<PAGE>
--------------------
SEMI-ANNUAL
REPORT
PORTFOLIOS
A, B AND C
--------------------
NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
SEPTEMBER 30, 1996
<PAGE>
NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
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600 West Broadway
San Diego, California 92101
800-551-8043
TRUSTEES OF NICHOLAS-APPLEGATE MUTUAL FUNDS
Fred C. Applegate, 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
Capital Markets Review.................................................... 3
Long-Term View of the U.S. Equity and Bond Markets........................ 4
Portfolio Managers' Roundtable Discussion................................. 6
The Portfolios' Review and Outlook, Performance, and the Funds' Schedules
of Investments
Emerging Growth......................................................... 9
Core Growth............................................................. 17
Income & Growth......................................................... 21
Balanced Growth......................................................... 26
Government Income....................................................... 32
Money Market............................................................ 35
Emerging Countries...................................................... 37
International Growth.................................................... 43
Worldwide Growth........................................................ 49
The Portfolios'
Financial Highlights.................................................... 56
Statements of Assets and Liabilities.................................... 62
Statements of Operations................................................ 68
Statements of Changes in Net Assets..................................... 74
Notes to the Financial Statements....................................... 85
Notes to the Funds' Financial Statements.................................. 98
</TABLE>
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This report is authorized for distribution to shareholders and to others only
when preceded or accompanied by a currently effective prospectus for
Nicholas-Applegate Series A, B and C Portfolios. Distributor: Nicholas-Applegate
Securities.
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<PAGE>
LETTER TO SHAREHOLDERS
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DEAR FELLOW SHAREHOLDER:
We are in the midst of the longest bull market in this century. U.S. stocks
have been on an
uptrend for the past 14 years and 1996 has seen the largest inflow of capital
into mutual funds of any year in history.
Investors are doing an excellent job of educating themselves. More individuals
today are taking a harder look at their financial planning needs than ever
before. We're seeing people in their 20's and early 30's saving more, on a
percentage basis, than previous generations at that stage of life. As our
population is aging it is preparing for a longer life span. There is a
compounding awareness that simple savings rates are insufficient not only for
baby boomers heading into prime earning years, but also for those in
semi-retirement or fully retired.
Before we experienced a sharp-but-shortlived market downturn last summer, many
Wall Street experts suggested investors would be lulled into a false sense of
security as the market marched higher. Those investors, conventional wisdom
held, would pull out of the market at the first sign of a setback. What we saw
in July, however, were relatively calm investors who did not rush to sell when
the market dipped or when reports of a likely increase in interest rates rippled
through markets.
In fact, much of the volatile activity last summer was created by larger
institutions, not the retail sector. What we learned from this was that
individual investors are savvy, well educated and more inclined to think and act
long-term with their investing capital.
That's great news to us. At Nicholas-Applegate, our goal is to deliver GROWTH
OVER TIME-REGISTERED TRADEMARK- to our shareholders. Whether it's through our
portfolios of small or large company stocks, government or corporate bonds, or
investments here or abroad, we help you build your portfolio one security at a
time. We welcome a partnership with you that enables you to achieve your goals.
We thank you for selecting Nicholas-Applegate Mutual Funds and look forward to
serving you in the future.
Sincerely,
[SIG]
John D. Wylie
President
Nicholas-Applegate Mutual Funds
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1
<PAGE>
ORGANIZATION
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Nicholas-Applegate Mutual Funds (the "Trust") is organized as a diversified,
open-end management investment company which offers 46 separate series comprised
of Portfolios A, with an initial sales charge, B, with a contingent deferred
sales charge, C, with a level asset-based sales charge, Institutional, with no
load, and Qualified, with no load (each a "Portfolio" and collectively the
"Portfolios"). The Portfolios of the Trust seek to achieve their respective
investment objectives by investing all of their assets in corresponding series
of Nicholas-Applegate Investment Trust (the "Master Trust"), a diversified,
open-end management investment company offering 15 investment vehicles (the
"Funds"). As of September 30, 1996, the Funds and corresponding Portfolios are
as follows:
<TABLE>
<CAPTION>
INCLUDED
IN INCLUDED IN
FUNDS OF THE PORTFOLIOS OF THIS ANOTHER
MASTER TRUST THE TRUST REPORT REPORT
- -------------------------------- ------------------------------------ ---------- -------------
<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 Fixed Income Fully Discretionary Institutional x
Short-Intermediate Fixed Income Short-Intermediate Institutional x
Strategic Income Strategic Income Institutional x
High Yield Bond High Yield Bond Institutional x
</TABLE>
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2
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CAPITAL MARKETS REVIEW
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The U.S. stock market continued its broad advance through September 1996, with
large and small company stocks delivering solid returns despite a brief
midsummer dip in prices. In the six-month period from April 1 through September
30, domestic markets favored large company stocks over small company stocks, and
bond market returns trailed those of equities.
The Standard & Poor's 500 Index, a measure of large company stock performance,
returned 7.7% for the period while the Russell 2000 Index, which measures the
returns of smaller companies, returned 5.4%. Energy, technology, capital goods,
and consumer durables stocks were among the best performing domestic issues
during the period. Transportation and utility companies' shares performed poorly
relative to other sectors.
There was lingering uncertainty throughout the period over whether the Federal
Reserve Board would raise interest rates. Bond prices fell and yields rose on
news of continued job creation, a development many analysts saw as adding to
inflationary pressures in the economy. But despite continued economic growth,
prices remained stable and bonds bounced back toward the end of the period.
International company stocks trailed domestic market measures in the period,
as evidenced by returns for Morgan Stanley Capital International's Europe,
Australasia, and Far East Index, or EAFE-Registered Trademark-. Individual
country averages showed signs of strength, especially in Northern Europe and
Latin America. Stocks in Germany, the United Kingdom, and Mexico reached record
highs.
INDEX RETURNS*
4/1/96 -- 9/30/96
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
S&P 500 Large Company Stocks 7.7
S&P 400 Mid-Size Company Stocks 5.7
Russell 2000 Small Company Stocks 5.4
MSCI EAFE Foreign Stocks 1.3
IFC Investable Developing Countries 2.0
</TABLE>
Stable interest rates, a strong dollar, and good corporate earnings favored
domestic stocks over international stocks through most of the period. Some of
the world's best performing markets were in emerging market countries, including
Mexico, Brazil, Hungary, and other Latin American and Eastern European nations.
However, emerging market performance was irregular and declines in some Asian
markets led to more moderate returns for broad global measures of emerging
country performance, such as the IFC Investable Index.
Increased political stability, advanced communications, and new technologies
are creating a closer global community and economy. This facilitates
international commerce and is creating dynamic new investment opportunities. We
believe this bodes well for investors generally and for those availing
themselves of our bottom-up style of investing specifically. We continue to seek
and find securities throughout the world that we believe are worthy of your
investment. We are upbeat about the outlook for both domestic and international
markets.
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* Index returns reflect reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or
other expenses of investing. Past performance is no indication of future
performance.
