index.
Among technology stocks, a top performer was Rational Software, a developer of
database management systems and tools software. The company's shares appreciated
sharply in the period due in part to important agreements with Microsoft and the
anticipated release of future products. Another top-performing technology
holding was Saville Systems, a leading supplier of customized mid-range computer
billing and customer-care software systems for telecommunications service
providers. The company has been improving earnings and earnings estimates due to
additional signed contracts with three new carriers and an expanded relationship
with AT&T. The earnings of two of our holdings, Software 2000, Inc. and
Theratech, Inc. did not meet our expectations. We sold Software 2000 shares due
to concerns over licensing revenues. We sold shares of Theratech, a manufacturer
of testosterone patches, because of marketing difficulties.
Our growth style of investing continues to be compatible with the current
market environment. Stable economic conditions in the United States and
increasingly favorable conditions abroad are providing an excellent operating
environment for dynamic small companies. We seek out and invest in companies
that we believe will continue to benefit from change and grow earnings as a
result. We believe long-term investors will continue to achieve growth of
capital from their investments in these types of companies through the Emerging
Growth Advisory Portfolio.
REPRESENTATIVE HOLDINGS
Rational Software Corp.
Wolverine World Wide, Inc.
S3, Inc.
American Radio Systems Corp.
Oregon Metallurgical Corp.
Saville Systems Ireland PLC
Rainforest Cafe, Inc.
Ethan Allen Interiors, Inc.
Medicis Pharmaceutical Corp.
Insight Enterprises, Inc.
- --------------------------------------------------------------------------------
14
<PAGE>
EMERGING GROWTH ADVISORY PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING GROWTH ADVISORY PORTFOLIO WITH THE RUSSELL 2000 GROWTH INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/96
1 YEAR 5 YEARS 10 YEARS
25.08% 17.47% 16.76%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING GROWTH ADVISORY PORTFOLIO RUSSELL 2000 GROWTH INDEX
<S> <C> <C>
7/31/85 $ 10,000 $ 10,000
9/30/85 9,431 9,134
12/31/85 11,124 10,697
3/31/86 12,838 12,282
6/30/86 14,066 13,086
9/30/86 11,396 10,960
12/31/86 11,801 11,080
3/31/87 14,381 14,093
6/30/87 14,375 13,897
9/30/87 15,183 14,348
12/31/87 11,316 9,919
3/31/88 13,360 11,647
6/30/88 14,556 12,386
9/30/88 14,242 12,045
12/31/88 14,331 11,940
3/31/89 15,904 12,826
6/30/89 16,608 13,656
9/30/89 18,613 14,877
12/31/89 18,228 14,348
3/31/90 18,539 13,967
6/30/90 19,719 14,848
9/30/90 15,171 10,974
12/31/90 16,657 11,850
3/31/91 21,916 15,470
6/30/91 20,771 14,934
9/30/91 23,988 16,545
12/31/91 25,941 17,916
3/31/92 25,904 18,406
6/30/92 23,012 16,195
9/30/92 24,390 16,509
12/31/92 29,163 19,308
3/31/93 28,967 18,962
6/30/93 29,985 19,507
9/30/93 33,785 21,327
12/31/93 33,746 21,887
3/31/94 31,685 20,997
6/30/94 29,322 19,679
9/30/94 32,411 21,514
12/31/94 32,454 21,355
3/31/95 34,325 22,526
6/30/95 38,236 24,761
9/30/95 42,909 27,576
12/31/95 43,985 27,988
3/31/96 47,617 29,596
6/30/96 52,292 31,325
9/30/96 53,670 31,057
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Emerging Growth Advisory Portfolio with the Russell
2000 Growth Index, on a cumulative and average annual total return 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.
- --------------------------------------------------------------------------------
15
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
EMERGING GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK -- 94.7%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ADVERTISING -- 1.7%
CKS Group*................................. 78,500 $ 1,854,562
Eagle River Interactive, Inc.*............. 37,800 387,450
Ha-Lo Industries, Inc.*.................... 24,900 722,100
Lamar Advertising Co.*..................... 61,000 2,531,500
National Media Corp.*...................... 17,000 252,875
Outdoor Systems, Inc.*..................... 23,850 1,120,950
Universal Outdoor Holdings, Inc.*.......... 71,000 2,556,000
-------------
9,425,437
-------------
AGRICULTURE -- 0.3%
Dekalb Genetics Corp. Class B.............. 51,200 1,740,800
-------------
AIR FREIGHT/SHIPPING -- 0.1%
Airnet Systems, Inc.*...................... 36,600 521,550
-------------
AIRLINES -- 0.1%
Midwest Express Holdings, Inc.*............ 22,400 669,200
-------------
ALCOHOLIC BEVERAGES -- 0.2%
Mondavi Robert Corp.*...................... 35,500 1,162,625
-------------
APPAREL -- 3.3%
Cole Kenneth Productions, Inc.*............ 104,000 1,963,000
Donnkenny, Inc.*........................... 89,000 1,524,125
Genesco, Inc.*............................. 27,600 258,750
Nautica Enterprises, Inc.*................. 136,350 4,397,287
St. John Knits, Inc........................ 48,000 2,406,000
Stein Mart, Inc.*.......................... 93,500 2,068,688
Vans, Inc.*................................ 97,300 1,860,863
Wolverine Worldwide, Inc................... 198,300 5,502,825
-------------
19,981,538
-------------
BEVERAGES/SOFT DRINKS -- 0.3%
Cott Corp.................................. 244,500 1,849,031
-------------
BIOTECHNOLOGY -- 2.8%
Advanced Techonology Labs, Inc.*........... 51,900 1,660,800
Biopsys Medical, Inc.*..................... 9,500 140,125
Depotech Corp.*............................ 20,000 345,000
Endovascular Technology, Inc.*............. 47,200 566,400
Guilford Pharmaceuticals, Inc.*............ 25,000 687,500
Martek Biosciences Corp.*.................. 63,600 1,590,000
Matritech, Inc.*........................... 30,000 388,125
Mentor Corp................................ 129,800 3,569,500
Neurex Corp.*.............................. 108,300 2,071,237
Neurogen Corp.*............................ 35,000 883,750
Nexstar Pharmaceuticals, Inc.*............. 50,000 1,050,000
Pharmaceutical Product Development,
Inc.*.................................... 14,054 379,457
Quintiles Transnational Corp.*............. 8,600 629,950
Regeneron Pharmaceuticals, Inc.*........... 37,300 750,663
Sequus Pharmaceuticals, Inc.*.............. 96,800 1,524,600
Sonus Pahrmaceuticals, Inc.*............... 17,800 343,763
Vertex Pharmaceuticals, Inc.*.............. 19,700 581,150
-------------
17,162,020
-------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
BROADCASTING -- 2.7%
American Radio Systems Corp.*.............. 72,400 $ 2,696,900
Argyle Television, Inc. Class A*........... 21,400 601,875
Chancellor Corp.*.......................... 58,400 2,423,600
Emmis Broadcasting Corp. Class A*.......... 43,600 2,016,500
Evergreen Media Corp. Class A*............. 93,450 2,920,313
Premiere Radio Networks, Inc. Class A*..... 33,600 361,200
Saga Communications, Inc. Class A*......... 50,062 1,120,137
SFX Broadcasting, Inc. Class A*............ 42,500 1,933,750
Telemundo Group, Inc. Class A*............. 18,000 616,500
United Video Satellite Group, Inc. Class
A*....................................... 35,000 708,750
Westwood One, Inc.*........................ 71,000 1,304,625
-------------
16,704,150
-------------
BUILDING MATERIALS -- 0.6%
Falcon Building Products, Inc. Class A*.... 45,000 585,000
Hexcel Corp.*.............................. 102,600 1,987,875
NCI Building Systems, Inc.*................ 26,600 864,500
-------------
3,437,375
-------------
BUILDING MATERIAL CHAIN -- 0.4%
Eagle Hardware & Garden, Inc............... 85,000 2,295,000
-------------
CHEMICALS -- 0.2%
OM Group, Inc.............................. 38,300 1,455,400
-------------
CLOTHING CHAINS -- 2.5%
American Eagle Outfitters, Inc.*........... 26,500 563,125
Baker (J), Inc............................. 20,000 122,187
Buckle, Inc. (The)*........................ 2,400 76,200
Charming Shoppes, Inc.*.................... 544,500 3,267,000
Gadzooks, Inc.*............................ 69,000 2,397,750
Loehmanns, Inc.*........................... 53,200 1,426,425
Ross Stores, Inc........................... 109,900 3,956,400
Wet Seal, Inc. Class A*.................... 86,300 3,106,800
99 Cents Only Stores*...................... 30,300 424,200
-------------
15,340,087
-------------
COAL MINING -- 0.1%
Zeigler Coal Holding Company............... 25,000 431,250
-------------
COMPUTER/OFFICE AUTOMATION -- 1.8%
Amati Communications Corp.*................ 71,000 1,562,000
Auspex Systems, Inc.*...................... 135,600 2,084,850
Brooktrout Technology, Inc.*............... 39,700 1,449,050
Discreet Logic, Inc.*...................... 96,000 732,000
Eltron International, Inc.*................ 47,750 1,545,906
Encad, Inc.*............................... 10,000 418,750
GEAC Computer Corp. LTD*................... 40,500 493,540
IDX Systems Corp.*......................... 8,000 280,000
Network Appliance, Inc.*................... 53,000 1,590,000
Safeguard Scientifics, Inc.*............... 23,100 921,113
Sunquest Information Systems, Inc.*........ 9,000 166,500
-------------
11,243,709
-------------
CONTAINERS -- 0.0%
U.S. Can Corp.*............................ 18,600 299,925
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
16
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CONTRACTING DRILLING -- 1.4%
Cliffs Drilling Co.*....................... 35,500 $ 1,224,750
Falcon Drilling, Inc.*..................... 82,400 2,142,400
Marine Drilling Co., Inc.*................. 311,400 2,997,225
Noble Drilling Corp.*...................... 71,700 1,084,462
Reading & Bates Corp.*..................... 40,100 1,087,713
-------------
8,536,550
-------------
DEPARTMENT/DISCOUNT STORES -- 0.1%
Carson Pirie Scott & Co.*.................. 28,500 758,812
-------------
DRUGS/PHARMACEUTICALS -- 3.0%
Anesta Corp.*.............................. 58,500 826,312
Columbia Laboratories, Inc.*............... 30,000 367,500
Curative Health Services, Inc.*............ 67,400 1,297,450
Dura Pharmaceuticals, Inc.*................ 142,200 5,243,625
Incyte Pharmaceuticals, Inc.*.............. 51,000 2,524,500
Inhale Therapeutic Systems*................ 11,500 148,062
Jones Medical Industries, Inc.............. 28,125 1,364,062
Medicis Pharmaceutical Corp. Class A*...... 16,900 815,425
MIM Corp.*................................. 40,500 587,250
Nabi, Inc.*................................ 137,900 1,637,562
NCS Healthcare, Inc. Class A*.............. 19,100 599,263
Noven Pharmaceuticals, Inc.*............... 30,700 387,587
Parexel International Corp.*............... 19,400 1,222,200
Pathogenesis Corp.*........................ 51,300 910,575
Sangstat Medical Corp.*.................... 9,300 237,150
-------------
18,168,523
-------------
ELECTRONIC DATA PROCESSING -- 1.5%
Affiliated Computer Services, Inc. Class
A*....................................... 30,900 1,815,375
Checkfree Corp.*........................... 45,000 900,000
Envoy Corp.*............................... 81,200 3,146,500
Industry-Matematik International*.......... 79,000 977,625
Object Design, Inc.*....................... 70,000 1,128,750
Peerless Systems Corp.*.................... 14,500 166,750
Versant Object Technology Corp.*........... 37,500 890,625
-------------
9,025,625
-------------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 1.8%
Belden, Inc.*.............................. 38,800 1,125,200
Checkpoint Systems, Inc.*.................. 167,400 4,436,100
Coherent, Inc.*............................ 56,600 1,995,150
Lernout & Hauspie Speech*.................. 42,300 1,004,625
Orbotech LTD*.............................. 16,000 190,000
Uniphase Corp.*............................ 45,300 1,913,925
-------------
10,665,000
-------------
ELECTRONICS/MUSIC CHAINS -- 0.5%
Inacom Corp.*.............................. 87,000 2,979,750
-------------
ENTERTAINMENT -- 0.3%
Family Golf Centers, Inc.*................. 20,000 580,000
Hollywood Entertainment Corp.*............. 73,300 1,502,650
-------------
2,082,650
-------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ENVIRONMENTAL SERVICES -- 1.8%
Newpark Resources, Inc.*................... 26,585 $ 967,029
Superior Services, Inc.*................... 17,000 272,000
Tetra Technologies, Inc.*.................. 42,300 777,263
United Waste Systems, Inc.*................ 156,600 5,441,850
U.S. Filter Corp.*......................... 71,400 2,436,525
U.S.A. Waste Services, Inc.*............... 26,800 844,200
-------------
10,738,867
-------------
FINANCE COMPANIES -- 1.4%
AmeriCredit Corp.*......................... 115,400 2,120,475
Cityscape Financial Corp.*................. 47,000 1,245,500
Imperial Credit Industries, Inc.*.......... 109,200 3,999,450
Westcorp., Inc............................. 56,205 1,215,433
-------------
8,580,858
-------------
FOOD CHAINS -- 0.1%
Quality Food Centers, Inc.*................ 13,000 451,750
-------------
HOME FURNISHINGS -- 0.6%
Bush Industries, Inc. Class A.............. 20,000 367,500
Cort Business Services Corp.*.............. 30,000 611,250
Ethan Allen Interiors, Inc................. 24,000 747,000
Furniture Brands International, Inc.*...... 47,600 696,150
Renters Choice, Inc.*...................... 71,600 1,342,500
-------------
3,764,400
-------------
HOMEBUILDING -- 1.2%
American Homestar Corp.*................... 24,700 600,519
Cavalier Homes, Inc........................ 2,100 38,850
Champion Enterprises, Inc.*................ 93,700 2,119,962
Diamond Home Services, Inc.*............... 29,700 861,300
Oakwood Homes Corp......................... 74,800 2,057,000
Redman Industries, Inc.*................... 36,800 1,030,400
United States Home Corp.*.................. 40,000 820,000
-------------
7,528,031
-------------
HOSPITALS -- 0.7%
Health Management Systems, Inc.*........... 88,400 2,585,700
National Surgery Centers, Inc.*............ 52,600 1,472,800
-------------
4,058,500
-------------
INDUSTRIAL ENGINEERING/CONSTRUCTION -- 0.6%
Granite Construction, Inc.................. 69,900 1,450,425
Greenwich Air Services, Inc. Class B*...... 42,500 881,875
Greenwich Air Services, Inc. Class A....... 40,400 1,131,200
-------------
3,463,500
-------------
LEISURE/GAMING -- 0.9%
Anchor Gaming*............................. 40,400 2,514,900
Sodak Gaming, Inc.*........................ 119,000 2,737,000
-------------
5,251,900
-------------
LIFE INSURERS -- 0.1%
Delphi Financial Group, Inc. Class A*...... 900 25,200
Protective Life Corp....................... 8,900 335,975
-------------
361,175
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
17
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
LODGING -- 1.1%
Bristol Hotel Co.*......................... 40,400 $ 1,075,650
Doubletree Corp.*.......................... 24,600 980,925
Prime Hospitality Corp.*................... 174,200 2,874,300
Studio Plus Hotels, Inc.*.................. 45,750 754,875
Suburban Lodges of America*................ 27,200 571,200
Wyndham Hotel Corp.*....................... 26,500 483,625
-------------
6,740,575
-------------
MACHINERY/EQUIPMENT -- 1.1%
Digitran Systems, Inc.*.................... 14,500 145
Elbit Vision Systems LTD*.................. 17,500 126,875
Etec Systems, Inc.*........................ 49,600 1,686,400
Greenfield Industries, Inc................. 57,700 1,384,800
Iwerks Entertainment, Inc.*................ 72,500 507,500
JLG Industries, Inc........................ 6,800 127,500
Kuhlman Corp............................... 20,800 304,200
Miller Industries, Inc.*................... 35,600 1,406,200
Robbins & Myers, Inc....................... 34,000 769,250
Watsco, Inc. Class A....................... 13,950 284,231
-------------
6,597,101
-------------
MANAGED HEALTHCARE/HMO'S/PPO'S -- 0.8%
CRA Managed Care, Inc.*.................... 17,600 950,400
FPA Medical Management, Inc.*.............. 44,700 1,178,962
Medcath, Inc.*............................. 52,200 887,400
OccuSystems, Inc.*......................... 68,800 2,064,000
-------------
5,080,762
-------------
MEDICAL SPECIALTIES -- 0.0%
Impath, Inc.*.............................. 5,200 63,700
-------------
MEDICAL SUPPLIES -- 3.2%
Adac Laboratories.......................... 113,500 2,284,187
Capstone Pharmacy Services*................ 48,400 598,950
ESC Medical Systems LTD*................... 36,000 1,152,000
Femrx, Inc.*............................... 18,600 153,450
Invacare Corp.............................. 49,900 1,397,200
Iridex Corp.*.............................. 15,100 124,575
Keravision, Inc.*.......................... 36,100 541,500
Lunar Corp.*............................... 8,500 272,000
Minimed, Inc.*............................. 18,600 467,325
Orthologic Corp.*.......................... 91,600 973,250
Physio-Control International Corp.*........ 78,400 1,979,600
ResMed, Inc.*.............................. 18,800 371,300
Safeskin Corp.*............................ 62,500 2,171,875
Serologicals Corp.*........................ 13,600 472,600
Steris Corp.*.............................. 36,200 1,226,275
Target Therapeutics, Inc.*................. 96,900 4,142,475
Urologix, Inc.*............................ 8,000 123,000
Vivus, Inc.*............................... 27,300 1,037,400
-------------
19,488,962
-------------
MEDICAL/HEALTH SERVICES -- 2.0%
ABR Information Services, Inc.*............ 39,125 2,817,000
American Homepatient, Inc.*................ 22,100 491,725
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL/HEALTH SERVICES (CONTINUED)
Collaborative Clinical Research, Inc.*..... 32,000 $ 432,000
EmCare Holdings, Inc.*..................... 58,700 1,584,900
Multicare Companies, Inc.*................. 63,900 1,389,825
Pediatric Services of America, Inc.*....... 21,700 401,450
Pediatrix Medical Group, Inc.*............. 6,800 340,850
Prime Medical Services, Inc.*.............. 35,000 463,750
Renal Care Group, Inc.*.................... 32,000 1,184,000
Renal Treatment Centers, Inc.*............. 79,800 2,653,350
Sterling Healthcare Group*................. 12,000 259,500
-------------
12,018,350
-------------
METALS -- 1.7%
Gibraltar Steel Corp....................... 26,800 603,000
Mueller Industries, Inc.*.................. 76,500 3,107,812
Olympic Steel, Inc.*....................... 73,000 1,961,875
Oregon Metallurgical Corp.*................ 70,000 2,275,000
RMI Titanium Co.*.......................... 86,000 2,171,500
UNR Industries, Inc........................ 46,600 308,725
-------------
10,427,912
-------------
MILITARY /DEFENSE TECHNOLOGY -- 0.9%
Avondale Industries, Inc.*................. 32,600 607,175
Rohr Industries, Inc.*..................... 88,900 1,744,663
Stanford Telecommunications, Inc.*......... 46,500 2,325,000
Tracor, Inc.*.............................. 28,700 591,938
-------------
5,268,776
-------------
MULTI-LINE INSURERS -- 0.3%
Penncorp Financial Group, Inc.............. 54,600 1,760,850
-------------
OIL/GAS PRODUCTION -- 1.8%
Abacan Resource Corp.*..................... 50,000 343,750
Barrett Resources Corp.*................... 19,900 701,475
Belden & Blake Corp........................ 17,000 395,250
Brown (Tom), Inc.*......................... 50,600 955,075
Cross Timbers Oil Co....................... 34,000 816,000
Global Natural Resources, Inc.*............ 57,800 1,004,275
Houston Exploration Co.*................... 17,000 289,000
KCS Energy, Inc............................ 34,500 1,229,062
Lomak Petroleum, Inc....................... 18,000 236,250
Newfield Exploration Co.*.................. 17,600 792,000
Nuevo Energy Co.*.......................... 18,500 751,562
Petroleum Securities Australia LTD*........ 34,000 790,500
Plains Resources, Inc.*.................... 17,500 242,813
Swift Energy Co.*.......................... 70,500 1,692,000
Tesoro Petroleum Corp.*.................... 17,000 218,875
Vintage Petroleum, Inc..................... 17,900 525,813
-------------
10,983,700
-------------
OILFIELD SERVICES/EQUIPMENT -- 3.3%
BJ Services Co.*........................... 104,400 3,784,500
Camco International, Inc................... 56,700 2,119,162
Energy Ventures, Inc.*..................... 31,700 1,283,850
Global Industries, LTD*.................... 107,000 1,698,625
Oceaneering International, Inc.*........... 52,600 894,200
Pool Energy Services Co.*.................. 71,200 898,900
Pride Petroleum Services, Inc.*............ 129,400 1,827,775
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
18
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OILFIELD SERVICES/EQUIPMENT (CONTINUED)
Seacor Holdings, Inc.*..................... 63,400 $ 3,217,550
Tuboscope Vetco International, Corp.*...... 82,100 1,282,813
Varco International, Inc.*................. 123,700 2,180,213
Veritas DGC, Inc.*......................... 35,000 630,000
-------------
19,817,588
-------------
OTHER COMMERCIAL/INDUSTRIAL SERVICE -- 4.5%
ATC Communications, Inc.................... 18,000 315,000
Caribiner International, Inc............... 28,900 1,221,025
Claremont Technology Group, Inc.*.......... 25,500 918,000
Corestaff, Inc.*........................... 22,500 601,875
G&K Services, Inc., Class A................ 16,050 469,462
ICTS International NV*..................... 8,700 106,575
Learning Tree International*............... 12,100 447,700
Mastec, Inc.*.............................. 36,000 1,233,000
Meta Group, Inc.*.......................... 21,000 582,750
National Education Corp.*.................. 107,700 2,059,762
National Techteam, Inc.*................... 34,000 922,250
National Wireless Holdings, Inc.*.......... 15,800 252,800
Norrell Corp............................... 43,800 1,379,700
Nova Corp.*................................ 24,200 798,600
Personnel Group of America, Inc.*.......... 56,500 1,469,000
PMT Services, Inc.*........................ 90,350 1,829,588
Pre Paid Legal Services, Inc.*............. 90,500 1,165,188
Protection One, Inc.*...................... 96,300 1,215,788
Rental Service Corp.*...................... 14,000 302,750
Robert Half International, Inc.*........... 17,600 649,000
Romac International, Inc.*................. 59,300 1,808,650
Seattle Filmworks, Inc.*................... 26,500 583,000
Techforce Corp.*........................... 18,600 137,175
The Registry, Inc.*........................ 10,000 380,000
Vincam Group, Inc.*........................ 22,500 860,625
Wackenhut Corp. Series B................... 45,000 703,125
Wackenhut Corrections Corp.*............... 63,000 1,401,750
Western Staff Services, Inc.*.............. 18,300 276,788
Whittman-Hart, Inc.*....................... 57,400 2,712,150
Youth Services International, Inc.*........ 27,000 374,625
-------------
27,177,701
-------------
OTHER CONSUMER DURABLES -- 0.4%
Sola International, Inc.*.................. 68,900 2,566,525
-------------
OTHER CONSUMER NON-DURABLES -- 0.0%
Blyth Industries, Inc.*.................... 30,600 1,484,100
-------------
OTHER CONSUMER SERVICES -- 0.4%
American Residential Services, Inc.*....... 11,500 219,937
Amre, Inc.*................................ 51,600 715,950
Apollo Group, Inc. Class A*................ 34,647 926,807
ITT Educational Services*.................. 11,800 413,000
-------------
2,275,694
-------------
OTHER FINANCIAL SERVICES -- 0.9%
Ocwen Financial Corp.*..................... 17,000 346,375
RAC Financial Group, Inc.*................. 85,000 3,878,125
Southern Pacific Funding Corp.*............ 17,200 434,300
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER FINANCIAL SERVICES (CONTINUED)
WFS Financial, Inc.*....................... 33,000 $ 676,500
-------------
5,335,300
-------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 1.6%
Clintrials, Inc.*.......................... 71,000 2,893,250
Enterprise Systems, Inc.*.................. 16,000 412,000
Horizon Mental Health Management, Inc.*.... 15,600 386,100
Physician Computer Network, Inc.*.......... 188,700 2,004,938
Physician Support Systems, Inc.*........... 23,000 557,750
RTW, Inc.*................................. 38,700 1,117,463
Summit Medical Systems, Inc.*.............. 31,000 434,000
Veterinary Centers America, Inc.*.......... 76,500 1,678,219
-------------
9,483,720
-------------
OTHER PRODUCERS/MANUFACTURING -- 1.2%
BE Aerospace, Inc.*........................ 32,200 664,125
BMC Industries, Inc........................ 82,600 2,364,425
Chicago Miniature Lamp, Inc.*.............. 29,400 889,350
Foamex International, Inc.*................ 140,000 2,275,000
Memtec LTD Sponsored ADR................... 17,000 476,000
Rexel, Inc.*............................... 27,900 439,425
-------------
7,108,325
-------------
OTHER RETAIL TRADE -- 0.0%
Cost Plus*................................. 66,800 1,544,750
