<PAGE>
--------------------
SEMI-ANNUAL
REPORT
INSTITUTIONAL
PORTFOLIOS
--------------------
NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
SEPTEMBER 30, 1996
<PAGE>
NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
- --------------------------------------------------------------------------------
600 West Broadway
San Diego, California 92101
800-551-8643
TRUSTEES OF NICHOLAS-APPLEGATE MUTUAL FUNDS
Fred C. Applegate, Chairman
Dr. Arthur B. Laffer
Charles E. Young
TRUSTEES OF NICHOLAS-APPLEGATE INVESTMENT TRUST
Arthur E. Nicholas, Chairman
Dann V. Angeloff
Walter A. Auch
Theodore J. Coburn
Darlene T. DeRemer
George F. Keane
OFFICERS
John D. Wylie, President
Peter J. Johnson, Vice President
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
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
<S> <C>
Letter to Shareholders.................................................. 1
Organization............................................................ 2
Insights and Outlook, Portfolio Managers' Roundtable Discussion......... 3
The Portfolios' Review and Outlook, Performance and the Funds' Schedules
of Investments
Mini Cap Growth....................................................... 6
Emerging Growth....................................................... 11
Core Growth........................................................... 19
Income & Growth....................................................... 23
Balanced Growth....................................................... 28
Value................................................................. 33
Emerging Countries.................................................... 35
International Growth.................................................. 40
Worldwide Growth...................................................... 45
Fully Discretionary Fixed Income...................................... 51
Short-Intermediate Fixed Income....................................... 54
Strategic Income...................................................... 57
High Yield Bond....................................................... 60
The Portfolios'
Financial Highlights.................................................. 62
Statements of Assets and Liabilities.................................. 64
Statements of Operations.............................................. 66
Statements of Changes in Net Assets................................... 68
Notes to the Financial Statements..................................... 72
Notes to the Funds' Financial Statements................................ 84
</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 Institutional Series Portfolios. Distributor:
Nicholas-Applegate Securities.
<PAGE>
(This page intentionally left blank)
<PAGE>
LETTER TO SHAREHOLDERS
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FELLOW SHAREHOLDER,
Over the last six months, stock markets around the world climbed to record
highs. Inflows
of cash to stock mutual funds in the United States reached unprecedented levels.
And we witnessed the ongoing maturity of stock exchanges among the world's
developing countries. These are just a few examples of the dynamic developments
in which you -- as a Nicholas-Applegate shareholder -- have participated over
the last six months.
As we reflect upon the past two quarters and share our insights in this
Semi-Annual Report, we also extend our sincere appreciation for your continued
confidence in our investment process and portfolio management talents. Thank you
for choosing Nicholas-Applegate Mutual Funds as a partner in the pursuit of your
investment objectives. We look forward to working with you for many years.
Amid an ever-changing investment environment, Nicholas-Applegate Mutual Funds'
portfolio managers retain strict adherence to the investment philosophy which
has guided our success and delivered solid long-term results for our
shareholders. We strive to selectively fill our equity portfolios with stocks of
companies we believe are successfully adapting to change. We seek companies that
are innovators, leaders, and visionaries. Using both fundamental and
quantitative analysis of thousands of companies around the world, we have
identified and invested in scores of promising stocks. And we continue to add
value as a direct result of our individual stock selection.
Over the past six months, we have strengthened the depth and resources of our
portfolio management team by attracting high-quality investment professionals.
We have responded to the changing needs of our shareholders by adding three new
Portfolios -- Value, Strategic Income, and High Yield Bond. We have gained
critical insights in diverse areas from leading analysts worldwide as a result
of our highly successful International Analyst Exchange Program. We have
enhanced the speed and efficiency with which we gather, analyze, and disseminate
crucial information used in our security-selection process by upgrading key
elements of our technology infrastructure.
Reflecting our commitment to delivering superior performance results and high
quality shareholder service, we will continue to explore opportunities to
strengthen our resources. With respect to the investment horizon, we retain our
optimism. We believe the strict application of our bottom-up investment
philosophy will continue to generate GROWTH OVER TIME-Registered Trademark- for
our shareholders.
Again, thank you for selecting Nicholas-Applegate Mutual Funds.
Best Regards,
[SIGNATURE]
John D. Wylie
President
Nicholas-Applegate Mutual Funds
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1
<PAGE>
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 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
- ----------------------- --------------------------------------------- ---------- -------------
<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 Institutional 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
<PAGE>
INSIGHTS AND OUTLOOK:
PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION
- -------------------------------------------------------------------
In September, members of Nicholas-Applegate's portfolio management team shared
their perspectives on the current market environment. The following portfolio
managers participated in the forum:
<TABLE>
<S> <C> <C> <C>
[PHOTO] [PHOTO] [PHOTO] [PHOTO]
Jack Marshall Fred Robertson Catherine Somhegyi Larry Speidell, CFA
Partner, Partner, Partner, Partner,
Chief Investment Officer, Chief Investment Officer, Chief Investment Officer, Director of Global/
Institutional Equity Fixed Income Management Global Equity Management Systematic Portfolio
Management Management and Research
</TABLE>
Q: WHAT IS YOUR OUTLOOK IN THE COMING YEAR FOR THE ECONOMY?
A: FRED: Currently, the economy is healthy and operating at a satisfactory
rate. The Federal Reserve has been successful in its preemptive money policy or
"soft landing" approach. Over the next year, we foresee periods of both moderate
economic acceleration and sluggishness and anticipate corresponding interest
rate fluctuations. However, the long-term outlook for financial assets remains
positive.
Q: HOW CAN YOU ADD VALUE IN THIS TYPE OF "TRADING RANGE" INTEREST RATE
ENVIRONMENT?
A: FRED: With bonds trading in a narrow range, sector decisions are the primary
means for adding value. We continue to emphasize mortgage securities in our
Fully Discretionary and Short-Intermediate Bond Funds primarily because of their
attractive yield advantage versus Treasuries. In the Fully Discretionary Fund,
we also have purchased hedged international bonds. Our underlying perspective is
that economic conditions in Europe and Japan are weaker than here in the United
States and in need of more stimulus. We believe this economic stimulus will
manifest itself in the form of easing monetary policy.
Q: WHAT IS YOUR OUTLOOK FOR CORPORATE EARNINGS GROWTH?
A: JACK: The economy has been in a full-employment, sustained growth cycle. As
a result of these favorable economic conditions, corporate earnings results have
been quite strong. Specifically, technology appears to be regaining strength,
especially among telecommunication and personal computer-related companies. A
number of our Funds, including Mini Cap Growth, Emerging Growth, and Core
Growth, retain significant weightings in technology stocks as a result of our
bottom-up stock selection process.
Many specialty retailers have exhibited strong earnings performance,
particularly those companies that satisfy a specific niche such as Nike and
Gucci. However, on a sector basis, there have been some weaker areas within the
economy. Cyclical companies
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3
<PAGE>
INSIGHTS AND OUTLOOK:
PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION -- CONTINUED
- --------------------------------------------------------------------------------
have experienced earnings shortfalls. The healthcare sector has also
underperformed. But in general, earnings growth has been quite robust.
A: LARRY: One factor to consider is the distinction between operating earnings
and reported earnings over the last 5 years. The non-operating portion of
earnings has been abnormally high on a historical basis. This is attributable in
part to lower effective tax rates and declining interest expenses and
depreciation costs. It is not sufficient to focus solely on reported earnings.
Our investment process closely scrutinizes the quality of earnings as well as
their sustainability.
A: CATHERINE: Economic data supports the assertion that strong earnings growth
will become much more stock specific. Recently, the Producer Price Index (PPI)
increased and the Consumer Price Index (CPI) declined. Apparently, production
and associated costs are rising, but they are not being passed on to the
consumer. If this trend continues, this does not bode well for companies
sensitive to cost considerations. Individual stock selection becomes even more
critical.
Q: WHAT IS YOUR VIEW OF CURRENT MARKET VALUATIONS?
A: LARRY: While some traditional tools suggest valuations are high, we do not
believe valuations are excessive. Although the dividend yield for the S&P 500 is
at a record low, its composition has changed considerably. There are currently
more high growth stocks represented, such as technology stocks, that do not pay
dividends and trade at higher multiples. Energy and cyclical stocks typically
paying higher dividends have not exhibited as much growth and, therefore,
currently hold lower index representation than in previous years.
A: JACK: The S&P 500's low dividend yield has been perceived as an indication
of the market's extreme valuation level. However, if the S&P 500's energy
component were the same today as in the mid-80's, the market's dividend yield
would be much greater. As Larry suggested, traditional measures applied to the
S&P 500 may no longer accurately reflect valuation levels.
Q: WHAT ARE THE IMPLICATIONS OF THE RECORD INFLOWS TO STOCK MUTUAL FUNDS?
A: JACK: Mutual fund inflows are short-term market catalysts. However, on a
long-term basis, fundamentals will continue to be the main impetus for driving
prices. The emphasis on mutual funds is overplayed with respect to their
influence over a full market cycle. One element contributing to this year's
record mutual fund inflows has been the continued shift in retirement plan
assets from defined benefit plans to defined contribution plans. There is a
growing social attitude toward the transfer of responsibility away from
government and corporations, back to the individual.
A: FRED: The other trend creating increased mutual fund activity is a
generational shift away from owning individual stocks. The baby boom generation
prefers mutual funds.
A: LARRY: The secular trend is clear. Demographically, the population is aging
and recognizing they are going to live longer. People are concerned about the
quality of their retirement lifestyle, particularly in light of problems with
Social Security. There is an exploding awareness that savings rates are
insufficient. This "savings crisis" is starting to be resolved and mutual funds
provide a convenient savings solution.
A: CATHERINE: There are also statistics indicating
20- to 30-year-olds, referred to collectively as Generation X, are saving more
on a percentage basis than previous generations. And again, their preferred
savings vehicle is mutual funds.
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4
<PAGE>
INSIGHTS AND OUTLOOK:
PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION -- CONCLUDED
- --------------------------------------------------------------------------------
Q: WHAT IS YOUR OUTLOOK FOR THE INTERNATIONAL MARKETS?
A: LARRY: International markets continue to offer a variety of attractive
investment opportunities. For example, Germany has started to stimulate its
economy by lowering interest rates. This could help eliminate pressure on the
other European economies. Across the globe in Asia, China is likewise beginning
to stimulate its economy. The Chinese economy is much more
infrastructure-oriented and reflects a focus on improvements such as power
stations, roads, and buildings. With half the world's population in China and
nearby India, the growth potential is enormous!
A: FRED: The unified currency issue will continue to be a dominant theme in
Western Europe for the next two years. As a result, we anticipate tight fiscal
controls and the easing of monetary policy during that period as the Western
European economies attempt to resolve this issue.
A: CATHERINE: Yet another exciting development is the new market being created
in Europe called the EASDAQ. Right now, there is no mechanism for small,
European companies to go public. Companies must instead issue public offerings
in the United States on the NASDAQ exchange. Hence, smaller European companies
have previously been deprived of capital. The creation of the EASDAQ exchange
will enhance the growth prospects of many emerging European companies.
A: LARRY: We have identified some interesting companies within the consumer
sector. It is not just a case of the rest of the world buying U.S. Levi's
anymore. Consumers are buying non-U.S. consumer products such as Adidas and
Fila. Outside of the consumer sector, there are also many exciting technology
companies. We have identified several promising Israeli military technology
companies. Further, for the first time, we are finding highly competitive
technology companies in Europe.
A: CATHERINE: In the current market environment, we have been able to identify
many strong growth companies at a relatively attractive price. This has
particularly been the case recently in Eastern Europe and Latin America. Many
holdings in our Emerging Countries Fund have both significant earnings growth
rates and attractive valuations.
Q: DESCRIBE THE NICHOLAS-APPLEGATE INTERNATIONAL ANALYST EXCHANGE PROGRAM.
A: LARRY: The exchange program enables investment professionals from countries
around the world to work with our team at our San Diego office for up to
one-month periods. It strengthens existing relationships and promotes sharing
investment perspectives with our local contacts around the world. In addition,
our investment team members are able to work in the offices of our local
contacts during the course of their research trips abroad. We apply the
information gathered through this program in the management of various
portfolios, especially the Worldwide Growth, International Growth, and Emerging
Countries Funds.
Q: ANY FINAL COMMENTS?
A: JACK: We remain confident in our bottom-up investment process identifying
companies successfully managing change. Many aspects of the current environment
lead me to believe this will continue to be a stock picker's market. And in that
environment, we should excel.
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5
<PAGE>
MINI CAP GROWTH FUND
INSTITUTIONAL 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 Mini Cap Growth Fund seeks to maximize long-term
capital appreciation by investing primarily in U.S. companies with less than
$100 million in market capitalization.
REVIEW AND OUTLOOK: The Mini Cap Growth Fund delivered solid returns from
April 1 through September 30, 1996. The Fund's Institutional shares returned
13.4% for the period, well ahead of the 4.9% return of the Russell 2000 Growth
Index. Relative performance benefited primarily from stock selection in the
technology and retail sectors.
The Fund's technology exposure at the end of the period was virtually equal to
that of the Russell 2000 Growth Index, comprising 27.9% versus 28.2% for the
Index. As a result of our bottom-up stock selection process, the Fund's
technology holdings significantly outperformed those of the Index. For example,
Radisys Corp., a leader in the design and manufacture of embedded computer
solutions, was one of the Fund's top-performing holdings. The company has
exceeded earnings expectations due to strong product sales and the continued
expansion of its customer base.
Among retail stocks, the Fund also outperformed the Index. Finish Line, a
specialty retailer of athletic and leisure footwear, activewear and accessories,
was another top performing holding for the period. Finish Line's new store
openings have positively impacted the company's earnings growth.
The mini cap segment continues to offer a source of attractive growth
opportunities. As of September 30, 1996, the median earnings growth rate for
holdings in the Mini Cap Growth Fund was 34% as opposed to 19% for the Russell
2000 Growth Index.
We remain optimistic about the prospects for smaller capitalization companies
as we continue to discover promising stocks in the mini cap universe.
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.
- --------------------------------------------------------------------------------
6
<PAGE>
MINI CAP GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
MINI CAP GROWTH INSTITUTIONAL 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>
Institutional
Portfolio Russell 2000 Growth Index
7/12/95 $ 250,000 $ 250,000
9/30/95 275,600 268,240
12/31/95 287,000 272,246
3/31/96 317,000 287,885
6/30/96 371,600 304,705
9/30/96 359,600 302,100
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Mini Cap Growth Institutional 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.
- --------------------------------------------------------------------------------
7
<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
------------
MEDICAL SPECIALTIES -- 0.2%
Impath, Inc.*.............................. 4,500 55,125
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
8
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
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
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER HEALTH TECHNOLOGY/SERVICES (CONTINUED)
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
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
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
9
<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>
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
Tessco Technologies, Inc.*................. 5,800 242,150
------------
1,548,274
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
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
------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
10
<PAGE>
EMERGING GROWTH FUND
INSTITUTIONAL 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 Growth Fund seeks to maximize long-term
capital appreciation through investment primarily in U.S. equity securities of
companies with market capitalizations below $500 million.
REVIEW AND OUTLOOK: The Emerging Growth Fund delivered substantial returns
between April 1 and September 30, 1996. The Institutional Portfolio returned
12.5% for the period, more than twice the 4.9% gain of the Russell 2000 Growth
Index. Contributing to the Portfolio's advance versus that of the benchmark was
stock selection in the technology, commercial/industrial services, and retail
sectors.
Among the top performing technology holdings was Rational Software, a
developer of database management systems and software tools. The company's
shares appreciated significantly in the period due in part to the addition of
important licensing agreements with Microsoft. Viasoft, Inc., a software
developer, was another technology holding delivering strong performance. The
company's innovative application, "Enterprise 2000," provides solutions for the
problems associated with the year 2000 conversion. Many important software
applications still use a two-digit field to distinguish years. As a result, they
cannot differentiate between years after 1999 -- mistaking 2000 for 1900, 2001
for 1901, etc.
The recent strength of the U.S. dollar has made exports more expensive and
reduced U.S. competitiveness overseas. Smaller cap companies, which typically do
not derive significant revenues from international trade, are expected to be
less impacted by this trend. Thus, relative to larger cap companies, the
earnings growth potential of smaller capitalization companies in the current
market environment appears attractive.
We continue to identify dynamic opportunities meeting our investment criteria
in the small cap segment and believe the powerful appreciation potential offered
by smaller cap growth companies will further benefit our shareholders.
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.
- --------------------------------------------------------------------------------
11
<PAGE>
EMERGING GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING GROWTH INSTITUTIONAL PORTFOLIO WITH THE RUSSELL 2000 GROWTH INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/96
1 YEAR 5 YEARS 10 YEARS
24.25% 17.62% 17.03%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING GROWTH INSTITUTIONAL PORTFOLIO RUSSELL 2000 GROWTH INDEX
<S> <C> <C>
7/31/85 $ 250,000 $ 250,000
9/30/85 235,902 228,349
12/31/85 278,463 267,425
3/31/86 321,624 307,046
6/30/86 352,685 327,142
9/30/86 285,983 273,988
12/31/86 296,385 277,004
3/31/87 361,471 352,326
6/30/87 361,618 347,425
9/30/87 382,249 358,710
12/31/87 285,177 247,984
3/31/88 336,938 291,164
6/30/88 367,386 309,646
9/30/88 359,772 301,127
12/31/88 362,320 298,502
3/31/89 402,398 320,660
6/30/89 420,560 341,411
9/30/89 471,710 371,913
12/31/89 462,329 358,702
3/31/90 470,606 349,173
6/30/90 500,969 371,207
9/30/90 385,769 274,340
12/31/90 423,896 296,251
3/31/91 558,142 386,759
6/30/91 529,438 373,345
9/30/91 611,921 413,636
12/31/91 662,270 447,893
3/31/92 661,872 460,151
6/30/92 588,473 404,885
9/30/92 624,230 412,728
12/31/92 746,968 482,694
3/31/93 742,563 474,044
6/30/93 769,277 487,678
9/30/93 867,464 533,181
12/31/93 867,187 547,182
3/31/94 814,912 524,920
6/30/94 754,761 491,981
9/30/94 834,963 537,851
12/31/94 836,746 533,875
3/31/95 885,696 563,151
6/30/95 987,421 619,015
9/30/95 1,109,032 689,403
12/31/95 1,137,101 699,699
3/31/96 1,224,695 739,892
6/30/96 1,340,676 783,122
9/30/96 1,377,984 776,426
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Emerging Growth Institutional Portfolio with the
Russell 2000 Growth Index, 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 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.