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3
<PAGE>
LONG-TERM VIEW OF THE U.S. EQUITY AND BOND MARKETS
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EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LARGE COMPANY STOCK SMALL COMPANY STOCK LONG-TERM GOVERNMENT BONDS
<S> <C> <C> <C>
1925 1.000 1.000 1.000
1926 1.116 1.003 1.078
1927 1.535 1.224 1.174
1928 2.204 1.710 1.175
1929 2.016 0.832 1.215
1930 1.516 0.515 1.272
1931 0.859 0.259 1.204
1932 0.789 0.245 1.407
1933 1.214 0.594 1.406
1934 1.197 0.738 1.547
1935 1.767 1.035 1.624
1936 2.367 1.705 1.746
1937 1.538 0.716 1.750
1938 2.016 0.951 1.847
1939 2.008 0.954 1.957
1940 1.812 0.905 2.076
1941 1.602 0.823 2.096
1942 1.927 1.190 2.163
1943 2.427 2.242 2.208
1944 2.906 3.446 2.270
1945 3.965 5.983 2.514
1946 3.645 5.287 2.511
1947 3.853 5.335 2.445
1948 4.065 5.223 2.529
1949 4.829 6.254 2.692
1950 6.360 8.677 2.693
1951 7.888 9.355 2.587
1952 9.336 9.638 2.617
1953 9.244 9.013 2.713
1954 14.106 14.473 2.907
1955 18.561 17.431 2.870
1956 19.778 18.177 2.710
1957 17.646 15.529 2.912
1958 25.298 25.605 2.734
1959 28.322 29.804 2.673
1960 28.455 28.823 3.041
1961 36.106 38.072 3.070
1962 32.954 33.540 3.282
1963 40.469 41.444 3.322
1964 47.139 51.193 3.438
1965 53.008 72.567 3.463
1966 47.674 67.479 3.589
1967 59.104 123.670 3.259
1968 65.642 168.429 3.251
1969 60.059 126.233 3.086
1970 62.465 104.226 3.460
1971 71.406 121.423 3.917
1972 84.956 126.807 4.140
1973 72.500 87.618 4.094
1974 53.311 70.142 4.272
1975 73.144 107.189 4.665
1976 90.584 166.691 5.447
1977 84.077 211.500 5.410
1978 89.592 261.120 5.346
1979 106.113 374.614 5.280
1980 140.514 523.992 5.071
1981 133.616 596.717 5.166
1982 162.223 763.829 7.251
1983 198.745 1066.828 7.298
1984 211.199 995.680 8.427
1985 279.117 1241.234 11.037
1986 330.671 1326.275 13.745
1987 347.967 1202.966 13.372
1988 406.458 1478.135 14.665
1989 534.455 1628.590 17.322
1990 517.499 1277.449 18.392
1991 675.592 1847.629 21.942
1992 727.412 2279.039 23.709
1993 800.078 2757.147 28.034
1994 810.538 2842.773 25.856
1995 1113.918 3822.398 34.044
1996 1265.04 4359.05 32.14
Large Company Stock Small Company Stock Long-Term Government Bonds
Cumulative 1,265.04 4,359.05 32.14
The Growth of $1.00 Invested at
Year-end 1925 through September 1996
Source: Ibbotson Associates
<CAPTION>
TREASURY BILLS INFLATION
<S> <C> <C>
1925 1.000 1.000
1926 1.033 0.985
1927 1.065 0.965
1928 1.103 0.955
1929 1.155 0.957
1930 1.183 0.899
1931 1.196 0.814
1932 1.207 0.730
1933 1.211 0.734
1934 1.213 0.749
1935 1.215 0.771
1936 1.217 0.780
1937 1.221 0.804
1938 1.221 0.782
1939 1.221 0.778
1940 1.221 0.786
1941 1.222 0.862
1942 1.225 0.942
1943 1.229 0.972
1944 1.233 0.993
1945 1.237 1.015
1946 1.242 1.199
1947 1.248 1.307
1948 1.258 1.343
1949 1.272 1.318
1950 1.287 1.395
1951 1.306 1.477
1952 1.328 1.490
1953 1.352 1.499
1954 1.364 1.492
1955 1.385 1.497
1956 1.419 1.540
1957 1.464 1.587
1958 1.486 1.615
1959 1.530 1.639
1960 1.571 1.663
1961 1.604 1.674
1962 1.648 1.695
1963 1.700 1.723
1964 1.760 1.743
1965 1.829 1.777
1966 1.916 1.836
1967 1.997 1.892
1968 2.101 1.981
1969 2.239 2.102
1970 2.385 2.218
1971 2.490 2.292
1972 2.585 2.371
1973 2.764 2.579
1974 2.986 2.894
1975 3.159 3.097
1976 3.319 3.246
1977 3.489 3.465
1978 3.740 3.778
1979 4.128 4.281
1980 4.592 4.812
1981 5.267 5.242
1982 5.822 5.445
1983 6.335 5.652
1984 6.959 5.875
1985 7.496 6.097
1986 7.958 6.166
1987 8.393 6.438
1988 8.926 6.722
1989 9.673 7.034
1990 10.429 7.464
1991 11.012 7.693
1992 11.398 7.916
1993 11.728 8.133
1994 12.186 8.351
1995 12.868 8.563
1996 13.36 8.790
Treasury Bills Inflation
Cumulative 13.36 8.79
The Growth of $1.00 Invested at
Year-end 1925 through September 1996
Source: Ibbotson Associates
</TABLE>
IBBOTSON ASSOCIATES GROWTH OF $1.00 CHART
SMALL COMPANY STOCK
Small Company Stocks data represents the smallest one-fifth of NYSE stocks
from 1/1/26 through 12/31/81 and Dimensional Fund Advisors ("DFA") Small Company
Fund thereafter, with all income dividends and capital gains distributions, if
any, reinvested.
LARGE COMPANY STOCK
Large Company Stocks data represents the Standard & Poor's 500 Index which
contains 500 industrial, transportation, utility and financial companies
regarded as generally representative of the U.S. stock market.
LONG-TERM GOVERNMENT BONDS
Long Term Government Bond data is based on a one bond portfolio whose
rolling approximate maturity is twenty years.
TREASURY BILLS
Treasury bill data is measured by a portfolio having a minimum maturity of
one month.
INFLATION
The Consumer Price Index is a measure of change in consumer prices as
determined by a monthly survey of the U.S. Bureau of Labor Statistics. Many
pension and employment contracts are tied to changes in consumer prices, as
protection against inflation and reduced purchasing power.
Each equity and bond index reflects the reinvestment of income dividends and
capital gains distributions, if any, but does not reflect fees, brokerage
commissions, or other expenses of investing (except for the DFA Small Company
Fund's returns which are net of transaction costs). All results are historical.
Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.
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4
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5
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PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION
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<TABLE>
<S> <C> <C> <C>
[PHOTO] [PHOTO] [PHOTO] [PHOTO]
Catherine Somhegyi Larry Speidell, CFA Fred Robertson Doug Forsyth, CFA,
Partner, Chief Investment Partner, Director of Partner, Chief Investment Portfolio Manager,
Officer, Global Equity Global/Systematic Officer, Fixed Income Fixed Income Investments
Management Portfolio Management and Management
Research
</TABLE>
Nicholas-Applegate brought together the panel of investment professionals
above to review this year's activities in the world's capital markets and in the
Nicholas-Applegate Mutual Funds.
Q: CATHERINE, U.S. STOCKS HAVE CONTINUED TO DELIVER SOLID RETURNS IN 1996 AND
MANY FOREIGN STOCKS SEEM TO BE JOINING THE RALLY. WHAT FORCES HAVE BEEN DRIVING
THE MARKET HERE AND ABROAD?
A: CATHERINE: Strong fundamentals in U.S. stocks and a benign interest rate
environment are two of the major factors contributing to the strong performance
of domestic stocks. The markets experienced strong capital flows into mutual
funds. For international stocks, a friendly interest rate environment, and lower
inflation rates in some of the larger developed markets, such as Germany and
Northern Europe, have contributed to a favorable environment for both stock and
bond markets. We're positive on Australia, Canada, The Netherlands, Norway and
New Zealand. Latin America is offering strong companies with solid fundamentals.