-------------
OTHER TECHNOLOGY -- 1.2%
Compucom Systems, Inc.*.................... 18,300 160,125
Computer Products, Inc.*................... 89,400 1,955,625
Henry (Jack) & Associates.................. 24,100 765,175
Renaissance Solutions, Inc.*............... 22,100 936,488
Technology Solutions Company*.............. 48,750 1,700,156
Vanstar Corp.*............................. 63,000 1,527,750
-------------
7,045,319
-------------
OTHER TRANSPORTATION -- 0.3%
Coach USA, Inc.*........................... 23,000 615,250
Trico Marine Services, Inc.*............... 38,200 1,165,100
-------------
1,780,350
-------------
PAPER -- 0.2%
American Pad & Paper Co.*.................. 60,000 1,275,000
-------------
PRINTING/FORMS -- 0.0%
Applied Graphics Technologies, Inc.*....... 18,600 276,675
-------------
PROPERTY-CASUALTY INSURERS -- 0.8%
Capmac Holdings, Inc....................... 38,500 1,280,125
HCC Insurance Holdings, Inc................ 48,100 1,388,887
La Salle Re Holdings LTD................... 49,300 1,158,550
Vesta Insurance Group, Inc................. 34,350 1,318,181
-------------
5,145,743
-------------
PUBLISHING -- 0.2%
Golden Books Family Entertainment, Inc.*... 90,000 1,046,250
-------------
RAILROADS -- 0.2%
Railtex, Inc.*............................. 40,000 952,500
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
19
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
REAL ESTATE BROKERS/SERVICES -- 0.8%
Amresco, Inc.*............................. 144,700 $ 3,310,012
Insignia Financial Group, Inc. Class A*.... 26,300 670,650
NHP, Inc.*................................. 23,300 441,244
Redwood Trust, Inc......................... 17,700 566,400
-------------
4,988,306
-------------
RECREATIONAL PRODUCTS -- 0.4%
Coachmen Industries, Inc................... 35,500 914,125
Galoob Lewis T*............................ 38,000 1,111,500
Rockshox*.................................. 9,000 135,000
Tyco Toys, Inc.*........................... 34,300 197,225
-------------
2,357,850
-------------
REGIONAL BANKS -- 0.1%
Provident Bankshares Corp.................. 19,700 696,888
-------------
REAL ESTATE INVESTMENT TRUSTS -- 0.2%
FelCor Suite Hotels, Inc................... 19,100 615,975
Storage USA, Inc........................... 24,000 798,000
-------------
1,413,975
-------------
RENTAL/LEASING COMPANIES -- 0.2%
Team Rental Group, Inc.*................... 22,400 425,600
Leasing Solutions, Inc.*................... 34,000 977,500
Winthrop Resources Corp.................... 900 24,300
-------------
1,427,400
-------------
RESTAURANTS -- 1.7%
Apple South, Inc........................... 65,300 873,387
CKE Restaurants, Inc....................... 76,000 2,337,000
Foodmaker, Inc.*........................... 253,200 2,532,000
Logan's Roadhouse, Inc.*................... 27,000 543,375
Papa John's International, Inc.*........... 17,900 939,750
Rainforest Cafe, Inc.*..................... 63,550 1,970,050
Showbiz Pizza Time, Inc.*.................. 71,300 1,292,313
Taco Cabana Class A*....................... 3,700 21,275
-------------
10,509,150
-------------
RETAIL/FOOD DISTRIBUTION -- 0.5%
Richfood Holdings, Inc..................... 87,700 3,266,825
-------------
SEMICONDUCTORS/ELECTRONIC COMPONENT -- 3.4%
Actel Corp.*............................... 144,300 2,777,775
Flextronics International, LTD*............ 62,300 1,721,037
Radisys Corp.*............................. 19,400 960,300
Sawtek, Inc.*.............................. 90,700 2,358,200
SDL, Inc.*................................. 100,400 2,058,200
S3, Inc.*.................................. 246,700 4,872,325
Trident Microsystems, Inc.*................ 68,000 1,028,500
Vitesse Semiconductor Corp.*............... 125,800 4,859,025
-------------
20,635,362
-------------
SOFTWARE -- 14.0%
Amisys Managed Care Systems*............... 36,000 859,500
Applix, Inc.*.............................. 16,500 433,125
Aspen Technology, Inc.*.................... 42,400 2,872,600
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SOFTWARE (CONTINUED)
Avant Corp.*............................... 46,500 $ 1,395,000
BDM International, Inc.*................... 32,600 1,939,700
CBT Group PLC Sponsored ADR*............... 80,400 3,778,800
Ciber, Inc.*............................... 61,500 2,337,000
Clarify, Inc.*............................. 33,500 2,077,000
Cognos, Inc.*.............................. 183,600 5,989,950
Cooper & Chyan Technology, Inc.*........... 38,700 948,150
Datastream Systems, Inc.*.................. 57,600 1,742,400
Dataworks Corp.*........................... 33,200 863,200
Dendrite International, Inc.*.............. 31,500 952,875
Geoworks*.................................. 21,700 564,200
Harbinger Corp.*........................... 61,700 1,542,500
HCIA, Inc.*................................ 17,700 1,062,000
HNC Software, Inc.*........................ 99,000 3,960,000
HPR, Inc.*................................. 17,500 280,000
Ikos Systems, Inc.*........................ 41,600 826,800
Indus Group, Inc.*......................... 21,000 420,000
Integrated Systems, Inc.*.................. 78,200 2,580,600
JDA Software Group, Inc.*.................. 69,800 1,919,500
Legato Systems, Inc.*...................... 81,800 3,885,500
Manugistics Group, Inc.*................... 12,800 515,200
MDL Information Systems, Inc.*............. 30,700 970,888
Mecon, Inc.*............................... 19,000 475,000
National Instruments Corp.*................ 61,000 1,616,500
Onewave, Inc.*............................. 8,500 128,562
Pegasystems, Inc.*......................... 17,500 455,000
Perceptron, Inc.*.......................... 32,700 825,675
Platinum Software Corp.*................... 1,795 19,969
Pure Atria Corp.*.......................... 116,005 4,379,189
Quick Response Services, Inc.*............. 14,800 551,300
Rational Software Corp.*................... 155,200 5,296,200
Sapient Corp.*............................. 12,200 542,900
Saville Systems Ireland PLC*............... 63,700 2,245,425
Scopus Technology, Inc.*................... 55,000 1,663,750
Seibel Systems, Inc.*...................... 43,500 1,810,688
SPSS, Inc.*................................ 18,000 499,500
SQA, Inc.*................................. 23,600 637,200
Sykes Enterprises, Inc.*................... 82,350 3,973,388
Systemsoft Corp.*.......................... 156,300 5,353,275
Verilink Corp.*............................ 5,900 144,550
Veritas Software Co.*...................... 34,000 2,405,500
Viasoft, Inc.*............................. 69,800 2,931,600
Viewlogic Systems, Inc.*................... 71,600 832,350
Visio Corp.*............................... 27,500 1,251,250
Wind River Systems, Inc.*.................. 49,800 2,203,650
-------------
84,958,909
-------------
SPECIALTY CHAINS -- 2.9%
Cross Continenet Auto Retailers, Inc.*..... 12,000 276,000
Duty Free International, Inc............... 56,400 775,500
Finish Line, Inc. Class A*................. 24,000 1,140,000
Insight Enterprises, Inc.*................. 13,600 508,300
Just for Feet, Inc.*....................... 58,100 2,912,262
Men's Wearhouse, Inc.*..................... 25,300 632,500
Microage, Inc.*............................ 103,000 1,944,125
Party City Corp.*.......................... 8,000 150,000
Petco Animal Supplies, Inc.*............... 40,650 1,107,712
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
20
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SPECIALTY CHAINS (CONTINUED)
Pier 1 Imports, Inc........................ 116,200 $ 1,873,725
Rexall Sundown, Inc.*...................... 51,600 1,883,400
West Coast Entertainment Corp.*............ 13,500 136,688
West Marine, Inc.*......................... 22,800 752,400
Williams-Sonoma, Inc.*..................... 135,300 3,839,138
-------------
17,931,750
-------------
TELECOMMUNICATIONS EQUIPMENT -- 4.2%
ACT Networks, Inc.*........................ 74,300 2,080,400
AML Communications, Inc.*.................. 1,100 17,875
Aspect Telecommunications Corp.*........... 107,300 6,679,425
Cable Design Technologies, Inc.*........... 50,000 2,000,000
Coherent Communications Systems Corp.*..... 46,400 881,600
Comverse Technology, Inc.*................. 43,200 1,679,400
Davox Corp.*............................... 19,000 717,250
Digital Systems International, Inc.*....... 36,000 643,500
Inter-Tel, Inc.*........................... 35,200 712,800
Lightbridge, Inc.*......................... 9,360 109,980
Natural Microsystems Corp.*................ 39,000 1,876,875
Nice-Systems LTD*.......................... 33,500 767,359
Ortel Corp.*............................... 54,000 1,296,000
P Com, Inc.*............................... 51,400 1,272,150
Periphonics Corp.*......................... 22,000 858,000
Remec, Inc.*............................... 17,100 241,538
TCSI Corp.*................................ 57,500 761,875
Teledata Communications LTD.*.............. 5,000 91,875
Teltrend, Inc.*............................ 34,200 1,453,500
Westell Technologies, Inc.*................ 28,600 1,265,550
-------------
25,406,952
-------------
TELEPHONE -- 2.4%
ACC Corp.*................................. 52,900 2,499,525
Clearnet Communications Class A*........... 18,000 294,750
ICG Communications, Inc.*.................. 70,000 1,470,000
Intercel, Inc.*............................ 83,500 1,753,500
Intermedia Communications of Florida,
Inc.*.................................... 58,100 1,699,425
Midcom Connumications, Inc.*............... 69,000 948,750
Pacific Gateway Exchange, Inc.*............ 38,200 1,126,900
Pricellular Corp., Class A*................ 40,375 580,391
Tel-Save Holdings, Inc.*................... 72,000 2,070,000
Winstar Communications*.................... 123,800 2,058,175
-------------
14,501,416
-------------
TOBACCO PRODUCTS -- 0.3%
Mafco Consolidated Group, Inc.*............ 68,800 2,107,000
-------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TRUCKING -- 0.6%
Knight Transportation, Inc.*............... 17,000 $ 371,875
Landstar System, Inc.*..................... 76,500 2,046,375
Swift Transportation Co.*.................. 17,000 372,938
USFreightways Corp......................... 51,000 1,045,500
-------------
3,836,688
-------------
WHOLESALE DISTRIBUTION -- 1.4%
Anicom, Inc.*.............................. 10,700 189,925
Central Garden & Pet Co.*.................. 74,900 1,507,362
Daisytek International Corp.*.............. 3,800 164,350
Fresh America Corp.*....................... 800 15,450
Hughes Supply, Inc.*....................... 3,600 133,200
Tech Data Corp.*........................... 238,300 6,642,613
-------------
8,652,900
-------------
TOTAL COMMON STOCKS
(COST $402,514,887)..................................... 575,572,587
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------
<CAPTION>
COMMERCIAL PAPER -- 5.6%
<S> <C> <C>
- ----------------------------------------------
Associates Corp. -- 0.7%
5.80%, 10/01/96.......................... 4,068 4,068,000
Merrill Lynch & Co.
5.85%, 10/01/96.......................... 29,614 29,614,000
-------------
TOTAL COMMERCIAL PAPER
(COST $33,682,000)...................................... 33,682,000
- ---------------------------------------------------------
<CAPTION>
REPURCHASE AGREEMENT -- 0.2%
<S> <C> <C>
- ----------------------------------------------
J. P. Morgan & Co., Inc. $1,667,000 at
5.65%, (Agreement dated 09/30/96; to be
repurchased at $1,667,262 on 10/01/96;
collateralized by $1,665,000 FHMA Note,
7.16% due 01/10/97)(VALUE $1,708,661)
(COST $1,667,000) 1,667,000 1,667,000
-------------
TOTAL INVESTMENTS -- 100.5%
(COST $437,863,887)..................................... 610,921,587
LIABILITIES IN EXCESS OF OTHER ASSETS (0.5%).............. (2,979,076)
-------------
NET ASSETS 100.0%......................................... $ 607,942,511
-------------
<FN>
- ---------------
* Non-Income Producing Security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
21
<PAGE>
CORE GROWTH FUND
ADVISORY PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
Jack C. Marshall, Jr.
Partner, Chief Investment Officer
Institutional Equity Management
Andrew B. Gallagher
Portfolio Manager
Thomas J. Sullivan
Assistant Portfolio Manager
GOAL: The Nicholas-Applegate Core Growth Fund seeks to maximize long-term
capital appreciation through investment primarily in U.S. companies generally
over $500 million in market capitalization.
REVIEW AND OUTLOOK: The Core Growth Advisory Portfolio earned strong returns
for the period April 1 through September 30, 1996. The Fund's holdings in the
retail, technology, and energy sectors boosted performance relative to broad
market measures. The Fund overcame the brief midsummer downturn of the stock
market with solid third-quarter performance. Core Growth Advisory Portfolio
shares gained 11.0% over the six-month period, compared with a 7.7% rise in the
Standard & Poor's 500 Index.
The Core Growth Fund emphasizes mid-sized and larger companies. We search
among more than 1,000 U.S. traded stocks for the best possible growth potential
for inclusion in the Fund. This search resulted in the Fund holding such stocks
as Nike during the period. Shares of the athletic shoe and sportswear maker rose
sharply along with earnings in the period. Nike management has been especially
successful creating worldwide brand recognition. Safeway, the California-based
supermarket giant, also soared in the period as it continued to deliver solid,
stable, and timely earnings growth. Shares of Cadence Design Systems, a provider
of server and enterprise hardware, climbed in light of the company's recent 50%
increase in software licensing and new product introductions. Shares of Gap were
sold during the period because of weaker "same store" sales and tough
competition entering the marketplace next year. Aggressive pricing by a major
competitor of United States Satellite could lead to slower growth for this
company and in anticipation of this development, we recently sold these issues.
We also sold shares of credit card provider Advanta Corp. The company has been
experiencing fewer loan originations and writing off more bad debt than in the
past.
Our consistent investment philosophy applied to the mid-cap and large-cap
segments of the stock market has continued to deliver rewards for shareholders.
We continue to find solid companies that we believe are poised for growth and
have the added benefit of commanding the financial resources that provide
stability to larger companies. We remain confident the Core Growth Fund is well
positioned to provide strong returns.
REPRESENTATIVE HOLDINGS
Safeway, Inc.
ADC Telecommunications
Cascade Communications Company
Nike, Inc.
Tommy Hilfiger Corp.
Dura Pharmaceuticals, Inc.
USA Waste Services, Inc.
BMC Software, Inc.
Diamond Offshore Drilling, Inc.
B.J. Services Company
- --------------------------------------------------------------------------------
22
<PAGE>
CORE GROWTH ADVISORY PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE CORE
GROWTH ADVISORY PORTFOLIO WITH THE S&P 500 INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/96
1 YEAR 5 YEARS 10 YEARS
20.12% 17.42% 17.53%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE GROWTH ADVISORY
<S> <C> <C>
Portfolio S&P 500 Index
9/30/85 $ 10,000 $ 10,000
12/31/85 12,467 11,714
3/31/86 15,518 13,365
6/30/86 17,469 14,150
9/30/86 15,510 13,163
12/31/86 16,522 13,898
3/31/87 20,279 16,860
6/30/87 20,840 17,704
9/30/87 22,701 18,869
12/31/87 17,073 14,630
3/31/88 17,490 15,465
6/30/88 19,425 16,486
9/30/88 18,997 16,543
12/31/88 19,188 17,050
3/31/89 20,204 18,266
6/30/89 21,483 19,864
9/30/89 25,268 21,985
12/31/89 25,634 22,441
3/31/90 25,944 21,782
6/30/90 29,805 23,137
9/30/90 24,438 19,976
12/31/90 25,757 21,758
3/31/91 32,441 24,916
6/30/91 30,970 24,859
9/30/91 34,935 26,189
12/31/91 39,961 28,384
3/31/92 38,882 27,667
6/30/92 36,166 28,192
9/30/92 37,927 29,083
12/31/92 45,264 30,548
3/31/93 48,144 31,883
6/30/93 51,457 32,034
9/30/93 55,475 32,860
12/31/93 54,328 33,624
3/31/94 50,472 32,347
6/30/94 47,536 32,482
9/30/94 49,730 34,071
12/31/94 48,400 34,067
3/31/95 51,935 37,389
6/30/95 57,676 40,956
9/30/95 64,938 44,212
12/31/95 66,906 46,874
3/31/96 70,306 49,338
6/30/96 75,933 51,602
9/30/96 78,005 53,197
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Core Growth Advisory Portfolio with the Standard & Poor's
("S&P") 500 Index, on a cumulative and average annual total return 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.
- --------------------------------------------------------------------------------
23
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
CORE GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 96.6%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
AIRLINES -- 0.7%
Comair Holdings, Inc....................... 152,325 $ 3,579,637
-------------
APPAREL -- 4.5%
Gucci Group NV............................. 135,000 9,787,500
Nike, Inc. Class B......................... 52,600 6,390,900
Tommy Hilfiger Corp.*...................... 110,000 6,517,500
-------------
22,695,900
-------------
BIOTECHNOLOGY -- 0.8%
Genetics Institute, Inc.................... 59,200 4,114,400
-------------
BROADCASTING -- 2.7%
Evergreen Media Corp.*..................... 135,000 4,218,750
Infinity Broadcasting Corp. Class A*....... 119,025 3,749,287
Tele-Communications, Inc. Class A Liberty
Media Group*............................. 101,100 2,893,988
Tele-Communications, Inc. Class A TCI
Group*................................... 188,100 2,809,744
-------------
13,671,769
-------------
BUILDING MATERIALS -- 1.2%
Lowe's Companies, Inc...................... 142,300 5,816,513
-------------
CLOTHING CHAINS -- 1.8%
Fila Holdings SPA.......................... 63,000 6,055,875
Intimate Brands, Inc....................... 155,700 2,841,525
-------------
8,897,400
-------------
COMPUTERS/OFFICE AUTOMATION -- 6.8%
Ceridian Corp.*............................ 156,300 7,815,000
Cisco Systems, Inc.*....................... 73,500 4,561,594
Compaq Computer Corp.*..................... 94,100 6,034,162
Computer Sciences Corp.*................... 74,600 5,734,875
Dell Computer Corp.*....................... 60,100 4,672,775
Sun Microsystems, Inc.*.................... 84,700 5,261,988
-------------
34,080,394
-------------
COMPUTERS & OFFICE EQUIPMENT -- 1.4%
Gateway 2000, Inc.*........................ 135,000 6,463,125
-------------
DEPARTMENT/DISCOUNT STORES -- 2.2%
Consolidated Stores Corp.*................. 144,500 5,780,000
Kohls Corp.*............................... 145,000 5,220,000
-------------
11,000,000
-------------
DRUGS/PHARMACEUTICALS -- 2.5%
Cardinal Health, Inc....................... 78,500 6,486,062
Dura Pharmaceuticals....................... 160,000 5,900,000
-------------
12,386,062
-------------
ELECTRONIC DATA PROCESSING -- 0.8%
First Data Corp............................ 49,777 4,063,048
-------------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 1.2%
Fore Systems, Inc.*........................ 146,500 6,061,437
-------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONICS/MUSIC CHAINS -- 1.4%
Compusa, Inc.*............................. 130,000 $ 7,020,000
-------------
FINANCE COMPANIES -- 1.2%
Green Tree Financial Corp.................. 156,200 6,130,850
-------------
FINANCIAL SERVICES -- 2.5%
Associates First Capital Corp.............. 160,000 6,560,000
Household International, Inc............... 73,700 6,061,825
-------------
12,621,825
-------------
FOOD CHAINS -- 1.6%
Safeway, Inc.*............................. 192,800 8,218,100
-------------
GAMBLING -- 2.0%
International Game Technology.............. 350,000 7,175,000
Mirage Resorts, Inc.*...................... 108,000 2,767,500
-------------
9,942,500
-------------
HOME FURNISHINGS -- 1.2%
Mohawk Industries, Inc*.................... 232,900 5,968,063
-------------
HOSPITALS -- 2.5%
Healthsouth Corp.*......................... 169,000 6,485,375
Tenet Healthcare Corp.*.................... 261,400 5,816,150
-------------
12,301,525
-------------
LODGING -- 0.5%
Host Marriott Corp.*....................... 177,800 2,578,100
-------------
MEDICAL SUPPLIES -- 1.3%
Boston Scientific Corp.*................... 111,500 6,411,250
-------------
OIL/GAS PRODUCTION -- 4.0%
Burlington Resources, Inc.................. 116,000 5,147,500
Enron Oil & Gas Co......................... 120,000 2,985,000
Triton Energy Corp.*....................... 76,800 3,436,800
United Meridian Corp.*..................... 185,600 8,444,800
-------------
20,014,100
-------------
OILFIELD SERVICES/EQUIPMENT -- 4.9%
BJ Services Co.*........................... 145,000 5,256,250
Diamond Offshore Drilling, Inc.*........... 100,000 5,500,000
Ensco International, Inc.*................. 140,000 4,550,000
Tidewater, Inc............................. 91,900 3,434,763
Western Atlas, Inc.*....................... 89,300 5,558,925
-------------
24,299,938
-------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 7.4%
Accustaff, Inc.*........................... 205,100 5,306,962
Corestaff, Inc.*........................... 157,500 4,213,125
Corrections Corp. of America*.............. 213,200 6,662,500
CUC International, Inc.*................... 151,162 6,027,585
MFS Communications, Inc.*.................. 89,500 3,904,438
Republic Waste Industries*................. 175,000 5,075,000
USA Waste Services, Inc.*.................. 185,600 5,846,400
-------------
37,036,010
-------------
OTHER FINANCIAL SERVICES -- 2.7%
Equifax, Inc............................... 232,600 6,134,825
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
24
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER FINANCIAL SERVICES (CONTINUED)
Sunamerica Inc............................. 205,100 $ 7,075,950
-------------
13,210,775
-------------
PIPELINES -- 1.1%
Williams Companies, Inc.................... 108,200 5,518,200
-------------
RECREATION PRODUCTS -- 1.2%
Harley-Davidson, Inc....................... 140,000 6,020,000
-------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 3.9%
Intel Corp................................. 77,000 7,348,687
S3, Inc.*.................................. 322,000 6,359,500
Vitesse Semiconductor*..................... 150,000 5,793,750
-------------
19,501,937
-------------
SOFTWARE -- 11.1%
Baan Co. NV*............................... 94,900 3,167,287
BMC Software*.............................. 70,000 5,565,000
Cadence Design Systems, Inc.*.............. 128,625 4,598,344
Computer Associates International, Inc..... 105,000 6,273,750
Microsoft Corp.*........................... 44,000 5,802,500
Netscape Communications, Inc.*............. 124,000 5,750,500
Parametric Technology Corp.*............... 117,000 5,776,875
Rational Software Corp.*................... 220,000 7,507,500
Sterling Commerce, Inc.*................... 160,000 4,720,000
Synopsys, Inc.*............................ 130,600 6,023,925
-------------
55,185,681
-------------
SPECIALTY CHAINS -- 4.9%
Borders Group, Inc.*....................... 182,600 6,801,850
Home Depot, Inc............................ 102,000 5,801,250
Staples, Inc.*............................. 240,700 5,340,531
Tech Data Corp.*........................... 230,000 6,411,250
-------------
24,354,881
-------------
SPECIALTY INSURERS -- 1.2%
MGIC Investment Corp....................... 87,100 5,868,363
-------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELECOMMUNICATIONS EQUIPMENT -- 9.7%
ADC Telecommunications*.................... 110,000 $ 7,040,000
Andrew Corp.*.............................. 110,000 5,486,250
Aspect Telecommunications Corp.*........... 82,300 5,123,175
Cascade Communications Corp*............... 78,200 6,373,300
DSP Communications, Inc.*.................. 152,300 8,509,762
ICG Communications*........................ 215,000 4,515,000
Nokia Corp................................. 133,000 5,885,250
Telebras-Sponsored ADR..................... 68,000 5,338,000
-------------
48,270,737
-------------
TELEPHONE -- 3.7%
LCI International, Inc.*................... 195,700 6,164,550
Nextel Communications, Inc.*............... 170,000 3,145,000
Teleport Comm.*............................ 310,000 7,323,750
WorldCom, Inc.*............................ 90,200 1,928,025
-------------
18,561,325
-------------
TOTAL COMMON STOCKS
(Cost $372,559,894)...................................... 481,863,845
-------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------
COMMERCIAL PAPER -- 4.0%
- ---------------------------------------------------------------------------
Merrill Lynch & Co.