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.
- --------------------------------------------------------------------------------
12
<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.
- --------------------------------------------------------------------------------
13
<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>
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.
- --------------------------------------------------------------------------------
14
<PAGE>
- -------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
15
<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>
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER FINANCIAL SERVICES (CONTINUED)
Southern Pacific Funding Corp.*............ 17,200 $ 434,300
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
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
16
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
RAILROADS -- 0.2%
Railtex, Inc.*............................. 40,000 $ 952,500
------------
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
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
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
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
</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>
SPECIALTY CHAINS (CONTINUED)
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
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
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TOBACCO PRODUCTS -- 0.3%
Mafco Consolidated Group, Inc.*............ 68,800 $ 2,107,000
------------
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
-------------
</TABLE>
- ------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
18
<PAGE>
CORE GROWTH FUND
INSTITUTIONAL 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 Portfolio delivered strong returns for the
six-month period ending September 30, 1996. The Portfolio outperformed the S&P
500 Index, posting a return of 11.2% versus 7.7% for the Index. The Fund's
holdings in the technology and retail sectors boosted performance relative to
the benchmark.
Despite the downturn in the technology sector in June and July, some of the
Fund's best performers over the period were computer software and hardware
stocks. Shares of Cadence Design Systems, Inc., a provider of server and
enterprise hardware, climbed in light of the company's recent 50% increase in
software licensing and new product introductions.
Stock selection in the retail trade sector also resulted in strong returns.
Safeway, the California supermarket giant, soared in the period as it continued
to exceed earnings expectations. The company is successfully growing market
share versus its competitors and is expanding margins. Nike, the athletic shoe
and sportswear maker, was also among the best performing holdings over the past
six months. Nike has been especially successful in creating brand name
recognition for its product lines worldwide.
The Core Growth Fund continues to demonstrate solid earnings growth
characteristics. As of September 30, 1996, the median earnings growth rate for
portfolio holdings was 29% versus 12% for the S&P 500 Index.
We continue to find superior earnings growth potential within the mid and
large cap segments. Our bottom-up growth investment philosophy as applied to
these segments of the market continues to reward our shareholders. We remain
confident the Core Growth Fund will continue to deliver strong, long-term
results to our shareholders.
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
- --------------------------------------------------------------------------------
19
<PAGE>
CORE GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
CORE GROWTH INSTITUTIONAL PORTFOLIO WITH THE S&P 500 INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/96
1 YEAR 5 YEARS 10 YEARS
20.54% 17.68% 17.80%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE GROWTH INSTITUTIONAL
<S> <C> <C>
Portfolio S&P 500 Index
9/30/85 $ 250,000 $ 250,000
12/31/85 311,845 292,860
3/31/86 388,397 334,118
6/30/86 437,508 353,762
9/30/86 388,690 329,063
12/31/86 414,299 347,444
3/31/87 508,798 421,503
6/30/87 523,217 442,611
9/30/87 570,277 471,735
12/31/87 429,184 365,741
3/31/88 439,956 386,614
6/30/88 488,926 412,140
9/30/88 478,446 413,572
12/31/88 483,552 426,260
3/31/89 509,490 456,652
6/30/89 542,075 496,597
9/30/89 637,945 549,614
12/31/89 647,590 561,013
3/31/90 655,822 544,538
6/30/90 753,891 578,425
9/30/90 618,533 499,388
12/31/90 652,318 543,946
3/31/91 822,080 622,905
6/30/91 785,307 621,480
9/30/91 886,374 654,716
12/31/91 1,014,500 709,606
3/31/92 987,752 691,681
6/30/92 919,329 704,810
9/30/92 964,695 727,076
12/31/92 1,151,988 763,705
3/31/93 1,226,048 797,065
6/30/93 1,305,243 800,858
9/30/93 1,408,010 821,511
12/31/93 1,379,773 840,600
3/31/94 1,282,663 808,673
6/30/94 1,208,819 812,061
9/30/94 1,268,501 851,780
12/31/94 1,234,654 851,663
3/31/95 1,324,943 934,713
6/30/95 1,472,975 1,023,897
9/30/95 1,659,853 1,105,290
12/31/95 1,710,920 1,171,847
3/31/96 1,799,454 1,234,698
6/30/96 1,945,536 1,290,056
9/30/96 2,000,869 1,329,937
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in Core Growth Institutional Portfolio with the Standard &
Poor's ("S&P") 500 Index, 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.
- --------------------------------------------------------------------------------
20
<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.
- --------------------------------------------------------------------------------
21
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
CORE GROWTH FUND
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.
- --------------------------------------------------------------------------------
22
<PAGE>
INCOME & GROWTH FUND
INSTITUTIONAL 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 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
Portfolio performed well compared to the First Boston Convertible Index, gaining
8.9% between April 1 and September 30, 1996 versus a 4.5% rise for the
benchmark. Portfolio returns also outpaced the S&P 500 and Lehman
Government/Corporate Indexes, up 7.7% and 2.3%, respectively, over the same
period.
Comprised primarily of convertible bonds issued by small and mid cap
companies, the Fund delivered solid results, especially in August and September
as small and mid cap stocks rallied.
The Fund benefited from holdings in such companies as Staples, the operator of
discount office supply stores, and 3Com, a manufacturer of computer
communication systems. Staples' common stock rose sharply during the period as a
result of its announced merger with Office Depot. Its climbing share price
lifted the company's convertible bonds. The convertible notes of 3Com also rose
along with the company's stock as earnings grew and earnings projections for the
California-based technology company continued to rise. 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 market
share from Intel, its largest competitor.
During the period, we reduced our exposure to the technology sector on a
security-specific basis while increasing our weighting in the consumer services
and insurance services sectors.
We remain optimistic about the outlook for convertible securities and believe
our approach will continue to reward shareholders with positive long-term
results and limited downside risk.
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.
- --------------------------------------------------------------------------------
23
<PAGE>
INCOME & GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
INCOME & GROWTH INSTITUTIONAL 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
18.37% 14.45% 14.89%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME AND GROWTH INSTITUTIONAL PORTFOLIO FIRST BOSTON CONVERTIBLE INDEX
<S> <C> <C>
12/31/86 $ 250,000 $ 250,000
3/31/87 282,650 281,944
6/30/87 283,328 288,757
9/30/87 298,974 302,043
12/31/87 242,192 249,439
3/31/88 256,810 267,254
6/30/88 277,739 280,484
9/30/88 277,006 277,535
12/31/88 290,339 282,892
3/31/89 324,952 299,377
6/30/89 343,057 313,413
9/30/89 363,686 326,634
12/31/89 372,775 321,822
3/31/90 390,390 317,883
6/30/90 412,936 325,477
9/30/90 365,477 290,715
12/31/90 379,633 299,661
3/31/91 436,754 339,938
6/30/91 444,501 343,671
9/30/91 492,799 369,371
12/31/91 525,253 386,905
3/31/92 528,862 405,298
6/30/92 509,646 415,378
9/30/92 529,749 431,500
12/31/92 576,920 454,916
3/31/93 600,581 488,214
6/30/93 652,280 501,327
9/30/93 709,414 526,248
12/31/93 733,126 539,288
3/31/94 716,057 523,670
6/30/94 683,382 509,448
9/30/94 697,860 524,679
12/31/94 677,476 513,857
3/31/95 701,600 543,962
6/30/95 751,174 593,568
9/30/95 817,560 630,348
12/31/95 828,248 635,736
3/31/96 888,828 672,870
6/30/96 920,260 687,220
9/30/96 967,731 702,864
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in Income & Growth Institutional Portfolio with the 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.
- --------------------------------------------------------------------------------
24
<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.
- --------------------------------------------------------------------------------
25
<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>
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.
- --------------------------------------------------------------------------------
26
<PAGE>
- -------------------------------------------------------------------
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
------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
27
<PAGE>
BALANCED GROWTH FUND
INSTITUTIONAL 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 Investments
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 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. The Portfolio rose 10.1% compared to a 5.6% return for a Balanced
Index comprised of 60% of the S&P 500 Index and 40% of the Lehman Government/
Corporate Index.
The Fund's technology holdings contributed to the Portfolio's gains. Stock
selection in the retail, health care, financial, and commercial/industrial
services sectors also added to the Portfolio's outperformance of the benchmark.
Among the Fund's best performers was Ascend Communications, a manufacturer of
high speed digital network access products. Its price soared above its
competitors due to a 30% increase in international sales. Ross Stores, Inc., the
third largest off-price retailer in the country, also performed well. Its
earnings jumped 60% this year due to favorable industry dynamics and its
merchandise purchasing expertise.
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 Board's decision not to raise interest rates this fall, bond
prices firmed. Overall, the six-month period ending September 30 was relatively
lackluster for the fixed income markets.
Without a firmly established trend in interest rates, we reduced the duration
for the fixed income segment of the Balanced Growth Fund during the period,
bringing it more in line with the Lehman Government/Corporate Index.
We are optimistic that over the long term our disciplined approach to
selecting dynamic growth stocks, balanced by the diversification of fixed income
securities, 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%, 8/31/00
TJX Companies Note, 6.625%, 6/15/00
- --------------------------------------------------------------------------------
28
<PAGE>
BALANCED GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
BALANCED GROWTH INSTITUTIONAL PORTFOLIO WITH A MODEL INDEX CONSISTING OF 60% S&P
500 INDEX/40% LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/96 SINCE
1 YEAR 3 YEARS INCEPTION
12.67% 9.68% 9.68%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BALANCED GROWTH INSTITUTIONAL PORTFOLIO
<S> <C> <C>
Balanced 60/40 Index
10/01/93 $ 250,000 $ 250,000
12/31/93 242,780 253,187
3/31/94 235,858 244,253
6/30/94 224,276 243,689
9/30/94 235,450 251,328
12/31/94 231,595 251,733
3/31/95 246,606 271,449
6/30/95 270,815 294,028
9/30/95 292,724 310,270
12/31/95 288,577 327,299
3/31/96 299,512 334,618
6/30/96 317,757 344,238
9/30/96 329,813 353,160
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Balanced Growth Institutional Portfolio with a model
index consisting of 60% Standard & Poor's ("S&P") 500 Index and 40% Lehman
Brothers Government/Corporate Bond Index, 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.
- --------------------------------------------------------------------------------
29
<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
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
ELECTRONICS/MUSIC CHAINS -- 1.0%
CompUSA, Inc.*............................. 4,800 $ 259,200
------------
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
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
30
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
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
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SOFTWARE (CONTINUED)
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
------------
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
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
31
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED GROWTH FUND
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
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
------------
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
------------
</TABLE>
- ---------------
* Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
32
<PAGE>
VALUE FUND
INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
John D. Wylie
Partner, Chief Investment Officer,
Investor Services Group
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
GOAL: The Nicholas-Applegate Value Fund seeks to provide total return through
long-term capital appreciation plus interest and dividend income. Holdings
reflect a diversified portfolio comprised predominantly of U.S. companies with
larger market capitalizations.
REVIEW AND OUTLOOK: Concerns regarding earnings growth, inflation, interest
rates, and liquidity during the second and third quarters prompted investors to
migrate toward the perceived safety and quality of larger-cap stocks. For the
five-month period ending September 30, 1996, the S&P 500 Index gained 6.2% while
the S&P MidCap and S&P SmallCap Indexes advanced 2.6% and 2.7%, respectively.
While value stocks outperformed growth stocks in the small and mid cap
segments, larger-cap growth stocks delivered the best returns for the five-month
period ending September 30. The S&P/BARRA Growth Index was up 8.7% over that
period. The S&P/BARRA Value Index gained 3.7%.
The Nicholas-Applegate Value Institutional Portfolio outperformed both growth
and value indexes. It delivered an 11.5% gain between its inception on May 1,
1996 and September 30, 1996. The Fund's holdings in the technology sector made a
significant contribution to the Portfolio's outperformance. In fact,
computer-related companies such as Western Digital, Compaq Computer, and Intel
were among the best performing stocks in the Fund. While the S&P 500 fell 4.4%
in July, the Value Institutional Portfolio declined only 2.4%. The resilience
demonstrated by the Fund's holdings in the technology sector helped limit
overall price erosion.
The Fund retains both an attractive valuation and earnings growth rate. As of
September 30, the P/E ratio for holdings was 13 versus 16 for the S&P 500. The
median earnings growth rate for holdings was 16% versus 12% for the Index.
Applying our bottom-up stock selection approach, we reduced our exposure
within the financial services sector from 36.9% to 16.5% by quarter-end.
Conversely, we increased our weighting in the utilities and technology sectors.
Reflecting our fully invested position, 99% of the Fund was invested in equities
at the end of the third quarter.
We continue to find stocks with attractive P/E ratios and the potential for
strong earnings growth. We remain confident that strict adherence to our
objectives should continue to reward shareholders with long-term capital
appreciation.
REPRESENTATIVE HOLDINGS
American Home Products Corp
Conseco, Inc.
Compaq Computer Corp.
Federal National Mortgage Association
International Game Technology
Public Storage, Inc.
Shopko Stores, Inc.
Travelers Group, Inc.
USX Marathon Group
Western Digital Corporation
- --------------------------------------------------------------------------------
33
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
VALUE FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 99.8%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
AEROSPACE -- 2.4%
Northrop Grumm............................. 700 $ 56,175
------------
AIR FREIGHT / SHIPPING -- 4.2%
AMR Corporation*........................... 600 47,775
CSX Corporation............................ 1,000 50,500
------------
98,275
------------
AUTOMOBILES & RELATED -- 4.3%
Chrysler Corporation....................... 2,400 68,700
General Motors Corporation................. 700 33,600
------------
102,300
------------
BEVERAGES / SOFT DRINKS -- 1.1%
Coca-Cola Company.......................... 500 25,437
------------
BIOTECHNOLOGY -- 0.9%
Genetics Institute, Incorporated*.......... 300 20,775
------------
BUILDING MATERIALS -- 1.8%
Texas Industries, Incorporated............. 700 41,913
------------
COMMUNICATIONS AND MEDIA -- 1.8%
Sprint Corporation......................... 1,100 42,763
------------
COMPUTER / OFFICE AUTOMATION -- 6.9%
Compaq Computer Corporation*............... 1,000 64,125
Microsoft Corporation*..................... 200 26,375
Western Digital Corporation*............... 1,800 72,225
------------
162,725
------------
CONSUMER ELECTRICALS -- 2.3%
General Electric Company................... 600 54,600
------------
DEPARTMENT / DISCOUNT STORES -- 2.3%
Shopko Stores, Incorporated................ 3,500 55,563
------------
DRUGS / PHARMACEUTICALS -- 5.5%
American Home Products Corporation......... 1,000 63,750
Schering -- Plough Corporation............. 1,100 67,650
------------
131,400
------------
ELECTRIC & OTHER SERVICES -- 2.7%
Central Hudson Gas & Electric.............. 1,300 38,675
Edison International....................... 1,400 25,025
------------
63,700
------------
FOOD AND KINDRED PRODUCTS -- 3.0%
Philip Morris Companies, Incorporated...... 800 71,800
------------
FOOD CHAINS -- 1.0%
ConAgra, Incorporated...................... 500 24,625
------------
GAS UTILITIES -- 3.8%
Columbia Gas System........................ 800 44,800
PanEnergy Corporation...................... 1,300 45,012
------------
89,812
------------
HOME FURNISHINGS -- 1.1%
Kimball International Incorporated......... 700 25,637
------------
LIFE INSURERS -- 2.3%
Conseco, Incorporated...................... 1,100 54,175
------------
MACHINERY / EQUIPMENT -- 4.5%
Caterpillar, Incorporated.................. 1,000 75,375
Robbins & Myers, Incorporated.............. 1,400 31,675
------------
107,050
------------
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL SUPPLIES -- 1.5%
Becton Dickinson & Company................. 800 $ 35,400
------------
MONEY -- CENTER BANKS -- 7.7%
Bankers Trust New York Corporation......... 900 70,762
Chase Manhattan Corporation................ 500 40,062
Morgan J.P. & Company...................... 800 71,100
------------
181,924
------------
MORTGAGE BACKED SECURITIES -- 2.2%
Federal National Mortgage Association...... 1,500 52,312
------------
MULTI -- LINE INSURERS -- 1.0%
Cigna Corporation.......................... 200 23,975
------------
OIL/GAS PRODUCTION -- 8.4%
Exxon Corporation.......................... 600 49,950
Phillips Petroleum Company................. 1,800 76,950
USX Marathon Group......................... 3,300 71,363
------------
198,263
------------
OTHER FINANCIAL SERVICES -- 5.0%
Household International, Incorporated...... 600 49,350
Travelers Group, Incorporated.............. 1,400 68,775
------------
118,125
------------
OTHER TECHNOLOGY -- 1.3%
International Game Technology.............. 1,500 30,750
------------
PRINTING / FORMS -- 1.7%
Champion International Corporation......... 900 41,287
------------
PROPERTY -- CASUALTY INSURERS -- 3.0%
First American Financial Corporation....... 2,000 70,250
------------
REIT'S -- 5.0%
Equity Inns, Incorporated.................. 3,200 40,000
Public Storage, Incorporated............... 1,300 29,413
Reckson Associates Realty Corporation...... 1,300 48,263
------------
117,676
------------
SEMICONDUCTORS / ELECTRONIC COMPONENTS -- 3.2%
Intel Corporation.......................... 800 76,350
------------
SERVICES-INVESTIGATIVE & SECURITY -- 1.6%
Wackenhut Corporation -- Class B........... 2,500 39,063
------------
STEEL PRODUCERS -- 1.2%
LTV Corporation............................ 2,400 27,900
------------
TELECOMMUNICATIONS EQUIPMENT -- 1.9%
Telefonica de Espana -- ADR................ 800 44,500
------------
TELEPHONE -- 3.2%
Pacific Telesis Group...................... 1,200 40,350
Bell Atlantic Corporation.................. 600 35,925
------------
76,275
------------
TOTAL INVESTMENTS -- 99.8%
(Cost $2,242,732)........................................ $ 2,362,775
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%.............. 5,562
------------
NET ASSETS -- 100.0%....................................... $ 2,368,337
------------
</TABLE>
- ---------------
*Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
34
<PAGE>
EMERGING COUNTRIES FUND
INSTITUTIONAL 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 Portfolio continued to post
exceptionally strong performance during the six months ended September 30, 1996.