In the Asian markets, even though a few countries have underperformed, we are
positive about Malaysia, Indonesia and Hong Kong -- which have proven to be
strong.
Q: WHERE ARE YOU FINDING YOUR GREATEST BUYING OPPORTUNITIES?
A: LARRY: Well, bear in mind that we pick stocks, not markets or sectors. We
look for companies that are benefiting from positive change that is both timely
and sustainable. Because of this, we can and do find success in many industries
and sectors and we can sometimes earn gains in markets that are declining. In
our Emerging Countries Fund, for example, we delivered impressive gains from the
Fund's investments in Thailand from April through September even though that
market fell during the period. In our International Growth and Worldwide Growth
Fund we are finding many exciting opportunities in Europe, especially Northern
European markets.
A: CATHERINE: In our domestic funds we were especially successful with our
stock picks in the technology, retail, and consumer services areas. We found
some excellent growing companies among software developers and specialty
retailers. But I want to reinforce what Larry said. We are constantly looking
for healthy, growing companies in all
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6
<PAGE>
PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION -- CONTINUED
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<TABLE>
<S> <C>
[PHOTO] [PHOTO]
Pedro Marcal Maren Lindstrom
Portfolio Manager, Portfolio Manager,
Emerging Countries Fund Income & Growth Fund
</TABLE>
industries and sectors. And we base our buying and selling decisions on the
merits of the individual companies not on the economic outlook.
Q: WHY SHOULD INVESTORS DIVERSIFY THEIR PORTFOLIO
INTO FOREIGN STOCKS WHEN DOMESTIC ISSUES HAVE DONE SO WELL IN RECENT YEARS?
A: LARRY: One reason
to invest internationally is precisely because domestic markets have done so
well relative to international markets in recent years. Historically, domestic
and international markets have been subject to cycles of outperformance. For a
period of years, domestic investments would outperform international investments
and then the pattern would be reversed. Asset allocation plans attempt to take
advantage of these cycles. Over the last 25 years, for example, disciplined
investors who diversified investments between domestic and foreign stocks
generally enjoyed higher returns with less fluctuation in their portfolios than
purely domestic investors. Of course international investing carries certain
risks not found in domestic investing, such as those posed by political and
currency issues, and these risks are intensified in emerging markets.
Another reason to diversify into international investing is to gain exposure
to more of the world's opportunities and to some of its fastest growing markets
and companies. Rather than asking themselves why they should venture into
international investing, I recommend that investors ask why they should limit
themselves to domestic investments. Instead, why not strive to own more of the
best companies in the world?
Q: THE EMERGING COUNTRIES PORTFOLIOS HAVE DONE ESPECIALLY WELL. WHAT FACTORS
CONTRIBUTED TO THIS SUPERIOR PERFORMANCE?
A: PEDRO: Excellent stock selection has been the major factor contributing to
the success of our Emerging Countries Fund. It continues to benefit from some of
the world's most dynamic companies located in Asia, Eastern Europe, Latin
America, Africa and the Middle East. Because rapid changes are taking place in
these regions and countries, we believe the best investments are in those
companies that are able to take advantage of the opportunities the growth
provides. Some of our successful investments were in Israeli technology,
Brazilian retail, and Chinese consumer companies. We have also added value
through our stock selection decisions in countries where the market has
underperformed, such as Thailand. Some of the world's most dynamic companies --
those that are adapting to and managing change -- are based in emerging
countries, which are among the fastest growing in the world economy.
Q: NICHOLAS-APPLEGATE STATES THAT IT MANAGES PORTFOLIOS BY MANAGING INFORMATION.
WHAT TYPE OF INFORMATION ARE YOU LOOKING FOR, HOW DO YOU FIND IT, AND HOW DO YOU
ANALYZE IT?
A: CATHERINE: We are constantly researching companies that are poised for rapid
growth. To support our fundamental research, we have established a worldwide
network of experienced research analysts that provide us with timely information
and insight.
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7
<PAGE>
PORTFOLIO MANAGERS' ROUNDTABLE DISCUSSION -- CONCLUDED
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We draw from powerful internal research tools, including a sophisticated
database and computer system that evaluate and rank companies worldwide. Our
investment teams draw from these resources and from each other. Team members
work in close proximity, creating an environment that provides a constant flow
and exchange of information so we are able to make well-timed decisions. These
resources, coupled with our highly-disciplined technology, enable us to search
worldwide for companies that meet our stringent criteria.
A: MAREN: The information we look for in managing the Income & Growth Fund is
the same as in our stock portfolios except that we are focusing on investments
in convertible securities, mostly corporate bonds or preferred stocks that can
be converted to common stocks.
Just as in our stock
portfolios, we use a bottom-up approach to investing in convertibles. We look at
the fundamentals of the companies, building our portfolios on company-by-company
basis.
Our objective is to deliver superior risk-adjusted returns. Once we find
companies that meet our underlying equity criteria, we look to invest in
convertible securities of companies that we believe will provide 80% to 100% of
the upside performance of the stock, with only 40 to 50% of the downside
performance. In managing the portfolio, we leverage information from our
domestic and international equity teams, our high-yield bond team, and our
systematic team to deliver a lower risk approach to small- and mid-cap equity
investing.
Q: WHAT FORCES HAVE BEEN BEHIND THIS YEAR'S RATHER SLUGGISH BOND MARKET AND HOW
HAVE YOU ADJUSTED THE GOVERNMENT INCOME AND BALANCED GROWTH FUNDS IN RESPONSE?
WHAT IS YOUR TEAM'S OUTLOOK FOR THESE AREAS OF THE BOND MARKET?
A: DOUG: Fixed income investors realized early in 1996 that the economic
contraction witnessed in 1995 was unlikely to continue into the second quarter.
Surprisingly strong employment reports shook the bond market, sending interest
rates higher and bond prices down. In the second quarter Gross Domestic Product
or GDP, the primary measure of the economy's output, rose to 4.7% and the
outlook for a Federal Reserve interest rate hike was likely. Our portfolios were
positioned to perform well in a moderate growth-low inflationary environment by
maintaining a duration slightly longer than the Lehman Brothers
Government/Corporate Index. Although this strategy proved untimely in the second
quarter, it proved beneficial in the third quarter, when the economy returned to
a slower growth trend (2.2% GDP) and rates fell. In the Balanced Growth Fund, we
included corporate bonds to add diversification and yield in this historically
low market interest rate environment.
A: FRED: In the fourth quarter we expect to see continuation of moderate
economic growth and by that we mean continued low inflation is likely. Consumer
behavior will be the major factor over the coming months as the ability to spend
will be tested. Continued low inflation is a long term positive for the bond
market.
Q: HOW DO YOU DETERMINE WHAT PERCENTAGE OF THE PORTFOLIOS TO INVEST IN
INDIVIDUAL COUNTRIES AND INDUSTRIES? AND WHY DO YOU SELECT A DIFFERENT
PERCENTAGE FROM THE BENCHMARK INDEXES?
A: LARRY: Basically, we let the stocks tell us where to invest around the
world. Most of our currency exposures are based on our bottom-up stock picking
approach, but we do consider changes in the economic and political environment
in each country. If we do not find attractive stocks, we will not own companies
located in a country; whereas in countries where attractive stocks are
plentiful, they are overweighted. We look for growing companies in the U.S. and
abroad that offer excellent investment opportunities.
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8
<PAGE>
EMERGING GROWTH FUND
PORTFOLIOS A, B & C
- -------------------------------------------------------------------
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 the U.S. equity securities
of companies with market capitalizations below $500 million.