5.85%, 10/01/96
(Cost $19,644,000)....................... $ 19,644,000 19,644,000
-------------
TOTAL INVESTMENTS -- 100.6%
(Cost $392,203,894)...................................... $ 501,507,845
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.6%) . (2,865,689)
-------------
NET ASSETS -- 100.0%....................................... $ 498,642,156
-------------
</TABLE>
- ---------------
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
25
<PAGE>
INCOME & GROWTH FUND
ADVISORY PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
John D. Wylie
Partner, Chief Investment Officer
Investor Services Group
Maren Lindstrom
Portfolio Manager
Sandra K. Durn
Portfolio Manager
GOAL: The Nicholas-Applegate Income & Growth Fund seeks to maximize total
return through investment primarily in convertible and equity securities of U.S.
companies.
REVIEW AND OUTLOOK: The Income & Growth Advisory Portfolio earned steady
returns through the period on the strength of the Fund's individual holdings in
the technology, insurance, and commercial and industrial services sectors. The
Fund, which holds convertible bonds, preferred stocks, and other equity
securities of U.S. companies, performed well compared with the First Boston
Convertibles Index, an industry benchmark. Advisory Portfolio shares returned
8.7% for the period, April 1 through September 30, 1996; the benchmark rose 4.5%
during the same period. The Portfolio's effective yield for the 30 day period
ended September 30 was 2.06%.
The Fund seeks to tap the growth potential of small and medium-sized companies
through securities convertible into common stocks. By investing in these types
of securities, we seek lower risk than that found in the individual companies'
stocks and gain bond income as well. Convertible bonds are typically less
sensitive to interest rate risk than conventional bonds.
From April through September, the Portfolio shareholders were rewarded by the
Fund's holdings in such companies as Staples, the operator of discount office
supply stores, and 3Com, a computer products company. Staples shares rose
sharply during the period as a result of its announced merger with Office Depot
and this helped drive up the value of its convertible bonds. The convertible
notes of 3Com rose along with the company's stock as earnings and earnings
projections for the California-based technology company continued to grow. The
company offers computer networking solutions for data interface networks and
other products and services. 3Com has introduced 29 new products this year and
has taken away market share from Intel, its largest competitor. Among the
holdings we sold were Enron Corp., which showed a weak oil reserve replacement,
and MFS Communications, Inc., which took profits on a merger with WorldCom.
We remain optimistic about the outlook for investing in convertible securities
and believe our unique approach of managing the Fund for the underlying equity
values will continue to provide an excellent investment option for shareholders.
REPRESENTATIVE HOLDINGS
Service Corporation
United States Filter Corp.
Noble Affiliates, Inc.
Staples, Inc.
Thermo Electron Corp.
California Energy
3Com Corp.
United Waste Systems, Inc.
Penncorp Financial Group, Inc.
Hexcel Corp.
- --------------------------------------------------------------------------------
26
<PAGE>
INCOME & GROWTH ADVISORY PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
INCOME & GROWTH ADVISORY PORTFOLIO WITH THE CS FIRST BOSTON CONVERTIBLE INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/96
1 YEAR 5 YEARS SINCE INCEPTION
18.07% 14.18% 14.62%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME AND GROWTH ADVISORY PORTFOLIO FIRST BOSTON CONVERTIBLE INDEX
<S> <C> <C>
12/31/86 $ 10,000 $ 10,000
3/31/87 11,299 11,278
6/30/87 11,319 11,550
9/30/87 11,937 12,082
12/31/87 9,663 9,978
3/31/88 10,240 10,690
6/30/88 11,068 11,219
9/30/88 11,032 11,101
12/31/88 11,556 11,316
3/31/89 12,926 11,975
6/30/89 13,637 12,537
9/30/89 14,449 13,065
12/31/89 14,801 12,873
3/31/90 15,490 12,715
6/30/90 16,375 13,019
9/30/90 14,484 11,629
12/31/90 15,035 11,986
3/31/91 17,287 13,598
6/30/91 17,583 13,747
9/30/91 19,482 14,775
12/31/91 20,752 15,476
3/31/92 20,881 16,212
6/30/92 20,110 16,615
9/30/92 20,890 17,260
12/31/92 22,737 18,197
3/31/93 23,655 19,529
6/30/93 25,655 20,053
9/30/93 27,935 21,050
12/31/93 28,832 21,572
3/31/94 28,143 20,947
6/30/94 26,842 20,378
9/30/94 27,405 20,987
12/31/94 26,577 20,554
3/31/95 27,500 21,758
6/30/95 29,456 23,743
9/30/95 32,032 25,214
12/31/95 32,417 25,429
3/31/96 34,783 26,915
6/30/96 35,977 27,489
9/30/96 37,820 28,115
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in Income & Growth Advisory Portfolio with a similar
investment in the CS First Boston Convertible ("First Boston Convertible")
Index, on a cumulative and average annual total return 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 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.
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>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
INCOME & GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 14.2%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ADVERTISING -- 2.4%
Omnicom Group, Inc......................... 61,429 $ 2,871,806
------------
ELECTRICAL UTILITIES -- 0.6%
AES Corp.*................................. 17,980 707,962
------------
FINANCIAL SERVICES -- 0.2%
First Chicago NBD Corp..................... 11,700 223,762
------------
GAS UTILITIES -- 0.9%
MCN Corp................................... 41,860 1,124,987
------------
INVESTMENTS -- 1.7%
Merrill 6.25% "IGL"-Strypes................ 51,526 2,073,921
------------
INSURANCE SERVICES -- 1.0%
Penncorp Financial Group................... 20,805 1,178,083
------------
MACHINERY/EQUIPMENT -- 0.5%
Cooper Industry, Inc....................... 26,400 541,200
------------
SOAPS/COSMETICS -- 0.1%
AJL Peps Trust............................. 8,610 170,048
------------
REAL ESTATE INVESTMENT TRUSTS -- 6.1%
Cali Realty Corp........................... 39,920 1,082,830
CenterPoint Properties Corp................ 30,000 806,250
Patriot American Hospitality, Inc.......... 25,830 868,534
Reckson Associates Realty Corp............. 49,530 1,838,801
Spieker Properties, Inc.................... 20,300 596,313
Weeks Corp................................. 55,120 1,570,920
Starwood Lodging Trust..................... 14,900 623,937
------------
7,387,585
------------
TELECOMMUNICATIONS -- 0.0%
MFS Communications Co., Inc................ 1,232 53,746
------------
TELEPHONE -- 0.7%
ICG Communications*........................ 31,766 667,086
------------
TOTAL COMMON STOCKS
(Cost $14,240,312)....................................... 17,000,186
------------
- ----------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 27.1%
- ----------------------------------------------------------------------------
BROADCASTING -- 3.7%
American Radio Systems Corp., 7.0%*........ 39,100 $ 2,130,950
SFX Broadcasting, Inc., Series D, 6.5%*.... 40,080 2,304,600
------------
4,435,550
------------
ELECTRICAL UTILITIES -- 3.0%
California Energy Capital Trust*........... 27,380 1,635,955
Devon Energy 144A Pfd*..................... 30,148 1,575,233
Santa Fe Energy Res. Inc., $.732........... 31,100 388,750
------------
3,599,938
------------
ELECTRONIC DATA PROCESSING -- 2.0%
Ceridian Corp., 5.5%....................... 21,975 2,400,769
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
GAS UTILITIES -- 1.5%
Noram Financing I, 6.25%................... 29,100 $ 1,786,013
------------
MACHINERY/EQUIPMENT -- 0.6%
Greenfield Capital Trust, 6.0%*............ 16,510 718,185
------------
MEDICAL DEVICES -- 0.9%
United States Surgical Corp., Series A,
$2.20.................................... 24,720 1,022,790
------------
MULTI-LINE INSURERS -- 1.2%
Allstate Corp., $2.30...................... 29,900 1,390,350
------------
OIL/GAS PRODUCTION -- 1.2%
Occidental Petroleum Corp., $3.00.......... 23,800 1,398,250
------------
OTHER CONSUMER SERVICES -- 2.8%
SCI Finance LLC, Series A, $3.125.......... 34,690 3,555,725
------------
REGIONAL BANKS -- 1.3%
Sakura Finance Trust, 0.75%................ 26 1,523,104
------------
PIPELINES -- 1.4%
Williams Cos., $3.50....................... 20,595 1,681,067
------------
RESTAURANTS -- 1.5%
Wendy's Financing CV Pfd................... 35,300 1,817,950
------------
SPECIALTY INSURERS -- 1.8%
American Bankers Insurance, Series B,
6.25%.................................... 36,290 2,141,110
------------
TELECOMMUNICATIONS -- 2.2%
LM Ericsson Telephone Co., 4.25%........... 767,670 2,638,866
------------
TELEPHONE -- 0.8%
Nortel Inversora S A....................... 24,910 1,005,741
------------
WHOLESALE DISTRIBUTION -- 1.2%
Alco Standard Corp. Series BB, $5.040...... 16,540 1,505,140
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $28,502,445)....................................... 32,620,548
------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- ----------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 56.3%
- ----------------------------------------------------------------------------
BROADCASTING -- 0.4%
Comcast Corp.
3.375%, 09/09/05......................... $ 60,000 $ 52,575
Telemundo Group, Inc.
7.000%, 02/15/06......................... 225,000 215,437
------------
268,012
------------
BUILDING MATERIALS -- 2.1%
Hexcel Corp.
7.000%, 08/01/03......................... 840,000 1,187,550
Home Depot, Inc.
3.250%, 10/01/01......................... 1,310,000 1,334,563
------------
2,522,113
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
28
<PAGE>
- -------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CONVERTIBLE CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CLOTHING CHAINS -- 3.2%
Charming Shoppes, Inc.
7.500%, 07/15/06......................... $1,365,000 $ 1,470,787
Nine West Group, Inc.*
5.500%, 07/15/03......................... 1,220,000 1,314,550
Saks Holdings, Inc.
5.500%, 09/15/06......................... 1,040,000 1,101,100
------------
3,886,437
------------
COMPUTERS/OFFICE AUTOMATION -- 2.8%
Conner Peripherals, Inc.
6.500%, 03/01/02......................... 1,320,000 1,518,000
Safeguard Scientifics*
6.000%, 02/01/06......................... 1,375,000 1,832,188
------------
3,350,188
------------
DEPARTMENT/DISCOUNT STORES -- 3.2%
Proffitt's, Inc.*
4.750%, 11/01/03......................... 1,758,000 1,826,123
Price Co.
0.055%, 02/28/12......................... 1,904,000 1,968,260
------------
3,794,383
------------
DRUGS/PHARMACEUTICALS -- 3.1%
Elan International Finance*
0.000%, 10/16/12......................... 1,718,000 1,108,110
Sandoz Capital BVI LTD*
2.000%, 10/06/02......................... 900,000 2,660,325
Sandoz Euro
2.000%, 10/06/02......................... 1,470,000
------------
3,768,435
------------
ELECTRIC UTILITIES -- 1.2%
AES Corp.
10.250%, 07/15/06........................ 1,385,000 1,471,562
------------
ELECTRONICS -- 2.2%
Analog Devices
3.500%, 12/01/00......................... 1,060,000 1,294,525
Sanmina Corp.
5.500%, 08/15/02......................... 920,000 1,404,150
------------
2,698,675
------------
ELECTRONIC DATA PROCESSING -- 3.2%
C-Cube Microsystems, Inc.
5.875%, 11/01/05......................... 185,000 273,337
First Financial Management Corp.
5.000%, 12/15/99......................... 715,000 1,353,138
Automatic Data Process*
0.000%, 02/20/12......................... 3,985,000 2,281,412
------------
3,907,887
------------
ELECTRONIC INSTRUMENTS -- 1.7%
ADT Operations, Inc.*
0.000%, 07/06/10......................... 3,093,000 1,848,067
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONIC INSTRUMENTS (CONTINUED)
Checkpoint Systems, Inc. Euro
5.250%, 11/01/05......................... $ 100,000 $ 154,750
------------
2,002,817
------------
ENVIRONMENTAL SERVICES -- 5.5%
U.S. Filter Corp.*
6.000%, 09/15/05......................... 1,538,000 2,970,263
Sanifill, Inc.
5.000%, 03/01/06......................... 1,918,000 2,416,680
United Waste Systems, Inc.*
4.500%, 06/01/01......................... 1,060,000 1,287,900
------------
6,674,843
------------
FOOD CHAINS -- 2.6%
Food Lion, Inc.
5.000%, 06/01/03......................... 949,000 1,161,339
Starbucks Corp.
4.250%, 11/01/02......................... 1,280,000 1,926,400
------------
3,087,739
------------
INDUSTRIAL ENGINEERING/CONSTRUCTION -- 1.0%
Empresas ICA Sociedad
5.000%, 03/15/04......................... 1,726,000 1,210,358
------------
INSURANCE SERVICES -- 2.1%
American Travellers Corp.
6.500%, 10/01/05......................... 1,123,000 2,521,135
------------
INVESTMENT COMPANIES -- 0.6%
Morgan Stanley Group*
0.000%, 09/30/00......................... 690,000 747,788
------------
LODGING -- 2.5%
Marriott International
0.000%, 03/25/11......................... 3,125,000 1,707,031
Hilton Hotels Corp.
5.000%, 05/15/06......................... 1,210,000 1,300,750
------------
3,007,781
------------
MACHINERY/EQUIPMENT -- 2.8%
Thermo Electron Corp.
4.250%, 01/01/03......................... 1,675,000 2,049,781
Thermo Electron Corp. Euro*
4.250%, 01/01/03......................... 1,110,000 1,340,325
------------
3,390,106
------------
MEDICAL/NURSING/HEALTH SERVICES -- 2.1%
Phycor, Inc.
4.500%, 02/15/03......................... 710,000 803,188
Renal Treatment Centers, Inc.*
5.625%, 07/15/06......................... 1,480,000 1,716,800
------------
2,519,988
------------
OIL/GAS PRODUCTION -- 6.1%
Baker Hughes, Inc.*
0.000%, 05/05/08......................... 2,520,000 1,764,000
Cliffs Drilling Co.
10.250%, 05/15/03........................ 400,000 417,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
29
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
INCOME & GROWTH FUND
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CONVERTIBLE CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OIL/GAS PRODUCTION (CONTINUED)
Noble Affiliates, Inc.
0.0425, 11/01/03......................... $2,120,000 $ 2,427,400
Pride Petroleum Services, Inc.
0.0625, 02/15/06......................... 1,208,000 1,603,620
Nabors Industries, Inc.
5.000%, 05/15/06......................... 1,160,000 1,173,050
------------
7,385,070
------------
OTHER PRODUCTION/MANUFACTURING -- 0.9%
ALFA S.A. DE C.V.*
8.000%, 09/15/00......................... 1,000,000 1,068,750
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 1.8%
3Com Corp.
10.250%, 11/01/01........................ 665,000 1,267,656
S3 Inc.
5.750%, 10/01/03......................... 680,000 842,350
------------
2,110,006
------------
SPECIALTY CHAINS -- 2.0%
Staples, Inc.*
4.50%, 10/01/00.......................... 2,099,000 2,453,206
------------
TECHNOLOGY -- 1.0%
Intermedia Communications, Inc.*
0.000%, 05/15/06......................... 175,000 109,812
National Education Corporation
6.500%, 05/15/11......................... 955,000 897,700
Sygnet Wireless, Inc.
11.500%, 10/01/06........................ 150,000 154,875
------------
1,162,387
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELECOMMUNICATIONS -- 0.9%
Midcom Communications, Inc.*
8.25% 08/15/03........................... $ 785,000 $ 887,050
Pricecellular Wire*
14.000%, 11/15/01........................ 250,000 225,000
------------
1,112,050
------------
WHOLESALE DISTRIBUTORS -- 1.2%
Danka Business Systems PLC
6.750%, 04/01/02......................... 1,000,000 1,443,750
------------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $58,657,859)....................................... 67,565,466
------------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.6%
- ----------------------------------------------------------------------------
Merrill Lynch & Co.
5.85% 10/01/96
(Cost $3,153,000)........................ $3,153,000 $ 3,153,000
------------
TOTAL INVESTMENTS -- 100.1%
(Cost $104,553,616)...................................... $120,339,200
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1%)............
(70,689)
------------
NET ASSETS -- 100.0%....................................... $120,268,511
------------
<FN>
- ---------------
* Non-Income Producing Security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
30
<PAGE>
BALANCED GROWTH FUND
ADVISORY PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
EQUITIES
Lawrence S. Speidell, CFA
Partner, Director of Global/Systematic
Portfolio Management and Research
John J. Kane
Senior Portfolio Manager
U.S. Systematic
Craig R. Occhialini
Portfolio Manager
U.S. Systematic
Mark W. Stuckelman
Portfolio Manager
U.S. Systematic
Chris McCaman
Assistant Portfolio Manager
Stephen Ross
Assistant Portfolio Manager
BONDS
John D. Wylie
Partner, Chief Investment Officer
Investor Services Group
Fred S. Robertson
Partner, Chief Investment Officer
Fixed Income Management
Douglas G. Forsyth, CFA
Portfolio Manager
GOAL: The Nicholas-Applegate Balanced Growth Fund seeks to provide capital
appreciation and current income by investing approximately 60% of total assets
in equity and convertible securities primarily of U.S. companies and 40% of
total assets in debt securities, money market instruments, and other short-term
investments.
REVIEW AND OUTLOOK: The Balanced Growth Advisory Portfolio delivered strong
gains during the six months from April 1 to September 30, 1996. While the Fund
was affected by the broad market downturn in July, its small- and mid-cap stock
holdings rebounded in August and September, contributing to superior returns for
the period.
Qualified Advisory Portfolio shares rose 9.9% during the 6 month period,
compared with a 5.5% return for a balanced index comprising 60% of the Standard
& Poor's 500 Index and 40% of the Lehman Government/Corporate Index.
Stock picks in the technology sector contributed to the Fund's turnaround from
the summer setback. Stock selection in the retail, health care, financial, and
commercial-industrial services sectors also added to the Fund's gains over the
benchmark.
The stock portion of the Fund at the end of September was invested 32% in
technology, 9% in health care, 12% in retail, 12% in financial services, and 7%
in consumer services.
Among the Fund's best performers was Ascend Communications, a maker of
high-speed digital network access products. Its price soared above its
competitors because of a 30% increase in international sales. Another top
performer was Ross Stores, the third largest off-price retailer in the country.
Ross operates 300 outlets offering first quality, discounted merchandise for the
entire family. Its earnings jumped 60% this year due to favorable industry
dynamics and an expanded and experienced merchandise buying organization. We
sold shares of CQ Microsystems after the company reported disappointing earnings
due to encroaching competition from IBM. America Online was having difficulty
- --------------------------------------------------------------------------------
31
<PAGE>
BALANCED GROWTH FUND
ADVISORY PORTFOLIO -- CONTINUED
- --------------------------------------------------------------------------------
retaining subscribers, causing estimates of future earnings to fall. As a
result, we sold this issue at the end of the period.
Reports of higher employment and a stronger economy, especially during April
and May, sent yields higher and bond prices lower early in the period. But with
the Federal Reserve's decision not to raise interest rates this fall, bond
prices firmed. This resulted in a sluggish period for the fixed income portion
of the Fund.
In actively managing the fixed income side of the Fund, we changed the
structure of the Fund to take advantage of major activity in the market. We
reduced the duration (a measure of the Fund's tendency to fluctuate in value)
during the period, bringing it closer in line to that of the benchmark and
reflecting a more conservative stance.
Economically, it appears we are in a slow-growth environment. In line with our
style of growth investing, we actively seek companies that are using economic
change to their benefit. We are optimistic that over the long term our
disciplined approach to selecting high-quality U.S. government bonds and dynamic
growth stocks will continue to deliver investment benefits for our shareholders.
REPRESENTATIVE HOLDINGS
Ascend Communications, Inc.
McAfee Associates, Inc.
Ross Stores, Inc.
Jones Medical Industries, Inc.
Green Tree Financial Corp.
Robert Half International, Inc.
United States Treasury Note, 7.500%, 11/15/01
United States Treasury Note, 7.500%, 05/15/02
United States Treasury Note, 6.250%, 08/31/00
TJX Companies Note, 6.625%, 06/15/00
- --------------------------------------------------------------------------------
32
<PAGE>
BALANCED GROWTH ADVISORY PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
BALANCED GROWTH ADVISORY PORTFOLIO WITH A MODEL INDEX CONSISTING OF 60% S&P 500
INDEX/40% LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
12.23% As of 09/30/96 12.26%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BALANCED GROWTH ADVISORY
<S> <C> <C>
Portfolio Balanced 60/40 Index
8/31/95 $ 10,000 $ 10,000
9/30/95 10,101 10,294
12/31/95 9,959 10,859
3/31/96 10,310 11,102
6/30/96 10,922 11,421
9/30/96 11,336 11,717
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Balanced Growth Advisory Portfolio 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 and average annual total return
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 corporation issuers of
fixed rate, non-convertible, investment grade U.S. dollar denominated bonds
having maturities of greater than one year. It is generally regarded as
representative of the market for domestic bonds.
Each index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. 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.