Stock selection was key to the Fund's outperformance versus that of the Morgan
Stanley Capital International Emerging Markets Free (MSCI EMF) Index. During the
period, the Institutional shares gained 12.6% versus 0.3% for the MSCI EMF Index
and 2.0% for the IFC Investable Index.
Stock selection in Brazil, Mexico, and Thailand resulted in the period's
largest relative gains. By the end of the period, our bottom-up stock selection
process led us to increase the Fund's weighting relative to the Index in Brazil,
Mexico and Hong Kong, further boosting returns. In addition, gains were realized
among holdings in the technology, producers/manufacturing, consumer services,
and consumer non-durable sectors.
We believe the outlook for long-term growth from emerging countries remains
excellent, with many firms poised to take advantage of opportunities created by
changes in their economic and political environments. As a result of the
application of our investment philosophy, we have capitalized on various
positive changes in emerging countries, such as new building and manufacturing
capabilities in Venezuela and Mexico, expansion of higher technology in Israel,
and a growing consumer environment in Thailand and Brazil. Top-performing stocks
included Tubos de Acero de Mexico, a Mexican manufacturer of seamless drill pipe
and one of the most profitable steel companies in the world. Its international
competitiveness has gained momentum as a result of the peso devaluation. Also,
Elektrim, a Polish holding company involved in infrastructure and development,
Shanghai Industrials, a Chinese holding company, and Maseca, a Mexican tortilla
maker delivered strong returns during the period.
The Emerging Countries Portfolio provides investors with an opportunity to add
diversification to their domestic as well as other international holdings. The
Portfolio further enables investors to take advantage of the potential for
growth offered by emerging markets.
REPRESENTATIVE HOLDINGS
Companhia Cervejaria Brahma S.A., Brazil
Siderurgica Venezolana Sivensa,
Saica S.A.C.A., Venzuela
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, Phillipines
The Pizza Public Co., Ltd., Thailand
- --------------------------------------------------------------------------------
35
<PAGE>
EMERGING COUNTRIES INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING COUNTRIES INSTITUTIONAL PORTFOLIO WITH THE IFC INVESTABLE INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
18.87% As of 09/30/96 13.86%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING COUNTRIES INSTITUTIONAL
PORTFOLIO IFC INVESTABLE INDEX
11/28/94 $ 250,000 $ 250,000
12/31/94 237,014 211,506
3/31/95 218,398 180,838
<S> <C> <C>
6/30/95 251,427 196,621
9/30/95 267,042 195,837
12/31/95 253,511 194,014
3/31/96 281,857 208,606
6/30/96 310,807 217,663
9/30/96 317,441 212,749
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Emerging Countries Institutional 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 that 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.
- --------------------------------------------------------------------------------
36
<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.
- --------------------------------------------------------------------------------
37
<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.
- --------------------------------------------------------------------------------
38
<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.
- --------------------------------------------------------------------------------
39
<PAGE>
INTERNATIONAL GROWTH FUND
INSTITUTIONAL 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 Institutional Portfolio rewarded
shareholders with strong relative gains from April 1 through September 30, 1996.
The Fund's stock selection in the health services, technology, and
producers/manufacturing sectors enabled the Portfolio to outpace the Morgan
Stanley Capital International Europe, Australasia, and Far East (MSCI
EAFE-Registered Trademark-) Index. For the six months ended September 30, the
Portfolio returned 5.3% compared to a 1.3% return for the MSCI EAFE Index.
Fund holdings in The Netherlands, Mexico, Sweden, and Ireland performed well
versus respective holdings in the Index. Stock selection and an increased
exposure to technology, health services, consumer durables/nondurables, and
energy sectors helped lift performance well above the benchmark. For example,
Gucci Group, which designs, produces, and distributes personal luxury
accessories, nearly doubled in price during the period as its sales growth
increased significantly.
In the United States, stabilizing interest rates, a strong dollar, and solid
corporate earnings attracted investors to U.S. stocks over international
equities during the period. This caused international performance to lag that of
the U.S. stock market. In spite of this, we believe that over the long term,
international stocks offer opportunities for superior returns as well as
enhanced portfolio diversification. Reflecting tremendous international growth
potential, Hong Kong's stock market, for example, has grown almost twice as fast
as the U.S. stock market since 1970. We seek to take advantage of such
opportunities through superior stock selection.
We remain optimistic about the long-term opportunities for international
investing. As we continue 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
- --------------------------------------------------------------------------------
40
<PAGE>
INTERNATIONAL GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
INTERNATIONAL GROWTH INSTITUTIONAL PORTFOLIO WITH THE MSCI EAFE INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/96
1 YEAR 5 YEARS SINCE INCEPTION
12.45% 7.48% 4.49%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH MSCI EAFE
INSTITUTIONAL
PORTFOLIO INDEX
6/7/90 $ 250,000 $ 250,000
6/30/90 253,508 247,789
<S> <C> <C>
9/30/90 197,794 195,261
12/31/90 206,310 215,820
3/31/91 224,306 231,874
6/30/91 212,832 219,222
9/30/91 230,018 238,015
12/31/91 230,619 242,003
3/31/92 209,707 213,290
6/30/92 218,711 217,798
9/30/92 210,436 221,092
12/31/92 202,112 212,561
3/31/93 223,098 238,049
6/30/93 252,214 261,993
9/30/93 263,731 279,372
12/31/93 254,717 281,782
3/31/94 274,075 291,603
6/30/94 284,875 306,496
9/30/94 288,339 306,793
12/31/94 276,653 303,651
3/31/95 270,244 309,204
6/30/95 274,373 311,464
9/30/95 293,366 324,010
12/31/95 293,246 337,119
3/31/96 313,449 346,853
6/30/96 333,235 352,341
9/30/96 329,902 351,444
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the International Growth Institutional 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.
- --------------------------------------------------------------------------------
41
<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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
JAPAN (CONTINUED)
Hokuto Corp................................ 10,000 $ 426,428
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
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
42
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
PHILIPPINES -- 0.4%
Empire East Land Holdings, Inc.*........... 358,000 $ 191,079
------------
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA+ (CONTINUED)
British Biotech PLC-ADR (United
Kingdom)*................................ 8,400 $ 284,025
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
------------
</TABLE>
- ------------
* 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
43
<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.
- --------------------------------------------------------------------------------
44
<PAGE>
WORLDWIDE GROWTH FUND
INSTITUTIONAL 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 Portfolio delivered
better-than-benchmark performance from April 1 to September 30, 1996 on the
strength of the Fund's stock selection in the energy, consumer durable goods,
and retail trade sectors. The Portfolio gained 7.1% during the period, compared
to a 4.2% gain for the Morgan Stanley Capital International (MSCI) World Index.
The Worldwide Growth Fund seeks a strategic mix of U.S. and non-U.S. stocks,
based on our global, bottom-up stock selection process. One of the best
performing stocks in the Fund during the period was Robert Half International,
Inc., the world's largest provider of flexible staffing services. Shares of
Robert Half rose sharply during the period due to the company's exceptional
annual sales and earnings growth. In the technology sector, shares of
Netherlands-based Baan Company, which produces open-system client/server-based
planning software, rose dramatically during the period on the strength of
expansion in the United States and Asia.
As of September 30, 1996, approximately 34% of the Fund's assets were invested
in the United States versus 42% for the MSCI World Index. Approximately 20% of
the Fund's assets were invested in Japan and 12% in the United Kingdom. Another
12% of the Fund's assets were invested in emerging countries, which continue to
show robust growth, generally favorable investment environments, and attractive
valuations. Our emerging countries exposure positively impacted returns. While
underweighted in the United States relative to the Index, U.S. stock selection
significantly contributed to the Fund's outperformance. The Fund's larger-than-
benchmark weighting in the technology sector also positively impacted returns
versus those of the MSCI World Index.
We continue to search worldwide for what we believe to be the best growth
stocks. We are confident this bottom-up approach will help deliver superior
returns over the long term for our shareholders.
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
- --------------------------------------------------------------------------------
45
<PAGE>
WORLDWIDE GROWTH INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
WORLDWIDE GROWTH INSTITUTIONAL PORTFOLIO WITH THE MSCI WORLD INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
11.25% As of 09/30/96 10.56%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WORLDWIDE GROWTH MSCI WORLD
INSTITUTIONAL
PORTFOLIO INDEX
10/2/97 $ 250,000 $ 250,000
12/31/93 250,600 254,061
3/31/94 263,000 255,609
<S> <C> <C>
6/30/94 258,600 263,297
9/30/94 272,200 268,946
12/31/94 258,091 267,012
3/31/95 262,105 279,072
6/30/95 277,358 290,979
9/30/95 303,648 306,816
12/31/95 297,701 321,380
3/31/96 315,502 334,460
6/30/96 337,394 344,170
9/30/96 337,804 348,326
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Worldwide Growth Institutional 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.
- --------------------------------------------------------------------------------
46
<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
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
47
<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 -- 0.9%
Sensonor A/S*.............................. 54,100 $ 390,860
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Thorn EMI PLC.............................. 126 $ 717
Victrex PLC................................ 98,000 430,423
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
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
48
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA+ (CONTINUED)
Larsen & Toubro LTD-GDR (India)............ 30,000 $ 438,000
Lemout & Hauspie Speech Products N.V.
(Belgium)*............................... 35,000 831,250
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA+ (CONTINUED)
Telefonos de Mexico S.A.-ADR (Mexico)...... 20,850 $ 659,806
Tidewater, Inc............................. 9,400 351,325
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
-------------
</TABLE>
- ------------
* Non-Income Producing Security.
+ Certain securities issued by foreign companies are classified as United States
securities as their underlying currency is the U.S. Dollar.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
49
<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.
- --------------------------------------------------------------------------------
50
<PAGE>
FULLY DISCRETIONARY FUND
INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
Terence S. Ellis
Managing Partner Fixed Income
Fred S. Robertson
Partner, Chief Investment Officer
Fixed Income Management
James E. Kellerman
Portfolio Manager
Alan J. Brochstein
Portfolio Manager
Malcom S. Day
Portfolio Manager
David L. Kroon
Portfolio Manager
Ashvin Syal
Portfolio Manager
David Smith
Portfolio Manager
GOAL: The Nicholas-Applegate Fully Discretionary Fixed Income Fund seeks to
maximize long-term total return from a portfolio of investment grade
fixed-income securities with an average portfolio duration between two and eight
years.
REVIEW AND OUTLOOK: During the second and third quarters, the bond market was
buffeted by changing perceptions regarding the strength of the economy and the
likelihood of a tightening of monetary policy by the Federal Reserve Board.
Alternating strong and weak economic data caused bond prices to move up and down
sharply, but rates ended the quarter only slightly higher than they started.
Since the total change in bond yields was small, the environment was positive
for higher yielding bonds such as mortgages and asset-backed securities.
The returns in the Fund were enhanced by the relatively large allocation to
mortgage securities, which increased the yield of the Fund. International bonds
also had a positive impact on the Fund during this period. Bond yields fell
significantly in Europe, as economic growth remained weak and the prospects for
future growth deteriorated due to large cuts in planned government spending.
Hedging foreign currency back into the U.S. dollar increased the return from
international bonds, as the U.S. dollar appreciated moderately during the
period. The return of the Institutional Portfolio was 2.4% for the last six
months compared to the Lehman Government/Corporate Index return of 2.3%.
Our outlook for the bond market is based on a positive assessment of the
long-term, secular trends in inflation and economic growth, countered by some
degree of risk from the current precarious position in the economic cycle. We
believe the current structure of interest rates does not adequately reflect the
risks within the current environment, leading us to structure the Fund's
portfolio to have slightly less exposure to movement in interest rates than the
Index.
We have invested 56% of the Fund in mortgage securities while we are
concentrating our corporate bond investments in the highest quality securities.
We are continuing to invest 19% of the Fund in international bonds, concentrated
in Europe, due to our expectation that economic growth there will remain
sluggish. We are hedging the foreign currency, since we expect the U.S. dollar
to be stable within a moderate range over the coming months.
- --------------------------------------------------------------------------------
51
<PAGE>
FULLY DISCRETIONARY FIXED INCOME INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
FULLY DISCRETIONARY FIXED INCOME INSTITUTIONAL PORTFOLIO WITH THE LEHMAN
BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
<TABLE>
<S> <C> <C>
1 YEAR ANNUALIZED TOTAL RETURNS Since Inception
4.71% As of 09/30/96 7.35%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FULLY DISCRETIONARY FIXED INCOME FUND
<S> <C> <C>
Lehman Brothers Government/Corporate Bond Index
8/31/95 $ 250,000 $ 250,000
9/30/95 257,840 252,550
12/31/95 272,016 264,320
3/31/96 263,735 258,134
6/30/96 264,958 259,346
9/30/96 269,992 263,961
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Fully Discretionary Fixed Income Institutional
Portfolio with the Lehman Brothers Government/Corporate Bond Index, on a
cumulative and average annual total return basis. All return calculations
reflect the reinvestment of income 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/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.
Index returns reflect the reinvestment of income 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.
- --------------------------------------------------------------------------------
52
<PAGE>
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
FULLY DISCRETIONARY FIXED INCOME FUND
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 19.8%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
U.S. TREASURY BONDS -- 7.3%
8.50%, 02/15/20............................ $ 120,000 $ 139,406
6.25%, 08/15/23............................ 50,000 45,180
7.63%, 02/15/25............................ 85,000 91,269
6.88%, 08/15/25............................ 50,000 49,258
------------
325,113
------------
U.S. TREASURY NOTES -- 7.5%
7.38%, 11/15/97............................ 105,000 106,657
5.88%, 08/15/98............................ 235,000 234,008
------------
340,665
------------
U.S. TREASURY STRIPS -- 5.0%
0.00%, 08/15/04............................ 385,000 228,555
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $897,547).......................................... 894,333
------------
- ----------------------------------------------------------------------------
AGENCY OBLIGATIONS -- 55.4%
- ----------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 20.2%
POOL 50700
11.50%, 02/15/12......................... 9,262 10,533
POOL 64054
11.50%, 02/15/13......................... 8,225 9,328
POOL 57459
12.00%, 02/15/13......................... 2,324 2,698
POOL 125096
12.00%, 03/15/15......................... 2,312 2,691
POOL 141741
11.00%, 11/15/15......................... 14,617 16,434
POOL 321741
7.50%, 01/15/23.......................... 371,539 368,752
POOL 336173
7.50%, 04/15/23.......................... 364,534 362,030
POOL 352025
7.50%, 11/15/23.......................... 145,285 144,195
------------
916,661
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 19.3%
POOL 303481
10.00%, 10/01/05......................... 162,942 173,381
POOL 303758
9.50%, 07/01/06.......................... 163,503 172,240
1993 87 HA
6.00%, 10/25/21.......................... 125,000 117,070
1993 160PK
6.50%, 11/25/22.......................... 160,000 150,349
1993 138K
6.75%, 11/25/22.......................... 80,000 76,374
1993 183K
6.50%, 07/25/23.......................... 200,000 183,000
------------
872,414
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 15.9%
POOL 380032
10.00%, 10/01/03......................... $ 126,675 $ 134,196
POOL 200112
9.50%, 11/01/05.......................... 114,399 120,083
POOL 1702 A
6.50%, 04/15/22.......................... 90,000 85,444
POOL 1669 G
6.50%, 02/15/23.......................... 190,000 182,043
POOL 1836 H
6.50%, 09/15/24.......................... 95,000 89,597
POOL 1906 D
7.50%, 05/15/26.......................... 115,000 110,472
------------
721,835
------------
TOTAL AGENCY OBLIGATIONS
(Cost $2,545,263)........................................
2,510,910
------------
- ----------------------------------------------------------------------------
CORPORATE BONDS -- 4.5%
- ----------------------------------------------------------------------------
AT&T UNIVERSAL CARD MASTER TRUST
5.95%, 10/17/02.......................... 70,000 68,163
AMRO BANK, N.Y.
7.00%, 04/01/08.......................... 45,000 43,639
BELL SOUTH TELECOM.........................
7.00%, 12/01/45.......................... 100,000 92,976
------------
TOTAL CORPORATE BONDS
(Cost $217,077)..........................................
204,778
------------
- ----------------------------------------------------------------------------
FOREIGN BONDS -- 17.4%
- ----------------------------------------------------------------------------
DENMARK BULLET
9.00%, 11/15/00........................DK 1,000,000 192,514
FEDERAL NATIONAL MORTGAGE ASSOCATION GLOBAL
5.00%, 02/16/01........................DM 600,000 392,429
GERMANY UNITY FUND
8.50%, 02/20/01........................DM 275,000 204,917
------------
TOTAL FOREIGN BONDS
(Cost $786,484)..........................................
789,860
------------
- ----------------------------------------------------------------------------
DISCOUNT NOTES -- 6.1%
- ----------------------------------------------------------------------------
FEDERAL HOME LOAN BANK
5.18%, 10/02/96
(Cost $274,960).......................... 275,000 274,960
------------
TOTAL INVESTMENTS -- 103.2%
(Cost $4,721,331)........................................
$ 4,674,841
LIABILITIES IN EXCESS OF OTHER ASSETS -- (3.2%)............
(144,301)
------------
NET ASSETS -- 100.0%.......................................
$ 4,530,540
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
53
<PAGE>
SHORT-INTERMEDIATE FIXED INCOME FUND
INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
Terence S. Ellis
Managing Partner Fixed Income
Fred S. Robertson
Partner, Chief Investment Officer
Fixed Income Management
James E. Kellerman
Portfolio Manager
Alan J. Brochstein
Portfolio Manager
Malcom S. Day
Portfolio Manager
David L. Kroon
Portfolio Manager
Ashvin Syal
Portfolio Manager
David Smith
Portfolio Manager
GOAL: The Nicholas-Applegate Short-Intermediate Fixed Income Fund seeks
primarily to preserve principal and liquidity and, secondarily, to realize a
relatively high level of current income from a portfolio of investment grade
fixed-income securities with a maximum dollar-weighted maturity of five years.
REVIEW AND OUTLOOK: During the second and third quarters, the bond market was
buffeted by changing perceptions regarding the strength of the economy and the
likelihood of a tightening of monetary policy by the Federal Reserve Board.