REVIEW AND OUTLOOK: The Emerging Growth Portfolios delivered substantial
returns to shareholders over the period, from April 1 through September 30,
1996. Excellent stock selection decisions in the technology and
commercial/industrial services sectors contributed to the Fund's advance. For
example, Portfolio C shares returned 11.9% for the period, more than twice the
4.9% gain of the benchmark Russell 2000 Growth Index.
Among technology stocks, a top performer was Rational Software, a developer of
database management systems and tools software. The company's shares appreciated
sharply in the period due in part to important agreements with Microsoft and the
anticipated release of future products. Another top-performing technology
holding was Saville Systems, a leading supplier of customized mid-range computer
billing and customer-care software systems for telecommunications service
providers. The company has been improving earnings and earnings estimates due to
additional signed contracts with three new carriers and an expanded relationship
with AT&T. The earnings of two of our holdings, Software 2000, Inc. and
Theratech, Inc. did not meet our expectations. We sold Software 2000 shares due
to concerns over licensing revenues. We sold shares of Theratech, a manufacturer
of testosterone patches, because of marketing difficulties.
Our growth style of investing continues to be compatible with the current
market environment. Stable economic conditions in the United States and
increasingly favorable conditions abroad are providing an excellent operating
environment for dynamic small companies. We seek out and invest in companies
that we believe will continue to benefit from change and grow earnings as a
result. We believe long-term investors will continue to achieve growth of
capital from their investments in these types of companies through the Emerging
Growth Portfolios.
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.
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9
<PAGE>
EMERGING GROWTH PORTFOLIOS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years 10 Years
17.18% 15.54% 15.56%
Emerging Growth Portfolio A Russell 2000 Growth Index
7/31/85 $ 9,475 $ 10,000
9/30/85 8,929 9,134
12/31/85 10,520 10,697
3/31/86 12,128 12,282
6/30/86 13,274 13,086
9/30/86 10,741 10,960
12/31/86 11,111 11,080
3/31/87 13,526 14,093
6/30/87 13,505 13,897
9/30/87 14,248 14,348
12/31/87 10,606 9,919
3/31/88 12,508 11,647
6/30/88 13,613 12,386
9/30/88 13,304 12,045
12/31/88 13,373 11,940
3/31/89 14,824 12,826
6/30/89 15,463 13,656
9/30/89 17,311 14,877
12/31/89 16,934 14,348
3/31/90 17,203 13,967
6/30/90 18,278 14,848
9/30/90 14,045 10,974
12/31/90 15,404 11,850
3/31/91 20,246 15,470
6/30/91 19,167 14,934
9/30/91 22,112 16,545
12/31/91 23,886 17,916
3/31/92 23,825 18,406
6/30/92 21,140 16,195
9/30/92 22,381 16,509
12/31/92 26,733 19,308
3/31/93 26,523 18,962
6/30/93 27,425 19,507
9/30/93 30,867 21,327
12/31/93 30,796 21,887
3/31/94 28,909 20,997
6/30/94 26,735 19,679
9/30/94 29,506 21,514
12/31/94 29,554 21,355
3/31/95 31,203 22,526
6/30/95 34,715 24,761
9/30/95 38,944 27,576
12/31/95 39,860 27,988
3/31/96 42,899 29,596
6/30/96 46,918 31,325
9/30/96 48,163 31,057
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years 10 Years
16.42% 15.50% 15.38%
Emerging Growth Portfolio B Russell 2000 Growth Index
7/31/85 $10,000 $10,000
9/30/85 9,413 9,134
12/31/85 11,074 10,697
3/31/86 12,746 12,282
6/30/86 13,929 13,086
9/30/86 11,251 10,960
12/31/86 11,619 11,080
3/31/87 14,124 14,093
6/30/87 14,079 13,897
9/30/87 14,830 14,348
12/31/87 11,019 9,919
3/31/88 12,975 11,647
6/30/88 14,099 12,386
9/30/88 13,757 12,045
12/31/88 13,805 11,940
3/31/89 15,279 12,826
6/30/89 15,912 13,656
9/30/89 17,786 14,877
12/31/89 17,370 14,348
3/31/90 17,618 13,967
6/30/90 18,689 14,848
9/30/90 14,335 10,974
12/31/90 15,697 11,850
3/31/91 20,601 15,470
6/30/91 19,471 14,934
9/30/91 22,427 16,545
12/31/91 24,188 17,916
3/31/92 24,087 18,406
6/30/92 21,336 16,195
9/30/92 22,553 16,509
12/31/92 26,897 19,308
3/31/93 26,643 18,962
6/30/93 27,504 19,507
9/30/93 30,908 21,327
12/31/93 30,788 21,887
3/31/94 28,826 20,997
6/30/94 26,601 19,679
9/30/94 29,326 21,514
12/31/94 29,283 21,355
3/31/95 30,888 22,526
6/30/95 34,287 24,761
9/30/95 38,402 27,576
12/31/95 39,210 27,988
3/31/96 42,139 29,596
6/30/96 45,951 31,325
9/30/96 47,062 31,057
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 9/30/96
<S> <C> <C>
1 Year 5 Years 10 Years
22.87% 16.11% 15.45%
Emerging Growth Portfolio C Russell 2000 Growth Index
7/31/85 $ 10,000 $ 10,000
9/30/85 9,413 9,134
12/31/85 11,074 10,697
3/31/86 12,746 12,282
6/30/86 13,929 13,086
9/30/86 11,251 10,960
12/31/86 11,619 11,080
3/31/87 14,124 14,093
6/30/87 14,079 13,897
9/30/87 14,830 14,348
12/31/87 11,019 9,919
3/31/88 12,975 11,647
6/30/88 14,099 12,386
9/30/88 13,757 12,045
12/31/88 13,805 11,940
3/31/89 15,279 12,826
6/30/89 15,912 13,656
9/30/89 17,786 14,877
12/31/89 17,370 14,348
3/31/90 17,618 13,967
6/30/90 18,689 14,848
9/30/90 14,335 10,974
12/31/90 15,697 11,850
3/31/91 20,601 15,470
6/30/91 19,471 14,934
9/30/91 22,427 16,545
12/31/91 24,188 17,916
3/31/92 24,087 18,406
6/30/92 21,336 16,195
9/30/92 22,553 16,509
12/31/92 26,897 19,308
3/31/93 26,643 18,962
6/30/93 27,504 19,507
9/30/93 30,908 21,327
12/31/93 30,787 21,887
3/31/94 28,828 20,997
6/30/94 26,631 19,679
9/30/94 29,354 21,514
12/31/94 29,330 21,355
3/31/95 30,954 22,526
6/30/95 34,393 24,761
9/30/95 38,525 27,576
12/31/95 39,367 27,988
3/31/96 42,296 29,596
6/30/96 46,185 31,325
9/30/96 47,337 31,057
</TABLE>
The graphs compare a $10,000 investment in the Emerging Growth Portfolio A
(front load), the Emerging Growth Portfolio B (back-end load) and the Emerging
Growth Portfolio C (level load) with a similar investment in the Russell 2000
Growth Index, on a cumulative and average annual total return basis. Returns
reflect the reinvestment of income dividends and capital gains distributions, if
any, as well as all fees and expenses. Performance figures include the maximum
applicable sales charge of 5.25% for Class A shares. The effect of the maximum
contingent deferred sales charge for Class B shares (maximum 5% declining to 0%
over six years) is included in Class B performance. Performance is affected by a
12b-1 Plan which commenced at inception of each share class.
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 each share class. If the limited partnership and
pooled trust had been registered as investment companies under federal
securities laws, their performance might have been adversely affected because of
the additional restrictions applicable to registered investment companies.