- --------------------------------------------------------------------------------
33
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
BALANCED GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
AIRLINES -- 1.0%
AMR Corp.*................................. 1,700 $ 135,363
Continental Airlines Holding, Inc. - Class
B*....................................... 6,200 138,725
------------
274,088
------------
APPAREL -- 0.6%
Stein Mart, Inc.*.......................... 7,200 159,300
------------
AUTOMOBILES -- 0.5%
Chrysler Corp.............................. 4,900 140,263
------------
AUTOMOTIVE EQUIPMENT -- 0.3%
Gentex Corp.*.............................. 3,700 84,175
------------
BIOTECHNOLOGY -- 0.8%
Quintiles Transnational Corp.*............. 2,800 205,100
Mentor Corp................................ 900 24,750
------------
229,850
------------
BUILDING MATERIALS -- 0.4%
Texas Industries, Inc...................... 1,900 113,763
------------
BUILDING MATERIAL CHAINS -- 0.7%
Eagle Hardware & Garden, Inc.*............. 7,000 189,000
------------
CATALOG/OUTLET STORES -- 0.6%
Lands' End, Inc............................ 7,300 156,950
------------
CHEMICALS -- 0.6%
Cytec Industries, Inc.*.................... 4,400 171,050
------------
CLOTHING CHAINS -- 2.2%
Claire's Stores, Inc....................... 8,550 182,756
Ross Stores, Inc........................... 7,200 259,200
TJX Companies.............................. 4,600 165,025
------------
606,981
------------
COMPUTERS/OFFICE AUTOMATION -- 1.9%
Cisco Systems, Inc.*....................... 3,200 198,600
Iomega Corp.*.............................. 6,600 160,050
Storage Technology Corp.*.................. 3,900 147,713
------------
506,363
------------
CONTRACT DRILLING -- 2.9%
Global Marine, Inc.*....................... 11,100 174,825
Reading & Bates Corp.*..................... 13,600 368,900
Transocean Offshore, Inc................... 3,900 238,875
------------
782,600
------------
DEPARTMENT/DISCOUNT STORES -- 0.6%
Woolworth Corp.*........................... 7,400 152,625
------------
DRUGS/PHARMACEUTICALS -- 1.6%
Dura Pharmaceuticals, Inc.*................ 5,600 206,500
Jones Medical Industries, Inc.............. 4,650 225,525
------------
432,025
------------
ELECTRONICS/MUSIC CHAINS -- 1.0%
CompUSA, Inc.*............................. 4,800 259,200
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 0.8%
Dynatech Corp.*............................ 4,800 $ 219,600
------------
ENTERTAINMENT -- 0.4%
Regal Cinemas, Inc.*....................... 4,050 101,250
------------
FINANCIAL COMPANIES -- 3.4%
Aames Financial Corp....................... 2,800 141,050
First USA, Inc............................. 1,600 88,600
Green Tree Financial Corp.................. 4,700 184,475
Imperial Credit Industries, Inc.*.......... 5,600 205,100
MBNA Corp.................................. 3,200 111,200
The Money Store, Inc....................... 1,900 50,350
Student Loan Marketing Association......... 1,800 134,325
------------
915,100
------------
GAMBLING -- 1.2%
Anchor Gaming*............................. 2,600 161,850
Hilton Hotels Corp......................... 6,000 170,250
------------
332,100
------------
HOME FURNISHINGS -- 0.6%
Bed Bath & Beyond, Inc.*................... 6,000 164,250
------------
HOSPITALS -- 0.3%
Health Management Associates, Inc. - Class
A*....................................... 3,400 84,575
------------
INVESTMENT COMPANIES -- 1.4%
Bear Stearns Co............................ 4,305 100,091
Morgan Stanley Group, Inc.................. 2,800 139,300
Salomon, Inc............................... 2,800 127,750
------------
367,141
------------
LIFE INSURERS -- 0.8%
Conseco, Inc............................... 4,400 216,700
------------
LODGING -- 1.5%
Doubletree Corp.*.......................... 4,200 167,475
HFS, Inc.*................................. 3,400 227,375
------------
394,850
------------
MACHINERY/EQUIPMENT -- 0.5%
JLG Industries, Inc........................ 7,200 135,000
------------
MANAGED HEALTHCARE -- 0.8%
Oxford Health Plans, Inc.*................. 4,600 228,850
------------
MEDICAL SUPPLIES -- 0.6%
Guidant Corp............................... 2,900 160,225
------------
METALS -- 0.1%
Harsco Corp................................ 600 37,800
------------
OILFIELD SERVICES/EQUIPMENT -- 1.1%
Camco International, Inc................... 4,700 175,663
Tidewater, Inc............................. 3,600 134,550
------------
310,213
------------
OIL/GAS PRODUCTION -- 1.1%
Chesapeake Energy Corp.*................... 4,950 309,994
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 2.0%
Corrections Corp. of America*.............. 6,800 212,500
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
34
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER COMMERCIAL/INDUSTRIAL SERVICES (CONTINUED)
National Education Corp.*.................. 5,700 $ 109,013
PMT Services, Inc.*........................ 6,200 125,550
Robert Half International, Inc.*........... 2,300 84,813
------------
531,875
------------
OTHER CONSUMER PRODUCTS -- 0.6%
Blyth Industries, Inc.*.................... 3,500 169,750
------------
OTHER FINANCIAL SERVICES -- 0.7%
Sunamerica, Inc............................ 5,800 200,100
------------
OTHER HEALTH SERVICES -- 0.9%
HBO & Company.............................. 3,600 240,300
------------
OTHER PRODUCERS/MANUFACTURING -- 0.6%
BMC Industries, Inc........................ 5,800 166,025
------------
OTHER RETAIL TRADE -- 0.6%
CDW Computer Centers, Inc.*................ 2,500 170,625
------------
PAPER -- 0.6%
Fort Howard Corp.*......................... 6,400 156,000
------------
PIPELINES -- 0.2%
Williams Companies, Inc.................... 1,200 61,200
------------
PUBLISHING -- 1.2%
Gartner Group, Inc.*....................... 3,500 119,000
Harte-Hanks Communications................. 5,800 161,675
Meredith Corp.............................. 800 39,500
------------
320,175
------------
RECREATIONAL PRODUCTS -- 0.6%
Fleetwood Enterprises...................... 5,100 156,825
------------
SAVINGS & LOAN ASSOCIATIONS -- 1.5%
Charter One Financial, Inc................. 4,830 193,200
Greenpoint Financial Corp.................. 4,600 175,375
TCF Financial Corp......................... 900 33,863
------------
402,438
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 2.5%
Atmel Corp.*............................... 8,900 274,788
Vitesse Semiconductor Corp.*............... 5,100 196,987
Western Digital Corp.*..................... 5,500 220,687
------------
692,462
------------
SOFTWARE -- 7.9%
Aspen Technology Inc.*..................... 2,400 162,600
BMC Software, Inc.*........................ 2,700 214,650
Cadence Design System, Inc.*............... 5,100 182,325
Computer Associates International, Inc..... 2,850 170,288
Compuware Corp.*........................... 4,300 196,725
Integrated Systems, Inc.*.................. 5,800 191,400
McAfee Associations, Inc.*................. 4,200 289,800
Oracle Corp.*.............................. 4,000 170,250
Parametric Technology Co.*................. 3,600 177,750
Peoplesoft, Inc.*.......................... 2,700 224,774
Rational Software Corp.*................... 5,000 170,624
------------
2,151,186
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SPECIALTY CHAINS -- 1.2%
Gap, Inc. Del.............................. 5,100 $ 147,262
Rexall Sundown, Inc.*...................... 4,900 178,850
------------
326,112
------------
TELECOMMUNICATIONS EQUIPMENT -- 5.7%
Ascend Communications, Inc.*............... 5,200 343,850
Aspect Telecommunications, Inc.*........... 3,700 230,325
Cascade Communications, Inc.*.............. 3,400 277,100
Pairgain Technologies, Inc.*............... 5,400 421,875
TCSI Corp.*................................ 3,500 46,375
U.S. Robotics Corp.*....................... 3,400 219,725
------------
1,539,250
------------
TELEPHONE -- 0.6%
LCI International, Inc.* . 5,100 160,650
------------
TEXTILES -- 0.6%
Carlisle Cos, Inc.......................... 3,000 166,500
------------
TOTAL COMMON STOCKS
(Cost $11,953,375)....................................... 15,847,354
------------
<CAPTION>
Principal
Amount
<S> <C> <C>
- ----------------------------------------------------------------------------
CORPORATE BONDS -- 17.6%
- ----------------------------------------------------------------------------
AEROSPACE -- 0.9%
Lockheed Martin Corp.
7.75%, 05/01/26.......................... $ 250,000 248,750
------------
BROADCASTING -- 1.0%
Sinclair Broadcasting Group
10.00%, 09/30/96......................... 200,000 203,000
Telemundo Group, Inc.
7.00%, 02/15/06.......................... 75,000 71,813
------------
274,813
------------
CLOTHING CHAINS -- 3.6%
TJX Companies, Inc.
6.625%, 06/15/00......................... 1,000,000 986,250
------------
FINANCE COMPANIES -- 2.5%
Contifinancial Corp.
8.3755%, 08/15/03........................ 500,000 497,500
Ocwen Financial Corp.
11.875%, 10/01/03........................ 175,000 183,750
------------
681,250
------------
GAMBLING -- 2.3%
Bally's Grand, Inc.
10.375%, 12/15/03........................ 150,000 165,000
Casino Magic - Louisiana
13.00%, 08/15/03......................... 200,000 204,250
Majestic Star Casino
12.75%, 05/15/03......................... 250,000 275,000
------------
644,250
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
35
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED GROWTH FUND
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
LIFE INSURERS -- 1.9%
Penncorp Financial Group
9.25%, 12/15/03.......................... $ 500,000 $ 509,375
------------
OIL/GAS PRODUCTION -- 0.3%
KCS Energy, Inc.
11.00%, 01/15/03......................... 75,000 81,750
------------
OILFIELD SERVICES/EQUIPMENT -- 0.8%
Cliffs Drilling
10.25%, 05/15/03......................... 200,000 208,500
------------
OTHER COMMUNICATION/INDUSTRIAL SERVICES -- 0.4%
Iron Mountain, Inc.
10.125%, 10/01/06........................ 100,000 102,500
------------
OTHER PRODUCERS/MANUFACTURING -- 0.6%
J.B. Poindexter & Co.
12.50%, 05/15/04......................... 175,000 168,438
------------
SOAPS/COSMETICS -- 0.6%
Revlon Consumer Products Corp.
10.50%, 02/15/03......................... 150,000 156,750
------------
SPECIALTY CHAINS -- 0.3%
CompUSA, Inc.
9.50%, 06/15/00.......................... 75,000 77,250
------------
TELECOMMUNICATIONS EQUIPMENT -- 0.9%
Net Sat Servicos Ltd. A
12.75%, 08/05/04......................... 225,000 240,187
------------
TELEPHONE -- 1.5%
Intermedia Communications of Florida
0.00%, 05/15/06.......................... 100,000 62,750
PriceCellular Wire
14.00%, 11/15/01......................... 200,000 180,000
Teleport Communications
9.875%, 07/01/06......................... 25,000 25,812
Winstar Communications
0.00%, 10/15/05.......................... 225,000 128,250
------------
396,812
------------
TOTAL CORPORATE BONDS
(Cost $4,663,779)........................................ 4,776,874
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 19.6%
- ----------------------------------------------------------------------------
U.S.TREASURY BONDS -- 3.5%
8.125%, 08/15/21......................... $ 830,000 $ 931,741
U.S.TREASURY NOTES -- 16.1%
7.875%, 04/15/98......................... 180,000 184,883
6.250%, 08/31/00......................... 1,000,000 994,800
7.500%, 11/15/01......................... 1,040,000 1,085,500
7.500%, 05/15/02......................... 1,000,000 1,047,310
7.000%, 07/15/06......................... 750,000 765,855
6.000%, 02/15/26......................... 350,000 307,766
------------
4,386,114
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,480,253)........................................ $ 5,317,855
------------
- ----------------------------------------------------------------------------
AGENCY OBLIGATIONS -- 2.7%
- ----------------------------------------------------------------------------
Tennessee Valley Authority Notes
6.375%, 06/15/05 (Cost $760,580)......... 750,000 720,000
------------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.6%
- ----------------------------------------------------------------------------
Merrill Lynch & Co.
5.85%, 10/01/96
(Cost $430,000).......................... 430,000 430,000
------------
TOTAL INVESTMENTS -- 99.8%
(Cost $23,287,987)....................................... 27,092,084
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%.............. 67,599
------------
NET ASSETS -- 100.0%....................................... $ 27,159,683
------------
<FN>
- ---------------
* Non-income producing security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
36
<PAGE>
GOVERNMENT INCOME FUND
ADVISORY PORTFOLIO
- -------------------------------------------------------------------
MANGEMENT TEAM
John D. Wylie
Partner, Chief Investment Officer
Investor Services Group
Fred S. Robertson
Partner, Chief Investment Officer
Fixed Income Management
Douglas G. Forsyth
CFA, Portfolio Manager
GOAL: The Nicholas-Applegate 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.*
REVIEW AND OUTLOOK: The Government Income Fund declined slightly from April
through September 1996, because of rising interest rates and falling bond
prices. Reports of a stronger economy, rapid money growth and uncertainty over
the course of U.S. monetary policy all contributed to a temporary sluggishness
in the bond markets.
However, the bond market in general and the Fund in particular delivered
stronger results in the third quarter. By mid-August, more favorable economic
data including benign inflation reports sparked a rally. As a result, bonds
surged at quarter's end, allowing the Fund and the industry benchmark, the
Lehman Brothers Government Bond Index, to participate in a solid gain.
One of the Fund's corporate bond holdings, Cigna Corp., though a small
percentage of the overall Fund at 5.1% of assets, fared very well in 1996,
posting a return of 11.4%.
At the end of the period, 35.7% of the Fund's holdings had maturities under
three years, 27.0% had maturities of three to five years, 18.7% had maturities
of five to ten years, and 18.7% had maturities over ten years. The Fund's
average maturity was 8.8 years; the yield to maturity was 6.5%; bond duration
was 5.0 years; and the average quality of securities was AAA.
Looking forward, we believe economic and market conditions offer the potential
of stability and moderate growth, which would be beneficial for shareholders.
- ------------
* The government guarantee of the Fund's portfolio securities does not guarantee
the value of the Fund's shares, which will fluctuate.
- --------------------------------------------------------------------------------
37
<PAGE>
GOVERNMENT INCOME ADVISORY PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
GOVERNMENT INCOME ADVISORY PORTFOLIO WITH THE LEHMAN BROTHERS GOVERNMENT BOND
INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
1.60% As of 09/30/96 2.22%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GOVERNMENT INCOME LEHMAN BROTHERS
<S> <C> <C>
Advisory Government Bond
Portfolio Index
8/31/95 10000 10000
9/30/95 10079 10096
12/31/95 10558 10557
3/31/96 10232 10317
6/30/96 10127 10366
9/30/96 10241 10541
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Government Income Advisory Portfolio with the Lehman
Brothers Government Bond Index, on a cumulative and average annual total return
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.
- --------------------------------------------------------------------------------
38
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
GOVERNMENT INCOME FUND
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
U. S. TREASURY OBLIGATIONS -- 73.7%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
U. S. TREASURY NOTES
7.875%, 04/15/98................... $1,835,000 $ 1,884,784
6.250%, 08/31/00................... 1,100,000 1,094,280
7.500%, 11/15/01................... 350,000 365,312
7.000%, 07/15/06................... 750,000 765,855
6.000%, 02/15/26................... 775,000 681,481
-----------
TOTAL U. S. TREASURY OBLIGATIONS
(Cost $4,832,243)................................. 4,791,712
-----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CORPORATE BONDS -- 20.4%
- --------------------------------------------------------------------
CIGNA CORPORATION -- 5.1%
7.650% , 03/01/23.................. $ 350,000 $ 332,937
LOCKHEED MARTIN -- 15.3%
7.750% , 05/01/26.................. 1,000,000 995,000
-----------
TOTAL CORPORATE BONDS
(Cost $1,304,309)................................. 1,327,937
-----------
- --------------------------------------------------------------------
AGENCY OBLIGATIONS -- 3.7%
- --------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY
6.375%, 06/15/05
(Cost $258,725).................... 250,000 240,000
-----------
TOTAL INVESTMENTS -- 97.8%
(Cost $6,395,277).................. $ 6,359,649
OTHER ASSETS LESS LIABILITIES -- 2.2%............... 140,268
-----------
NET ASSETS -- 100.0%................................ $ 6,499,917
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
39
<PAGE>
EMERGING COUNTRIES FUND
ADVISORY PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
Lawrence S. Speidell CFA
Partner, Director of Global/Systematic Portfolio
Management and Research
Catherine Somhegyi
Partner, Chief Investment
Officer, Global Equity Management
Pedro V. Marcal
Portfolio Manager
Emerging Countries
Ernesto Ramos, Ph.D.
Senior Portfolio Manager, International
Eswar Menon
International Analyst
Aaron M. Harris
International Analyst
GOAL: The Nicholas-Applegate Emerging Countries Fund seeks to provide
long-term capital appreciation through investment in companies in developing
countries around the world.
REVIEW AND OUTLOOK: The Emerging Countries Fund continued to post
exceptionally strong performance during the six-month period from April through
September 1996. Advisory shares returned 12.6% in the period, six times the 2.0%
return of the IFC Investable Index, the World Bank's benchmark measure of
emerging countries' performance.
At the end of the third quarter, the Fund held about one-third of its assets
in the stocks of companies headquartered in Brazil, Mexico, Thailand, and Hong
Kong. Approximately one-quarter of the Fund's holdings were in the producers and
manufacturing sector and another quarter in the consumer non-durables and
financial services sectors.
We believe the outlook for long-term growth from emerging market companies
remains excellent, with many firms poised to take advantage of opportunities
created by changes in their economic and political environments. We've seen new
building and manufacturing capabilities in Venezuela and Mexico, expansion of
the high-technology sector in Israel, and increasing consumption in China and
Brazil. One of the Fund's representative holdings, Tubos de Acero de Mexico, a
manufacturer of seamless drill pipe, is one of the most profitable steel
companies in the world. Its international competitiveness has gained momentum as
a result of the peso devaluation. Its cash earnings per share increased 198% the
first half of this year compared with 1995, because of increased volume and
lower borrowing costs. Israel-based Nice Systems Ltd. is another technology
holding whose earnings almost doubled for the period. Nice develops,
manufactures, markets and services digital recording and retrieval systems. We
sold shares of San Luis Corp., a Mexican auto parts exporter, and Thai Stanley
Electric, a manufacturer of lighting parts for motorcycles and automobiles. The
strengthening peso created a weaker earnings outlook for San Luis and the
slowdown in the Thai economy affected the demand for autos and their components,
which hurt Thai Stanley's lighting business.
Although we expect fluctuations along the way, as is typical because of
possible currency fluctuations and economic and political uncertainties in
emerging markets, such as those experienced this summer, we believe a
disciplined investment plan and a long-term objective will continue to serve
investors seeking GROWTH OVER TIME-Registered Trademark-. The Emerging Countries
Advisory Portfolio provides investors with an opportunity to add diversification
to their domestic holdings as well as their other international holdings.
- --------------------------------------------------------------------------------
40
<PAGE>
-------------------------------------------------------------------
It also enables investors to take advantage of the potential for growth and
added diversification offered by emerging markets.
REPRESENTATIVE HOLDINGS
Companhia Cervejaria Brahma S.A., Brazil
Siderurgica Venezolana Sivensa,
Saica S.A.C.A., Venezuela
Tubos de Acero de Mexico S.A, Mexico
Lojas Arapua S.A., Brazil
Nice Systems, Ltd., Israel
Shanghai Industrial Holdings Ltd., Hong Kong
Elektrim Spolda Akcyjna S.A., Poland
Thai Engine Manufacturing, Thailand
Belle Corporation, Philippines
The Pizza Public Co., Ltd., Thailand
- --------------------------------------------------------------------------------
41
<PAGE>
EMERGING COUNTRIES ADVISORY PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING COUNTRIES ADVISORY PORTFOLIO WITH THE IFC INVESTABLE INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURN INCEPTION
18.63% As of 09/30/96 17.15%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING COUNTRIES ADVISORY PORTFOLIO IFC INVESTABLE INDEX
<S> <C> <C>
8/31/95 $ 10,000 $ 10,000
9/30/95 10,008 9,919
12/31/95 9,496 9,827
3/31/96 10,544 10,566
6/30/96 11,624 11,024
9/30/96 11,872 10,776
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Emerging Countries Advisory Portfolio with the
International Finance Corporation ("IFC") Investable Index, on a cumulative and
average annual total return 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 IFC Investable Index is an unmanaged index and measures the performance of
more than 1,100 stocks that are legally and practically available to outside
investors in 25 emerging market countries of the world.
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.
- --------------------------------------------------------------------------------
42
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
EMERGING COUNTRIES FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 97.4%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ARGENTINA -- 3.3%
Cresud SA.................................. 309,500 $ 526,150
Compania Naviera Perez Companc
S.A. -- B................................ 91,973 579,430
Importadora y Exportadora de la
Patagonia S.A............................ 23,000 315,100
Siderca S.A. -- A.......................... 415,900 615,532
------------
2,036,212
------------
BRAZIL -- 8.5%
Banco Bradesco S.A......................... 92,248,000 781,839
Companhia Cervejaria Brahma S.A............ 2,425,000 1,504,042
Elevadores Atlas S.A.*..................... 14,000 150,892
Itausa Investimentos S.A................... 654,000 512,640
Lojas Arapua S.A........................... 43,300,000 729,728
Lojas Renner S.A........................... 11,300,000 653,243
Tam TransportesAereos Regionais S.A........ 6,140,000 379,012
Telec de Rio Janeiro S.A................... 4,736,000 519,725
Telec de Rio Janeiro PN*................... 99,496 11,289
------------
5,242,410
------------
CHINA -- 0.2%
Shanghai Post & Telecommunications......... 330,000 141,240
------------
GREECE -- 0.4%
Sarantis S.A............................... 25,900 268,416
------------
HONG KONG -- 7.2%
Anhui Gujing Distillery Co. *.............. 248,200 180,381
Cheung Kong Holdings LTD................... 35,000 269,300
Qingling Motors Co......................... 720,000 276,995
Guangdong Investments Holdings LTD......... 752,000 529,988
Guangnan Holdings LTD...................... 440,000 293,030
HSBC Holdings LTD.......................... 31,200 578,973
Peregrine Investments Holdings LTD......... 424,000 671,667
Peregrine Investments Warrants*............ 42,400 7,950
Shanghai Industrial Holdings LTD*.......... 325,000 745,991
Shenzhen Fangda Co. LTD.................... 410,000 244,420
Sinocan Holdings LTD....................... 1,428,000 637,088
------------
4,435,783
------------
HUNGARY -- 1.5%
Gedeon Richter............................. 17,400 920,489
------------
INDONESIA -- 2.4%
PT Bank Bira -- Foreign.................... 300,000 307,377
PT Bukaka Teknik Utama -- Foreign*......... 120,000 97,067
PT Citra Marga -- Foreign.................. 260,000 176,661
PT Gudang Garam -- Foreign................. 32,000 120,794
PP London Sumatra Indonesia -- Foreign*.... 92,000 228,214
PT Medco Energi Corp. -- Foreign........... 17,000 18,335
PT Semen Gresik -- Foreign................. 90,000 267,903
PT Tigaraksa Satria -- Foreign............. 90,000 178,602
PT Wicaksana Overseas -- Foreign........... 79,000 95,427
------------
1,490,380
------------
KOREA -- 3.5%
Cho Hung Bank Co., LTD..................... 50,000 548,246
Korea Electric Power Corp.................. 3,980 132,376
Korea Housing Bank*........................ 8,000 190,058
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
KOREA (CONTINUED)
Korea Mobile Telecommunications Corp....... 440 $ 481,298
LG Info & Communications LTD............... 5,100 630,665
LG Info & Communications LTD (New)......... 579 69,835
Samsung Electronics -- (New)*.............. 3 237
Shinhan Bank............................... 3500 80,780
------------
2,133,495
------------
MALAYSIA -- 7.9%
Ekran BHD.................................. 128,000 551,592
Fraser & Neave *........................... 158,000 756,524
Fraser & Neave Warrants*................... 18,000 25,138
Hume Industries............................ 78,000 413,933
Jaya Tiasa Holdings BHD.................... 152,000 946,134
Kian Joo Can Factory BHD................... 84,000 462,533
Lityan Holdings BHD ......... 9,000 72,899
Malayan Banking BHD........................ 28,000 278,190
O. Y. L. Industries BHD.................... 43,000 437,515
O. Y. L. Industries BHD-Rights*............ 4,300 43,752
Technology Resources Industries BHD*....... 120,000 316,016
United Engineers LTD....................... 40,000 309,632
Westmont Industries BHD.................... 130,000 242,758
------------
4,856,616
------------
MEXICO -- 8.5%
Acer Computec Latino
America, S.A. de C.V.*................... 78,000 275,841
Apasco S.A................................. 61,200 424,752
Bafar S.A.*................................ 131,000 215,152
Cemex S.A.................................. 42,270 175,239
Consorcia S.A.*............................ 317,000 680,185
Convertidora Industrial S.A. de C.V.*...... 401,200 462,310
Corporacion Interamericana de Entertainment
S.A.*.................................... 570,900 1,404,943
Gruma S.A.*................................ 85,000 533,080
Grupo Carso S.A............................ 126,000 584,106
Tablex S.A. de C.V......................... 186,000 468,080
------------
5,223,688
------------
PAKISTAN -- 0.7%
SUI Northern Gas Pipelines*................ 405,000 408,509
------------
PERU -- 0.5%
Cementos Norte Pacasmayo................... 1 1
Telefonica de Peru S.A. -- B............... 116,664 263,435
------------
263,436
------------
PHILIPPINES -- 3.7%
Belle Corp.*............................... 860,000 252,459
Empire East Land Holdings, Inc.*........... 1,820,000 971,407
Far East Bank.............................. 6,080 213,252
Hi Cemente Corp.*.......................... 398,000 133,526
Marsman & Co., Inc......................... 755,000 273,447
Selecta Dairy Products, Inc................ 50,000 1,944
Solid Group,Inc.*.......................... 1,901,000 427,598
------------
2,273,633
------------
POLAND -- 5.5%
Agros Holdings S.A.*....................... 21,300 644,421
Bank Rozwoju Eksportu S.A.................. 20,800 710,732
Bank Slaski S.A............................ 6,400 626,446
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
43
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING COUNTRIES FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
POLAND (CONTINUED)
Elektrim Spolda Akcyjna S.A................ 65,000 $ 636,234
Mostosal-Export S.A........................ 196,000 558,106
Zaklady Przemyslu Cukierniczego Jutrzenka
S.A...................................... 8,700 190,443
------------
3,366,382
------------
PORTUGAL -- 0.7%
Portugal Telecom S.A....................... 15,650 402,044
------------
SINGAPORE -- 0.5%
Far East Levin............................. 70000 330,564
------------
SOUTH AFRICA -- 2.9%
De Beers Centenary AG...................... 10,000 310,812
King Food Holdings*........................ 1,413,000 348,850
Liberty Life Association of Africa LTD..... 14,500 438,692
Metro Cash & Carry LTD..................... 80,000 273,339
Western Areas Gold Mining Co., LTD......... 25,248 397,935
------------
1,769,628
------------
THAILAND -- 5.8%
Grammy Entertainment PLC -- Foreign*....... 49000 585,995
K.R. Precision Public Co., LTD -- Foreign.. 9,440 159,989
K.R. Precision Public Co., LTD -- Local.... 45,000 146,263
Nation Multimedia Group PLC -- Local....... 85,000 289,241
Pizza Co. LTD -- Foreign................... 21,000 137,136
Quality House Public Co. LTD -- Foreign.... 170,000 381,196
Serm Suk Co., LTD -- Local................. 2,000 43,273
Serm Suk Co., LTD -- Foreign............... 10,700 328,324
Thai Engine -- Foreign..................... 52,000 474,587
Thai Farmers Bank -- Foreign............... 61,000 643,115
Thai Farmers Bank -- Warrants*............. 10,250 10,081
Tipco Asphalt Co., LTD -- Foreign.......... 68,800 392,447
------------
3,591,647
------------
TURKEY -- 0.8%
Aygaz A.S.................................. 1,340,000 171,739
Otosan Otomobil Sanayii A.S................ 695,000 200,890
Turk Siemens Kablo Ve Elektrik Sanayii
A.S...................................... 400,000 107,984
------------
480,613
------------
UNITED STATES OF AMERICA+ -- 32.9%
Abacan Resource Corp. (Nigeria)*........... 20,000 137,500
Acer Computec Latino America, S.A. de C.V.