While alternating strong and weak economic data caused bond prices to move up
and down sharply, ultimately, rates were little changed over the period. Since
the total change in bond yields was small, the environment was positive for
higher-yielding bonds such as mortgages and asset-backed securities.
The performance of the Portfolio was enhanced by the Fund's relatively large
allocations to mortgage securities and asset-backed securities which increased
the yield of the Portfolio. The return of the Institutional Portfolio was 2.6%
for the last six months, compared to a return of 2.7% for the Merrill Lynch 1-3
Year Government Index.
Our outlook for the bond market is based on a positive assessment of the
long-term, secular trends in inflation and economic growth, countered by some
degree of risk from the current uncertain position in the economic cycle. Short
rates may rise over the next six months, but not enough to erode the yield
advantage relative to money-market instruments given the steep yield curve.
Thus, we believe a neutral level of interest rate exposure is appropriate in
this environment.
We continue to invest 35% of the Fund in government-backed mortgage securities
and we have 29% invested in asset-backed securities. We are concentrating our
asset-backed and corporate bond purchases in the highest quality issues.
- --------------------------------------------------------------------------------
54
<PAGE>
SHORT-INTERMEDIATE FIXED INCOME INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
SHORT-INTERMEDIATE FIXED INCOME INSTITUTIONAL PORTFOLIO WITH THE MERRILL LYNCH
1-3 YEAR TREASURY INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
5.63% As of 09/30/96 7.39%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SHORT INTERMEDIATE FIXED INCOME FUND
<S> <C> <C>
Merrill Lynch 1-3 Year
Fund Treasury Index
8/31/95 $ 250,000 $ 250,000
9/30/95 255,700 251,200
12/31/95 262,368 257,507
3/31/96 263,323 258,372
6/30/96 265,628 260,988
9/30/96 270,101 265,289
</TABLE>
This graph is furnished to you in accordance with SEC regulations. It compares a
$250,000 investment in the Short-Intermediate Fixed Income Institutional
Portfolio with the Merrill Lynch 1-3 Year Treasury Index, on a cumulative and
average annual total return basis. All return calculations reflect the
reinvestment of income 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 Merrill Lynch 1-3 Year Treasury is an index consisting of all public U.S.
Treasury obligations having maturities from one to 2.99 years. It includes
income and distributions but does not reflect fees, brokerage commissions or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
55
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
SHORT-INTERMEDIATE FIXED INCOME FUND
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 6.0%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
U.S. TREASURY NOTES
4.75%, 10/31/98............................ $100,000 $ 97,328
5.50%, 11/15/98............................ 200,000 197,406
------------
TOTAL U. S. TREASURY OBLIGATIONS
(Cost $294,399).......................................... 294,734
------------
- ----------------------------------------------------------------------------
AGENCY OBLIGATIONS -- 39.2%
- ----------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 28.2%
POOL 380032
10.00%, 10/01/03......................... 7,420 7,860
POOL 380062
9.50%, 11/01/04.......................... 267,519 281,397
POOL 1472E
6.25%, 02/15/05.......................... 200,000 198,936
POOL 380078
9.00%, 04/01/05.......................... 149,158 154,751
POOL 200112
9.50%, 11/01/05.......................... 163,991 172,139
POOL G10453
9.00%, 06/01/07.......................... 84,079 87,284
POOL 1552 EA
5.85%, 01/15/17.......................... 185,000 180,375
POOL 1836D
6.25%, 04/15/26.......................... 300,000 294,188
------------
TOTAL FHLMCS................................. 1,376,930
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 4.9%
POOL 50155
10.00%, 12/01/03......................... 7,585 8,088
POOL 1991-95Z
8.50%, 11/25/05.......................... 221,495 223,953
POOL 2454
14.75%, 10/01/12......................... 7,037 8,453
------------
TOTAL FNMAS.................................. 240,494
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 6.1%
POOL 780328
10.00%, 10/15/06......................... 163,042 172,621
POOL 64054
11.50%, 02/15/13......................... 8,225 9,328
POOL 59779
11.50%, 03/15/13......................... 3,357 3,818
POOL 65569
12.00%, 09/15/13......................... 700 734
POOL 67134
12.00%, 09/15/13......................... 1,804 2,095
POOL 780179
12.00%, 10/15/15......................... 74,570 86,968
POOL 141741
11.00%, 11/15/15......................... 10,277 11,555
POOL 200947
9.50%, 12/15/17.......................... 8,398 9,059
------------
TOTAL GNMAS.................................. 296,178
------------
TOTAL AGENCY OBLIGATIONS
(Cost $1,911,791)........................................ 1,913,602
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CMOs AND ASSET-BACKED SECURITIES -- 47.4%
- ----------------------------------------------------------------------------
AUTOS -- 19.2%
DAIMLER-BENZ AUTO GRANTOR TRUST 1993-A
3.90%, 10/15/98.......................... $ 1,889 $ 1,872
CARCO AUTO LOAN MASTER TRUST 1994-2
7.88%, 07/15/99.......................... 200,000 202,936
NATIONS BANK AUTO TRUST 1996-A2
6.13%, 07/15/99.......................... 200,000 200,124
PREMIER AUTO TRUST 1994-4
6.20%, 10/02/97.......................... 29,536 29,555
PREMIER AUTO TRUST 1995-2A5
7.15%, 02/04/99.......................... 250,000 252,699
PREMIER AUTO TRUST 1995-3A4
6.10%, 07/06/99.......................... 250,000 250,077
------------
TOTAL AUTOS.................................. 937,263
------------
BANKS -- 8.8%
SIGNET CREDIT CARD MASTER TRUST
5.20%, 02/15/02.......................... 235,000 229,931
STANDARD CREDIT CARD MASTER TRUST 1995-10A
5.90%, 02/07/01.......................... 200,000 197,562
------------
TOTAL BANKS.................................. 427,493
------------
FINANCE -- 15.3%
AMERICAN EXPRESS 1992-1
6.05%, 07/15/97.......................... 200,000 200,000
AT&T UNIVERSAL CARD MASTER TRUST
5.95%, 10/17/02.......................... 225,000 219,094
BANC ONE CREDIT CARD 94-B
7.55%, 12/15/99.......................... 175,000 177,597
FIRST DEPOSIT MASTER TRUST 1995-2
6.05%, 08/15/02.......................... 150,000 149,625
------------
TOTAL FINANCE................................ 746,316
------------
RETAIL -- 4.1%
SEARS CREDIT ACCOUNT MATER TRUST 1994-2
7.25%, 07/16/01.......................... 200,000 202,062
------------
TOTAL CMO'S AND ASSET-BACKED SECURITIES
(Cost $2,331,422)........................................ 2,313,134
------------
- ----------------------------------------------------------------------------
DISCOUNT NOTES -- 6.3%
- ----------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK
5.18%, 10/01/96.......................... $ 15,000 $ 15,000
5.18%, 10/01/96.......................... 290,000 290,000
------------
TOTAL DISCOUNT NOTES
(Cost $305,000).......................................... 305,000
------------
TOTAL INVESTMENTS -- 98.9%
(Cost $4,842,612)........................................ $ 4,826,470
OTHER ASSETS LESS LIABILITIES -- 1.1%...................... 52,232
------------
NET ASSETS -- 100.0%....................................... $ 4,878,702
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
56
<PAGE>
STRATEGIC INCOME FUND
INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT 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
Maren Lindstrom
Portfolio Manager
GOAL: The Nicholas-Applegate Strategic Income Fund seeks to provide a high
level of current income and long-term capital appreciation through investment in
convertible, high yield, and mortgage-backed debt securities.
REVIEW AND OUTLOOK: Early in 1996, expectations for sluggish economic growth
were widespread. During January, manufacturing slowed and consumer confidence
fell to its lowest level in two years. In fact, to promote economic growth, the
Federal Reserve Board reduced short-term interest rates the last week in
January. But the economy defied popular consensus and showed signs of
improvement during the first quarter. Various reports, including
stronger-than-anticipated employment data, sent rates higher throughout much of
the first and second quarters.
During the third quarter, leading economic indicators, including housing,
auto, and retail sales, tapered off despite continued employment strength. Since
lowering rates by 0.25% during the first quarter, the Federal Reserve Board has
held rates steady. Continued mixed economic signals have created uncertainty
regarding the direction and magnitude of economic activity and interest rates.
In this environment, our Strategic Income Fund has performed well.
Combining a mix of mortgage-backed, convertible, and high yield securities,
the Strategic Income Portfolio was created to meet the needs of investors
seeking enhanced return potential when investing in fixed income-related
securities. The diverse asset classes comprising the Fund have excellent risk/
return profiles. The low correlation among these asset classes provides the
potential for compelling relative performance in most market environments.
Between its inception on August 1, 1996 and September 30, 1996, the
Nicholas-Applegate Strategic Income Portfolio gained 5.7%. Over the same time
period, the Lehman Aggregate Bond Index gained 1.6%. An equal-weighted composite
of the Lehman Mortgage-Backed Securities Index, the First Boston High Yield
Index, and the First Boston Convertible Securities Index resulted in a 3.8%
gain.
Without a clear trend in the direction of interest rates, short-term
fluctuations will most likely continue. In this sensitive environment, we
believe the complementary nature of the securities which comprise the Strategic
Income Portfolio will continue to provide downside protection, current income,
and appreciation potential.
- --------------------------------------------------------------------------------
57
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
STRATEGIC INCOME FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 10.2%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT COMPANY -- 2.6%
Merrill Lynch "IGL", (Strypes)...................... 2,500 $ 100,937
-----------
MEDICAL SUPPLIES -- 3.3%
United States Surgical Corp......................... 3,000 127,500
-----------
SOAPS/COSMETICS -- 2.2%
AJL Peps Trust...................................... 4,300 84,925
-----------
TELEPHONE -- 2.1%
Nortel Inversora SA................................. 2,000 80,750
-----------
TOTAL COMMON STOCKS
(Cost $370,127).............................................. 394,112
-----------
- ---------------------------------------------------------
<CAPTION>
CONVERTIBLE PREFERRED STOCKS -- 6.3%
<S> <C> <C>
- ----------------------------------------------
FINANCE COMPANY -- 3.0%
Ahmanson H.F. and Company........................... 1,900 116,850
-----------
GAS UTILITIES -- 1.0%
MCN Corp............................................ 1,300 36,319
-----------
MULTI-LINE INSURERS -- 2.3%
American Bankers Insurance Group.................... 1,500 88,781
-----------
TOTAL PREFERRED STOCKS
(Cost $225,504).............................................. 241,950
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------
<CAPTION>
CONVERTIBLE CORPORATE BONDS -- 48.0%
<S> <C> <C>
- ----------------------------------------------
BROADCASTING -- 2.7%
Sinclair Broadcasting Group, Inc.
10.000%, 09/30/05................................. $100,000 $ 101,500
-----------
COMPUTERS/OFFICE AUTOMATION -- 2.6%
Data General Corp.
7.750%, 06/01/01.................................. 100,000 99,625
-----------
CONTRACT DRILLING -- 2.7%
Cliffs Drilling
10.250%, 05/15/03................................. 100,000 104,250
-----------
COSMETICS - SOAPS -- 2.0%
Revlon Consumer Products Corp.
10.500%, 02/15/03................................. 75,000 78,375
-----------
ENVIRONMENTAL SERVICES -- 2.7%
Molten Metals Technology, Inc.
5.500%, 05/01/06.................................. 100,000 101,000
-----------
FINANCIAL SERVICES -- 2.7%
Ocwen Financial Corp.
11.875%, 01/01/03................................. 100,000 105,000
-----------
INDUSTRIAL ENGINEERING/CONSTRUCTION -- 2.5%
Empresas CA, Sociedad
5.000%, 03/15/04.................................. 135,000 94,669
-----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
LEISURE/GAMING -- 6.3%
Bally's Grand, Inc.
10.375%, 12/15/03................................. $ 75,000 $ 82,500
Casino Magic Louisiana
13.000%, 08/15/03................................. 75,000 76,594
Majestic Star Casino
12.750%, 05/15/03................................. 75,000 82,500
-----------
241,594
-----------
LIFE INSURER -- 1.3%
Penncorp Financial Group
09.250%, 12/15/03................................. 50,000 50,938
-----------
OIL/GAS PRODUCTION -- 3.6%
KCS Energy, Inc.
11.000%, 01/15/03................................. 125,000 136,250
-----------
OTHER COMMUNICATIONS/INDUSTRIAL SERVICES -- 1.3%
Iron Mountain, Inc.
10.125%, 10/01/06................................. 50,000 51,250
-----------
OTHER PRODUCERS/MANUFACTURING -- 3.8%
Gencorp Inc.
08.000%, 08/01/02................................. 70,000 73,588
Poindexter J B, Inc.
12.500%, 05/15/04................................. 75,000 72,187
-----------
145,775
-----------
RESTAURANTS -- 2.0%
Foodmaker, Inc.
09.250%, 03/01/99................................. 75,000 75,375
-----------
SPECIALITY CHAINS -- 2.0%
Compusa, Inc.
09.500%, 06/15/00................................. 75,000 77,250
-----------
TELEPHONE -- 7.7%
PriCellular Wire
00.000% to 11/15/97
14.000%, 11/15/01................................. 100,000 90,000
Sygnet Wireless, Inc.
11.500%, 10/01/06................................. 100,000 103,250
Teleport Communications Group Inc.
09.875%, 07/01/06................................. 100,000 103,250
-----------
296,500
-----------
TELECOMMUNICATIONS EQUIPMENT -- 2.1%
Net Sat Services (B2,B)
12.750%, 08/05/04................................. 75,000 80,062
-----------
TOTAL CORPORATE BONDS
(Cost $1,775,928).............................................. 1,839,413
-----------
- ---------------------------------------------------------
<CAPTION>
AGENCY OBLIGATIONS -- 27.8%
<S> <C> <C>
- ----------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 10.8%
Pool 2468
10.50%, 12/01/00.................................. 120,169 127,491
Pool 50319
09.50%, 06/01/05.................................. 68,926 72,674
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
58
<PAGE>
- -------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
AGENCY OBLIGATIONS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
1991 95Z
08.50%, 11/25/05.................................. $ 53,238 $ 53,829
1993 202H
06.00%, 02/25/22.................................. 25,000 23,195
1993 183k
06.50%, 07/25/23.................................. 75,000 68,625
1993 160PK
06.50%, 11/25/22.................................. 75,000 70,476
-----------
416,290
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 7.5%
Pool 380003
09.50%, 06/01/02.................................. 36,997 38,373
Pool 380062
09.50%, 11/01/04.................................. 80,726 84,913
Pool 1356J
05.50%, 10/15/20.................................. 35,000 30,953
Pool 1610PM
06.25%, 04/15/22.................................. 30,000 28,359
Pool 1722PH
06.50%, 08/15/22.................................. 110,000 105,325
-----------
287,923
-----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 9.5%
Pool 357262
07.50%, 09/15/23.................................. $139,084 $ 138,041
Pool 370281
07.50%, 11/15/23.................................. 227,043 225,340
-----------
363,381
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $1,063,328).............................................. 1,067,594
-----------
- ---------------------------------------------------------
<CAPTION>
COMMERCIAL PAPER -- 7.4%
<S> <C> <C>
- ----------------------------------------------
Associates Corp of North America
5.80%, 10/01/96
(Cost $282,000)................................... 141,000 141,000
Merrill Lynch, Pierce, Fenner, and Smith
5.85%, 10/01/96................................... 141,000 141,000
-----------
TOTAL COMMERCIAL PAPER
(Cost $282,000)................................................ 282,000
-----------
TOTAL INVESTMENTS -- 99.7%
(Cost $3,716,887).............................................. $ 3,825,069
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.3%.................... 10,064
-----------
NET ASSETS -- 100.0%............................................. $ 3,835,133
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
59
<PAGE>
HIGH YIELD BOND FUND
INSTITUTIONAL PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT 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 High Yield Fund seeks to deliver total return via
high current income and long-term capital appreciation from a diversified
portfolio consisting primarily of U.S. corporate fixed income securities.
REVIEW AND OUTLOOK: Through the first three quarters of 1996, investors
continued to show enthusiasm for high yield bonds. New high-yield issues totaled
more than $41 billion through September, exceeding the new issuance total of
1994 and 1995 combined. Further, high yield mutual funds attracted more than
$7.2 billion. In addition to increasing levels of investment activity, high
yield bonds have delivered solid performance results this year.
Since its inception on August 1, 1996 through September 30, 1996, the
Nicholas-Applegate High Yield Bond Institutional Portfolio has gained 6.3%. By
comparison, the First Boston High Yield Index advanced 2.8%.
Our approach to high yield securities reflects the extension of the same
investment philosophy we use to manage equities. We look for companies
demonstrating sustainable, positive change which represent timely investment
opportunities. Extending our equity philosophy to the high yield market, we
focus on the recognition of growing companies demonstrating these criteria:
- positive fundamental change leading to earnings growth, cash flow growth,
debt reduction, and potential credit-quality upgrade;
- sustainability of improvement; and
- timeliness of investment.
Individual security selection was the primary contributor to the Portfolio's
strong performance. We believe our expertise in equity investing, especially
within the mid and smaller market capitalization segments, provides a
competitive advantage in researching and analyzing high yield bonds issued by
these companies. Of the companies that issue both high yield and equity
securities, more than half have equity market capitalizations less than $500
million.
The continuing maturity of the high yield market inspires optimism. Improved
liquidity has paralleled investor demand as mutual funds, insurance companies,
and institutional investors have shown an increasing appetite for high yield
securities. As a result, much of the liquidity concerns inherent in the high
yield market during the '80s has decreased. In addition, the days of a single
firm dominating the market appear over as the number of firms involved in
issuing, pricing, and trading high yield bonds has increased significantly.
We look forward to building upon the Fund's solid start and extending our
strong performance results.
REPRESENTATIVE HOLDINGS
Cliffs Drilling Co. 10.25% 5/15/03
Comp USA, Inc. 9.5% 6/15/00
Iron Mountain 10.125% 10/1/06
Ocwen Financial 11.875% 10/1/03
Revlon Consumer Products 10.5% 2/15/03
- --------------------------------------------------------------------------------
60
<PAGE>
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
HIGH YIELD BOND FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK -- 0.2%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FINANCE COMPANY
Ocwen Financial*
(Cost $7,500)......................... 500 $ 10,188
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -----------------------------------------------------------------
CORPORATE BONDS -- 92.0%
- -----------------------------------------------------------------
BROADCASTING -- 9.2%
Sinclair Broadcasting Group, Incorp.