Total returns reflect the fact that fees and expenses in excess of certain
expense limitations specified in the investment management agreement have been
deferred by the Adviser. Total return results would have been lower had there
been no deferral.
The Russell 2000 Growth Index is an unmanaged index comprised of stocks of
smaller U.S. companies with greater-than-average growth orientation and
represents the universe of stocks that generally have higher price-to-book and
price-earnings ratios. Its 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 indication of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
10
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
11
<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
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
12
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
LIFE INSURERS (CONTINUED)
Protective Life Corp....................... 8,900 $ 335,975
------------
361,175
------------
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL SUPPLIES (CONTINUED)
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
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
------------
</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>
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
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER CONSUMER SERVICES (CONTINUED)
Apollo Group, Inc. Class A*................ 34,647 $ 926,807
ITT Educational Services*.................. 11,800 413,000
------------
2,275,694
------------
OTHER FINANCIAL SERVICES -- 0.9%
Ocwen Financial Corp.*..................... 17,000 346,375
RAC Financial Group, Inc.*................. 85,000 3,878,125
Southern Pacific Funding Corp.*............ 17,200 434,300
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
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
14
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCK (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
PROPERTY-CASUALTY INSURERS (CONTINUED)
La Salle Re Holdings LTD................... 49,300 $ 1,158,550
Vesta Insurance Group, Inc................. 34,350 1,318,181
------------
5,145,743
------------
PUBLISHING -- 0.2%
Golden Books Family Entertainment, Inc.*... 90,000 1,046,250
------------
RAILROADS -- 0.2%
Railtex, Inc.*............................. 40,000 952,500
------------
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SEMICONDUCTORS/ELECTRONIC COMPONENT (CONTINUED)
Sawtek, Inc.*.............................. 90,700 $ 2,358,200
SDL, Inc.*................................. 100,400 2,058,200
S3, Inc.*.................................. 246,700 4,872,325
Trident Microsystems, Inc.*................ 68,000 1,028,500
Vitesse Semiconductor Corp.*............... 125,800 4,859,025
------------
20,635,362
------------
SOFTWARE -- 14.0%
Amisys Managed Care Systems*............... 36,000 859,500
Applix, Inc.*.............................. 16,500 433,125
Aspen Technology, Inc.*.................... 42,400 2,872,600
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
</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>
SOFTWARE (CONTINUED)
Wind River Systems, Inc.*.................. 49,800 $ 2,203,650
------------
84,958,909
------------
SPECIALTY CHAINS -- 2.9%
Cross Continenet Auto Retailers, Inc.*..... 12,000 276,000
Duty Free International, Inc............... 56,400 775,500
Finish Line, Inc. Class A*................. 24,000 1,140,000
Insight Enterprises, Inc.*................. 13,600 508,300
Just for Feet, Inc.*....................... 58,100 2,912,262
Men's Wearhouse, Inc.*..................... 25,300 632,500
Microage, Inc.*............................ 103,000 1,944,125
Party City Corp.*.......................... 8,000 150,000
Petco Animal Supplies, Inc.*............... 40,650 1,107,712
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
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELEPHONE (CONTINUED)
Tel-Save Holdings, Inc.*................... 72,000 2,070,000
Winstar Communications*.................... 123,800 2,058,175
------------
14,501,416
------------
TOBACCO PRODUCTS -- 0.3%
Mafco Consolidated Group, Inc.*............ 68,800 2,107,000
------------
TRUCKING -- 0.6%
Knight Transportation, Inc.*............... 17,000 371,875
Landstar System, Inc.*..................... 76,500 2,046,375
Swift Transportation Co.*.................. 17,000 372,938
USFreightways Corp......................... 51,000 1,045,500
------------
3,836,688
------------
WHOLESALE DISTRIBUTION -- 1.4%
Anicom, Inc.*.............................. 10,700 189,925
Central Garden & Pet Co.*.................. 74,900 1,507,362
Daisytek International Corp.*.............. 3,800 164,350
Fresh America Corp.*....................... 800 15,450
Hughes Supply, Inc.*....................... 3,600 133,200
Tech Data Corp.*........................... 238,300 6,642,613
------------
8,652,900
------------
TOTAL COMMON STOCKS
(COST $402,514,887)...................................... 575,572,587
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------
<CAPTION>
COMMERCIAL PAPER -- 5.6%
<S> <C> <C>
- ----------------------------------------------
Associates Corp. -- 0.7%
5.80%, 10/01/96................ 4,068 4,068,000
Merrill Lynch & Co.
5.85%, 10/01/96................ 29,614 29,614,000
------------
TOTAL COMMERCIAL PAPER
(COST $33,682,000)............................. 33,682,000
- ---------------------------------------------------------
<CAPTION>
REPURCHASE AGREEMENT -- 0.2%
<S> <C> <C>
- ----------------------------------------------
J. P. Morgan & Co., Inc.
$1,667,000 at 5.65%, (Agreement
dated 09/30/96; to be
repurchased at $1,667,262 on
10/01/96; collateralized by
$1,665,000 FHMA Note, 7.16% due
01/10/97)(VALUE $1,708,661)
(COST $1,667,000) 1,667,000 1,667,000
------------
TOTAL INVESTMENTS -- 100.5%
(COST $437,863,887)............................ 610,921,587
LIABILITIES IN EXCESS OF OTHER ASSETS (0.5%)..... (2,979,076)
------------
NET ASSETS 100.0%................................ $607,942,511
------------
<FN>
- ---------------
* Non-Income Producing Security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
16
<PAGE>
CORE GROWTH FUND
PORTFOLIOS A, B & C
- -------------------------------------------------------------------
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 Portfolios earned strong returns for the
period April 1 through September 30, 1996. The Fund's holdings in the retail,
technology, and energy sectors boosted performance relative to broad market
measures. The Fund overcame the brief midsummer downturn of the stock market
with solid third-quarter performance. Core Growth Portfolio C shares gained
10.5% over the six-month period, compared with a 7.7% rise in the Standard &
Poor's 500 Index.
The Core Growth Fund emphasizes mid-sized and larger companies. We search
among more than 1,000 U.S. traded stocks for the best possible growth potential
for inclusion in the Fund. This search resulted in the Fund holding such stocks
as Nike during the period. Shares of the athletic shoe and sportswear maker rose
sharply along with earnings in the period. Nike management has been especially
successful creating worldwide brand recognition. Safeway, the California-based
supermarket giant, also soared in the period as it continued to deliver solid,
stable, and timely earnings growth. Shares of Cadence Design Systems, a provider
of server and enterprise hardware, climbed in light of the company's recent 50%
increase in software licensing and new product introductions. Shares of Gap were
sold during the period because of weaker "same store" sales and tough
competition entering the marketplace next year. Aggressive pricing by a major
competitor of United States Satellite could lead to slower growth for this
company and in anticipation of this development, we recently sold these issues.
We also sold shares of credit card provider Advanta Corp. The company has been
experiencing fewer loan originations and writing off more bad debt than in the
past.
Our consistent investment philosophy applied to the mid-cap and large-cap
segments of the stock market has continued to deliver rewards for shareholders.
We continue to find solid companies that we believe are poised for growth and
have the added benefit of commanding the financial resources that provide
stability to larger companies. We remain confident the Core Growth Fund is well
positioned to provide strong returns.
REPRESENTATIVE HOLDINGS
Safeway, Inc.
ADC Telecommunications
Cascade Communications Company
Nike, Inc.
Tommy Hilfiger Corp.
Dura Pharmaceuticals, Inc.
USA Waste Services, Inc.
BMC Software, Inc.
Diamond Offshore Drilling, Inc.