(Mexico)*................................ 54,000 951,750
Banque Marocaine Commerce -- GDR
(Morroco)*............................... 26,000 412,750
Basic Petroleum International, LTD
(Guatemala)*............................. 8,800 244,200
BSES LTD -- GDR (India).................... 11,000 192,500
BSES LTD -- GDR 144A (India)............... 10,000 175,000
China Steel Co. (Taiwan)*.................. 33,000 676,500
CIA Telecom de Chile -- ADR (Chile)........ 7,200 695,700
Commercial International Bank of Egypt
(Egypt)*................................. 42,105 652,628
Credicorp LTD (Peru)....................... 25,700 488,300
Crompton Greaves LTD (India)*.............. 35,000 179,375
Elbit Vision Systems LTD (Israel)*......... 28,000 203,000
First NIS Regional Fund (Russia)*.......... 15,000 157,500
Flextronics International LTD
(Singapore)*............................. 13,800 381,225
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA+ (CONTINUED)
Grupo Industrial Maseca S.A. (Mexico)...... 41,900 $ 790,862
Gujarat Ambuja Cements -- GDR (India)...... 42,600 372,750
Hilfiger, Tommy Corp. (Hong Kong).......... 5,200 308,100
Laboratorio Chile S.A. (Chile)............. 34,300 561,662
Larsen & Toubro Limited -- GDR (India)..... 40,000 584,000
M-Systems Flash Disk Pioneer (Israel)*..... 40,000 355,000
Mahindra & Mahindra -- GDR (India)*........ 55,000 563,750
Moneda Chile Fund Limited (Chile)*......... 10,000 90,000
Mosenergo -- ADR 144A (Russia)*............ 5,900 158,562
NICE-System, LTD (Israel)*................. 30,700 703,222
Lukoil Holding -- ADR (Russia)............. 8,600 318,200
Orbotech LTD (Israel)*..................... 10,200 121,125
P.T. Telekomunikasi (Indonesia)............ 10,000 311,250
Pliva D.D. -- GDR (Croatia)*............... 9,000 447,750
Portugal Telecom S.A. (Portugal)........... 3,400 87,550
ROC Taiwan Fund (Taiwan)*.................. 45,000 483,750
Samsung Electronics Co. -- New GDS
(Korea)*................................. 14 350
Samsung Electronics Co. -- Voting GDR
(Korea)*................................. 6,000 300,600
Saville Systems Ireland PLC (Ireland)*..... 10,800 380,700
Siderurgica Venezolana Sivensa, Saica
S.A.C.A. (Venezuela)..................... 269,300 993,044
Taiwan Fund, Inc........................... 3,750 86,719
Tata Engineering & Locomotive Co. LTD
(India)*................................. 60,000 780,000
Tecnomatix Technologies LTD (Israel)*...... 18,000 312,750
Telecomunicacoes Brasileiras S.A. -- ADR
(Brazil)................................. 21,400 1,679,900
Teledata Communications LTD (Israel)*...... 58,400 1,073,100
Telefonica DelPeru S.A. (Peru)............. 22,000 503,250
Total Access Communication Public Co.
(Thailand)............................... 43,000 318,200
Tubos de Acero de Mexico S.A. (Mexico)*.... 78,200 850,425
TV Filme, Inc. (Brazil)*................... 40,400 555,500
Wockhardt LTD (India)*..................... 22,000 159,500
Zagrebacka Banka -- GDR (Croatia)*......... 20,000 387,500
------------
20,186,999
------------
TOTAL COMMON STOCKS
(Cost $54,718,875)...................................... 59,822,184
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
COMMERCIAL PAPER -- 4.3%
- -------------------------------------------------------------------------
Merrill Lynch
(Cost $2,631,000)
5.85%, 10/01/96.......................... $ 2,631,000 $ 2,631,000
------------
TOTAL INVESTMENTS -- 101.7%
(Cost $57,349,875)...................................... 62,453,184
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.7%)........... (1,025,559)
------------
NET ASSETS -- 100.0%...................................... $ 61,427,625
------------
</TABLE>
- ---------------
*Non-Income Producing Security.
+Certain securities issued by foreign companies are classified as United States
securities as their underlying currency is the United States Dollar.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
44
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
EMERGING COUNTRIES FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Agriculture................................... 2.2%
Airlines...................................... 0.7
Alcoholic Beverages........................... 2.9
Apparel....................................... 0.6
Automobiles................................... 3.1
Beverages/Soft Drinks......................... 0.7
Broadcasting.................................. 0.9
Building Materials............................ 6.6
Closed End / Country Funds.................... 1.3
Computers/Office Automation................... 1.5
Consumer Electricals.......................... 0.7
Containers.................................... 3.1
Department/Discount Stores.................... 1.1
Drugs/Pharmaceuticals......................... 3.9
Electric Utilities............................ 1.1
Electronic Instruments........................ 0.7
Entertainment................................. 3.2
Finance Companies............................. 1.1
Food Chains................................... 0.5
Grocery Products.............................. 4.3
Homebuilding.................................. 3.3
Industrial Engineering/Construction........... 1.4
Integrated Oil Companies...................... 0.9
Investment Companies.......................... 0.9
Life Insurers................................. 0.7
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Machinery/Equipment........................... 3.8%
Metals........................................ 2.8
Money-Center Banks............................ 8.5
Oilfield Services/Equipment................... 0.8
Oil/Gas Production............................ 1.6
Other Commercial/Industrial Services.......... 3.6
Other Consumer Non-Durables................... 0.9
Other Consumer Services....................... 1.0
Other Financial Services...................... 1.6
Other Production/Manufacturing................ 3.4
Other Retail Trade............................ 0.6
Pipelines..................................... 0.7
Publishing.................................... 0.5
Real Estate Brokers/Services.................. 1.2
Regional Banks................................ 1.9
Restaurants................................... 0.2
Semiconductors................................ 1.7
Soaps/Cosmetics............................... 0.4
Software...................................... 1.5
Telecommunications Equipment.................. 3.7
Telephone..................................... 8.6
Wholesale Distribution........................ 1.0
Short-Term Obligations........................ 4.3
Liabilities in Excess of Other Assets......... (1.7)
-----
NET ASSETS.................................... 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
45
<PAGE>
INTERNATIONAL GROWTH FUND
ADVISORY PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic Portfolio
Management and Research
Catherine Somhegyi
Partner, Chief Investment Officer
Global Equity Management
Loretta J. Morris
Senior Portfolio Manager, International
Ernesto Ramos, Ph.D.
Senior Portfolio Manager, International
Melisa Grigolite
Assistant Portfolio Manager, International
Ben-Ami Gradwohl
Senior Quantitative Analyst
Nader Iqbal
Investment Analyst
Alex Muromcew
Investment Analyst
GOAL: The International Growth Fund seeks to maximize long-term capital
appreciation through investment in a portfolio of equity securities primarily of
foreign companies.
REVIEW AND OUTLOOK: The International Growth Advisory Portfolio rewarded
shareholders with strong relative gains from April through September 1996 as the
Fund's individual holdings in health, technology, and producers and
manufacturing companies enabled the Fund to handily outpace the performance
benchmark, the Morgan Stanley Capital International Europe, Australasia, and Far
East Index (EAFE-Registered Trademark-). Advisory Portfolio shares returned 5.1%
for the period, compared with a 1.3% return for EAFE.
Stabilizing interest rates, a strong dollar, and solid corporate earnings
prompted investors to favor domestic stocks over international equities during
the period, causing international performance to lag that of domestic stocks. We
held true to our disciplined investment process through the period, investing
the International Growth Fund in foreign companies displaying strong, positive
fundamental change and earnings growth. Investors should know that international
investing involves additional risks such as currency fluctuations and political
and economic uncertainties. We believe that, in the long term, foreign stocks
offer opportunities for superior returns as well as reductions of risk. Since
international markets are growing economically, socially, and politically, the
global impact cannot be ignored. For example, since 1970, Hong Kong's stock
market has grown almost twice as fast as the U.S. stock market. We seek to take
advantage of such accelerations and their attendant opportunities by exercising
superior stock selection.
Our holdings in The Netherlands, Mexico, Germany, and Ireland performed well
in the period in comparison to the Index's holdings in those nations. Increased
exposure to such industry sectors as producers and manufacturing, technology,
health technology, consumer durables and nondurables, and energy enhanced
returns for the period and lifted returns well above the EAFE benchmark in those
sectors. One of our consumer non-durables stocks, Gucci Group, designs,
produces, and distributes personal luxury accessories. The stock almost doubled
in price during the period as sales grew significantly. We sold our positions in
Adidas because of slowing earnings growth and extended valuation compared to
competitors Fila and Nike.
We remain optimistic about the long-term opportunities for international
investing. As we continue
- --------------------------------------------------------------------------------
46
<PAGE>
-------------------------------------------------------------------
to uncover growing, dynamic companies, we believe we will continue to reach our
goal of delivering GROWTH OVER TIME-Registered Trademark- throughout the global
marketplace.
REPRESENTATIVE HOLDINGS
Asatsu, Inc. Japan
Sharp Corporation, Japan
Hennes & Mauritz AB, Sweden
Kon Ahrend NV, Netherlands
Rolls Royce PLC, United Kingdom
Salomon SA, France
Dixons Group PLC, United Kingdom
Commercial International Bank, Egypt
Gucci Group N.V., Italy
Volkswagen AG, Germany
- --------------------------------------------------------------------------------
47
<PAGE>
INTERNATIONAL GROWTH ADVISORY PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
INTERNATIONAL GROWTH ADVISORY PORTFOLIO WITH THE MSCI EAFE INDEX
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/96
1 YEAR 5 YEARS SINCE INCEPTION
12.07% 7.20% 4.22%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH MSCI EAFE
<S> <C> <C>
Advisory Portfolio Index
6/7/90 $ 10,000 $ 10,000
6/30/90 10,138 9,912
9/30/90 7,905 7,810
12/31/90 8,240 8,633
3/31/91 8,953 9,275
6/30/91 8,490 8,769
9/30/91 9,170 9,521
12/31/91 9,188 9,680
3/31/92 8,350 8,532
6/30/92 8,703 8,712
9/30/92 8,368 8,844
12/31/92 8,032 8,502
3/31/93 8,861 9,522
6/30/93 10,011 10,480
9/30/93 10,462 11,175
12/31/93 10,098 11,271
3/31/94 10,858 11,664
6/30/94 11,279 12,260
9/30/94 11,409 12,272
12/31/94 10,940 12,146
3/31/95 10,680 12,368
6/30/95 10,837 12,459
9/30/95 11,584 12,960
12/31/95 11,565 13,485
3/31/96 12,351 13,874
6/30/96 13,127 14,094
9/30/96 12,981 14,058
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the International Growth Advisory Portfolio with the
Morgan Stanley Capital International ("MSCI") EAFE Index, on a cumulative and
average annual total return 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 12/31/93. 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 MSCI Europe, Australia, Far East ("EAFE") Index is an unmanaged index that
is a generally accepted benchmark for major overseas markets. The MSCI EAFE
Index weightings represent the relative capitalization of the major overseas
markets included in the index on a U.S. dollar adjusted basis.
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.
- --------------------------------------------------------------------------------
48
<PAGE>
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 100.4%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ARGENTINA -- 0.9%
Compania Naviera Perez SA.................. 41,870 $ 263,781
Siderca S.A................................ 80,800 119,584
------------
383,365
------------
AUSTRALIA -- 0.5%
Australian Gas Light Co., LTD.............. 1,083 5,830
Westfield Holdings LTD..................... 14,600 232,332
------------
238,162
------------
BELGIUM -- 0.9%
Barco N.V.................................. 2,465 406,194
------------
BRAZIL -- 0.6%
Companhia Cervejaria Brahma................ 454,000 278,606
------------
FINLAND -- 1.7%
Raision Tehtaat Oy......................... 7,500 451,254
Valmet Corp. Oy............................ 15,500 255,360
------------
706,614
------------
FRANCE -- 3.8%
Cap Gemini Sogeti S.A.*.................... 9,400 411,275
Coflexip S.A............................... 7,700 329,442
Lagardere Groupe S.A. (Non-voting)......... 238 5,875
Lagardere Groupe S.A....................... 11,500 283,860
Salomon S.A................................ 425 377,246
Sidel S.A.................................. 5,320 319,278
------------
1,726,976
------------
GERMANY -- 6.5%
CKAG Colonia Konzern AG.................... 6,000 460,571
Continental AG............................. 25,000 457,002
Daimler-Benz AG*........................... 7,200 394,944
Fresenius AG............................... 2,150 399,217
Gehe AG.................................... 4,500 300,629
Gerresheimer Glas AG....................... 4,800 98,150
SGL Carbon AG.............................. 4,200 489,651
Volkswagen AG.............................. 900 334,818
------------
2,934,982
------------
HONG KONG -- 4.0%
Cheung Kong Holdings LTD................... 59,000 453,964
Guangdong Investments...................... 596,000 420,044
Hong Kong & China Gas Co., LTD*............ 67,200 114,274
HSBC Holdings LTD.......................... 24,800 460,209
Qingling Motors Company.................... 580,000 223,135
Shanghai Industrial Holdings LTD*.......... 60,000 137,721
------------
1,809,347
------------
ITALY -- 0.6%
Cn Eni SpA................................. 39,000 199,288
Telecom Italia SpA......................... 40,000 88,874
------------
288,162
------------
JAPAN -- 26.7%
Aim Services Co., LTD...................... 8,000 182,755
Asatsu, Inc................................ 17,000 670,101
Bridgestone Corp........................... 12,000 216,081
Canon, Inc................................. 31,000 608,197
Daiichi Corp............................... 22,000 571,557
Fuji Photo Film Co......................... 11,000 334,065
Hokuto Corp................................ 10,000 426,428
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
JAPAN (CONTINUED)
Honda Motor Co., LTD....................... 23,000 $ 576,932
Kawasaki Heavy Industries.................. 83,000 399,292
Kyocera Corp............................... 6,000 427,324
Laox Co.................................... 31,900 600,134
Matsushita Electric Co..................... 30,000 502,576
Minebea Co., LTD........................... 50,000 443,001
Mitsui Fudosan............................. 44,000 583,382
Mycal Corp................................. 22,000 350,817
NEC Corp................................... 33,000 387,279
Nichii Gakken Co........................... 3,000 151,579
Nissan Motors Co.,......................... 30,000 241,613
Sharp Corp................................. 35,000 580,067
Shinko Electric Industries................. 13,000 427,413
Sony Corp.................................. 12,000 755,745
TDK Corp................................... 12,000 744,994
Terumo Corp................................ 60,000 768,644
Tokai Rika Co.............................. 34,000 316,775
Toshiba Corp............................... 57,000 393,702
Toyoda Machine Works LTD................... 41,000 407,704
------------
12,068,157
------------
KOREA -- 1.9%
Cho Hung Bank Co., LTD..................... 16,000 175,439
Korea Housing Bank*........................ 4,000 95,029
Korea Mobile Telecommunications Corp....... 3,100 339,096
LG Information & Communication LTD......... 2,000 247,320
------------
856,884
------------
MALAYSIA -- 2.6%
Fraser & Neave Holdings BHD*............... 16,000 76,610
Hume Industries BHD........................ 24,000 127,364
Malayan Banking BHD........................ 20,000 198,707
Metroplex BHD.............................. 85,000 103,783
O.Y.L. Industries BHD...................... 14,000 142,447
O.Y.L. Industries BHD-New*................. 2,100 21,367
Technology Resources Industry BHD*......... 90,000 237,012
United Engineers BHD....................... 35,000 270,928
------------
1,178,218
------------
MEXICO -- 1.5%
Apasco S.A................................. 49,400 342,856
Cemex S.A.................................. 34,780 144,187
Convertidora Industrial SA de CV*.......... 178,600 198,707
------------
685,750
------------
NETHERLANDS -- 4.7%
Baan Co., N.V.*............................ 10,200 344,249
IHC Caland N.V............................. 6,800 357,748
ING Groep N.V.............................. 10,000 311,807
Internatio-Muller N.V...................... 12,000 291,487
Kon Ahrend N.V.*........................... 8,000 408,734
Koninklijke Volker Stevin N.V.-CVA......... 1,500 133,131
Oce-Van Der Grinten N.V.................... 2,423 264,428
------------
2,111,584
------------
NORWAY -- 1.0%
Sensonor A/S*.............................. 26,500 191,456
Tomra Systems A/S.......................... 23,000 254,558
------------
446,014
------------
PHILIPPINES -- 0.4%
Empire East Land Holdings, Inc.*........... 358,000 191,079
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
49
<PAGE>
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
POLAND -- 1.1%
Agros Holdings............................. 16,000 $ 484,072
------------
SINGAPORE -- 0.5%
Far East Levingston Shipbuilding LTD....... 46,000 217,228
------------
SOUTH AFRICA -- 0.6%
King Food Holdings LTD*.................... 472,000 114,449
Liberty Life Association of Africa LTD..... 5,500 166,400
------------
280,849
------------
SPAIN -- 0.4%
Telefonica de Espana SA.................... 10,000 185,661
------------
SWEDEN -- 3.0%
Autoliv AB................................. 8,800 379,894
Hennes & Mauritz AB........................ 4,000 490,868
Nordbanken AB.............................. 18,400 472,151
------------
1,342,913
------------
SWITZERLAND -- 1.1%
Sandoz AG.................................. 270 323,974
Swiss Reinsurance Co....................... 150 157,995
------------
481,969
------------
THAILAND -- 1.0%
K.R. Precision Public Co.,- Foreign........ 2,400 13,501
Thai Farmers Bank Public Co., LTD-
Foreign.................................. 19,000 200,315
Tipco Asphalt Public Co., LTD-Foreign...... 40,000 228,167
------------
441,983
------------
UNITED KINGDOM -- 16.7%
Barratt Developments PLC................... 100,000 422,766
British Aerospace PLC...................... 26,000 430,110
Dixons Group PLC........................... 43,000 353,143
EMI Group PLC.............................. 38 794
GKN PLC.................................... 23,295 409,071
Goldsmiths Group PLC....................... 75,000 402,215
Granada Group PLC.......................... 29,000 388,921
Kingfisher PLC............................. 57,000 565,402
Logica PLC................................. 36,000 424,175
Next PLC................................... 48,000 425,772
PizzaExpress PLC........................... 54,900 409,611
Powerscreen International PLC.............. 58,000 499,036
Provident Financial PLC.................... 44,460 342,856
Reuters Holdings PLC....................... 35,300 408,189
Rolls-Royce PLC............................ 110,000 412,510
Shell Transport & Trading Co. PLC.......... 27,000 412,197
Siebe PLC.................................. 27,400 432,247
Thorn EMI PLC.............................. 38 216
Victrex PLC................................ 90,000 395,286
WPP Group PLC.............................. 113,000 414,914
------------
7,549,431
------------
UNITED STATES OF AMERICA+ -- 17.7%
Abacan Resources Corp., (Nigeria)*......... 71,000 488,125
Basic Peteroleum International, LTD
(Guatemala)*............................. 6,400 177,600
British Biotech PLC-ADR (United
Kingdom)*................................ 8,400 284,025
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA+ (CONTINUED)
Commercial International Bank (Egypt)*..... 21,050 $ 326,275
Elan Corp. PLC -ADR (Ireland).............. 12,800 382,400
Flamel Technologies S.A.-ADR (France)*..... 32,000 244,000
Flextronics International, LTD
(Singapore)*............................. 10,300 284,538
Gucci Group N.V. (Italy)................... 4,600 333,500
ICTS International NV (Netherlands)*....... 20,000 245,000
Larsen & Toubro LTD-GDR (India)............ 8,117 115,667
Lernout & Hauspie Speech Products N.V.
(Belgium)*............................... 16,800 399,000
L.G. Electronics, Inc.-GDR (South
Korea)*.................................. 372 3,263
Memtec LTD-ADR (Australia)................. 9,000 252,000
Nice-Systems, LTD (Israel)*................ 8,000 183,250
P.T. Telekomunikasi-ADR (Indonesia)........ 7,500 233,438
Professional Staff PLC (United Kingdom)*... 28,000 297,500
Qiagen N. V. (Netherlands)*................ 19,500 575,249
Rofin-Sinar Technologies, Inc.
(Germany)*............................... 23,700 257,738
Samsung Electronics LTD-GDR (Korea)*....... 5,000 250,000
Samsung Electronics LTD-GDR New (Korea)*... 10 500
Saville Systems PLC-ADR (Ireland)*......... 12,400 437,100
Tag Heuer International S.A.-ADR
(Switzerland)*........................... 14,500 286,375
Tata Engineering & Locomotive Co.
(India)*................................. 12,000 157,200
Tecnomatix Technologies LTD (Israel)*...... 14,000 243,250
Telecomunicacoes Brasileiras - ADR
(Brazil)................................. 4,000 314,000
Telefonos De Mexico S.A.-ADR (Mexico)...... 9,150 293,944
Tommy Hilfiger Corporation (Hong Kong)*.... 6,700 396,975
Tubos De Acero De Mexico-ADR (Mexico)*..... 19,000 206,625
TV Filme, Inc. (Brazil)*................... 13,500 185,625
Videotron Holdings PLC-ADR (United
Kingdom)................................. 8,000 136,000
------------
7,990,162
------------
TOTAL COMMON STOCKS
(Cost $41,609,691)....................................... 45,284,362
------------
- ----------------------------------------------------------------------------
RIGHTS/WARRANTS -- 0.0%
- ----------------------------------------------------------------------------
HONG KONG
Hong Kong & China Gas Co., LTD-Warrants*... 5,600 1,702
------------
THAILAND
Thai Farmers Bank Public Co., LTD-
Warrants*................................ 3,250 3,197
------------
TOTAL RIGHTS/WARRANTS
(Cost $3,205)............................................ 4,899
------------
TOTAL INVESTMENTS -- 100.4%
(Cost $41,612,896)....................................... $ 45,289,261
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.4%)............ (202,682)
------------
NET ASSETS -- 100.0%....................................... $ 45,086,579
------------
<FN>
- ---------------
* Non-Income Producing Securities.
+ Certain securities issued by foreign companies are classified as United States
securities as their underlying currency is the U.S. Dollar.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
50
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Advertising................................... 2.5%
Aerospace..................................... 2.0
Agriculture................................... 1.1
Alcoholic Beverages........................... 0.7
Apparel....................................... 1.7
Automobiles................................... 4.4
Automotive Equipment.......................... 3.0
Biotechnology................................. 1.1
Broadcasting.................................. 0.5
Building Materials............................ 2.1
Chemicals..................................... 1.0
Clothing Chains............................... 1.2
Computers/Office Automation................... 4.3
Containers.................................... 0.5
Consumer Electricals.......................... 1.8
Department/Discount Stores.................... 1.4
Drugs/Pharmaceuticals......................... 2.7
Electronic Instruments........................ 2.7
Electronics/Music Chains...................... 3.3
Finance Companies............................. 0.8
Gas Utilities................................. 0.3
Grocery Products.............................. 3.1
Homebuilding.................................. 0.4
Industrial Engineering/Construction........... 1.8
Integrated Oil Companies...................... 0.6
Investment Companies.......................... 0.9
Life Insurers................................. 0.4
Machinery/Equipment........................... 6.9
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Medical/Health Services....................... 0.3%
Medical Supplies.............................. 2.6
Metals........................................ 0.3
Money-Center Banks............................ 4.8
Multi-Line Insurers........................... 1.4
Oil/Gas Production............................ 2.8
Oilfield Services/Equipment................... 2.0
Other Commercial/Industrial Services.......... 1.5
Other Consumer Durables....................... 0.6
Other Consumer Services....................... 0.5
Other Financial Services...................... 0.5
Other Production/Manufacturing................ 4.9
Other Technology.............................. 0.6
Photographic Products......................... 0.7
Publishing.................................... 1.5
Real Estate Brokers/Services.................. 2.8
Recreational Products......................... 1.7
Regional Banks................................ 0.2
Rental/Leasing Companies...................... 0.1
Restaurants................................... 1.3
Semiconductors................................ 6.4
Software...................................... 3.2
Specialty Chains.............................. 1.8
Telecommunications Equipment.................. 0.9
Telephone..................................... 3.2
Wholesale Distribution........................ 0.6
Liabilities in Excess of Other Assets......... (0.4)
-----
NET ASSETS.................................... 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
51
<PAGE>
WORLDWIDE GROWTH FUND
ADVISORY PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
Lawrence S. Speidell, CFA
Partner, Director of Global/Systematic Portfolio
Management and Research
Catherine Somhegyi
Partner, Chief Investment Officer
Global Equity Management
Loretta J. Morris
Senior Portfolio Manager
International
Ernesto Ramos, Ph.D.