10.000%, 09/30/96..................... $200,000 203,000
Telemundo Group, Incorp.
07.000%, 02/15/96..................... 200,000 191,500
------------
394,500
------------
BUSINESS SERVICES -- 2.4%
Iron Mountain, Incorp.
10.125%, 10/01/06..................... 100,000 102,500
------------
COSMETICS - SOAPS -- 5.5%
Revlon Consumer Products Corp.
10.500%, 02/15/03..................... 225,000 235,125
------------
FINANCE COMPANY -- 5.5%
Ocwen Financial
11.875%, 10/01/03..................... 225,000 236,250
------------
LESIURE/GAMING -- 15.8%
Bally's Grand, Incorp.
10.375%, 12/15/03..................... 225,000 247,500
Casino Magic
13.000%, 08/15/03..................... 225,000 229,781
Majestic Star Casino
12.750%, 05/15/03..................... 175,000 192,500
------------
669,781
------------
LIFE INSURER -- 2.4%
Penncorp Financial Group
09.250%, 12/15/03..................... 100,000 101,875
------------
OIL/GAS PRODUCTION -- 5.7%
KCS Energy, Incorp.
11.000%, 01/15/03..................... 225,000 245,250
------------
OILFIELD SERVICES/EQUIPMENT -- 7.3%
Cliffs Drilling Co.
10.250%, 05/15/03..................... 300,000 312,750
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER PRODUCERS/MANUFACTURING -- 4.5%
Poindexter J B, Incorp.
12.500%, 05/15/04..................... $200,000 $ 192,500
------------
RESTAURANTS -- 4.1%
Foodmaker, Incorp.
09.250%, 03/01/99..................... 175,000 175,875
------------
SPECIALTY CHAINS -- 3.6%
Compusa, Incorp.
9.500%, 06/15/00...................... 150,000 154,500
------------
TELEPHONE -- 21.0%
Intermedia Communications
0.000% to 5/01/97; 14.000%,
11/15/01.............................. 150,000 94,125
Pricellular Wire*
0.000% to 11/15/97; 14.000%,
11/15/01.............................. 200,000 180,000
Sygnet Wireless,
11.500%, 10/01/06..................... 250,000 258,125
Teleport Communications
09.875%, 07/01/06..................... 300,000 309,750
Winstar Communications
14.000%, 10/15/05..................... 100,000 57,000
------------
899,000
------------
TELECOMMUNICATIONS EQUIPMENT -- 5.0%
Net Sat Services
12.750%, 08/05/04..................... 200,000 213,500
------------
TOTAL CORPORATE BONDS
(Cost $3,833,187)................................ $ 3,933,406
------------
- -----------------------------------------------------------------
ZERO COUPON BONDS -- 5.2%
- -----------------------------------------------------------------
SOAP/COSMETICS
Revlon Worldwide Co.*
(Cost $213,815)....................... $250,000 220,312
------------
- -----------------------------------------------------------------
COMMERCIAL PAPER -- 3.4%
- -----------------------------------------------------------------
Merrill Lynch Pierce Fenner & Smith
5.850%, 10/01/96 (Cost$145,000)....... 145,000 145,000
------------
TOTAL INVESTMENTS -- 100.8%
(Cost$4,199,502)................................. $ 4,308,906
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.8%).... (34,686)
------------
NET ASSETS -- 100.0%............................... $ 4,274,220
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
61
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DISTRIBUTIONS
VALUES AT INVESTMENT AND UNREALIZED FROM NET DISTRIBUTIONS
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM
OF PERIOD (DEFICIT) ON INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
MINI CAP GROWTH(1)
Institutional (For the
period ended 09/30/96)#... $ 15.85 ($ 0.10) $ 2.23 -- --
Institutional (For the
period ended 03/31/96).... 12.50 (0.05) 3.40 -- --
EMERGING GROWTH(2)
Institutional (For the
period ended 09/30/96)#... 15.10 (0.14) 2.03 -- --
Institutional (For the year
ended 03/31/96)........... 11.58 (0.11) 4.45 -- ($ 0.82)
Institutional (For the year
ended 03/31/95)........... 11.38 (0.05) 0.95 -- (0.70)
Institutional (For the
period ended 03/31/94).... 12.50 (0.04) (0.69) -- (0.39)
CORE GROWTH(3)
Institutional (For the
period ended 09/30/96)#... 16.26 (0.03) 1.85 -- --
Institutional (For the year
ended 03/31/96)........... 12.62 (0.03) 4.47 -- (0.80)
Institutional (For the year
ended 03/31/95)........... 12.68 (0.01) 0.38 -- (0.43)
Institutional (For the
period ended 03/31/94).... 12.50 (0.01) 0.92 -- (0.73)
INCOME & GROWTH(3)
Institutional (For the
period ended 09/30/96)#... 14.45 0.25 1.02 ($ 0.26) --
Institutional (For the year
ended 03/31/96)........... 11.86 0.53 2.59 (0.53) --
Institutional (For the year
ended 03/31/95)........... 13.39 0.54 (0.85) (0.54) (0.68)
Institutional (For the
period ended 03/31/94).... 12.50 0.42 2.12 (0.42) (1.23)
BALANCED GROWTH(2)
Institutional (For the
period ended 09/30/96)#... 14.20 0.19 1.24 (0.19) --
Institutional (For the year
ended 03/31/96)........... 12.01 0.37 2.19 (0.37) --
Institutional (For the year
ended 03/31/95)........... 11.71 0.22 0.30 (0.22) --
Institutional (For the
period ended 03/31/94).... 12.50 0.08 (0.79) (0.08) --
VALUE(4)
Institutional (For the
period ended 09/30/96)#... 12.50 0.11 1.33 -- --
EMERGING COUNTRIES(5)
Institutional (For the
period ended 09/30/96)#... 14.02 (0.01) 1.78 -- --
Institutional (For the year
ended 03/31/96)........... 10.91 -- 3.16 (0.05) --
Institutional (For the
period ended 03/31/95).... 12.50 0.08 (1.66) (0.01) --
INTERNATIONAL GROWTH(6)
Institutional (For the
period ended 09/30/96)#... 15.05 (0.01) 0.80 -- --
Institutional (For the year
ended 03/31/96)........... 13.09 0.06 2.02 (0.12) --
Institutional (For the year
ended 03/31/95)........... 13.47 0.02 (0.22) (0.06) (0.12)
Institutional (For the
period ended 03/31/94).... 12.50 0.01 0.96 -- --
WORLDWIDE GROWTH(2)
Institutional (For the
period ended 09/30/96)#... 13.29 (0.11) 3.33 -- --
Institutional (For the year
ended 03/31/96)........... 13.06 0.06 2.58 (0.28) --
Institutional (For the year
ended 03/31/95)........... 13.15 (0.01) (0.04) (0.04) --
Institutional (For the
period ended 03/31/94).... 12.50 -- 0.65 -- --
FULLY DISCRETIONARY FIXED
INCOME(7)
Institutional (For the
period ended 09/30/96)#... 12.72 0.40 (0.10) (0.44) --
Institutional (For the
period ended 03/31/96).... 12.50 0.45 0.47 (0.44) (0.26)
SHORT-INTERMEDIATE FIXED
INCOME(7)
Institutional (For the
period ended 09/30/96)#... 12.79 0.40 (0.07) (0.40) --
Institutional (For the
period ended 03/31/96).... 12.50 0.37 0.29 (0.37) --
STRATEGIC INCOME(8)
Institutional (For the
period ended 09/30/96)#... 12.50 0.16 0.55 (0.16) --
HIGH YIELD BOND(8)
Institutional (For the
period ended 09/30/96)#... 12.50 0.18 0.60 (0.18) --
</TABLE>
- --------------------
(1) Mini Cap Institutional Portfolio commenced operations on July 12, 1995.
(2) Emerging Growth, Balanced Growth and Worldwide Growth Institutional
Portfolios commenced operations on October 1, 1993.
(3) Core Growth and Income & Growth Institutional Portfolios commenced
operations on April 19, 1993.
(4) Value Institutional Portfolio commenced operations on April 30, 1996.
(5) Emerging Countries Institutional Portfolio commenced operations on November
28, 1994.
(6) International Growth Institutional Portfolio commenced operations on January
3, 1994.
(7) Fully Discretionary and Short-Intermediate Fixed Income Institutional
Portfolios commenced operations on August 31, 1995.
(8) Strategic Income and High Yield Bond Institutional Portfolios commenced
operations on July 31,1996.
* Annualized.
** Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
# Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
62
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF
EXPENSES TO EXPENSES TO
NET ASSETS AVERAGE NET AVERAGE NET
NET ASSET AT ASSETS, AFTER ASSETS, BEFORE
VALUES AT TOTAL END OF EXPENSE EXPENSE
END OF PERIOD RETURN 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)
Institutional (For the
period ended 09/30/96)#... 16.99 12.52% 185,873,697 1.17%* 1.18%*
Institutional (For the year
ended 03/31/96)........... 15.10 38.27% 224,077,027 1.16% 1.20%
Institutional (For the year
ended 03/31/95)........... 11.58 8.69% 206,695,605 1.18% 1.24%
Institutional (For the
period ended 03/31/94).... 11.38 (6.06%) 165,939,862 1.17%* 1.18%*
CORE GROWTH(3)
Institutional (For the
period ended 09/30/96)#... 18.08 11.19% 191,570,545 1.00%* 0.98%*
Institutional (For the year
ended 03/31/96)........... 16.26 35.81% 149,969,371 0.98% 1.06%
Institutional (For the year
ended 03/31/95)........... 12.62 3.30% 72,825,771 0.99% 1.07%
Institutional (For the
period ended 03/31/94).... 12.68 6.84% 77,947,252 0.97%* 1.14%*
INCOME & GROWTH(3)
Institutional (For the
period ended 09/30/96)#... 15.47 8.88% 17,570,033 1.00%* 1.39%*
Institutional (For the year
ended 03/31/96)........... 14.45 26.69% 17,239,363 1.00% 1.53%
Institutional (For the year
ended 03/31/95)........... 11.86 (2.02%) 12,506,203 1.00% 1.48%
Institutional (For the
period ended 03/31/94).... 13.39 20.18% 18,331,546 0.99%* 1.50%*
BALANCED GROWTH(2)
Institutional (For the
period ended 09/30/96)#... 15.44 10.12% 608,922 1.00% 8.46%*
Institutional (For the year
ended 03/31/96)........... 14.20 21.45% 625,350 1.00% 9.90%
Institutional (For the year
ended 03/31/95)........... 12.01 4.56% 283,586 1.00% 20.66%
Institutional (For the
period ended 03/31/94).... 11.71 (5.66%) 142,745 0.99%* 43.16%*
VALUE(4)
Institutional (For the
period ended 09/30/96)#... 13.94 11.52% 2,339,993 0.98%* 2.35%*
EMERGING COUNTRIES(5)
Institutional (For the
period ended 09/30/96)#... 15.79 12.62% 23,724,106 1.65%* 1.96%*
Institutional (For the year
ended 03/31/96)........... 14.02 29.06% 6,877,500 1.65% 3.59%
Institutional (For the
period ended 03/31/95).... 10.91 (12.64%) 2,020,615 1.65%* 2.14%*
INTERNATIONAL GROWTH(6)
Institutional (For the
period ended 09/30/96)#... 15.84 5.25% 37,302,854 1.40%* 1.62%*
Institutional (For the year
ended 03/31/96)........... 15.05 15.99% 20,245,194 1.40% 2.44%
Institutional (For the year
ended 03/31/95)........... 13.09 (1.54%) 16,923,561 1.40% 1.92%
Institutional (For the
period ended 03/31/94).... 13.47 7.60% 3,668,113 1.40%* 2.35%*
WORLDWIDE GROWTH(2)
Institutional (For the
period ended 09/30/96)#... 16.51 7.07% 2,383,574 1.35%* 3.26%*
Institutional (For the year
ended 03/31/96)........... 15.42 20.37% 3,613,140 1.35% 2.60%
Institutional (For the year
ended 03/31/95)........... 13.06 (0.34%) 4,086,668 1.35% 2.50%
Institutional (For the
period ended 03/31/94).... 13.15 5.20% 2,981,559 1.34%* 3.58%*
FULLY DISCRETIONARY FIXED
INCOME(7)
Institutional (For the
period ended 09/30/96)#... 12.58 2.37% 4,393,133 0.45%* 3.99%*
Institutional (For the
period ended 03/31/96).... 12.72 5.49% 4,413,386 0.45%* 6.45%*
SHORT-INTERMEDIATE FIXED
INCOME(7)
Institutional (For the
period ended 09/30/96)#... 12.72 2.58% 4,731,471 0.35%* 3.59%*
Institutional (For the
period ended 03/31/96).... 12.79 5.33% 4,725,591 0.35%* 3.17%*
STRATEGIC INCOME(8)
Institutional (For the
period ended 09/30/96)#... 13.05 5.67% 3,782,112 0.75%* 1.59%*
HIGH YIELD BOND(8)
Institutional (For the
period ended 09/30/96)#... 13.10 6.28% 4,217,379 0.75%* 1.47%*
<CAPTION>
RATIO OF NET
INCOME (DEFICIT) TO TO
AVERAGE NET AVERAGE NET
ASSETS, AFTER ASSETS, BEFORE
EXPENSE 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)
Institutional (For the
period ended 09/30/96)#... (0.75%)* (0.76%)*
Institutional (For the year
ended 03/31/96)........... (0.62%) (0.66%)
Institutional (For the year
ended 03/31/95)........... (0.58%) (0.64%)
Institutional (For the
period ended 03/31/94).... (0.83%)* (0.84%)*
CORE GROWTH(3)
Institutional (For the
period ended 09/30/96)#... (0.45%)* (0.42%)*
Institutional (For the year
ended 03/31/96)........... (0.32%) (0.40%)
Institutional (For the year
ended 03/31/95)........... (0.06%) (0.14%)
Institutional (For the
period ended 03/31/94).... (0.07%)* (0.24%)*
INCOME & GROWTH(3)
Institutional (For the
period ended 09/30/96)#... 3.40%* 2.98%*
Institutional (For the year
ended 03/31/96)........... 3.88% 3.34%
Institutional (For the year
ended 03/31/95)........... 4.28% 3.80%
Institutional (For the
period ended 03/31/94).... 3.36%* 2.85%*
BALANCED GROWTH(2)
Institutional (For the
period ended 09/30/96)#... 2.53%* (4.63%)*
Institutional (For the year
ended 03/31/96)........... 2.74% (5.74%)
Institutional (For the year
ended 03/31/95)........... 2.06% (17.60%)
Institutional (For the
period ended 03/31/94).... 1.59%* (40.58%)*
VALUE(4)
Institutional (For the
period ended 09/30/96)#... 2.10%* 1.43%*
EMERGING COUNTRIES(5)
Institutional (For the
period ended 09/30/96)#... 0.12%* (0.19%)*
Institutional (For the year
ended 03/31/96)........... 0.29% (1.41%)
Institutional (For the
period ended 03/31/95).... 1.73%* 1.24%*
INTERNATIONAL GROWTH(6)
Institutional (For the
period ended 09/30/96)#... 0.01%* (0.20%)*
Institutional (For the year
ended 03/31/96)........... 0.34% (0.07%)
Institutional (For the year
ended 03/31/95)........... 0.19% (0.33%)
Institutional (For the
period ended 03/31/94).... 0.36%* (0.59%)*
WORLDWIDE GROWTH(2)
Institutional (For the
period ended 09/30/96)#... (0.27%)* (2.11%)*
Institutional (For the year
ended 03/31/96)........... 0.20% (0.99%)
Institutional (For the year
ended 03/31/95)........... 0.05% (1.10%)
Institutional (For the
period ended 03/31/94).... 0.05%* (2.19%)*
FULLY DISCRETIONARY FIXED
INCOME(7)
Institutional (For the
period ended 09/30/96)#... 6.28%* 4.72%*
Institutional (For the
period ended 03/31/96).... 6.39%* 2.63%*
SHORT-INTERMEDIATE FIXED
INCOME(7)
Institutional (For the
period ended 09/30/96)#... 6.04%* 4.59%*
Institutional (For the
period ended 03/31/96).... 5.81%* (4.01%)*
STRATEGIC INCOME(8)
Institutional (For the
period ended 09/30/96)#... 7.40%* 6.94%*
HIGH YIELD BOND(8)
Institutional (For the
period ended 09/30/96)#... 8.87%* 8.44%*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
63
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------
INSTITUTIONAL PORTFOLIOS
<TABLE>
<CAPTION>
MINI CAP BALANCED
GROWTH EMERGING GROWTH CORE GROWTH INCOME & GROWTH GROWTH
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 29,759,699 $ 185,832,339 $ 191,622,283 $ 17,710,240 $ 618,197
Receivable for shares of
beneficial interest
sold...................... 21,000 -- -- -- --
Due from adviser............ 3,772 2,162 -- 5,918 3,354
Deferred organization
costs..................... 2,045 4,639 20,901 11,665 --
Prepaid expenses and other
assets.................... 58,688 122,446 24,001 90 --
--------------------------------------------------------------------------------------
Total assets.............. 29,845,204 185,961,586 191,667,185 17,727,913 621,551
--------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 21,000 -- -- -- --
Due to adviser.............. -- -- 58,750 -- --
Dividend payable............ -- -- -- 141,965 3,864
Accrued expenses............ 39,625 87,889 37,890 15,915 8,765
--------------------------------------------------------------------------------------
Total liabilities......... 60,625 87,889 96,640 157,880 12,629
--------------------------------------------------------------------------------------
NET ASSETS.................... $ 29,784,579 $ 185,873,697 $ 191,570,545 $ 17,570,033 $ 608,922
--------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 23,134,899 $ 111,159,051 $ 149,391,075 $ 15,128,923 $ 489,844
Accumulated undistributed
net investment
income (deficit).......... (246,814) (3,670,456) (796,611) 697 (15)
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. 1,118,760 13,491,708 6,594,953 180,492 37,931
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- -- -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- -- -- --
Net unrealized appreciation
(depreciation) on
investments............... 5,777,734 64,893,394 36,381,128 2,259,921 81,162
--------------------------------------------------------------------------------------
Net assets................ $ 29,784,579 $ 185,873,697 $ 191,570,545 $ 17,570,033 $ 608,922
--------------------------------------------------------------------------------------
Shares of beneficial
interest, no par value,
issued and outstanding
(unlimited shares
authorized)............... 1,656,459 10,937,975 10,597,484 1,135,720 39,429
--------------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/Outstanding shares
of beneficial interest)... $ 17.98 $ 16.99 $ 18.08 $ 15.47 $ 15.44
--------------------------------------------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 23,098,865 $ 84,155,438 $ 137,823,364 $ 11,399,700 $ 473,632
--------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
64
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
FULLY
EMERGING INTERNATIONAL WORLDWIDE DISCRETIONARY
VALUE COUNTRIES GROWTH GROWTH FIXED INCOME
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 2,340,448 $ 23,707,985 $ 37,292,174 $ 2,378,775 $ 4,478,026
Receivable for shares of
beneficial interest
sold...................... -- -- -- --
Due from adviser............ 2,251 4,936 5,628 4,793 5,444
Deferred organization
costs..................... 2,964 6,491 -- -- 1,709
Prepaid expenses and other
assets.................... 1,677 26,364 22,164 14,298 16,274
---------------------------------------------------------------------------------------
Total assets.............. 2,347,340 23,745,776 37,319,966 2,397,866 4,501,453
---------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... -- -- -- -- --
Due to adviser.............. -- -- -- -- --
Dividend payable............ -- -- -- -- 83,458
Accrued expenses............ 7,347 21,670 17,112 14,292 24,862
---------------------------------------------------------------------------------------
Total liabilities......... 7,347 21,670 17,112 14,292 108,320
---------------------------------------------------------------------------------------
NET ASSETS.................... $ 2,339,993 $ 23,724,106 $ 37,302,854 $ 2,383,574 $ 4,393,133
---------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 2,108,216 $ 21,989,128 $ 33,915,103 $ 1,472,475 $ 4,590,024
Accumulated undistributed
net investment