B.J. Services Company
- --------------------------------------------------------------------------------
17
<PAGE>
CORE GROWTH PORTFOLIOS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years 10 Years
13.54% 15.73% 16.48%
Core Growth Portfolio A
S&P 500 Index
9/30/85 $ 9,475 $ 10,000
12/31/85 11,802 11,714
3/31/86 14,679 13,365
6/30/86 16,512 14,150
9/30/86 14,646 13,163
12/31/86 15,588 13,898
3/31/87 19,117 16,860
6/30/87 19,630 17,704
9/30/87 21,364 18,869
12/31/87 16,051 14,630
3/31/88 16,430 15,465
6/30/88 18,232 16,486
9/30/88 17,814 16,543
12/31/88 17,977 17,050
3/31/89 18,914 18,266
6/30/89 20,094 19,864
9/30/89 23,614 21,985
12/31/89 23,935 22,441
3/31/90 24,203 21,782
6/30/90 27,782 23,137
9/30/90 22,758 19,976
12/31/90 23,965 21,758
3/31/91 30,160 24,916
6/30/91 28,767 24,859
9/30/91 32,423 26,189
12/31/91 37,056 28,384
3/31/92 36,025 27,667
6/30/92 33,478 28,192
9/30/92 35,078 29,083
12/31/92 41,829 30,548
3/31/93 44,453 31,883
6/30/93 47,239 32,034
9/30/93 50,894 32,860
12/31/93 49,805 33,624
3/31/94 46,245 32,347
6/30/94 43,522 32,482
9/30/94 45,582 34,071
12/31/94 44,328 34,067
3/31/95 47,469 37,389
6/30/95 52,705 40,956
9/30/95 59,302 44,212
12/31/95 61,012 46,874
3/31/96 64,119 49,388
6/30/96 69,215 51,602
9/30/96 71,064 53,197
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years 10 Years
13.22% 15.79% 16.37%
Core Growth Portfolio B
S&P 500 Index
9/30/85 $ 10,000 $ 10,000
12/31/85 12,438 11,714
3/31/86 15,446 13,365
6/30/86 17,347 14,150
9/30/86 15,361 13,163
12/31/86 16,323 13,898
3/31/87 19,988 16,860
6/30/87 20,490 17,704
9/30/87 22,266 18,869
12/31/87 16,698 14,630
3/31/88 17,064 15,465
6/30/88 18,906 16,486
9/30/88 18,443 16,543
12/31/88 18,582 17,050
3/31/89 19,518 18,266
6/30/89 20,703 19,864
9/30/89 24,293 21,985
12/31/89 24,583 22,441
3/31/90 24,818 21,782
6/30/90 28,444 23,137
9/30/90 23,259 19,976
12/31/90 24,455 21,758
3/31/91 30,730 24,916
6/30/91 29,262 24,859
9/30/91 32,929 26,189
12/31/91 37,576 28,384
3/31/92 36,470 27,667
6/30/92 33,835 28,192
9/30/92 35,395 29,083
12/31/92 42,143 30,548
3/31/93 44,715 31,883
6/30/93 47,478 32,034
9/30/93 51,061 32,860
12/31/93 49,879 33,624
3/31/94 46,220 32,347
6/30/94 43,421 32,482
9/30/94 45,424 34,071
12/31/94 44,073 34,067
3/31/95 47,152 37,389
6/30/95 52,241 40,956
9/30/95 58,708 44,212
12/31/95 60,344 46,874
3/31/96 63,305 49,338
6/30/96 68,252 51,602
9/30/96 69,966 53,197
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years 10 Years
19.16% 16.25% 16.36%
Core Growth Portfolio C
S&P 500 Index
9/30/85 $ 10,000 $ 10,000
12/31/85 12,438 11,714
3/31/86 15,446 13,365
6/30/86 17,347 14,150
9/30/86 15,361 13,163
12/31/86 16,323 13,898
3/31/87 19,988 16,860
6/30/87 20,490 17,704
9/30/87 22,266 18,869
12/31/87 16,698 14,630
3/31/88 17,064 15,465
6/30/88 18,906 16,486
9/30/88 18,443 16,543
12/31/88 18,582 17,050
3/31/89 19,518 18,266
6/30/89 20,703 19,864
9/30/89 24,293 21,985
12/31/89 24,583 22,441
3/31/90 24,818 21,782
6/30/90 28,444 23,137
9/30/90 23,259 19,976
12/31/90 24,455 21,758
3/31/91 30,730 24,916
6/30/91 29,262 24,859
9/30/91 32,929 26,189
12/31/91 37,576 28,384
3/31/92 36,470 27,667
6/30/92 33,835 28,192
9/30/92 35,395 29,083
12/31/92 42,143 30,548
3/31/93 44,715 31,883
6/30/93 47,398 32,034
9/30/93 50,969 32,860
12/31/93 49,824 33,624
3/31/94 46,180 32,347
6/30/94 43,377 32,482
9/30/94 45,374 34,071
12/31/94 44,078 34,067
3/31/95 47,127 37,389
6/30/95 52,207 40,956
9/30/95 56,689 44,212
12/31/95 60,301 46,874
3/31/96 63,279 49,338
6/30/96 68,220 51,602
9/30/96 69,937 53,197
</TABLE>
The graphs compare a $10,000 investment in the Core Growth Portfolio A (front
load), the Core Growth Portfolio B (back-end load) and the Core Growth Portfolio
C (level load) with a similar investment in the Standard & Poor's 500 Index
("S&P 500"), on a cumulative and average annual total return basis. Returns
reflect the reinvestment of income dividends and capital gains distributions, if
any, as well as all fees and expenses. Performance figures include the maximum
applicable sales charge of 5.25% for Class A shares. The effect of the maximum
contingent deferred sales charge for Class B shares (maximum 5% declining to 0%
over six years) is included in Class B performance. Performance is affected by a
12b-1 Plan which commenced at inception of each share class.
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 on 4/19/93. Limited
partnership returns are restated to reflect all fees and expenses applicable to
each share class. If the limited partnership had been registered as an
investment company under federal securities laws, its performance might have
been adversely affected because of the additional restrictions applicable to
registered investment companies.
Total returns reflect the fact that fees and expenses in excess of certain
expense limitations specified in the investment management agreement have been
deferred by the Adviser. Total return results would have been lower had there
been no deferral.
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. 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 indication of future performance. Investment returns and
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.
- --------------------------------------------------------------------------------
18
<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.
- --------------------------------------------------------------------------------
19
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
CORE GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS -- 96.6%
- ---------------------------------------------------------
<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.
- --------------------------------------------------------------------------------
20
<PAGE>
INCOME & GROWTH FUND
PORTFOLIOS A, B & C
- -------------------------------------------------------------------
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 Portfolios earned steady returns
through the period on the strength of the Fund's individual holdings in the
technology, insurance, and commercial and industrial services sectors. The Fund,
which holds convertible bonds, preferred stocks, and other equity securities of
U.S. companies, performed well compared with the First Boston Convertibles
Index, an industry benchmark. For example, Portfolio C shares returned 8.2% for
the period, April 1 through September 30, 1996; the benchmark rose 4.5% during
the same period. The Portfolio's effective yield for the 30 day period ended
September 30 was 1.09%.
The Fund seeks to tap the growth potential of small and medium-sized companies
through securities convertible into common stocks. By investing in these types
of securities, we seek lower risk than that found in the individual companies'
stocks and gain bond income as well. Convertible bonds are typically less
sensitive to interest rate risk than conventional bonds.