Senior Portfolio Manager, International
John J. Kane
Senior Portfolio Manager, U.S. Systematic
Craig R. Occhialini
Portfolio Manager, U.S. Systematic
Melisa A. Grigolite
Assistant Portfolio Manager, International
Ben-Ami Gradwohl,
Sr. Quantitative Analyst
Nader Iqbal
Investment Analyst
Alex Muromcew
Investment Analyst
GOAL: The Nicholas-Applegate Worldwide Growth Fund seeks to maximize long-term
capital appreciation through investment in a portfolio of growth stocks of U.S.
and international companies.
REVIEW AND OUTLOOK: The Worldwide Growth Advisory Portfolio delivered solid
relative performance from April through September 30, 1996, on the strength of
the Fund's individual stock selection in the energy, consumer durable goods, and
retail trade sectors. Advisory Portfolio shares gained 7.0% during the period,
compared with a 4.2% gain in the Morgan Stanley Capital International World
Index, the Fund's performance benchmark.
The Worldwide Growth Fund seeks a strategic mix of foreign and domestic
stocks, based on our global, bottom-up selection process. One of the best-
performing stocks in the Fund during the period was Robert Half International,
the world's largest provider of flexible staffing services. Shares rose sharply
during the period because of exceptional annual sales and earnings growth.
In the technology sector, Netherlands-based Baan Company, which produces
open-system client/server-based planning software, is one of our largest
holdings at 0.8% of assets. Its shares rose dramatically during the period, on
the strength of expansion in the United States and Asia. We sold our position in
Adidas, the athletic shoe and apparel manufacturer, because of slowing earnings
growth and extended valuation compared to competitors, Fila and Nike. We also
sold Italy-based Safilo, which manufactures and sells eyeglass frames,
sunglasses and optical equipment. Management disclosed that profits would be
flat for the year due to increased costs of integrating two recently-acquired
companies. As of September 30, approximately 34% of the Fund's net assets were
invested in U.S. companies, 20% in Japanese firms, and 12% in United Kingdom
companies; 20% of assets were held in the technology sector, 14% in producers
and manufacturing and 8% in health technology.
International stocks, as represented by the Morgan Stanley Europe,
Australasia, and Far East Index, declined slightly at the end of the period due
to strengthening of the U.S. dollar; even so, United
- --------------------------------------------------------------------------------
52
<PAGE>
-------------------------------------------------------------------
Kingdom and German stocks were up 11% and 3%, respectively. This helped boost
the Fund's performance. The world's emerging countries continue to show robust
growth and a generally favorable investment environment; we believe
international valuations are still very attractive. In the last two decades, the
ten best-performing stock markets, on average, have been foreign markets. This
is why we continue to search for and invest in the best growth companies
wherever they are located. We believe this will help deliver superior returns
for our shareholders over the long term.
REPRESENTATIVE HOLDINGS
Daiichi Corp., Japan
Asatsu, Inc., Japan
Rolls Royce PLC, United Kingdom
Hennes & Mauritz AB, Sweden
Baan Company, Netherlands
CAP Gemini Sogeti S.A., France
Jones Medical Industries, Inc., United States
Volkswagen AG, Germany
Commercial International Bank, Egypt
Robert Half International, Inc., United States
- --------------------------------------------------------------------------------
53
<PAGE>
WORLDWIDE GROWTH ADVISORY PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
WORLDWIDE GROWTH ADVISORY PORTFOLIO WITH THE MSCI WORLD INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
11.09% As of 09/30/96 12.70%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WORLDWIDE GROWTH MSCI WORLD
<S> <C> <C>
Advisory Portfolio Index
8/31/95 $ 10,000 $ 10,000
9/30/95 10,248 10,289
12/31/95 10,040 10,777
3/31/96 10,640 11,216
6/30/96 11,376 11,542
9/30/96 11,384 11,681
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Worldwide Growth Advisory Portfolio with the Morgan
Stanley Capital International ("MSCI") World Index, on a cumulative and average
annual total return 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.
MSCI World Index consists of more than 1,400 securities listed on exchanges in
the U.S., Europe, Canada, Australia, New Zealand, and the Far East. The Index is
a market-value weighted combination of countries and is 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.
- --------------------------------------------------------------------------------
54
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK -- 97.5%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ARGENTINA -- 0.8%
Compania Naviera Periz SA.................. 82,715 $ 521,104
Siderca SA................................. 193,200 285,936
-------------
807,040
-------------
AUSTRALIA -- 0.5%
Australian Gas & Light Co., LTD............ 3,170 17,066
Westfield Holdings LTD..................... 30,000 477,395
-------------
494,461
-------------
BELGIUM -- 1.4%
Banque Bruxelles Lambert SA................ 1,430 280,223
Barco N.V.................................. 6,620 1,090,873
-------------
1,371,096
-------------
BRAZIL -- 0.6%
Companhia Cervejaria Brahma................ 900,000 552,302
-------------
FINLAND -- 1.3%
Raision Tehtaat Oy......................... 14,300 860,390
Valmet Oy.................................. 25,000 411,872
-------------
1,272,262
-------------
FRANCE -- 2.8%
Cap Gemini Sogeti S.A.*.................... 16,000 700,042
Coflexip S.A.*............................. 14,800 633,213
Lagardere Groupe S.A. (Non Trading)........ 377 9,306
Lagardere Groupe S.A....................... 18,200 449,239
Salomon S.A................................ 570 505,953
Sidel S.A.................................. 8,000 480,118
-------------
2,777,871
-------------
GERMANY -- 5.2%
CKAG Colonia Konzern AG.................... 10,000 767,619
Continental AG............................. 60,000 1,096,804
Daimler Benz AG*........................... 10,000 548,533
Fresenius AG............................... 5,450 1,011,969
Gerresheimer Glas AG....................... 14,100 288,317
SGL Carbon AG.............................. 7,700 897,694
Volkswagen AG.............................. 1,700 632,434
-------------
5,243,370
-------------
HONG KONG -- 2.7%
Cheung Kong Holdings, LTD.................. 89,000 684,792
Guangdong Investments, LTD................. 898,000 632,885
Hong Kong & China Gas Co., LTD*............ 204,000 346,903
HSBC Holdings, LTD......................... 37,200 690,314
Qingling Motors, LTD....................... 860,000 330,855
-------------
2,685,749
-------------
ITALY -- 1.0%
Ente Nazionale Idrocarburi SpA............. 122,000 623,413
Telecom Italia SpA......................... 182,000 404,378
-------------
1,027,791
-------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
JAPAN -- 19.7%
Asatsu, Inc................................ 27,000 $ 1,064,278
Bank of Tokyo-Mitsubishi................... 2,000 43,539
Bridgestone Corp........................... 29,000 522,195
Canon, Inc................................. 50,000 980,963
DDI Corp................................... 80 645,733
Dalichi Corp............................... 52,000 1,350,952
Hirose Electric............................ 9,000 549,877
Honda Motor Co., LTD....................... 30,000 752,519
Ibiden Co., Ltd............................ 36,000 351,534
Kawasaki Heavy Industries.................. 125,000 601,344
Laox Co.................................... 54,000 1,117,492
Matsushita Electric Co..................... 50,000 837,626
Minebea Co., LTD........................... 176,000 1,559,364
Mitsui Fudosan Co.......................... 86,000 1,140,246
NEC Corp................................... 68,000 798,029
Nippon Telephone & Telegraph............... 100 734,602
Nissan Motors Co........................... 70,000 563,763
Sharp Corp................................. 75,000 1,243,001
Sony Corp.................................. 22,000 1,385,532
TDK Corp................................... 28,000 1,738,320
Terumo Corp................................ 85,000 1,088,914
Toshiba Corp............................... 115,000 794,311
-------------
19,864,134
-------------
KOREA -- 1.2%
Cho Hung Bank Co., LTD..................... 22,000 241,228
Korea Housing Bank*........................ 15,000 356,360
Korea Mobile Telecommunications Corp....... 180 196,895
LG Information & Communicaiton LTD......... 3,000 370,979
-------------
1,165,462
-------------
MALAYSIA -- 2.0%
Hume Industries BHD........................ 47,000 249,422
Malayan Banking BHD........................ 33,000 327,867
Metroplex BHD.............................. 200,000 244,194
O.Y.L. Industries BHD...................... 32,400 329,662
O.Y.L. Ind. Rights* W*..................... 5,000 50,874
Technology Resource Industries BHD*........ 155,000 408,188
United Engineers BHD....................... 50,000 387,040
-------------
1,997,247
-------------
MEXICO -- 1.6%
Apasco S.A................................. 114,100 791,899
Cemex S.A.................................. 81,110 336,257
Convertidora Industrial S.A. de CV*........ 399,700 460,582
-------------
1,588,738
-------------
NETHERLANDS -- 2.8%
IHC Caland N.V............................. 12,900 678,670
ING Groep N.V.............................. 17,000 530,071
Kon Ahrend NV.............................. 12,000 613,103
Koninklijke Volker Stevin N.V.-CVA......... 5,400 479,271
Oce-Van Der Grinten N.V.................... 5,155 562,577
-------------
2,863,692
-------------
NORWAY -- 0.9%
Sensonor A/S*.............................. 54,100 390,860
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
55
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
NORWAY (CONTINUED)
Tomra Systems A/S.......................... 44,500 $ 492,514
-------------
883,374
-------------
PHILIPPINES -- 0.2%
Empire East Land Holdings, Inc.*........... 436,000 232,711
-------------
POLAND -- 0.9%
Agros Holdings S.A.*....................... 30,000 907,635
-------------
SINGAPORE -- 0.3%
Far East Levingston Shipbuilding LTD....... 69,000 325,841
United Overseas Bank LTD................... 495 4,816
-------------
330,657
-------------
SOUTH AFRICA -- 0.5%
Liberty Life Association of Africa LTD..... 18,000 544,583
-------------
SPAIN
Telefonica De Espana SA.................... 34,000 631,247
-------------
SWEDEN -- 3.2%
Autoliv AB................................. 16,500 712,302
Ericsson................................... 27,000 680,604
Hennes & Mauritz AB........................ 8,000 981,736
Nordbanken AB.............................. 33,000 846,792
-------------
3,221,434
-------------
SWITZERLAND -- 1.1%
Sandoz AG.................................. 525 629,950
Swiss Reinsurance Co....................... 450 473,986
-------------
1,103,936
-------------
THAILAND -- 0.8%
K.R. Precision Public Co., LTD --
Foreign.................................. 9,960 56,030
Thai Farmers Bank Public Co., LTD --
Foreign.................................. 32,000 337,372
Tipco Asphalt Public Co., LTD -- Foreign... 75,000 427,813
-------------
821,215
-------------
UNITED KINGDOM -- 11.6%
Barratt Developments PLC................... 150,000 634,149
British Aerospace PLC...................... 48,000 794,049
Dixons Group PLC........................... 90,000 739,136
EMI Group PLC.............................. 126 2,634
GKN PLC*................................... 44,055 798,210
Granada Group PLC.......................... 47,700 639,708
Kingfisher PLC............................. 90,000 892,741
Next PLC................................... 85,000 753,972
PizzaExpress PLC........................... 100,000 746,104
Powerscreen International PLC.............. 73,000 628,097
Reuters Holdings PLC....................... 93,400 1,080,025
Rolls-Royce PLC............................ 295,000 1,106,277
Shell Transport & Trading Co. PLC.......... 48,000 732,794
Siebe PLC.................................. 50,279 793,173
Thorn EMI PLC.............................. 126 717
Victrex PLC................................ 98,000 430,423
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
WPP Group PLC.............................. 260,000 $ 954,668
-------------
11,726,877
-------------
UNITED STATES OF AMERICA+ -- 33.8%
Abacan Resource Corp. (Nigeria)............ 120,000 825,000
Affiliated Computer Services, Inc.*........ 4,000 235,000
Anchor Gaming Inc.......................... 3,400 211,650
Ascend Communications, Inc.*............... 6,200 409,975
Aspect Telecommunications, Inc.*........... 7,600 473,100
Aspen Technologies, Inc.*.................. 4,100 277,775
Atlantic Coast Airlines, Inc.*............. 2,800 32,900
Baan Co., N.V. (Netherlands)*.............. 25,400 847,725
Basic Petroleum International, LTD
(Guatemela)*............................. 7,300 202,575
Bed Bath & Beyond, Inc.*................... 14,000 383,250
BMC Industries, Inc........................ 10,600 303,425
Boston Chicken, Inc.*...................... 5,400 190,350
British Biotech PLC (United Kingdom)*...... 11,900 402,369
BSES Limited GDR (India)................... 17,000 297,500
Cadence Design Systems, Inc.*.............. 9,250 330,688
Callaway Golf Co........................... 11,500 392,438
Cambridge Tech Partners, Inc.*............. 7,900 238,975
Camco International, Inc................... 9,600 358,800
Caraustar Industries, Inc.................. 7,100 210,781
Cascade Communication Corp.*............... 3,300 268,950
Central Garden and Pet Co.*................ 8,900 179,112
Chesapeake Energy Co.*..................... 7,400 463,425
Children's Comprehensive Services, Inc..... 8,800 156,200
China Steel Co. (Taiwan)*.................. 12,500 256,250
Cisco Systems, Inc.*....................... 6,000 372,375
Coachmen Industries, Inc................... 11,200 288,400
Commercial International Bank (Egypt)*..... 42,105 652,828
CompUSA, Inc.*............................. 9,000 486,000
Compuware Inc.*............................ 4,300 196,725
Concord EFS, Inc.*......................... 4,150 106,863
Continental Airlines, Inc., Class B........ 18,200 407,225
Danaher Corp............................... 2,500 103,437
Elan Corp. PLC-ADR (Ireland)*.............. 24,600 734,925
Electronics For Imaging, Inc.*............. 5,100 365,925
Encad, Inc.*............................... 7,400 309,875
Executive Risk, Inc........................ 5,400 207,900
Finish Line, Inc.*......................... 8,100 384,750
Flamel Technologies S.A. (France)*......... 48,600 370,575
Foamex International, Inc.*................ 13,800 224,250
Gartner Group, Inc., Class A*.............. 7,500 255,000
Gucci Group N.V. (Italy)................... 10,800 783,000
Guidant Corp............................... 3,700 204,425
HBO & Co................................... 5,700 380,475
HFS, Inc.*................................. 6,500 434,688
Hologic, Inc.*............................. 4,900 137,200
Integrated Systems, Inc.*.................. 7,700 254,100
International Specialty Products, Inc.*.... 15,500 155,000
Iomega Corp.*.............................. 8,800 213,400
Jones Medical Industries, Inc.............. 13,625 660,813
Larsen & Toubro LTD-GDR (India)............ 30,000 438,000
Lemout & Hauspie Speech Products N.V.
(Belgium)*............................... 35,000 831,250
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
56
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA+ (CONTINUED)
L.G. Electronics, Inc., GDR New (South
Korea)*.................................. 1,668 $ 14,632
Liz Claiborne, Inc......................... 7,500 279,375
McAfee Associates, Inc.*................... 4,000 276,000
Medic Computer Systems, Inc.*.............. 10,000 363,750
Medicis Pharmaceutical Corp.*.............. 5,200 250,900
Memtec LTD-ADR (Australia)................. 19,000 532,000
Money Store, Inc........................... 8,750 231,875
Morgan Stanley Group, Inc.................. 6,000 298,500
Nautica Enterprises, Inc.*................. 7,900 254,775
NBTY, Inc.*................................ 18,900 311,850
New York Bancorp, Inc...................... 1,300 41,112
Nice-Systems, LTD (Israel)*................ 40,000 916,250
P.T. Telekomunikasi (Indonesia)............ 14,000 435,750
Pacific Sunwear of California*............. 9,100 299,162
Pairgain Technology, Inc.*................. 5,800 453,125
Peoplesoft, Inc.*.......................... 3,300 274,725
Petro Canada (Canada)...................... 43,000 419,250
PMT Services, Inc.......................... 8,300 168,075
Professional Staff PLC (United Kingdom)*... 47,000 499,375
Quintiles Transnational Corp.*............. 4,200 307,650
Reading & Bates Corp.*..................... 15,400 417,725
Rexall Sundown, Inc.*...................... 6,200 226,300
Riser Foods, Inc........................... 7,600 197,600
Robert Half International, Inc.*........... 14,300 527,312
Rofin-Sinar Technologies, Inc. (Germany)*.. 16,600 180,525
Ross Stores Inc............................ 13,600 489,600
Safeskin Corp.*............................ 5,100 177,225
Samsung Electronics LTD-GDR (Korea)*....... 7,000 350,000
Samsung Electronics LTD-GDR New (Korea)*... 172 8,600
Saville Systems PLC (Ireland)*............. 27,400 965,850
Showbiz Pizza Time, Inc.*.................. 11,900 215,687
SPX Corp................................... 8,200 244,975
Student Loan Marketing Association......... 3,800 283,575
Sun Microsystems, Inc.*.................... 5,100 316,837
Supertex, Inc.*............................ 12,800 232,000
TCF Financial Corp......................... 2,000 75,250
Technitrol, Inc............................ 6,100 169,275
Tecnomatix Technology LTD (Israel)*........ 23,000 399,625
Telecomunicacoes Brasileiras -
ADR (Brazil)............................. 9,600 753,600
Telefonos de Mexico S.A.-ADR (Mexico)...... 20,850 659,806
Tidewater, Inc............................. 9,400 351,325
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA+ (CONTINUED)
Transocean Offshore, Inc................... 7,000 $ 428,750
Tubos de Acero De Mexico-ADR (Mexico)*..... 47,000 511,125
Tuntex Distinct Corp. (Taiwan)*............ 5,001 35,123
TV Filme, Inc. ADR (Brazil)*............... 10,500 144,375
Universal Health Realty Income Trust*...... 6,000 163,500
Videotron Holdings PLC-ADR (United
Kingdom)*................................ 41,800 710,600
Zions Bancorporation....................... 3,100 274,350
-------------
34,056,063
-------------
TOTAL COMMON STOCKS
(Cost $83,163,049)....................................
98,170,947
-------------
- ------------------------------------------------------------------------
WARRANTS/RIGHTS --
- ------------------------------------------------------------------------
HONG KONG
Hong Kong & China Gas Co., LTD-Warrants.... 17,000 5,168
-------------
SINGAPORE
United Overseas Bank LTD-Warrants.......... 208 761
-------------
THAILAND
Thai Farmers Bank-Warrants................. 5,375 5,286
-------------
TOTAL WARRANTS/RIGHTS
(Cost $6,631).........................................
11,213
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------
<CAPTION>
COMMERCIAL PAPER -- 1.8%
<S> <C> <C>
- ----------------------------------------------
Merrill Lynch 5.85%, 10/01/96
(Cost $1,839,000)........................ $ 1,839,000 $ 1,839,000
-------------
TOTAL INVESTMENTS -- 99.3%
(Cost $85,008,680).......................................
$ 100,021,160
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.7%..............
737,287
-------------
NET ASSETS -- 100.0%.......................................
$ 100,758,447
-------------
<FN>
- ---------------
* Non-Income Producing Security.
+ Certain securities issued by foreign companies are classified as United States
securities as their underlying currency is the United States Dollar.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
57
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Advertising................................... 2.1%
Aerospace..................................... 1.9
Airlines...................................... 0.5
Alcoholic Beverages........................... 0.6
Apparel....................................... 1.3
Automobiles................................... 2.8
Automotive Equipment.......................... 2.3
Biotechnology................................. 0.3
Broadcasting.................................. 0.2
Building Materials............................ 2.0
Chemicals..................................... 0.6
Clothing Chains............................... 1.8
Computers/Office Automation................... 4.0
Containers.................................... 0.5
Contract Drilling............................. 0.9
Consumer Electricals.......................... 1.4
Department/Discount Stores.................... 0.9
Drugs/Pharmaceuticals......................... 3.4
Electric Utilities............................ 0.3
Electronic Data Processing.................... 0.4
Electronic Instruments........................ 2.7
Electronics/Music Chains...................... 3.6
Finance Companies............................. 0.5
Food Chains................................... 0.2
Gas Utilities................................. 0.4
Grocery Products.............................. 1.8
Home Furnishings.............................. 0.4
Homebuilding.................................. 0.3
Industrial Engineering/Construction........... 1.5
Integrated Oil Companies...................... 0.5
Investment Companies.......................... 0.9
Leisure/Gaming................................ 0.2
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Life Insurers................................. 0.6%
Machinery/Equipment........................... 5.4
Medical Supplies.............................. 2.6
Metals........................................ 0.6
Money-Center Banks............................ 3.9
Multi-Line Insurers........................... 1.3
Oil/Gas Production............................ 3.1
Oilfield Services/Equipment................... 2.4
Other Commercial/Industrial Services.......... 1.2
Other Consumer Services....................... 0.5
Other Financial Services...................... 0.5
Other Health Services......................... 0.4
Other Production/Manufacturing................ 5.3
Other Technology.............................. 0.2
Other Utilities............................... 0.7
Property--Casualty Insurance.................. 0.2
Publishing.................................... 1.8
Real Estate Brokers/Services.................. 2.3
Recreational Products......................... 1.8
Regional Banks................................ 0.6
Restaurants................................... 1.2
Savings & Loan Associations................... 0.1
Semiconductors................................ 4.4
Software...................................... 5.5
Specialty Chains.............................. 1.4
Telecommunications Equipment.................. 2.9
Telephone..................................... 5.0
Wholesale Distribution........................ 0.2
Short-Term Obligations........................ 1.9
Other Assets in Excess of Liabilities......... 0.8
-----
NET ASSETS.................................... 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
58
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
59
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
ADVISORY SERIES PORTFOLIOS
<TABLE>
<CAPTION>
NET REALIZED
AND
NET ASSET NET UNREALIZED DISTRIBUTIONS
VALUES AT INVESTMENT GAINS FROM NET DISTRIBUTIONS
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM
OF PERIOD (DEFICIT) INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
MINI CAP GROWTH(1)
Institutional (For the
period ended 09/30/96)# $15.85 $(0.12) $2.25 -- --
Institutional (For the
period ended 03/31/96) 12.50 (0.05) 3.40 -- --
EMERGING GROWTH(2)
Qualified (For the period
ended 09/30/96)# 14.16 0.01 1.79 -- --
Qualified (For the period
ended 03/31/96) 12.50 (0.03) 1.69 -- --
CORE GROWTH(3)
Qualified (For the period
ended 09/30/96)# 17.99 (0.08) 2.04 -- --
Qualified (For the year
ended 03/31/96) 13.66 (0.07) 4.86 -- $(0.46)
Qualified (For the period
ended 03/31/95) 12.50 (0.02) 1.18 -- --
INCOME & GROWTH(2)
Qualified (For the period
ended 09/30/96)# 13.72 0.18 1.01 $(0.18) --
Qualified (For the period
ended 03/31/96) 12.50 0.17 1.22 (0.17) --
BALANCED GROWTH(2)
Qualified (For the period
ended 09/30/96)# 12.69 0.13 1.19 (0.12) --
Qualified (For the period
ended 03/31/96) 12.50 0.15 0.19 (0.15) --
GOVERNMENT INCOME(2)
Qualified (For the period
ended 09/30/96)# 12.74 0.33 (0.65) (0.33) --
Qualified (For the period
ended 03/31/96) 12.50 0.37 (0.06) (0.37) --
EMERGING COUNTRIES(2)
Qualified (For the period
ended 09/30/96)# 13.18 (0.01) 1.67 -- --
Qualified (For the period
ended 03/31/96) 12.50 0.01 0.67 -- --
INTERNATIONAL GROWTH(2)
Qualified (For the period
ended 09/30/96)# 13.52 (0.02) 0.71 -- --
Qualified (For the period
ended 03/31/96) 12.50 0.01 1.01 -- --
WORLDWIDE GROWTH(2)
Qualified (For the period
ended 09/30/96)# 13.29 0.01 0.93 -- --
Qualified (For the period
ended 03/31/96) 12.50 (0.04) 0.81 -- --
</TABLE>
- -------------
(1) Commenced operations on July 12, 1995.
(2) Commenced operations on August 31, 1995.
(3) Commenced operations on June 30, 1994.
* Annualized.
** Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
# Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
60
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF EXPENSES RATIO OF EXPENSES
NET ASSET TO AVERAGE NET TO AVERAGE NET
VALUES AT ASSETS, AFTER ASSETS, BEFORE
END OF NET ASSETS AT EXPENSE EXPENSE
PERIOD TOTAL RETURN END OF PERIOD REIMBURSEMENT** REIMBURSEMENT**
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
MINI CAP GROWTH(1)
Institutional (For the
period ended 09/30/96)# $17.98 13.44% $ 29,784,579 1.56%* 1.95%*
Institutional (For the
period ended 03/31/96) 15.85 26.80% 25,237,077 1.56%* 2.46%*
EMERGING GROWTH(2)
Qualified (For the period
ended 09/30/96)# 15.96 12.71% 642,115 1.50%* 15.39%*
Qualified (For the period
ended 03/31/96) 14.16 13.28% 313,634 1.49%* 37.86%*
CORE GROWTH(3)
Qualified (For the period
ended 09/30/96)# 19.95 10.95% 11,013,390 1.25%* 1.90%*
Qualified (For the year
ended 03/31/96) 17.99 35.37% 4,273,872 1.23% 2.84%
Qualified (For the period
ended 03/31/95) 13.66 9.28% 2,120,619 1.24%* 3.52%*
INCOME & GROWTH(2)
Qualified (For the period
ended 09/30/96)# 14.73 8.74% 3,079,587 1.25%* 4.85%*
Qualified (For the period
ended 03/31/96) 13.72 11.13% 1,084,730 1.25%* 9.21%*
BALANCED GROWTH(2)
Qualified (For the period
ended 09/30/96)# 13.88 9.96% 3,469 1.25%* 2,847.13%*
Qualified (For the period
ended 03/31/96) 12.69 2.77% 1,231 1.25%* 3,094.48%*
GOVERNMENT INCOME(2)
Qualified (For the period
ended 09/30/96)# 12.09 0.09% 1,209 0.95%* 3,005.91%*
Qualified (For the period
ended 03/31/96) 12.44 2.48% 1,219 0.95%* 3,029.81%*
EMERGING COUNTRIES(2)
Qualified (For the period
ended 09/30/96)# 14.84 12.59% 1,189,367 1.90%* 9.42%*
Qualified (For the period
ended 03/31/96) 13.18 5.44% 350,058 1.90%* 44.24%*
INTERNATIONAL GROWTH(2)
Qualified (For the period
ended 09/30/96)# 14.21 5.10% 25,614 1.65%* 225.54%*
Qualified (For the period
ended 03/31/96) 13.52 8.16% 19,082 1.65%* 531.72%*
WORLDWIDE GROWTH(2)
Qualified (For the period
ended 09/30/96)# 14.23 6.99% 7,655 1.58%* 1,653.88%*
Qualified (For the period
ended 03/31/96) 13.27 6.32% 1,115 1.60%* 3,232.53%*
<CAPTION>
RATIO OF NET RATIO OF NET
(DEFICIT) TO AVERAGE TO AVERAGE
NET ASSETS, NET ASSETS,
AFTER EXPENSE BEFORE EXPENSE
REIMBURSEMENT** REIMBURSEMENT**
<S> <C> <C>
- ------------------------------
MINI CAP GROWTH(1)
Institutional (For the
period ended 09/30/96)# (1.18%)* (1.33%)*
Institutional (For the
period ended 03/31/96) (0.98%)* (1.38%)*
EMERGING GROWTH(2)
Qualified (For the period
ended 09/30/96)# (1.03%)* (14.92%)*
Qualified (For the period
ended 03/31/96) (1.05%)* (32.41%)*
CORE GROWTH(3)
Qualified (For the period
ended 09/30/96)# (0.68%)* (1.33%)*
Qualified (For the year
ended 03/31/96) (0.57%) (2.18%)
Qualified (For the period
ended 03/31/95) (0.33%)* (1.61%)*
INCOME & GROWTH(2)
Qualified (For the period
ended 09/30/96)# 3.39%* (0.24%)*
Qualified (For the period
ended 03/31/96) 3.59%* (4.22%)*
BALANCED GROWTH(2)
Qualified (For the period
ended 09/30/96)# 2.40%* (2,843.24%)*
Qualified (For the period
ended 03/31/96) 2.16%* (3,090.46%)*
GOVERNMENT INCOME(2)
Qualified (For the period
ended 09/30/96)# 4.59%* (2,998.34%)*
Qualified (For the period
ended 03/31/96) 5.23%* (3,021.56%)*
EMERGING COUNTRIES(2)
Qualified (For the period
ended 09/30/96)# (0.20%)* (7.72%)*
Qualified (For the period
ended 03/31/96) 0.47%* (35.33%)*
INTERNATIONAL GROWTH(2)
Qualified (For the period
ended 09/30/96)# (0.24%)* (224.11%)*
Qualified (For the period
ended 03/31/96) 0.33%* (529.11%)*
WORLDWIDE GROWTH(2)
Qualified (For the period
ended 09/30/96)# (0.82%)* (1,653.05%)*
Qualified (For the period
ended 03/31/96) (0.50%)* (3,231.44%)*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
61
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------
ADVISORY SERIES PORTFOLIOS
<TABLE>
<CAPTION>
MINI CAP EMERGING CORE
GROWTH GROWTH GROWTH
<S> <C> <C> <C>
----------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 29,759,699 $ 652,544 $ 10,994,292
Receivable for shares of
beneficial interest
sold...................... 21,000 1,000 --
Receivable for investments
sold in Master Trust
Fund...................... -- -- --
Due from adviser............ 3,772 6,140 2,823
Deferred organization
costs..................... 2,045 726 9,396
Prepaid expenses and other
assets.................... 58,688 7,504 51,472
----------------------------------------
Total assets............ 29,845,204 667,914 11,057,983
----------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 21,000 1,000 --
Payable for shares of
beneficial interest
repurchased............... -- -- 23,134
Dividend payable............ -- -- --
Accrued expenses............ 39,625 24,799 21,459
----------------------------------------
Total liabilities....... 60,625 25,799 44,593
----------------------------------------
NET ASSETS.................... $ 29,784,579 $ 642,115 $ 11,013,390
----------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 23,134,899 $ 550,292 $ 9,373,730
Accumulated undistributed
net investment income
(deficit)................. (246,814) (2,997) (44,153)
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. 1,118,760 (12,178) 354,697
Accumulated undistributed
net realized foreign
exchange loss............. -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- --
Net unrealized appreciation
on investments............ 5,777,734 106,998 1,329,116
----------------------------------------
Net assets.............. $ 29,784,579 $ 642,115 $ 11,013,390
----------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 1,656,459 40,234 551,936
----------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/ Outstanding shares
of beneficial interest)... $ 17.98 $ 15.96 $ 19.95
----------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 23,098,865 $ 559,570 $ 8,272,591
----------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
62
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & BALANCED GOVERNMENT EMERGING INTERNATIONAL WORLDWIDE
GROWTH GROWTH INCOME COUNTRIES GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 3,099,847 $ 3,485 $ 1,220 $ 1,190,552 $ 25,659 $ 7,663
Receivable for shares of
beneficial interest
sold...................... 148,729 -- -- 2,500 500 --
Receivable for investments
sold in Master Trust
Fund...................... -- -- 78 -- -- --
Due from adviser............ 4,510 3,304 3,241 4,764 3,810 4,874
Deferred organization
costs..................... 725 743 743 760 25,375 726
Prepaid expenses and other
assets.................... 17,034 23,825 23,619 10,697 726 25,010
----------------------------------------------------------------------------
Total assets............ 3,270,845 31,357 28,901 1,209,273 56,070 38,273
----------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 148,729 -- -- 2,500 500 --
Payable for shares of
beneficial interest
repurchased............... -- -- -- -- -- --
Dividend payable............ 17,142 12 6 -- -- --
Accrued expenses............ 25,387 27,876 27,686 17,406 29,956 30,618
----------------------------------------------------------------------------
Total liabilities....... 191,258 27,888 27,692 19,906 30,456 30,618
----------------------------------------------------------------------------
NET ASSETS.................... $ 3,079,587 $ 3,469 $ 1,209 $ 1,189,367 $ 25,614 $ 7,655
----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 2,862,287 $ 3,247 $ 1,178 $ 1,116,301 $ 23,547 $ 7,271
Accumulated undistributed
net investment income
(deficit)................. 75 1 -- (448) (15) (16)
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. 3,930 (33) 28 (11,466) 128 (13)
Accumulated undistributed
net realized foreign
exchange loss............. -- -- -- (687) (53) (10)
Net unrealized foreign
exchange gain (loss)...... -- -- -- 35 (1) --
Net unrealized appreciation
on investments............ 213,295 254 3 85,632 2,008 423
----------------------------------------------------------------------------
Net assets.............. $ 3,079,587 $ 3,469 $ 1,209 $ 1,189,367 $ 25,614 $ 7,655
----------------------------------------------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 209,055 250 100 80,148 1,802 538
----------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/ Outstanding shares
of beneficial interest)... $ 14.73 $ 13.88 $ 12.09 $ 14.84 $ 14.21 $ 14.23
----------------------------------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 2,377,884 $ 3,226 $ 1,116 $ 1,116,301 $ 23,547 $ 7,271
----------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
63
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
ADVISORY SERIES PORTFOLIOS+
<TABLE>
<CAPTION>
MINI CAP EMERGING CORE
GROWTH GROWTH GROWTH
<S> <C> <C> <C>
------------------------------------
INVESTMENT INCOME:
Net investment income
(deficit) from Master
Trust Fund................ $ (162,513) $ (1,426) $ (10,745)
------------------------------------
EXPENSES
Accounting fees........... 10,920 13,000 15,600
Administration fees....... 2,586 2,500 281
Audit & tax fees.......... 3,821 3,746 4,068
Insurance................. 207 3 58
Legal fees................ 3,884 61 956
Miscellaneous............. 217 3 52
Organization costs........ 288 104 1,347
Registration fees......... 806 7,016 704
Shareholder reporting
fees.................... 567 32 129
Shareholder servicing
fees.................... -- 1,170 8,836
Transfer agent fees....... 5,483 3,881 4,254
Trustees' fee............. 921 900 110
------------------------------------
Total expenses.......... 29,700 32,416 36,395
Less: Reimbursement from
advisor................. (22,490) (31,504) (23,108)
------------------------------------
Net expenses............ 7,210 912 13,287
------------------------------------
Net investment income
(deficit)........... (169,723) (2,338) (24,032)
------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
on security
transactions............ 1,175,395 (2,962) 172,736
Net realized foreign
exchange loss........... -- -- --
Change in net unrealized
appreciation of
investments and foreign
currency................ 2,622,260 75,585 566,883
------------------------------------
Net gain on
investments........... 3,797,655 72,623 739,619
------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 3,627,932 $ 70,285 $ 715,587
------------------------------------
</TABLE>
- ------------
+Commenced operations on August 31, 1995 except Core Growth Qualified Portfolio
and Mini Cap Growth Institutional Portfolio which commenced operations on June
30, 1994 and July 12, 1995, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
64
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & BALANCED GOVERNMENT EMERGING INTERNATIONAL WORLDWIDE
GROWTH GROWTH INCOME COUNTRIES GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
INVESTMENT INCOME:
Net investment income
(deficit) from Master
Trust Fund................ $ 29,894 $ 22 $ 39 $ 359 $ 7 $ (7)
------------------------------------------------------------------------
EXPENSES
Accounting fees........... 11,440 11,700 11,700 13,000 11,700 13,000
Administration fees....... 311 2 6 318 10 1
Audit & tax fees.......... 5,306 3,746 3,746 3,746 3,746 3,746
Insurance................. 4 -- 6 1 13 --
Legal fees................ 218 -- -- 93 4 --
Miscellaneous............. 12 -- -- 5 -- --
Organization costs........ 104 104 104 104 104 105
Registration fees......... 7,067 7,016 7,016 7,557 7,541 7,541
Shareholder reporting
fees.................... 70 70 71 54 71 71
Shareholder servicing
fees.................... 4,209 4 4 988 64 9
Transfer agent fees....... 2,237 195 -- 297 1,472 760
Trustees' fee............. 900 900 900 900 900 900
------------------------------------------------------------------------
Total expenses.......... 31,878 23,737 23,553 27,063 25,625 26,133
Less: Reimbursement from
advisor................. (29,447) (23,735) (23,550) (26,026) (25,591) (26,127)
------------------------------------------------------------------------
Net expenses............ 2,431 2 3 1,037 34 6
------------------------------------------------------------------------
Net investment income
(deficit)........... 27,463 20 36 (678) (27) (13)
------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
on security
transactions............ 15,468 (12) 9 (1,436) 272 26
Net realized foreign
exchange loss........... -- -- -- (468) (45) (9)
Change in net unrealized
appreciation of
investments and foreign
currency................ 139,825 215 34 73,663 834 315
------------------------------------------------------------------------
Net gain on
investments........... 155,293 203 43 71,759 1,061 332
------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 182,756 $ 223 $ 79 $ 71,081 $ 1,034 $ 319
------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
65
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------
ADVISORY SERIES PORTFOLIOS+
<TABLE>
<CAPTION>
MINI CAP GROWTH EMERGING GROWTH
---------------------------- ----------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, PERIOD ENDED SEPTEMBER 30, PERIOD ENDED
1996 MARCH 31, 1996 MARCH 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
<S> <C> <C> <C> <C>
----------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ (169,723) $ (77,091) $ (2,338) $ (659)
Net realized gain (loss)
from security
transactions.............. 1,175,395 (56,635) (2,962) (9,216)
Change in net unrealized
appreciation
(depreciation) on
investments............... 2,622,260 3,155,474 75,585 31,413
----------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations......... 3,627,932 3,021,748 70,285 21,538
----------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... -- -- -- --
Capital gain*............... -- -- -- --
----------------------------------------------------------
Total distributions....... -- -- -- --
----------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 5,785,913 22,406,432 726,404 291,096
Proceeds from shares issued
for distribution
reinvestment.............. -- -- -- --
Cost of shares
repurchased............... (4,866,343) (192,103) (468,208) --
----------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 919,570 22,214,329 258,196 291,096
----------------------------------------------------------
Total increase (decrease)
in net assets........... 4,547,502 25,236,077 326,481 312,634
NET ASSETS:
BEGINNING OF PERIOD......... 25,237,077 1,000 313,634 1,000
----------------------------------------------------------
END OF PERIOD............... $29,784,579 $25,237,077 $ 642,115 $ 313,634
----------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 1,592,133 80 22,145 80
Shares sold................. 312,628 1,605,094 49,479 22,065
Shares issued for
distributions
reinvested................ -- -- -- --
Shares repurchased.......... (248,302) (13,041) (31,390) --
----------------------------------------------------------
Ending balance.............. 1,656,459 1,592,133 40,234 22,145
----------------------------------------------------------
</TABLE>
- -------------
+Commenced operations on August 31, 1995 except Core Growth Qualified Portfolio
and Mini Cap Growth Institutional Portfolio which commenced operations on June
30, 1994 and July 12, 1995, respectively.
*See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
66
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH INCOME & GROWTH BALANCED GROWTH
---------------------------- ---------------------------- ----------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, PERIOD ENDED SEPTEMBER 30, PERIOD ENDED
1996 MARCH 31, 1996 MARCH 31, 1996 MARCH 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ (24,032) $ (17,123) $ 27,463 $ 8,172 $ 20 $ 13
Net realized gain (loss)
from security
transactions.............. 172,736 374,703 15,468 (11,531) (21)
Change in net unrealized
appreciation
(depreciation) on
investments............... 566,883 517,611 139,825 73,470 203 39
----------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations......... 715,587 875,191 182,756 70,111 223 31
----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... -- -- (27,494) (8,073) (19) (13)
Capital gain*............... -- (85,273) -- -- -- --
----------------------------------------------------------------------------------------
Total distributions....... -- (85,273) (27,494) (8,073) (19) (13)
----------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 6,432,680 1,546,943 1,912,110 1,019,564 2,030 200
Proceeds from shares issued
for distribution
reinvestment.............. -- 85,271 10,351 8,072 7 13
Cost of shares
repurchased............... (408,749) (268,879) (82,866) (5,944) (3) --
----------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 6,023,931 1,363,335 1,839,595 1,021,692 2,034 213
----------------------------------------------------------------------------------------
Total increase (decrease)
in net assets........... 6,739,518 2,153,253 1,994,857 1,083,730 2,236 231
NET ASSETS:
BEGINNING OF PERIOD......... 4,273,872 2,120,619 1,084,730 1,000 1,231 1,000
----------------------------------------------------------------------------------------
END OF PERIOD............... $11,013,390 $ 4,273,872 $ 3,079,587 $ 1,084,730 $ 3,469 $ 1,231
----------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 237,524 155,240 79,061 80 97 80
Shares sold................. 336,041 93,640 135,098 78,829 152 16
Shares issued for
distributions
reinvested................ -- 5215 735 590 1 1
Shares repurchased.......... (21,629) (16,571) (5,839) (438) -- --
----------------------------------------------------------------------------------------
Ending balance.............. 551,936 237,524 209,055 79,061 250 97
----------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
67
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- Continued
- --------------------------------------------------------------------------------
ADVISORY SERIES PORTFOLIOS+
<TABLE>
<CAPTION>
GOVERNMENT INCOME EMERGING COUNTRIES
---------------------------- ----------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, PERIOD ENDED SEPTEMBER 30, PERIOD ENDED
1996 MARCH 31, 1996 MARCH 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
<S> <C> <C> <C> <C>
----------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ 36 $ 32 $ (676) $ 230
Net realized gain (loss)
from security
transactions.............. 19 (1,436) (10,030)
Net realized foreign
exchange gain (loss)...... -- -- (468) (219)
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 43 (31) 73,663 12,004
----------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations......... 79 20 71,081 1,985
----------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... (36) (32) -- --
Capital gain*............... -- -- -- --
----------------------------------------------------------
Total distributions....... (36) (32) -- --
----------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... -- 200 782,964 347,073
Proceeds from shares issued
for distribution
reinvestment.............. 29 32 -- --
Cost of shares
repurchased............... (82) (1) (14,736) --
----------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ (53) 231 768,228 347,073
----------------------------------------------------------
Total increase (decrease)
in net assets........... (10) 219 839,309 349,058
NET ASSETS:
BEGINNING OF PERIOD......... 1,219 1,000 350,058 1,000
----------------------------------------------------------
END OF PERIOD............... $ 1,209 $ 1,219 $ 1,189,367 $ 350,058
----------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 98 80 26,554 80
Shares sold................. -- 15 54,611 26,474
Shares issued for
distributions
reinvested................ 2 3 -- --
Shares repurchased.......... -- -- (1,017) --
----------------------------------------------------------
Ending balance.............. 100 98 80,148 26,554
----------------------------------------------------------
</TABLE>
- -------------
+Commenced operations on August 31, 1995 except Core Growth Qualified Portfolio
and Mini Cap Growth Institutional Portfolio which commenced operations on June
30, 1994 and July 12, 1995, respectively.
*See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
68
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH WORLDWIDE GROWTH
---------------------------- ----------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, PERIOD ENDED SEPTEMBER 30, PERIOD ENDED
1996 MARCH 31, 1996 MARCH 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
<S> <C> <C> <C> <C>
----------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ (27) $ 12 $ (13) $ (3)
Net realized gain (loss)
from security
transactions.............. 272 (144) 26 (39)
Net realized foreign
exchange gain (loss)...... (45) (8) (9) (1)
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 834 1,173 315 108
----------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations......... 1,034 1,033 319 65
----------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... -- -- -- --
Capital gain*............... -- -- -- --
----------------------------------------------------------
Total distributions....... -- -- -- --
----------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 5,500 17,049 6,224 50
Proceeds from shares issued
for distribution
reinvestment.............. -- -- -- --
Cost of shares
repurchased............... (2) -- (3) --
----------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 5,498 17,049 6,221 50
----------------------------------------------------------
Total increase (decrease)
in net assets........... 6,532 16,082 6,540 115
NET ASSETS:
BEGINNING OF PERIOD......... 19,082 1,000 1,115 1,000
----------------------------------------------------------
END OF PERIOD............... $ 25,614 $ 19,082 $ 7,655 $ 1,115
----------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 1,411 80 84 80
Shares sold................. 391 1,331 454 4
Shares issued for
distributions
reinvested................ -- -- -- --
Shares repurchased.......... -- -- -- --
----------------------------------------------------------
Ending balance.............. 1,802 1,411 538 84
----------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
69
<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 46 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 fifteen investment vehicles (the
"Funds"). For a description of each fund, see Note A to the accompanying Funds'
financial statement.
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 Portfolios' organization costs, the redemption
proceeds will be reduced by any such unamortized organization costs in the same
proportion as the number of initial shares being redeemed bears to the number of
those shares outstanding at the time of redemption.
OTHER ASSETS
Other Assets for the Income and Growth Qualified Portfolio, Balanced Growth
Qualified Portfolio, and Government Income Qualified Portfolio includes cash
received from the advisor for expense reimbursements.
- --------------------------------------------------------------------------------
70
<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 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.
SHAREHOLDER SERVICE PLAN
The Trust has approved a shareholder service plan under which Nicholas
Applegate Securities is also compensated .25% of the average daily net asset
value of the Qualified Series for non-distribution related expenses.
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>
<S> <C>
Mini Cap Growth Institutional
Portfolio............................ 1.56%
Emerging Growth Qualified Portfolio.... 1.50%
Core Growth Qualified Portfolio........ 1.25%
Income & Growth Qualified Portfolio.... 1.25%
Balanced Growth Qualified Portfolio.... 1.25%
Government Income Qualified
Portfolio............................ 0.80%
Emerging Countries Qualified
Portfolio............................ 1.90%
International Growth Qualified
Portfolio............................ 1.65%
Worldwide Growth Qualified Portfolio... 1.60%
</TABLE>
These percentages are based on the average net assets of the Portfolios,
exclusive of interest, taxes, brokerage commissions and other costs incurred in
connection with portfolio securities transactions, capital expenditures, and
extraordinary expenses.
The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Portfolios, during the periods from inception (respectively) to September
30, 1996, are as follows:
<TABLE>
<S> <C>
Mini Cap Growth Institutional
Portfolio.......................... $ 52,836
Emerging Growth Qualified
Portfolio.......................... 86,762
Core Growth Qualified Portfolio...... 47,374
Income & Growth Qualified
Portfolio.......................... 35,854
Balanced Growth Qualified
Portfolio.......................... 42,432
Government Income Qualified
Portfolio.......................... 42,255
Emerging Countries Qualified
Portfolio.......................... 45,281
International Growth Qualified
Portfolio.......................... 44,895
Worldwide Growth Qualified
Portfolio.......................... 45,434
</TABLE>
- --------------------------------------------------------------------------------
71
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of September 30, 1996, the following Portfolios have amounts due to
Nicholas-Applegate for organization costs advanced:
<TABLE>
<S> <C>
Mini Cap Growth Institutional
Portfolio.......................... $ 2,670
Core Growth Qualified Portfolio...... 12,539
Income & Growth Qualified
Portfolio.......................... 951
Balanced Growth Qualified
Portfolio.......................... 969
Government Income Qualified
Portfolio.......................... 969
Emerging Countries Qualified
Portfolio.......................... 951
International Growth Qualified
Portfolio.......................... 951
Worldwide Growth Qualified
Portfolio.......................... 951
</TABLE>
RELATED PARTIES
Certain officers of the Trust and the Master Trust are also officers of the
Investment Advisor and the Distributor.
3. INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the respective Master Trust
Funds for the period ended September 30, 1996, were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
----------- -----------
<S> <C> <C>
Mini Cap Growth Institutional
Portfolio........................ $ 5,810 4,924
Emerging Growth Qualified
Portfolio........................ 730 475
Core Growth Qualified Portfolio.... 6,467 456
Income & Growth Qualified
Portfolio........................ 1,912 83
Balanced Growth Qualified
Portfolio........................ 2 --
Government Income Qualified
Portfolio........................ -- --
Emerging Countries Qualified
Portfolio........................ 783 15
International Growth Qualified
Portfolio........................ 6 --
Worldwide Growth Qualified
Portfolio........................ 6 --
</TABLE>
- --------------------------------------------------------------------------------
72
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
73
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
MINI CAP EMERGING CORE
GROWTH GROWTH GROWTH
FUND FUND FUND
<S> <C> <C> <C>
-----------------------------------------------
ASSETS
Investments, at value*...... $ 30,490,477 $ 610,921,587 $ 501,507,845
Foreign currencies, at
value**................... -- -- --
Cash........................ 476 -- 4,046
Receivable for investment
securities sold........... 461,275 4,455,633 4,402,001
Receivable for interests
sold...................... 21,000 1,367,624 566,885
Dividends receivable........ 5,285 79,563 56,430
Interest receivable......... -- 262 --
Deferred organization
costs..................... -- 18,693 24,091
Other assets................ 91 3,879 25,137
-----------------------------------------------
Total assets.............. 30,978,604 616,847,241 506,586,435
-----------------------------------------------
LIABILITIES
Payable for investment
securities purchased.... 857,304 -- --
Payable for interests
repurchased............. -- 7,426,621 7,012,750
Due to adviser............ -- 743,930 534,968
Accrued expenses and other
liabilities............. 38,339 734,179 396,561
-----------------------------------------------
Total liabilities......... 895,643 8,904,730 7,944,279
-----------------------------------------------
NET ASSETS.................... $ 30,082,961 $ 607,942,511 $ 498,642,156
-----------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 23,368,865 $ 355,184,425 $ 343,504,966
Accumulated net investment
income (deficit).......... (236,541) (8,203,977) (1,423,696)
Accumulated net realized
gain (loss)............... 1,110,856 87,904,363 47,256,935
Accumulated net realized
foreign exchange gain
(loss).................... -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- --
Net unrealized appreciation
(depreciation) on
investments............... 5,839,781 173,057,700 109,303,951
-----------------------------------------------
Net assets................ $ 30,082,961 $ 607,942,511 $ 498,642,156
-----------------------------------------------
* Investments, at cost..... $ 24,650,696 $ 437,863,887 $ 392,203,894
-----------------------------------------------
** Foreign currencies, at
cost...................... -- -- --
-----------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
74
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME & BALANCED GOVERNMENT EMERGING INTERNATIONAL WORLDWIDE
GROWTH GROWTH INCOME COUNTRIES GROWTH GROWTH
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
ASSETS
Investments, at value*...... $ 120,339,331 $ 27,092,084 $ 6,359,649 $ 62,453,184 $ 45,289,261 $ 100,021,160
Foreign currencies, at
value**................... -- -- -- 346,142 1,429,378 2,666,936
Cash........................ 900 651 33,349 666 -- 530
Receivable for investment
securities sold........... 1,701,034 1,110,525 -- 935,576 41,818 1,969,837
Receivable for interests
sold...................... 323,581 26,500 74 507,199 1,431,833 122,036
Dividends receivable........ 215,769 3,759 -- 46,169 110,535 201,917
Interest receivable......... 621,033 204,673 138,781 -- -- --
Deferred organization
costs..................... 11,947 8,522 7,839 -- 679 9,703
Other assets................ 532 61 9 2,800 1,032 351
-------------------------------------------------------------------------------------------
Total assets.............. 123,214,127 28,446,775 6,539,701 64,291,736 48,304,536 104,992,470
-------------------------------------------------------------------------------------------
LIABILITIES
Payable for investment
securities purchased.... -- -- -- 2,764,775 3,039,586 3,978,944
Payable for interests
repurchased............. 2,792,669 1,126,250 -- 9,137 -- 135,963
Due to adviser............ 48,882 139,356 90 -- -- --
Accrued expenses and other
liabilities............. 104,065 21,486 39,694 90,199 178,371 119,116
-------------------------------------------------------------------------------------------
Total liabilities......... 2,945,616 1,287,092 39,784 2,864,111 3,217,957 4,234,023
-------------------------------------------------------------------------------------------
NET ASSETS.................... $ 120,268,511 $ 27,159,683 $ 6,499,917 $ 61,427,625 $ 45,086,579 $ 100,758,447
-------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 81,533,055 $ 19,872,942 $ 5,780,066 $ 56,430,674 $ 40,848,416 $ 69,608,120
Accumulated net investment
income (deficit).......... 13,587,460 1,740,133 891,155 84,234 119,725 488,560
Accumulated net realized
gain (loss)............... 9,362,281 1,742,511 (135,676) (134,561) 349,175 14,898,238
Accumulated net realized
foreign exchange gain
(loss).................... -- -- -- (57,873) 95,152 757,906
Net unrealized foreign
exchange gain (loss)...... -- -- -- 1,842 (2,254) (6,857)
Net unrealized appreciation
(depreciation) on
investments............... 15,785,715 3,804,097 (35,628) 5,103,309 3,676,365 15,012,480
-------------------------------------------------------------------------------------------
Net assets................ $ 120,268,511 $ 27,159,683 $ 6,499,917 $ 61,427,625 $ 45,086,579 $ 100,758,447
-------------------------------------------------------------------------------------------
* Investments, at cost..... $ 104,553,616 $ 23,287,987 $ 6,395,277 $ 57,349,875 $ 41,612,896 $ 85,008,680
-------------------------------------------------------------------------------------------
** Foreign currencies, at
cost...................... -- -- -- $ 345,999 $ 1,439,151 $ 2,691,094
-------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
75
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
FOR THE YEAR ENDED SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
MINI CAP EMERGING CORE GROWTH
GROWTH FUND GROWTH FUND FUND
<S> <C> <C> <C>
------------------------------------------
INVESTMENT INCOME:
Dividends................... $ 21,214 $ 465,839 $ 535,873
Interest.................... 34,108 847,900 719,415
------------------------------------------
Total income.............. 55,322 1,313,739 1,255,288
------------------------------------------
EXPENSES:
Advisory Fee................ 180,936 3,017,321 1,712,555
Accounting Fee.............. 35,625 92,788 80,662
Administration.............. 4,452 17,500 70,223
Audit & tax fees............ 3,639 75,900 57,549
Custodian fee............... 21,462 67,232 38,123
Insurance................... 175 7,775 2,861
Legal fee................... 163 3,402 2,579
Miscellaneous............... 1,235 25,752 19,904
Organization costs.......... -- 4,269 7,792
Trustees' fee............... 4,319 3,564 3,564
------------------------------------------
Total expense............. 252,006 3,315,503 1,995,812
Less: Reimbursement to
(from) adviser............ (33,435) -- --
------------------------------------------
Net expenses.............. 218,571 3,315,503 1,995,812
------------------------------------------
Net investment income
(deficit)............... (163,249) (2,001,764) (740,524)
------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
from security
transactions.............. 1,166,750 63,561,561 28,329,596
Net realized foreign
exchange loss............. -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currencies................ 2,679,530 12,427,523 20,550,277
------------------------------------------
Net gain (loss) on
investments............. 3,846,280 75,989,084 48,879,873
------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 3,683,031 $ 73,987,320 $ 48,139,349
------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
76
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING
INCOME & BALANCED GOVERNMENT COUNTRIES INTERNATIONAL WORLDWIDE
GROWTH FUND GROWTH FUND INCOME FUND FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends................... $ 749,168 $ 30,032 -- $ 323,642 $ 244,293 $ 507,538
Interest.................... 1,736,898 422,677 $ 149,973 59,829 30,185 42,376
---------------------------------------------------------------------------------
Total income.............. 2,486,066 452,709 149,973 383,471 274,478 549,914
---------------------------------------------------------------------------------
EXPENSES:
Advisory Fee................ 423,507 96,012 9,588 271,596 196,401 505,580
Accounting Fee.............. 39,399 37,500 37,500 45,266 37,500 37,733
Administration.............. 17,372 3,937 736 6,654 6,031 15,562
Audit & tax fees............ 14,237 3,228 606 5,481 4,954 12,757
Custodian fee............... 11,582 11,681 7,278 12,202 17,797 60,163
Insurance................... 668 91 110 132 168 735
Legal fee................... 638 145 27 246 222 572
Miscellaneous............... 4,830 1,095 207 1,859 1,681 4,328
Organization costs.......... 3,865 2,758 2,536 -- 150 3,156
Trustees' fee............... 3,564 3,564 3,564 3,564 3,564 3,564
---------------------------------------------------------------------------------
Total expense............. 519,662 160,011 62,152 347,000 268,468 644,150
Less: Reimbursement to
(from) adviser............ 16,780 (38,396) (47,770) 642 (3,327) (37,454)
---------------------------------------------------------------------------------
Net expenses.............. 536,442 121,615 14,382 347,642 265,141 606,696
---------------------------------------------------------------------------------
Net investment income
(deficit)............... 1,949,624 331,094 135,591 35,829 9,337 (56,782)
---------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
from security
transactions.............. 6,413,257 1,032,726 (134,140) 121,909 538,673 7,403,797
Net realized foreign
exchange loss............. -- -- -- (33,016) (70,052) (149,957)
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currencies................ 1,520,523 1,059,501 38,130 3,726,624 1,140,702 (124,779)
---------------------------------------------------------------------------------
Net gain (loss) on
investments............. 7,933,780 2,092,227 (96,010) 3,815,517 1,609,323 7,129,061
---------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 9,883,404 $ 2,423,321 $ 39,581 $ 3,851,346 $ 1,618,660 $ 7,072,279
---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
77
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
MINI CAP GROWTH FUND
---------------------------- EMERGING GROWTH FUND
FOR THE --------------------------------
PERIOD ENDED FOR THE FOR THE PERIOD FOR THE
SEPTEMBER 30, PERIOD ENDED ENDED SEPTEMBER YEAR ENDED
1996 MARCH 31, 30, 1996 MARCH 31,
(UNAUDITED) 1996+ (UNAUDITED) 1996
<S> <C> <C> <C> <C>
--------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (163,249) $ (73,292) $ (2,001,764) $ (2,945,373)
Net realized gain (loss)
from security
transactions.............. 1,166,750 (55,894) 63,561,561 78,797,996
Change in net unrealized
appreciation
(depreciation) of
investments............... 2,679,530 3,160,251 12,427,523 91,635,716
--------------------------------------------------------------
Net increase in net assets
from operations......... 3,683,031 3,031,065 73,987,320 167,488,339
--------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 6,060,120 22,441,390 151,775,458 107,044,506
Withdrawals by partners..... (4,924,159) (208,486) (201,906,649) (161,495,614)
--------------------------------------------------------------
Net increase (decrease) in
net assets from
transactions in
interests............... 1,135,961 22,232,904 (50,131,191) (54,451,108)
--------------------------------------------------------------
Total increase in net
assets.................. 4,818,992 25,263,969 23,856,129 113,037,231
NET ASSETS
BEGINNING OF PERIOD......... 25,263,969 -- 584,086,382 471,049,151
--------------------------------------------------------------
END OF PERIOD............... $ 30,082,961 $ 25,263,969 $ 607,942,511 $ 584,086,382
--------------------------------------------------------------
</TABLE>
- ------------
+Commenced operations on July 12, 1995.
- --------------------------------------------------------------------------------
78
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH FUND INCOME & GROWTH FUND BALANCED GROWTH FUND
------------------------------ ------------------------------ ----------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE
ENDED FOR THE ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1996 MARCH 31, 1996 MARCH 31, 1996 MARCH 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (740,524) $ (752,357) $ 1,949,624 $ 4,142,172 $ 331,094 $ 638,909
Net realized gain (loss)
from security
transactions.............. 28,329,596 50,587,998 6,413,257 10,319,301 1,032,726 2,837,068
Change in net unrealized
appreciation
(depreciation) of
investments............... 20,550,277 52,583,826 1,520,523 10,732,341 1,059,501 742,010
--------------------------------------------------------------------------------------------
Net increase in net assets
from operations......... 48,139,349 102,419,467 9,883,404 25,193,814 2,423,321 4,217,987
--------------------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 72,503,285 113,757,799 14,602,221 15,608,507 4,474,202 4,914,004
Withdrawals by partners..... (42,543,081) (79,489,585) (15,975,050) (35,130,807) (3,582,391) (7,102,941)
--------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from
transactions in
interests............... 29,960,204 34,268,214 (1,372,829) (19,522,300) 891,811 (2,188,937)
--------------------------------------------------------------------------------------------
Total increase in net
assets.................. 78,099,553 136,687,681 8,510,575 5,671,514 3,315,132 2,029,050
NET ASSETS
BEGINNING OF PERIOD......... 420,542,603 283,854,922 111,757,936 106,086,422 23,844,551 21,815,501
--------------------------------------------------------------------------------------------
END OF PERIOD............... $ 498,642,156 $ 420,542,603 $ 120,268,511 $ 111,757,936 $ 27,159,683 $ 23,844,551
--------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
79
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
GOVERNMENT INCOME FUND EMERGING COUNTRIES FUND
---------------------------- ----------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1996 MARCH 31, 1996 MARCH 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
<S> <C> <C> <C> <C>
----------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 135,591 $ 291,713 $ 35,829 $ 26,122
Net realized gain (loss)
from security transactions
and foreign exchange...... (134,140) 363,388 88,893 (61,164)
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 38,130 (175,424) 3,726,624 1,751,439
----------------------------------------------------------
Net increase (decrease) in
net assets from
operations.............. 39,581 479,677 3,851,346 1,716,397
----------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 3,928,620 3,577,045 39,571,901 16,175,253
Withdrawals by partners..... (1,946,278) (4,912,231) (1,894,608) (1,272,742)
----------------------------------------------------------
Net increase (decrease) in
net assets from
transactions in
interests............... 1,982,342 (1,335,186) 37,677,293 14,902,511
----------------------------------------------------------
Total increase (decrease)
in net assets........... 2,021,923 (855,509) 41,528,639 16,618,908
NET ASSETS
BEGINNING OF PERIOD......... 4,477,994 5,333,503 19,898,986 3,280,078
----------------------------------------------------------
END OF PERIOD............... $ 6,499,917 $ 4,477,994 $ 61,427,625 $ 19,898,986
----------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
80
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND WORLDWIDE GROWTH FUND
----------------------------- ------------------------------
FOR THE PERIOD FOR THE PERIOD
ENDED FOR THE ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1996 MARCH 31, 1996 MARCH 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
<S> <C> <C> <C> <C>
-------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (56,782) $ 73,015 $ (56,782) $ 299,362
Net realized gain (loss)
from security transactions
and foreign exchange...... 7,253,840 259,455 7,253,840 9,015,557
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. (124,779) 2,584,830 (124,779) 9,091,917
-------------------------------------------------------------
Net increase (decrease) in
net assets from
operations.............. 7,072,279 2,917,300 7,072,279 18,406,836
-------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 6,500,703 6,044,445 6,500,703 17,650,729
Withdrawals by partners..... (13,157,561) (2,768,514) (13,157,561) (33,276,911)
-------------------------------------------------------------
Net increase (decrease) in
net assets from
transactions in
interests............... (6,656,858) 3,275,931 (6,656,858) (15,626,182)
-------------------------------------------------------------
Total increase (decrease)
in net assets........... 415,421 6,193,231 415,421 2,780,654
NET ASSETS
BEGINNING OF PERIOD......... 23,805,628 17,612,397 100,343,026 97,562,372
-------------------------------------------------------------
END OF PERIOD............... $ 45,086,579 $ 23,805,628 $ 100,758,447 $ 100,343,026
-------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
81
<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 fifteen investment vehicles (each a "Fund" and collectively the
"Funds") as of September 30, 1996. Up to five Portfolios of Nicholas-Applegate
Mutual Funds have invested in the respective Funds of the Master Trust to
achieve their investment objective.
The investment objectives of the Funds are as follows:
Mini Cap Growth Fund seeks to maximize long-term capital appreciation through
investment primariliy in equity securities of U.S. companies whose earnings and
stock prices are expected to grow faster than the average rate of companies in
the Standard & Poor's 500 Stock Price Index.
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.
Balance 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.
Emerging Countries Fund seeks to maximize long-term capital appreciation
through investment primarily in equity securities of companies in developing
countries of the world.
International Growth Fund seeks to maximize long-term capital appreciation
through investment primariily in equity securities of non-U.S. companies.
Worldwide Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in growth stocks of U.S. and foreign companies.
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.
SECURITIES TRANSACTIONS
Equity securities are valued at the last sale price (for exchange-listed
securities) or the mean between the last bid and asked price (if lacking any
sales and for over-the-counter securities). Debt securities generally are valued
at the mean between the last bid and asked prices. Securities with 60 days or
less remaining to maturity are valued on an amortized cost basis which
approximates market value.
Securities for which market quotations are not readily available are valued at
fair value determined in good faith by or under the direction of the Master
Trust's Board of Trustees.
Securities transactions are recognized on the trade date. Realized gains and
losses from securities transactions are calculated using the first-in, first-out
method. Dividend income is recognized on the ex-dividend date, and interest
income is recorded on the accrual basis. Discounts and premiums on securities
purchased are amortized over the life of the respective securities. The
prospectus for Nicholas-Applegate
- --------------------------------------------------------------------------------
82
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
Mutual Funds describes each Portfolio's policies with respect to declaration and
payment of dividends and distribution of capital gains.
FEDERAL INCOME TAXES
The Funds are treated as partnerships for federal income tax purposes. Any
interest, dividends and gains or losses of a Fund will be deemed to have been
"passed through" to the Portfolios.
DEFERRED ORGANIZATION COSTS
Organization costs incurred by the Master Trust have been allocated to the
various Funds based upon management's best estimate of the costs applicable to
each Fund. These costs have been deferred and will be amortized over a period of
60 months from the date the Funds commenced operations.
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 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
asset
<TABLE>
<CAPTION>
FIRST $500 NEXT $500 EXCESS OF
MILLION MILLION $1 BILLION
----------- ----------- -----------
<S> <C> <C> <C>
Mini Cap Growth Fund........ 1.25% 1.25% 1.25%
Emerging Growth Fund........ 1.00% 1.00% 1.00%
Core Growth Fund............ 0.75% 0.675% 0.65%
Income & Growth Fund........ 0.75% 0.675% 0.65%
Balanced Growth Fund........ 0.75% 0.675% 0.65%
Government Income Fund...... 0.40% 0.35% 0.35%
Worldwide Growth Fund....... 1.00% 0.90% 0.85%
International Growth Fund... 1.00% 0.90% 0.85%
Emerging Countries Fund..... 1.25% 1.25% 1.25%
</TABLE>
The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Fund's, during the periods from inception (respectively) to September 30,
1996 are as follows:
<TABLE>
<S> <C>
Mini Cap Growth Fund................ $ 74,158
Income & Growth Fund................ 20,720
Balanced Growth Fund................ 283,267
Government Income Fund.............. 303,447
</TABLE>
Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of September 30, 1996, the following Funds have amounts due to
Nicholas-Applegate for organizational costs advanced:
<TABLE>
<S> <C>
Government Income Fund............... $24,688
</TABLE>
- --------------------------------------------------------------------------------
83
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
C. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investment securities, other than
short-term obligations, for the period ended September 30, 1996, were as follows
(in 000's):
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Mini Cap Growth Fund............ $ 22,920 $ 22,287
Emerging Growth Fund............ 268,714 344,899
Core Growth Fund................ 281,890 248,636
Income & Growth Fund............ 87,859 84,911
Balanced Growth Fund............ 20,119 18,083
Government Income Fund.......... 6,392 4,092
Emerging Countries Fund......... 63,858 26,898
International Growth Fund....... 51,800 31,043
Worldwide Growth Fund........... 76,814 84,240
</TABLE>
At September 30, 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>
GROSS GROSS NET
TAX COST OF UNREALIZED UNREALIZED UNREALIZED
INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
----------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
Mini Cap
Growth
Fund..... $ 24,651 $ 6,556 $ 716 $ 5,840
Emerging
Growth
Fund..... 437,864 182,579 9,521 173,058
Core Growth
Fund..... 392,204 115,777 6,473 109,304
Income &
Growth
Fund..... 104,554 16,211 425 15,786
Balanced
Growth
Fund..... 23,288 4,216 412 3,804
Government
Income
Fund..... 6,395 44 79 (35)
Emerging
Countries
Fund..... 57,350 7,307 2,204 5,103
International
Growth
Fund..... 41,613 4,656 980 3,676
Worldwide
Growth
Fund..... 85,009 16,885 1,873 15,012
</TABLE>
D. OFF BALANCE SHEET RISKS
The Nicholas-Applegate Mutual Funds' investment in foreign securities may
entail risks due to the potential of political and economic instability in the
countries where the securities are being offered. In addition, foreign exchange
fluctuations could affect the value of positions held. It is the Master Trust's
policy to continuously monitor its exposure to these risks.
- --------------------------------------------------------------------------------
84
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
E. SELECTED RATIO DATA
<TABLE>
<CAPTION>
RATIO OF RATIO OF RATIO OF NET
EXPENSES TO EXPENSES TO INVESTMENT RATIO OF NET
AVERAGE NET AVERAGE NET INCOME INVESTMENT
ASSETS, ASSETS, (DEFICIT) TO INCOME (DEFICIT)
AFTER BEFORE AVERAGE NET TO AVERAGE NET
EXPENSE EXPENSE ASSETS, AFTER ASSETS, BEFORE
REIMBURSEMENTS REIMBURSEMENTS EXPENSE EXPENSE PORTFOLIO
(RECOUPMENT) (RECOUPMENT) REIMBURSEMENTS REIMBURSEMENTS TURNOVER RATE
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
MINI CAP GROWTH(1)
For the period ended 09/30/96*+.... 1.51% 1.74% (1.13%) (1.36%) 79.75%
For the period ended 03/31/96*..... 1.50% 2.02% (0.93%) (1.44%) 106.99%
EMERGING GROWTH(2)
For the period ended 09/30/96*+.... 1.10% 1.10% (0.66%) (0.66%) 46.42%
For the year ended 03/31/96........ 1.11% 1.11% (0.57%) (0.57%) 129.59%
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(3)
For the period ended 09/30/96*+.... 0.87% 0.87% (0.32%) (0.32%) 57.67%
For the year ended 03/31/96........ 0.89% 0.89% (0.22%) (0.22%) 114.48%
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(4)
For the period ended 09/30/96*+.... 0.95% 0.92% 3.45% 3.48% 77.49%
For the year ended 03/31/96........ 0.95% 0.94% 3.94% 3.94% 144.97%
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(3)
For the period ended 09/30/96*+.... 0.95% 1.25% 2.59% 2.29% 73.43%
For the year ended 03/31/96........ 0.95% 1.37% 2.83% 2.37% 197.19%
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 FUND(3)
For the period ended 09/30/96*+.... 0.60% 2.59% 5.66% 3.66% 86.79%
For the year ended 03/31/96........ 0.60% 2.72% 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%
EMERGING COUNTRIES FUND(4)
For the period ended 09/30/96*+.... 1.60% 1.60% 0.16% 0.17% 60.16%
For the year ended 03/31/96........ 1.60% 2.80% 0.30% (0.90%) 118.21%
For the period ended 03/31/95*..... 1.60% 1.81% 1.73% 1.52% 60.79%
INTERNATIONAL GROWTH FUND(5)
For the period ended 09/30/96*+.... 1.35% 1.37% 0.05% 0.03% 82.38%
For the year ended 03/31/96........ 1.35% 1.98% 0.39% (0.24%) 141.02%
For the year ended 03/31/95........ 1.35% 1.85% 0.24% (0.26%) 74.88%
For the period ended 03/31/94*..... 1.35% 2.28% 0.41% (0.52%) 23.71%
WORLDWIDE GROWTH FUND(3)
For the period ended 09/30/96*+.... 1.20% 1.27% (0.11%) (0.19%) 78.42%
For the year ended 03/31/96........ 1.20% 1.26% 0.31% 0.25% 132.20%
For the year ended 03/31/95........ 1.20% 1.30% 0.24% 0.14% 98.54%
For the period ended 03/31/94*..... 1.20% 1.36% 0.01% (0.15%) 95.09%
<CAPTION>
BROKER
COMMISSIONS
PER SHARE
<S> <C>
MINI CAP GROWTH(1)
For the period ended 09/30/96*+.... $0.0499
For the period ended 03/31/96*..... $0.0529
EMERGING GROWTH(2)
For the period ended 09/30/96*+.... $0.0551
For the year ended 03/31/96........ $0.0523
For the year ended 03/31/95........ --
For the period ended 03/31/94*..... --
CORE GROWTH(3)
For the period ended 09/30/96*+.... $0.0567
For the year ended 03/31/96........ $0.0593
For the year ended 03/31/95........ --
For the period ended 03/31/94*..... --
INCOME & GROWTH(4)
For the period ended 09/30/96*+.... $0.0569
For the year ended 03/31/96........ $0.0597
For the year ended 03/31/95........ --
For the period ended 03/31/94*..... --
BALANCED GROWTH(3)
For the period ended 09/30/96*+.... $0.0593
For the year ended 03/31/96........ $0.0594
For the year ended 03/31/95........ --
For the period ended 03/31/94*..... --
GOVERNMENT INCOME FUND(3)
For the period ended 09/30/96*+.... --
For the year ended 03/31/96........ --
For the year ended 03/31/95........ --
For the period ended 03/31/94...... --
EMERGING COUNTRIES FUND(4)
For the period ended 09/30/96*+.... $0.0015
For the year ended 03/31/96........ $0.0022
For the period ended 03/31/95*..... --
INTERNATIONAL GROWTH FUND(5)
For the period ended 09/30/96*+.... $0.0208
For the year ended 03/31/96........ $0.0128
For the year ended 03/31/95........ --
For the period ended 03/31/94*..... --
WORLDWIDE GROWTH FUND(3)
For the period ended 09/30/96*+.... $0.0173
For the year ended 03/31/96........ $0.0187
For the year ended 03/31/95........ --
For the period ended 03/31/94*..... --
</TABLE>
- -----------------
(1)Commenced operations on July 12, 1995.
(2)Commenced operations on October 1, 1993.
(3)Commenced operations on April 19, 1993.
(4)Commenced operations on November 28, 1994.
(5)Commenced operations on January 3, 1994.
*Annualized
+Unaudited
- --------------------------------------------------------------------------------
85
<PAGE>
(This page intentionally left blank)
<PAGE>
NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
- --------------------------------------------------------------------------------
600 West Broadway
San Diego, California 92101
800-551-8033
SAN996Q