income (deficit).......... 19,192 20,760 20,122 (20,359) (11,167)
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. 93,960 (236,695) 248,476 431,428 (151,878)
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- (24,463) (47,958) (4,693) (156)
Net unrealized foreign
exchange gain (loss)...... -- 715 (2,205) (404) 12,489
Net unrealized appreciation
(depreciation) on
investments............... 118,625 1,974,661 3,169,316 505,127 (46,179)
---------------------------------------------------------------------------------------
Net assets................ $ 2,339,993 $ 23,724,106 $ 37,302,854 $ 2,383,574 $ 4,393,133
---------------------------------------------------------------------------------------
Shares of beneficial
interest, no par value,
issued and outstanding
(unlimited shares
authorized)............... 167,848 1,502,028 2,355,491 144,362 349,195
---------------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/Outstanding shares
of beneficial interest)... $ 13.94 $ 15.79 $ 15.84 $ 16.51 $ 12.58
---------------------------------------------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 2,108,216 $ 21,949,302 $ 33,534,220 $ 1,377,871 $ 4,469,079
---------------------------------------------------------------------------------------
<CAPTION>
SHORT-
INTERMEDIATE STRATEGIC
FIXED INCOME INCOME HIGH YIELD BOND
<S> <C> <C> <C>
ASSETS
Investments in Master Trust
Fund, at value*........... $ 4,826,268 $ 3,808,716 $ 4,247,652
Receivable for shares of
beneficial interest
sold...................... -- 10,534 --
Due from adviser............ 5,436 1,412 1,405
Deferred organization
costs..................... 1,709 -- --
Prepaid expenses and other
assets.................... 113 1,032 1,031
Total assets.............. 4,833,526 3,821,694 4,250,088
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... -- 10,534 --
Due to adviser.............. -- -- --
Dividend payable............ 75,899 26,293 29,942
Accrued expenses............ 26,156 2,755 2,767
Total liabilities......... 102,055 39,582 32,709
NET ASSETS.................... $ 4,731,471 $ 3,782,112 $ 4,217,379
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 4,779,660 $ 3,621,741 $ 4,032,768
Accumulated undistributed
net investment
income (deficit).......... 140 (13) 76
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. (32,239) 52,943 75,817
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- --
Net unrealized appreciation
(depreciation) on
investments............... (16,090) 107,441 108,718
Net assets................ $ 4,731,471 $ 3,782,112 $ 4,217,379
Shares of beneficial
interest, no par value,
issued and outstanding
(unlimited shares
authorized)............... 372,053 289,760 321,951
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/Outstanding shares
of beneficial interest)... $ 12.72 $ 13.05 $ 13.10
* Cost of investments in the
Master Trust Fund........... $ 4,615,418 $ 3,602,021 $ 4,004,069
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
65
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
MINI CAP BALANCED
GROWTH EMERGING GROWTH CORE GROWTH INCOME & GROWTH GROWTH
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
INVESTMENT INCOME:
Net investment income
(deficit) from Master
Trust Fund................ $ (162,513) $ (684,388) $ (267,690) $ 290,613 $ 7,621
--------------------------------------------------------------------------------------
EXPENSES
Accounting fees........... 10,920 15,600 15,600 15,600 7,800
Administration fees....... 2,586 2,499 6,615 2,413 369
Audit & tax fees.......... 3,821 2,370 3,472 3,982 4,083
Insurance................. 207 3,364 2,081 256 8
Legal fees................ 3,884 27,220 22,366 2,279 80
Miscellaneous............. 217 1,523 1,250 127 4
Organization costs........ 288 1,166 6,760 3,772 --
Registration fees......... 806 16,182 11,508 1,227 41
Shareholder reporting
fees.................... 567 1,219 1,274 784 156
Transfer agent fees....... 5,483 10,437 10,537 8,624 8,781
Trustees' fee............. 921 3,140 2,580 263 9
--------------------------------------------------------------------------------------
Total expenses.......... 29,700 84,720 84,043 39,327 21,331
Less: Reimbursement from
advisor................. (22,490) (12,776) 20,264 (35,109) (21,184)
--------------------------------------------------------------------------------------
Net expenses............ 7,210 71,944 104,307 4,218 147
--------------------------------------------------------------------------------------
Net investment income
(deficit)........... (169,723) (756,332) (371,997) 286,395 7,474
--------------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
security transactions..... 1,175,395 26,564,695 8,650,701 908,769 18,926
Net realized foreign
exchange gain (loss)...... -- -- -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments............... 2,622,260 1,805,254 9,215,072 266,777 34,924
--------------------------------------------------------------------------------------
Net gain (loss) on
investments........... 3,797,655 28,369,949 17,865,773 1,175,546 53,850
--------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 3,627,932 $ 27,613,617 $ 17,493,776 $ 1,461,941 $ 61,324
--------------------------------------------------------------------------------------
</TABLE>
- -------------
+ Commenced operations on April 30, 1996.
++ Commenced operations on July 31, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
66
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
FULLY
EMERGING INTERNATIONAL WORLDWIDE DISCRETIONARY
VALUE+ COUNTRIES GROWTH GROWTH FIXED INCOME
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INVESTMENT INCOME:
Net investment income
(deficit) from Master
Trust Fund................ $ 19,647 $ 15,792 $ 9,587 $ (1,606) $ 141,324
---------------------------------------------------------------------------------------
EXPENSES
Accounting fees........... 1,560 15,600 7,800 15,600 11,700
Administration fees....... 1,678 6,591 12,950 400 2,496
Audit & tax fees.......... 1,813 4,112 4,185 154 3,685
Insurance................. 20 28 270 37 10
Legal fees................ 244 2,486 4,525 349 604
Miscellaneous............. 14 139 253 20 34
Organization costs........ 271 929 201 -- 245
Registration fees......... -- 1,280 2,716 180 11,930
Shareholder reporting
fees.................... -- 601 482 517 86
Transfer agent fees....... 546 1,595 8,669 8,269 4,326
Trustees' fee............. 436 287 522 40 884
---------------------------------------------------------------------------------------
Total expenses.......... 6,582 33,648 42,573 25,566 36,000
Less: Reimbursement from
advisor................. (6,127) (29,048) (34,194) (23,634) (34,883)
---------------------------------------------------------------------------------------
Net expenses............ 455 4,600 8,379 1,932 1,117
---------------------------------------------------------------------------------------
Net investment income
(deficit)........... 19,192 11,192 1,208 (3,538) 140,207
---------------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
security transactions..... 93,960 (51,882) 542,421 292,876 (128,662)
Net realized foreign
exchange gain (loss)...... -- (14,373) (60,268) (3,264) (1,012)
Change in net unrealized
appreciation
(depreciation) of
investments............... 118,625 1,421,584 919,450 (70,085) 95,068
---------------------------------------------------------------------------------------
Net gain (loss) on
investments........... 212,585 1,355,329 1,401,603 219,527 (34,606)
---------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 231,777 $ 1,366,521 $ 1,402,811 $ 215,989 $ 105,601
---------------------------------------------------------------------------------------
<CAPTION>
SHORT-
INTERMEDIATE STRATEGIC HIGH YIELD
FIXED INCOME INCOME++ BOND++
<S> <C> <C> <C>
INVESTMENT INCOME:
Net investment income
(deficit) from Master
Trust Fund................ $ 146,015 $ 46,311 $ 59,048
EXPENSES
Accounting fees........... 11,700 -- --
Administration fees....... 2,496 853 854
Audit & tax fees.......... 3,684 1,219 1,219
Insurance................. 18 14 15
Legal fees................ 649 167 178
Miscellaneous............. 36 9 9
Organization costs........ 245 -- --
Registration fees......... 11,928 -- --
Shareholder reporting
fees.................... 84 -- --
Transfer agent fees....... 4,324 634 634
Trustees' fee............. 884 293 293
Total expenses.......... 36,048 3,189 3,202
Less: Reimbursement from
advisor................. (34,850) (2,878) (2,870)
Net expenses............ 1,198 311 332
Net investment income
(deficit)........... 144,817 46,000 58,716
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on
security transactions..... (37,774) 52,943 75,817
Net realized foreign
exchange gain (loss)...... -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments............... 14,348 107,441 108,718
Net gain (loss) on
investments........... (23,426) 160,384 184,535
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 121,391 $ 206,384 $ 243,251
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
67
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
MINI CAP GROWTH EMERGING GROWTH
-------------------------------- ---------------------------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, FOR THE SEPTEMBER 30, FOR THE
1996 PERIOD ENDED 1996 YEAR ENDED
(UNAUDITED) MARCH 31, 1996+ (UNAUDITED) MARCH 31, 1996
<S> <C> <C> <C> <C>
--------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ (169,723) $ (77,091) $ (756,332) $ (1,297,127)
Net realized gain (loss)
from security
transactions.............. 1,175,395 (56,635) 26,564,695 36,854,224
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 2,622,260 3,155,474 1,805,254 33,557,773
--------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 3,627,932 3,021,748 27,613,617 69,114,870
--------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... -- -- -- --
Capital gain*............... -- -- -- (11,944,149)
--------------------------------------------------------------------
Total distributions..... -- -- -- (11,944,149)
--------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 5,785,913 22,406,432 11,269,232 21,738,499
Proceeds from shares issued
for distribution
reinvestment.............. -- -- -- 11,195,132
Cost of shares
repurchased............... (4,866,343) (192,103) (77,086,179) (72,722,930)
--------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 919,570 22,214,329 (65,816,947) (39,789,299)
--------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 4,547,502 25,236,077 (38,203,330) 17,381,422
NET ASSETS:
BEGINNING OF PERIOD......... 25,237,077 1,000 224,077,027 206,695,605
--------------------------------------------------------------------
END OF PERIOD............... $ 29,784,579 $ 25,237,077 $ 185,873,697 $ 224,077,027
--------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 1,592,133 80 14,834,897 17,845,788
Shares sold................. 312,628 1,605,094 690,072 1,606,361
Shares issued for
distributions
reinvested................ -- -- -- 823,777
Shares repurchased.......... (248,302) (13,041) (4,586,994) (5,441,029)
--------------------------------------------------------------------
Ending balance.......... 1,656,459 1,592,133 10,937,975 14,834,897
--------------------------------------------------------------------
</TABLE>
- -------------
+ Commenced operations on July 12, 1995.
++ Commenced operations on April 30, 1996.
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
68
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH INCOME & GROWTH BALANCED GROWTH
--------------------------------- --------------------------------- ---------------
FOR THE FOR THE FOR THE
PERIOD ENDED PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, FOR THE SEPTEMBER 30, FOR THE SEPTEMBER 30,
1996 YEAR ENDED 1996 YEAR ENDED 1996
(UNAUDITED) MARCH 31, 1996 (UNAUDITED) MARCH 31, 1996 (UNAUDITED)
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ (371,997) $ (333,533) $ 286,395 $ 529,941 $ 7,474
Net realized gain (loss)
from security
transactions.............. 8,650,701 13,876,018 908,769 1,265,964 18,926
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 9,215,072 17,420,211 266,777 1,584,928 34,924
---------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 17,493,776 30,962,696 1,461,941 3,380,833 61,324
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... -- -- (288,660) (528,014) (7,513)
Capital gain*............... -- (4,998,748) -- -- --
---------------------------------------------------------------------------------------
Total distributions..... -- (4,998,748) (288,660) (528,014) (7,513)
---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 32,456,915 59,521,255 1,337,989 4,259,507 179,036
Proceeds from shares issued
for distribution
reinvestment.............. -- 4,613,020 143,648 515,752 3,648
Cost of shares
repurchased............... (8,349,517) (12,954,623) (2,324,248) (2,894,918) (252,923)
---------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 24,107,398 51,179,652 (842,611) 1,880,341 (70,239)
---------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 41,601,174 77,143,600 330,670 4,733,160 (16,428)
NET ASSETS:
BEGINNING OF PERIOD......... 149,969,371 72,825,771 17,239,363 12,506,203 625,350
---------------------------------------------------------------------------------------
END OF PERIOD............... $ 191,570,545 $ 149,969,371 $ 17,570,033 $ 17,239,363 $ 608,922
---------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 9,221,300 5,768,800 1,193,034 1,054,784 44,039
Shares sold................. 1,854,858 3,993,369 91,073 315,794 12,492
Shares issued for
distributions
reinvested................ -- 312,747 9,686 38,265 244
Shares repurchased.......... (478,674) (853,616) (158,073) (215,809) (17,346)
---------------------------------------------------------------------------------------
Ending balance.......... 10,597,484 9,221,300 1,135,720 1,193,034 39,429
---------------------------------------------------------------------------------------
<CAPTION>
VALUE
---------------
FOR THE
PERIOD ENDED
FOR THE SEPTEMBER 30,
YEAR ENDED 1996
MARCH 31, 1996 (UNAUDITED)++
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ 11,761 $ 19,192
Net realized gain (loss)
from security
transactions.............. 38,873 93,960
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 22,385 118,625
Net increase in net
assets resulting from
operations............ 73,019 231,777
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... (11,756) --
Capital gain*............... -- --
Total distributions..... (11,756) --
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 330,767 2,180,940
Proceeds from shares issued
for distribution
reinvestment.............. 11,755 --
Cost of shares
repurchased............... (62,021) (73,724)
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 280,501 2,107,216
Total increase
(decrease) in net
assets................ 341,764 2,338,993
NET ASSETS:
BEGINNING OF PERIOD......... 283,586 1,000
END OF PERIOD............... $ 625,350 $ 2,339,993
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 23,604 80
Shares sold................. 24,001 173,603
Shares issued for
distributions
reinvested................ 857 --
Shares repurchased.......... (4,423) (5,835)
Ending balance.......... 44,039 167,848
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
69
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- Continued
- --------------------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING COUNTRIES INTERNATIONAL GROWTH
-------------------------------- ---------------------------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, FOR THE SEPTEMBER 30, FOR THE
1996 YEAR ENDED 1996 YEAR ENDED
(UNAUDITED) MARCH 31, 1996 (UNAUDITED) MARCH 31, 1996
<S> <C> <C> <C> <C>
--------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ 11,192 $ 10,548 $ 1,208 $ 58,952
Net realized gain (loss)
from security
transactions.............. (51,882) (9,283) 542,421 79,202
Net realized foreign
exchange gain (loss)...... (14,373) (10,388) (60,268) 188,185
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 1,421,584 850,582 919,450 2,302,322
--------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 1,366,521 841,459 1,402,811 2,628,661
--------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... -- (14,493) -- (142,279)
Capital gain*............... -- -- -- --
--------------------------------------------------------------------
Total distributions..... -- (14,493) -- (142,279)
--------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 15,728,528 4,084,306 16,385,608 3,161,273
Proceeds from shares issued
for distribution
reinvestment.............. -- 14,314 -- 133,555
Cost of shares
repurchased............... (248,443) (68,701) (730,759) (2,459,577)
--------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 15,480,085 4,029,919 15,654,849 835,251
--------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 16,846,606 4,856,885 17,057,660 3,321,633
NET ASSETS:
BEGINNING OF PERIOD......... 6,877,500 2,020,615 20,245,194 16,923,561
--------------------------------------------------------------------
END OF PERIOD............... $ 23,724,106 $ 6,877,500 $ 37,302,854 $ 20,245,194
--------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 490,586 185,138 1,345,544 1,292,929
Shares sold................. 1,027,326 309,531 1,056,617 218,835
Shares issued for
distributions
reinvested................ -- 1,158 -- 9,657
Shares repurchased.......... (15,884) (5,241) (46,670) (175,877)
--------------------------------------------------------------------
Ending balance.......... 1,502,028 490,586 2,355,491 1,345,544
--------------------------------------------------------------------
</TABLE>
- -------------
+ Commenced operations on August 31, 1995.
++ Commenced operations on July 31, 1996.