From April through September, the Portfolios were rewarded by the Fund's
holdings in such companies as Staples, the operator of discount office supply
stores, and 3Com, a computer products company. Staples shares rose sharply
during the period as a result of its announced merger with Office Depot and this
helped drive up the value of its convertible bonds. The convertible notes of
3Com rose along with the company's stock as earnings and earnings projections
for the California-based technology company continued to grow. The company
offers computer networking solutions for data interface networks and other
products and services. 3Com has introduced 29 new products this year and has
taken away market share from Intel, its largest competitor. Among the holdings
we sold were Enron Corp., which showed a weak oil reserve replacement, and MFS
Communications, Inc., which took profits on a merger with WorldCom.
We remain optimistic about the outlook for investing in convertible securities
and believe our unique approach of managing the Fund for the underlying equity
values will continue to provide an excellent investment option for shareholders.
REPRESENTATIVE HOLDINGS
Service Corporation
United States Filter Corp.
Noble Affiliates, Inc.
Staples, Inc.
Thermo Electron Corp.
California Energy
3Com Corp.
United Waste Systems, Inc.
Penncorp Financial Group, Inc.
Hexcel Corp.
- --------------------------------------------------------------------------------
21
<PAGE>
INCOME & GROWTH PORTFOLIOS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years Since Inception
11.49% 12.58% 13.60%
Income and Growth Portfolio A First Boston Convertible Index
12/31/86 $ 9,475 $ 10,000
3/31/87 10,697 11,278
6/30/87 10,707 11,550
9/30/87 11,281 12,082
12/31/87 9,124 9,978
3/31/88 9,660 10,690
6/30/88 10,432 11,219
9/30/88 10,389 11,101
12/31/88 10,873 11,316
3/31/89 12,152 11,975
6/30/89 12,810 12,537
9/30/89 13,560 13,065
12/31/89 13,878 12,873
3/31/90 14,513 12,715
6/30/90 15,328 13,019
9/30/90 13,545 11,629
12/31/90 14,049 11,986
3/31/91 16,140 13,598
6/30/91 16,402 13,747
9/30/91 18,158 14,775
12/31/91 19,325 15,476
3/31/92 19,429 16,212
6/30/92 18,694 16,615
9/30/92 19,403 17,260
12/31/92 21,100 18,197
3/31/93 21,933 19,529
6/30/93 23,789 20,053
9/30/93 25,862 21,050
12/31/93 26,687 21,572
3/31/94 26,028 20,947
6/30/94 24,791 20,378
9/30/94 25,280 20,987
12/31/94 24,491 20,554
3/31/95 25,342 21,758
6/30/95 27,102 23,743
9/30/95 29,462 25,214
12/31/95 29,799 25,429
3/31/96 31,932 26,915
6/30/96 33,019 27,489
9/30/96 34,667 28,115
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/96
<S> <C> <C>
1 Year 5 Years Since Inception
11.24% 12.63% 13.51%
Income and Growth Portfolio B First Boston Convertible Index
12/31/86 $ 10,000 $ 10,000
3/31/87 11,272 11,278
6/30/87 11,264 11,550
9/30/87 11,849 12,082
12/31/87 9,567 9,978
3/31/88 10,113 10,690
6/30/88 10,904 11,219
9/30/88 10,841 11,101
12/31/88 11,328 11,316
3/31/89 12,640 11,975
6/30/89 13,304 12,537
9/30/89 14,060 13,065
12/31/89 14,367 12,873
3/31/90 15,000 12,715
6/30/90 15,817 13,019
9/30/90 13,954 11,629
12/31/90 14,450 11,986
3/31/91 16,574 13,598
6/30/91 16,816 13,747
9/30/91 18,587 14,775
12/31/91 19,750 15,476
3/31/92 19,824 16,212
6/30/92 19,043 16,615
9/30/92 19,734 17,260
12/31/92 21,425 18,197
3/31/93 22,235 19,529
6/30/93 24,046 20,053
9/30/93 26,120 21,050
12/31/93 26,892 21,572
3/31/94 26,183 20,947
6/30/94 24,909 20,378
9/30/94 25,369 20,987
12/31/94 24,540 20,554
3/31/95 25,329 21,758
6/30/95 27,070 23,743
9/30/95 29,369 25,214
12/31/95 29,672 25,429
3/31/96 31,775 26,915
6/30/96 32,788 27,489
9/30/96 34,389 28,115
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years Since Inception
16.93% 13.06% 13.49
Income and Growth Portfolio C First Boston Convertible Index
12/31/86 $ 10,000 $ 10,000
3/31/87 11,272 11,278
6/30/87 11,264 11,550
9/30/87 11,849 12,082
12/31/87 9,567 9,978
3/31/88 10,113 10,690
6/30/88 10,904 11,219
9/30/88 10,841 11,101
12/31/88 11,328 11,316
3/31/89 12,640 11,975
6/30/89 13,304 12,537
9/30/89 14,060 13,065
12/31/89 14,367 12,873
3/31/90 15,000 12,715
6/30/90 15,817 13,019
9/30/90 13,954 11,629
12/31/90 14,450 11,986
3/31/91 16,574 13,598
6/30/91 16,816 13,747
9/30/91 18,587 14,775
12/31/91 19,750 15,476
3/31/92 19,824 16,212
6/30/92 19,043 16,615
9/30/92 19,734 17,260
12/31/92 21,425 18,197
3/31/93 22,235 19,529
6/30/93 24,046 20,053
9/30/93 26,120 21,050
12/31/93 26,892 21,572
3/31/94 26,183 20,947
6/30/94 24,909 20,378
9/30/94 25,369 20,987
12/31/94 24,540 20,554
3/31/95 25,329 21,758
6/30/95 27,065 23,743
9/30/95 29,368 25,214
12/31/95 29,651 25,429
3/31/96 31,743 26,915
6/30/96 32,741 27,489
9/30/96 34,341 28,115
</TABLE>
The graphs compare a $10,000 investment in the Income & Growth Portfolio A
(front load), the Income & Growth Portfolio B (back-end load) and the Income &
Growth Portfolio C (level load) with a similar investment in the First Boston
Convertible Index, on a cumulative and average annual total return basis.
Returns reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses. Performance figures
include the maximum applicable sales charge of 5.25% for Class A shares. The
effect of the maximum contingent deferred sales charge for Class B shares
(maximum 5% declining to 0% over six years) is included in Class B performance.
Performance is affected by a 12b-1 Plan which commenced at inception of each
share class.
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 on 4/19/93. Limited
partnership returns are restated to reflect all fees and expenses applicable to
each share class. If the limited partnership had been registered as an
investment company under federal securities laws, its performance might have
been adversely affected because of the additional restrictions applicable to
registered investment companies.
Total returns reflect the fact that fees and expenses in excess of certain
expense limitations specified in the investment management agreement have been
deferred by the Adviser. Total return results would have been lower had there
been no deferral.
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. Index returns reflect the reinvestment of
income dividends and capital gains distributions, if any, but does not reflect
fees, brokerage commissions, or other expenses of investing.
Past performance is no indication of future performance. Investment returns and
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.
- --------------------------------------------------------------------------------
22
<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.
- --------------------------------------------------------------------------------
23
<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
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
24
<PAGE>
- -------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
CONVERTIBLE CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OIL/GAS PRODUCTION (CONTINUED)
Cliffs Drilling Co.
10.250%, 05/15/03........................ $ 400,000 $ 417,000
Noble Affiliates, Inc.
0.0425, 11/01/03......................... 2,120,000 2,427,400
Pride Petroleum Services, Inc.
0.0625, 02/15/06......................... 1,208,000 1,603,620
Nabors Industries, Inc.