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
70
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
WORLDWIDE GROWTH FULLY DISCRETIONARY FIXED INCOME FIXED INCOME
--------------------------------- --------------------------------- ---------------
FOR THE FOR THE FOR THE
PERIOD ENDED PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, FOR THE SEPTEMBER 30, FOR THE SEPTEMBER 30,
1996 YEAR ENDED 1996 PERIOD ENDED 1996
(UNAUDITED) MARCH 31, 1996 (UNAUDITED) MARCH 31, 1996+ (UNAUDITED)
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ (3,538) $ 7,801 $ 140,207 $ 54,694 $ 144,817
Net realized gain (loss)
from security
transactions.............. 292,876 368,239 (128,662) (22,139) (37,774)
Net realized foreign
exchange gain (loss)...... (3,264) 35,476 (1,012) -- --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. (70,085) 348,485 95,068 (128,758) 14,348
---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 215,989 760,001 105,601 (96,203) 121,391
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... -- (54,929) (153,490) (52,578) (144,491)
Capital gain*............... -- -- -- (221) --
---------------------------------------------------------------------------------------
Total distributions..... -- (54,929) (153,490) (52,799) (144,491)
---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 358,039 2,895,533 142,564 4,516,992 521,506
Proceeds from shares issued
for distribution
reinvestment.............. -- 54,179 70,031 52,796 68,591
Cost of shares
repurchased............... (1,803,594) (4,128,312) (184,959) (8,400) (561,117)
---------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ (1,445,555) (1,178,600) 27,636 4,561,388 28,980
---------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ (1,229,566) (473,528) (20,253) 4,412,386 5,880
NET ASSETS:
BEGINNING OF PERIOD......... 3,613,140 4,086,668 4,413,386 1,000 4,725,591
---------------------------------------------------------------------------------------
END OF PERIOD............... $ 2,383,574 $ 3,613,140 $ 4,393,133 $ 4,413,386 $ 4,731,471
---------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 234,347 312,949 346,945 80 369,411
Shares sold................. 21,700 196,095 11,232 343,351 40,948
Shares issued for
distributions
reinvested................ -- 3,799 5,567 4,145 5,397
Shares repurchased.......... (111,685) (278,496) (14,549) (631) (43,703)
---------------------------------------------------------------------------------------
Ending balance.......... 144,362 234,347 349,195 346,945 372,053
---------------------------------------------------------------------------------------
<CAPTION>
STRATEGIC
INCOME HIGH YIELD BOND
--------------- ---------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
FOR THE SEPTEMBER 30, SEPTEMBER 30,
PERIOD ENDED 1996 1996
MARCH 31, 1996+ (UNAUDITED)++ (UNAUDITED)++
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income
(deficit)................. $ 112,189 $ 46,000 $ 58,716
Net realized gain (loss)
from security
transactions.............. 5,535 52,943 75,817
Net realized foreign
exchange gain (loss)...... -- -- --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. (30,438) 107,441 108,718
Net increase (decrease)
in net assets
resulting from
operations............ 87,286 206,384 243,251
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income*...... (112,375) (46,013) (58,640)
Capital gain*............... -- -- --
Total distributions..... (112,375) (46,013) (58,640)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 4,664,407 3,746,530 4,067,822
Proceeds from shares issued
for distribution
reinvestment.............. 112,373 1,129 2,317
Cost of shares
repurchased............... (27,100) (126,918) (38,371)
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 4,749,680 3,620,741 4,031,768
Total increase
(decrease) in net
assets................ 4,724,591 3,781,112 4,216,379
NET ASSETS:
BEGINNING OF PERIOD......... 1,000 1,000 1,000
END OF PERIOD............... $ 4,725,591 $ 3,782,112 $ 4,217,379
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 80 80 80
Shares sold................. 362,652 299,614 324,704
Shares issued for
distributions
reinvested................ 8,769 88 182
Shares repurchased.......... (2,090) (10,022) (3,015)
Ending balance.......... 369,411 289,760 321,951
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
71
<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 the investment objectives of each Fund, see Note
A to the accompanying Funds' financial statements.
Pursuant to Rule 24f-2 under the Investment Company Act, the Trust has elected
to register an indefinite number of shares. The Trust commenced operations on
April 19, 1993.
INVESTMENT INCOME
Each Portfolio accrues income, net of expenses, daily on its investment in the
applicable Fund. All of the net investment income (deficit) and realized and
unrealized gains and losses from the security transactions and foreign currency
of the Fund are allocated pro rata among the investors in the Fund at the time
of such determination.
FEDERAL INCOME TAXES
It is the Portfolios' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their taxable income to their shareholders. Accordingly, no
federal income tax provisions are required if the Portfolios continue to comply
with such requirements.
The Funds are treated as partnerships for federal income tax purposes. Any
interest, dividends and gains or losses of the Funds will be deemed to have been
"passed through" to the Portfolios.
Net investment income and net realized gains for the year (or period where
appropriate) differ for financial statement and tax purposes primarily because
of one or all of the following: deferral of wash-sale losses, passive foreign
investments, unrealized appreciation/depreciation, and capital loss
carryforwards.
The character of distributions made during the year (or period where
appropriate) from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes due to book/tax
differences in the character of income and expense recognition.
DEFERRED ORGANIZATION COSTS
Organization costs incurred by the Trust have been allocated to certain
Portfolios based upon management's best estimate of the costs applicable to each
Portfolio. These costs have been deferred and will be amortized over a period of
60 months from the date the Portfolios commenced operations.
In the event that any of the initial shares are redeemed by the holder during
the period of amortization of the 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.
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
- --------------------------------------------------------------------------------
72
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
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.
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 Institutional
Portfolio............................. 1.17%
Core Growth Institutional Portfolio.... 1.00%
Income & Growth Institutional
Portfolio............................. 1.00%
Balanced Growth Institutional
Portfolio............................. 1.00%
Value Institutional Portfolio.......... 1.00%
Emerging Countries Institutional
Portfolio............................. 1.65%
International Growth Institutional
Portfolio............................. 1.40%
Worldwide Growth Institutional
Portfolio............................. 1.35%
Fully Discretionary Institutional Fixed
Income Portfolio...................... 0.45%
Short-Intermediate Institutional Fixed
Income Portfolio...................... 0.35%
Strategic Income Institutional
Portfolio............................. 0.75%
High Yield Bond Institutional
Portfolio............................. 0.75%
</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 Institutional
Portfolio.......................... 205,047
Core Growth Institutional
Portfolio.......................... 231,149
Income & Growth Institutional
Portfolio.......................... 251,418
Balanced Growth Institutional
Portfolio.......................... 128,498
Value Institutional Portfolio....... 6,127
Emerging Countries Institutional
Portfolio.......................... 104,521
International Growth Institutional
Portfolio.......................... 185,212
Worldwide Growth Institutional
Portfolio.......................... 147,436
Fully Discretionary Institutional
Fixed Income Portfolio............. 66,847
Short-Intermediate Institutional
Fixed Income Portfolio............. 69,253
Strategic Income Institutional
Portfolio.......................... 2,878
High Yield Bond Institutional
Portfolio.......................... 2,870
</TABLE>
Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of September 30, 1996, the following Portfolio's have amounts due to
Nicholas-Applegate for organizational costs advanced:
<TABLE>
<S> <C>
Mini Cap Growth Institutional
Portfolio............................. 2,670
Value Institutional Portfolio.......... 3,235
Fully Discretionary Institutional Fixed
Income Portfolio...................... 2,240
Short-Intermediate Institutional Fixed
Income Portfolio...................... 2,240
</TABLE>
- --------------------------------------------------------------------------------
73
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
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 Institutional
Portfolio........................ 11,280 77,237
Core Growth Institutional
Portfolio........................ 32,487 8,452
Income & Growth Institutional
Portfolio........................ 1,384 2,370
Balanced Growth Institutional
Portfolio........................ 200 274
Value Institutional Portfolio..... 2,207 74
Emerging Countries Institutional
Portfolio........................ 15,753 296
International Growth Institutional
Portfolio........................ 16,426 792
Worldwide Growth Institutional
Portfolio........................ 385 1,836
Fully Discretionary Institutional
Fixed Income Portfolio........... 143 185
Short-Intermediate Institutional
Fixed Income Portfolio........... 567 598
Strategic Income Institutional
Portfolio........................ 3,748 146
High Yield Bond Institutional
Portfolio........................ 4,069 65
</TABLE>
- --------------------------------------------------------------------------------
74
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
75
<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 INCOME & BALANCED
GROWTH GROWTH GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------
ASSETS
Investments, at value*...... $ 30,490,477 $ 610,921,587 $ 501,507,845 $ 120,339,331 $ 27,092,084
Foreign currencies, at
value**................... -- -- -- -- --
Cash........................ 476 -- 4,046 900 651
Receivable for investment
securities sold........... 461,275 4,455,633 4,402,001 1,701,034 1,110,525
Receivable for interests
sold...................... 21,000 1,367,624 566,885 323,581 26,500
Dividends receivable........ 5,285 79,563 56,430 215,769 3,759
Interest receivable......... -- 262 -- 621,033 204,673
Due from adviser............ -- -- -- -- --
Deferred organization
costs..................... -- 18,693 24,091 11,947 8,522
Other assets................ 91 3,879 25,137 532 61
-----------------------------------------------------------------------
Total assets............ 30,978,604 616,847,241 506,586,435 123,214,127 28,446,775
-----------------------------------------------------------------------
LIABILITIES
Payable for investment
securities purchased...... 857,304 -- -- -- --
Payable for interests
repurchased............... -- 7,426,621 7,012,750 2,792,669 1,126,250
Due to adviser.............. -- 743,930 534,968 48,882 139,356
Accrued expenses............ 38,339 572,559 396,561 104,065 21,486
Cash overdraft.............. -- 161,620 -- -- --
-----------------------------------------------------------------------
Total liabilities....... 895,643 8,904,730 7,944,279 2,945,616 1,287,092
-----------------------------------------------------------------------
NET ASSETS.................... $ 30,082,961 $ 607,942,511 $ 498,642,156 $ 120,268,511 $ 27,159,683
-----------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 23,368,865 $ 355,184,425 $ 343,504,966 $ 81,533,055 $ 19,872,942
Accumulated net investment
income (deficit).......... (236,541) (8,203,977) (1,423,696) 13,587,460 1,740,133
Accumulated net realized
gain (loss)............... 1,110,856 87,904,363 47,256,935 9,362,281 1,742,511
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 15,785,715 3,804,097
-----------------------------------------------------------------------
Net assets.............. $ 30,082,961 $ 607,942,511 $ 498,642,156 $ 120,268,511 $ 27,159,683
-----------------------------------------------------------------------
*Investments, at cost $ 24,650,696 $ 437,863,887 $ 392,203,894 $ 104,553,616 $ 23,287,987
-----------------------------------------------------------------------
**Foreign currencies, at cost -- -- -- -- --
-----------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
76
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
FULLY SHORT-
EMERGING INTERNATIONAL WORLDWIDE DISCRETIONARY INTERMEDIATE STRATEGIC
VALUE COUNTRIES GROWTH GROWTH FIXED INCOME FIXED INCOME INCOME
FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
ASSETS
Investments, at value*...... $ 2,362,775 $ 62,453,184 $ 45,289,261 $ 100,021,160 $4,674,841 $4,826,470 $ 3,825,069
Foreign currencies, at
value**................... -- 346,142 1,429,378 2,666,936 -- -- --
Cash........................ 2,558 666 -- 530 3,119 1,577 253
Receivable for investment
securities sold........... -- 935,576 41,818 1,969,837 275,298 -- --
Receivable for interests
sold...................... -- 507,199 1,431,833 122,036 12,860 -- 10,534
Dividends receivable........ 6,292 46,169 110,535 201,917 -- -- 12,552
Interest receivable......... -- -- -- -- 65,185 35,896 40,434
Due from adviser............ 1,351 -- -- -- 6,965 7,861 --
Deferred organization
costs..................... -- -- 679 9,703 1,709 1,709 --
Other assets................ -- 2,800 1,032 351 5,334 18,535 --
-----------------------------------------------------------------------------------------------
Total assets............ 2,372,976 64,291,736 48,304,536 104,992,470 5,045,311 4,892,048 3,888,842
-----------------------------------------------------------------------------------------------
LIABILITIES
Payable for investment
securities purchased...... -- 2,764,775 3,039,586 3,978,944 499,319 -- 50,000
Payable for interests
repurchased............... -- 9,137 -- 135,963 -- -- --
Due to adviser.............. -- -- -- -- -- -- --
Accrued expenses............ 4,639 90,199 37,547 119,116 15,452 13,346 3,709
Cash overdraft.............. -- -- 140,824 -- -- -- --
-----------------------------------------------------------------------------------------------
Total liabilities....... 4,639 2,864,111 3,217,957 4,234,023 514,771 13,346 53,709
-----------------------------------------------------------------------------------------------
NET ASSETS.................... $ 2,368,337 $ 61,427,625 $ 45,086,579 $ 100,758,447 $4,530,540 $4,878,702 $ 3,835,133
-----------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 2,133,216 $ 56,430,674 $ 40,848,416 $ 69,608,120 $4,517,079 $4,665,418 $ 3,627,021
Accumulated net investment
income (deficit).......... 19,886 84,234 119,725 488,560 198,617 261,241 46,628
Accumulated net realized
gain (loss)............... 95,192 (134,561) 349,175 14,898,238 (151,156) (31,815) 53,302
Accumulated net realized
foreign exchange gain
(loss).................... -- (57,873) 95,152 757,906 (146) -- --
Net unrealized foreign
exchange gain (loss)...... -- 1,842 (2,254) (6,857) 12,636 -- --
Net unrealized appreciation
(depreciation) on
investments............... 120,043 5,103,309 3,676,365 15,012,480 (46,490) (16,142) 108,182
-----------------------------------------------------------------------------------------------
Net assets.............. $ 2,368,337 $ 61,427,625 $ 45,086,579 $ 100,758,447 $4,530,540 $4,878,702 $ 3,835,133
-----------------------------------------------------------------------------------------------
*Investments, at cost $ 2,242,732 $ 57,349,875 $ 41,612,896 $ 85,008,680 $4,721,331 $4,842,612 $ 3,716,887
-----------------------------------------------------------------------------------------------
**Foreign currencies, at cost -- $ 345,999 $ 1,439,151 $ 2,691,094 -- -- --
-----------------------------------------------------------------------------------------------
<CAPTION>
HIGH YIELD
BOND
FUND
<S> <C>
ASSETS
Investments, at value*...... $ 4,308,906
Foreign currencies, at
value**................... --
Cash........................ 515
Receivable for investment
securities sold........... --
Receivable for interests
sold...................... --
Dividends receivable........ --
Interest receivable......... 68,423
Due from adviser............ --
Deferred organization
costs..................... --
Other assets................ --
Total assets............ 4,377,844
LIABILITIES
Payable for investment
securities purchased...... 100,000
Payable for interests
repurchased............... --
Due to adviser.............. --
Accrued expenses............ 3,624
Cash overdraft.............. --
Total liabilities....... 103,624
NET ASSETS.................... $ 4,274,220
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 4,029,069
Accumulated net investment
income (deficit).......... 59,425
Accumulated net realized
gain (loss)............... 76,322
Accumulated net realized
foreign exchange gain
(loss).................... --
Net unrealized foreign
exchange gain (loss)...... --
Net unrealized appreciation
(depreciation) on
investments............... 109,404
Net assets.............. $ 4,274,220
*Investments, at cost $ 4,199,502
**Foreign currencies, at cost --
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
77
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
FOR THE PERIOD ENDED SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
MINI CAP EMERGING CORE INCOME & BALANCED
GROWTH GROWTH GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------
INVESTMENT INCOME:
Dividends................... $ 21,214 $ 465,839 $ 535,873 $ 749,168 $ 30,032
Interest.................... 34,108 847,900 719,415 1,736,898 422,677
-----------------------------------------------------------------
Total income.............. 55,322 1,313,739 1,255,288 2,486,066 452,709
-----------------------------------------------------------------
EXPENSES:
Advisory fee................ 180,936 3,017,321 1,712,555 423,507 96,012
Accounting fee.............. 35,625 92,788 80,662 39,399 37,500
Administration fee.......... 4,452 17,500 70,223 17,372 3,937
Audit & tax fees............ 3,639 75,900 57,549 14,237 3,228
Custodian fee............... 21,462 67,232 38,123 11,582 11,681
Insurance................... 175 7,775 2,861 668 91
Legal fee................... 163 3,402 2,579 638 145
Miscellaneous............... 1,235 25,752 19,904 4,830 1,095
Organization costs.......... -- 4,269 7,792 3,865 2,758
Trustees' fee............... 4,319 3,564 3,564 3,564 3,564
-----------------------------------------------------------------
Total expense............. 252,006 3,315,503 1,995,812 519,662 160,011
Less: Reimbursement to
(from) adviser............ (33,435) -- -- 16,780 (38,396)
-----------------------------------------------------------------
Net expenses............ 218,571 3,315,503 1,995,812 536,442 121,615
-----------------------------------------------------------------
Net investment income
(deficit)........... (163,249) (2,001,764) (740,524) 1,949,624 331,094
-----------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
from security
transactions.............. 1,166,750 63,561,561 28,329,596 6,413,257 1,032,726
Net realized foreign
exchange gain (loss)...... -- -- -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currencies................ 2,679,530 12,427,523 20,550,277 1,520,523 1,059,501
-----------------------------------------------------------------
Net gain (loss) on
investments........... 3,846,280 75,989,084 48,879,873 7,933,780 2,092,227
-----------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS................... $ 3,683,031 $ 73,987,320 $ 48,139,349 $ 9,883,404 $ 2,423,321
-----------------------------------------------------------------
</TABLE>
- -------------
+Commenced operations on April 30, 1996.
++Commenced operations on July 31, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
78
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FULLY SHORT-
EMERGING INTERNATIONAL WORLDWIDE DISCRETIONARY INTERMEDIATE STRATEGIC HIGH YIELD
VALUE COUNTRIES GROWTH GROWTH FIXED INCOME FIXED INCOME INCOME BOND
FUND+ FUND FUND FUND FUND FUND FUND++ FUND++
<S> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends................... $ 26,384 $ 323,642 $ 244,293 $ 507,538 $ 151,459 $ 154,377 $ 45,089 $ 64,091
Interest.................... 2,258 59,829 30,185 42,376 -- -- 5,922 --
----------------------------------------------------------------------------------------------------
Total income.............. 28,642 383,471 274,478 549,914 151,459 154,377 51,011 64,091
----------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fee................ 6,867 271,596 196,401 505,580 10,125 7,260 3,757 3,999
Accounting fee.............. 3,750 45,266 37,500 37,733 31,250 31,250 -- --
Administration fee.......... 282 6,654 6,031 15,562 693 745 189 201
Audit & tax fees............ 231 5,481 4,954 12,757 568 612 157 167
Custodian fee............... 1,964 12,202 17,797 60,163 6,168 5,918 1,210 760
Insurance................... -- 132 168 735 9 91 -- --
Legal fee................... 10 246 222 572 26 27 7 7
Miscellaneous............... 78 1,859 1,681 4,328 193 208 53 57
Organization costs.......... -- -- 150 3,156 245 245 -- --
Trustees' fee............... 2,070 3,564 3,564 3,564 4,147 4,147 1,388 1,388
----------------------------------------------------------------------------------------------------
Total expense............. 15,252 347,000 268,468 644,150 53,424 50,503 6,761 6,579
Less: Reimbursement to
(from) adviser............ (6,496) 642 (3,327) (37,454) (44,424) (43,243) (2,378) (1,913)
----------------------------------------------------------------------------------------------------
Net expenses............ 8,756 347,642 265,141 606,696 9,000 7,260 4,383 4,666
----------------------------------------------------------------------------------------------------
Net investment income
(deficit)........... 19,886 35,829 9,337 (56,782) 142,459 147,117 46,628 59,425
----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
from security
transactions.............. 95,192 121,909 538,673 7,403,797 (129,328) (37,941) 53,302 76,322
Net realized foreign
exchange gain (loss)...... -- (33,016) (70,052) (149,957) (1,008) -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currencies................ 120,043 3,726,624 1,140,702 (124,779) 95,729 14,466 108,182 109,404
----------------------------------------------------------------------------------------------------
Net gain (loss) on
investments........... 215,235 3,815,517 1,609,323 7,129,061 (34,607) (23,475) 161,484 185,726
----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 235,121 $ 3,851,346 $1,618,660 $ 7,072,279 $ 107,852 $ 123,642 $ 208,112 $ 245,151
----------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
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>
MINI CAP GROWTH FUND EMERGING GROWTH FUND
--------------------------- ----------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, PERIOD 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)................. $ (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 (decrease) 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
(decrease) 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.
++ Commenced operations on April 30, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
80
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH FUND INCOME & GROWTH FUND BALANCED GROWTH FUND
CORE GROWTH FUND INCOME & GROWTH FUND BALANCED GROWTH FUND
---------------------------- ---------------------------- ---------------------------
---------------------------- ---------------------------- ---------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
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 (decrease) 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
(decrease) 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
---------------------------------------------------------------------------------------
<CAPTION>
VALUE FUND
VALUE FUND
-------------
-------------
FOR THE
PERIOD ENDED
SEPTEMBER 30,
1996
(UNAUDITED)++
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 19,886
Net realized gain (loss)
from security
transactions.............. 95,192
Change in net unrealized
appreciation
(depreciation) of
investments............... 120,043
Net increase (decrease) in
net assets from
operations.............. 235,121
TRANSACTIONS IN INTERESTS
Contributions by partners... 2,206,940
Withdrawals by partners..... (73,724 )
Net increase (decrease) in
net assets from
transactions in
interests............... 2,133,216
Total increase
(decrease) in net
assets................ 2,368,337
NET ASSETS
BEGINNING OF PERIOD......... --
END OF PERIOD............... $ 2,368,337
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
81
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
EMERGING COUNTRIES FUND INTERNATIONAL GROWTH 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)................. $ 35,829 $ 26,122 $ (56,782) $ 73,015
Net realized gain (loss)
from security transactions
and foreign exchange...... 88,893 (61,164) 7,253,840 259,455
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 3,726,624 1,751,439 (124,779) 2,584,830
--------------------------------------------------------
Net increase (decrease) in
net assets from
operations.............. 3,851,346 1,716,397 7,072,279 2,917,300
--------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 39,571,901 16,175,253 6,500,703 6,044,445
Withdrawals by partners..... (1,894,608 ) (1,272,742) (13,157,561 ) (2,768,514)
--------------------------------------------------------
Net increase (decrease) in
net assets from
transactions in
interests............... 37,677,293 14,902,511 (6,656,858 ) 3,275,931
--------------------------------------------------------
Total increase
(decrease) in net
assets................ 41,528,639 16,618,908 415,421 6,193,231
NET ASSETS
BEGINNING OF PERIOD......... 19,898,986 3,280,078 23,805,628 17,612,397
--------------------------------------------------------
END OF PERIOD............... $ 61,427,625 $ 19,898,986 $ 45,086,579 $ 23,805,628
--------------------------------------------------------
</TABLE>
- -------------
+ Commenced operations on August 31, 1995.
++ Commenced operations on July 31, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
82
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FULLY DISCRETIONARY SHORT-INTERMEDIATE
WORLDWIDE GROWTH FUND FULLY DISCRETIONARY SHORT-INTERMEDIATE
FIXED INCOME FUND FIXED INCOME FUND
WORLDWIDE GROWTH FUND FIXED INCOME FUND FIXED INCOME FUND
---------------------------- --------------------------- ---------------------------
---------------------------- --------------------------- ---------------------------
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 OPERATIONS
Net investment income
(deficit)................. $ (56,782) $ 299,362 $ 142,459 $ 56,158 $ 147,117 $ 114,124
Net realized gain (loss)
from security transactions
and foreign exchange...... 7,253,840 9,015,557 (130,336) (20,966) (37,941) 6,126
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. (124,779) 9,091,917 95,729 (129,583) 14,466 (30,608)
--------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from
operations.............. 7,072,279 18,406,836 107,852 (94,391 ) 123,642 89,642
--------------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 6,500,703 17,650,729 167,563 4,542,991 592,048 4,708,688
Withdrawals by partners..... (13,157,561) (33,276,911) (184,960 ) (8,515 ) (598,211 ) (37,107)
--------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from
transactions in
interests............... (6,656,858) (15,626,182) (17,397 ) 4,534,476 (6,163 ) 4,671,581
--------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 415,421 2,780,654 90,455 4,440,085 117,479 4,761,223
NET ASSETS
BEGINNING OF PERIOD......... 100,343,026 97,562,372 4,440,085 -- 4,761,223 --
--------------------------------------------------------------------------------------
END OF PERIOD............... $ 100,758,447 $ 100,343,026 $ 4,530,540 $ 4,440,085 $ 4,878,702 $ 4,761,223
--------------------------------------------------------------------------------------
<CAPTION>
STRATEGIC
STRATEGIC
INCOME FUND
INCOME FUND HIGH YIELD
------------- BOND FUND
------------- -------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1996
(UNAUDITED)++ (UNAUDITED)++
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 46,628 $ 59,425
Net realized gain (loss)
from security transactions
and foreign exchange...... 53,302 76,322
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 108,182 109,404
Net increase (decrease) in
net assets from
operations.............. 208,112 245,151
TRANSACTIONS IN INTERESTS
Contributions by partners... 3,772,529 4,093,822
Withdrawals by partners..... (145,508 ) (64,753 )
Net increase (decrease) in
net assets from
transactions in
interests............... 3,627,021 4,029,069
Total increase
(decrease) in net
assets................ 3,835,133 4,274,220
NET ASSETS
BEGINNING OF PERIOD......... -- --
END OF PERIOD............... $ 3,835,133 $ 4,274,220
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
83
<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.
Value Fund seeks to provide a total return consisting of capital appreciation
plus dividend and interest income that exceeds the total return on the Standard
& Poor's 500 Stock Price Index by investing primarily in a diversified portfolio
of equity securities of issuers with larger market capitalizations.
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 primarily 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.
Fully Discretionary Fixed Income Fund seeks to maximize total return through
investment primarily in investment grade fixed-income securities with an average
portfolio duration between two and eight years.
Short-Intermediate Fixed Income Fund seeks to preserve principal and liquidity
and realize a relatively high level of current income through investment
primarily in investment grade fixed-income securities with a maximum average
dollar-weighted portfolio maturity of five years.
Strategic Income Fund seeks to provide a high level of current income by
investing primarily in convertible, lower quality and mortgage-backed debt
securities.
High Yield Bond Fund seeks to provide a higher level of income and capital
growth by investing primarily in debt and equity securities, with an emphasis on
lower quality debt securities.
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
- --------------------------------------------------------------------------------
84
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
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 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
assets:
<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%
Value Fund.................. 0.75% 0.75% 0.75%
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%
Fully Discretionary Fixed
Income Fund............... See Footnote 1
Short-Intermediate Fixed
Income Fund............... See Footnote 1
Strategic Income Fund....... 0.60% 0.60% 0.60%
High Yield Bond Fund........ 0.60% 0.60% 0.60%
</TABLE>
(1) The advisory fee for Fully Discretionary Fixed Income Fund is computed as
follows: 0.45% of the first $500 million of the Fund's average net assets, 0.40%
of the next $250 million of average net assets, and 0.35% of average net assets
in excess of $750 million. The advisory fee for Short-Intermediate Fixed Income
Fund is computed as follows: 0.30% of the first $250 million of the Fund's
average net assets and 0.25% of average net assets in excess of $250 million.
- --------------------------------------------------------------------------------
85
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Funds, during the periods from inception 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
Value Fund........................... 6,496
Emerging Countries Fund.............. 111,131
International Growth Fund............ 198,984
Worldwide Growth Fund................ 271,377
Fully Discretionary Fixed Income
Fund............................... 64,506
Short-Intermediate Fixed Income
Fund............................... 64,122
Strategic Income Fund................ 2,378
High Yield Bond Fund................. 1,913
</TABLE>
Nicholas-Applegate advanced certain organization costs discussed in Note A. As
of September 30, 1996, the following Funds have amounts due to
Nicholas-Applegate for organizational costs advanced:
<TABLE>
<S> <C>
Fully Discretionary Fixed Income
Fund............................... 2,240
Short-Intermediate Fixed Income
Fund............................... 2,240
</TABLE>
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
Value Fund...................... 4,501 2,354
Emerging Countries Fund......... 63,858 26,898
International Growth Fund....... 51,800 31,043
Worldwide Growth Fund........... 76,814 84,240
Fully Discretionary Fixed Income
Fund.......................... 4,024 4,252
Short-Intermediate Fixed Income
Fund.......................... 2,939 2,937
Strategic Income Fund........... 5,834 2,458
High Yield Bond Fund............ 9,872 5,900
</TABLE>
- --------------------------------------------------------------------------------
86
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
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>
NET
GROSS GROSS UNREALIZED
TAX COST OF UNREALIZED UNREALIZED APPRECIATION
INVESTMENTS APPRECIATION DEPRECIATION (DEPRECIATION)
----------- ----------- ------------- -------------
<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
Value Fund.... 2,243 188 68 120
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
Fully
Discretionary
Fixed
Income
Fund....... 4,721 24 70 (46)
Short-
Intermediate
Fixed
Income
Fund....... 4,843 10 26 (16)
Strategic
Income
Fund....... 3,717 116 8 108
High Yield
Bond
Fund....... 4,200 121 11 109
</TABLE>
D. OFF BALANCE SHEET RISKS
The Master Trust's 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.
- --------------------------------------------------------------------------------
87
<PAGE>
NICHOLAS APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS
- -------------------------------------------------------------------
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
(RECOUPMENT) (RECOUPMENT) REIMBURSEMENTS REIMBURSEMENTS
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
MINI CAP GROWTH(1)
For the period ended 09/30/96*#.............................. 1.51% 1.74% (1.13%) (1.36%)
For the period ended 03/31/96*............................... 1.50% 2.02% (0.93%) (1.44%)
EMERGING GROWTH(2)
For the period ended 09/30/96*#.............................. 1.10% 1.10% (0.66%) (0.66%)
For the year ended 03/31/96.................................. 1.11% 1.11% (0.57%) (0.57%)
For the year ended 03/31/95.................................. 1.12% 1.11% (0.53%) (0.52%)
For the period ended 03/31/94*............................... 1.12% 1.16% (0.07%) (0.84%)
CORE GROWTH(3)
For the period ended 09/30/96*#.............................. 0.87% 0.87% (0.32%) (0.32%)
For the year ended 03/31/96.................................. 0.89% 0.89% (0.22%) (0.22%)
For the year ended 03/31/95.................................. 0.89% 0.89% 0.05% 0.05%
For the period ended 03/31/94*............................... 0.92% 0.92% (0.03%) (0.03%)
INCOME & GROWTH(3)
For the period ended 09/30/96*#.............................. 0.95% 0.92% 3.45% 3.48%
For the year ended 03/31/96.................................. 0.95% 0.94% 3.94% 3.94%
For the year ended 03/31/95.................................. 0.93% 0.95% 4.37% 4.35%
For the period ended 03/31/94*............................... 0.94% 0.97% 3.51% 3.48%
BALANCED GROWTH(3)
For the period ended 09/30/96*#.............................. 0.95% 1.25% 2.59% 2.29%
For the year ended 03/31/96.................................. 0.95% 1.37% 2.83% 2.37%
For the year ended 03/31/95.................................. 0.95% 1.33% 2.13% 1.75%
For the period ended 03/31/94*............................... 0.94% 1.37% 1.93% 1.50%
VALUE FUND(4)
For the period ended 09/30/96*#.............................. 0.93% 1.63% 2.12% 1.43%
EMERGING COUNTRIES FUND(5)
For the period ended 09/30/96*#.............................. 1.60% 1.60% 0.16% 0.17%
For the year ended 03/31/96.................................. 1.60% 2.80% 0.30% (0.90%)
For the period ended 03/31/95*............................... 1.60% 1.81% 1.73% 1.52%
INTERNATIONAL GROWTH FUND(5)...................................
For the period ended 09/30/96*#.............................. 1.35% 1.37% 0.05% 0.03%
For the year ended 03/31/96.................................. 1.35% 1.98% 0.39% (0.24%)
For the year ended 03/31/95.................................. 1.35% 1.85% 0.24% (0.26%)
For the period ended 03/31/94*............................... 1.35% 2.28% 0.41% (0.52%)
WORLDWIDE GROWTH FUND(3)
For the period ended 09/30/96*#.............................. 1.20% 1.27% (0.11%) (0.19%)
For the year ended 03/31/96.................................. 1.20% 1.26% 0.31% 0.25%
For the year ended 03/31/95.................................. 1.20% 1.30% 0.24% 0.14%
For the period ended 03/31/94*............................... 1.20% 1.36% 0.01% (0.15%)
FULLY DISCRETIONARY FIXED INCOME(7)
For the period ended 09/30/96*#.............................. 0.40% 2.37% 6.08% 4.36%
For the year ended 03/31/96*................................. 0.45% 3.49% 7.38% 60.06%
SHORT-INTERMEDIATE FIXED INCOME(7)
For the period ended 09/30/96*#.............................. 0.30% 2.09% 4.08% 4.29%
For the period ended 03/31/96*............................... 0.30% 3.24% 2.76% 114.38%
STRATEGIC INCOME FUND(8)
For the period ended 09/30/96*#.............................. 0.70% 1.08% 7.45% 7.07%
HIGH YIELD BOND FUND(8)
For the period ended 09/30/96*#.............................. 0.70% 0.99% 8.92% 8.63%
<CAPTION>
BROKER
PORTFOLIO COMMISSIONS
TURNOVER RATE PER SHARE
<S> <C> <C>
- ---------------------------------------------------------------
MINI CAP GROWTH(1)
For the period ended 09/30/96*#.............................. 79.73% $0.0499
For the period ended 03/31/96*............................... 106.99% $0.0529
EMERGING GROWTH(2)
For the period ended 09/30/96*#.............................. 46.42% $0.0537
For the year ended 03/31/96.................................. 129.59% $0.0523
For the year ended 03/31/95.................................. 100.46% --
For the period ended 03/31/94*............................... 50.51% --
CORE GROWTH(3)
For the period ended 09/30/96*#.............................. 57.67% $0.0567
For the year ended 03/31/96.................................. 144.48% $0.0593
For the year ended 03/31/95.................................. 96.09% --
For the period ended 03/31/94*............................... 84.84% --
INCOME & GROWTH(3)
For the period ended 09/30/96*#.............................. 77.49% $0.0569
For the year ended 03/31/96.................................. 144.97% $0.0597
For the year ended 03/31/95.................................. 125.51% --
For the period ended 03/31/94*............................... 177.52% --
BALANCED GROWTH(3)
For the period ended 09/30/96*#.............................. 73.43% $0.0593
For the year ended 03/31/96.................................. 197.19% $0.0594
For the year ended 03/31/95.................................. 110.40% --
For the period ended 03/31/94*............................... 85.43% --
VALUE FUND(4)
For the period ended 09/30/96*#.............................. 107.55% $0.0584
EMERGING COUNTRIES FUND(5)
For the period ended 09/30/96*#.............................. 60.16% $0.0015
For the year ended 03/31/96.................................. 118.21% $0.0022
For the period ended 03/31/95*............................... 60.79% --
INTERNATIONAL GROWTH FUND(5)...................................
For the period ended 09/30/96*#.............................. 82.38% $0.0208
For the year ended 03/31/96.................................. 141.02% $0.0128
For the year ended 03/31/95.................................. 74.88% --
For the period ended 03/31/94*............................... 23.71% --
WORLDWIDE GROWTH FUND(3)
For the period ended 09/30/96*#.............................. 78.42% $0.0173
For the year ended 03/31/96.................................. 132.20% $0.0187
For the year ended 03/31/95.................................. 98.54% --
For the period ended 03/31/94*............................... 95.09% --
FULLY DISCRETIONARY FIXED INCOME(7)
For the period ended 09/30/96*#.............................. 97.77% 0.00
For the year ended 03/31/96*................................. 60.09% 0.00
SHORT-INTERMEDIATE FIXED INCOME(7)
For the period ended 09/30/96*#.............................. 63.75% 0.00
For the period ended 03/31/96*............................... 114.38% 0.00
STRATEGIC INCOME FUND(8)
For the period ended 09/30/96*#.............................. 68.24% $0.0590
HIGH YIELD BOND FUND(8)
For the period ended 09/30/96*#.............................. 145.73% $0.0300
</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 April 30, 1996.
(5) Commenced Operations on November 26, 1994.
(6) Commenced Operations on January 3, 1994.
(7) Commenced Operations on August 31, 1993.
(8) Commenced Operations on July 31, 1996.
* Annualized
# Unaudited
- --------------------------------------------------------------------------------
88
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<PAGE>
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<PAGE>
NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
- --------------------------------------------------------------------------------
600 West Broadway
San Diego, California 92101
800-551-8643
SAN9961