5.000%, 05/15/06......................... 1,160,000 1,173,050
------------
7,385,070
------------
OTHER PRODUCTION/MANUFACTURING -- 0.9%
ALFA S.A. DE C.V.*
8.000%, 09/15/00......................... 1,000,000 1,068,750
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 1.8%
3Com Corp.
10.250%, 11/01/01........................ 665,000 1,267,656
S3 Inc.
5.750%, 10/01/03......................... 680,000 842,350
------------
2,110,006
------------
SPECIALTY CHAINS -- 2.0%
Staples, Inc.*
4.50%, 10/01/00.......................... 2,099,000 2,453,206
------------
TECHNOLOGY -- 1.0%
Intermedia Communications, Inc.*
0.000%, 05/15/06......................... 175,000 109,812
National Education Corporation
6.500%, 05/15/11......................... 955,000 897,700
Sygnet Wireless, Inc.
11.500%, 10/01/06........................ 150,000 154,875
------------
1,162,387
------------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELECOMMUNICATIONS -- 0.9%
Midcom Communications, Inc.*
8.25% 08/15/03........................... $ 785,000 $ 887,050
Pricecellular Wire*
14.000%, 11/15/01........................ 250,000 225,000
------------
1,112,050
------------
WHOLESALE DISTRIBUTORS -- 1.2%
Danka Business Systems PLC
6.750%, 04/01/02......................... 1,000,000 1,443,750
------------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $58,657,859)....................................... 67,565,466
------------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.6%
- ----------------------------------------------------------------------------
Merrill Lynch & Co.
5.85% 10/01/96
(Cost $3,153,000)........................ $3,153,000 $ 3,153,000
------------
TOTAL INVESTMENTS -- 100.1%
(Cost $104,553,616)...................................... $120,339,200
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1%)............
(70,689)
------------
NET ASSETS -- 100.0%....................................... $120,268,511
------------
<FN>
- ---------------
* Non-Income Producing Security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
25
<PAGE>
BALANCED GROWTH FUND
PORTFOLIOS A, B & C
- -------------------------------------------------------------------
MANAGEMENT TEAM
EQUITIES
Lawrence S. Speidell, CFA
Partner, Director of Global/Systematic Portfolio
Management and Research
John J. Kane
Senior Portfolio Manager, U.S. Systematic
Craig R. Occhialini
Portfolio Manager, U.S. Systematic
Mark W. Stuckelman
Portfolio Manager, U.S. Systematic
Chris McCaman
Assistant Portfolio Manager
Stephen Ross
Assistant Portfolio Manager
BONDS
John D. Wylie
Partner, Chief Investment Officer,
Investor Services Group
Fred S. Robertson
Partner, Chief Investment Officer,
Fixed Income Management
Douglas G. Forsyth, CFA
Portfolio Manager
GOAL: The Nicholas-Applegate Balanced Growth Fund seeks to provide capital
appreciation and current income by investing approximately 60% of total assets
in equity and convertible securities primarily of U.S. companies and 40% of
total assets in debt securities, money market instruments, and other short-term
investments.
REVIEW AND OUTLOOK: The Balanced Growth Portfolios 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.
For example, Portfolio C shares rose 9.3% during the 6 month period, compared
with a 5.5% return for a balanced index comprising 60% of the Standard & Poor's
500 Index and 40% of the Lehman Government/Corporate Index.
Stock picks in the technology sector contributed to the Fund's turnaround from
the summer setback. Stock selection in the retail, health care, financial, and
commercial-industrial services sectors also added to the Fund's gains over the
benchmark.
The stock portion of the Fund at the end of September was invested 32% in
technology, 9% in health care, 12% in retail, 12% in financial services, and 7%
in consumer services.
Among the Fund's best performers was Ascend Communications, a maker of
high-speed digital network access products. Its price soared above its
competitors because of a 30% increase in international sales. Another top
performer was Ross Stores, the third largest off-price retailer in the country.
Ross operates 300 outlets offering first quality, discounted merchandise for the
entire family. Its earnings jumped 60% this year due to favorable industry
dynamics and an expanded and experienced merchandise buying organization. We
sold shares of CQ Microsystems after the company reported disappointing earnings
due to encroaching competition from IBM. America Online was having difficulty
retaining subscribers, causing estimates of future earnings to fall. As a
result, we sold this issue at the end of the period.
Reports of higher employment and a stronger economy, especially during April
and May, sent yields higher and bond prices lower early in the period.
- --------------------------------------------------------------------------------
26
<PAGE>
BALANCED GROWTH FUND
PORTFOLIOS A, B & C -- CONTINUED
- --------------------------------------------------------------------------------
But with the Federal Reserve's decision not to raise interest rates this fall,
bond prices firmed. This resulted in a sluggish period for the fixed income
portion of the Fund.
In actively managing the fixed income side of the Fund, we changed the
structure of the Fund to take advantage of major activity in the market. We
reduced the duration (a measure of the Fund's tendency to fluctuate in value)
during the period, bringing it closer in line to that of the benchmark and
reflecting a more conservative stance.
Economically, it appears we are in a slow-growth environment. In line with our
style of growth investing, we actively seek companies that are using economic
change to their benefit. We are optimistic that over the long term our
disciplined approach to selecting high-quality U.S. government bonds and dynamic
growth stocks will continue to deliver investment benefits to our shareholders.
REPRESENTATIVE HOLDINGS
Ascend Communications, Inc.
McAfee Associates, Inc.
Ross Stores, Inc.
Jones Medical Industries, Inc.
Green Tree Financial Corp.
Robert Half International, Inc.
United States Treasury Note, 7.500%, 11/15/01
United States Treasury Note, 7.500%, 05/15/02
United States Treasury Note, 6.250%, 08/31/00
TJX Companies Note, 6.625%, 06/15/00
- --------------------------------------------------------------------------------
27
<PAGE>
BALANCED GROWTH PORTFOLIOS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years Since Inception
5.93% 6.48% 10.45%
Balanced Growth Portfolio A
Balanced 60/40 Index
4/19/93 $ 9,475 $ 10,000
6/30/93 10,464 10,168
9/30/93 11,058 10,461
12/31/93 10,737 10,594
3/31/94 10,361 10,220
6/30/94 9,746 10,196
9/30/94 10,250 10,516
12/31/94 10,061 10,533
3/31/95 10,694 11,358
6/30/95 11,682 12,303
9/30/95 12,605 12,982
12/31/95 12,419 13,695
3/31/96 12,850 14,001
6/30/96 13,597 14,404
9/30/96 14,092 14,777
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year Since Inception
5.74% 14.80%
Balanced Growth Portfolio B
Balanced 60/40 Index
5/31/96 $ 10,000 $ 10,000
9/30/95 11,254 10,733
12/31/95 11,065 11,322
3/31/96 11,445 11,575
6/30/96 12,098 11,908
9/30/96 12,025 12,217
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 3 Years Since Inception
11.11% 7.76% 11.58%
Balanced Growth Portfolio C
Balanced 60/40 Index
4/19/93 $ 10,000 $ 10,000
6/30/93 11,039 10,168
9/30/93 11,661 10,461
12/31/93 11,305 10,594
3/31/94 10,891 10,220
6/30/94 10,228 10,196
9/30/94 10,738 10,516
12/31/94 10,522 10,533
3/31/95 11,161 11,358
6/30/95 12,184 12,303
9/30/95 12,132 12,982
12/31/95 12,920 13,695
3/31/96 13,346 14,001
6/30/96 14,098 14,404
9/30/96 14,591 14,777
</TABLE>
The graphs compare a $10,000 investment in the Balanced Growth Portfolio A
(front load), the Balanced Growth Portfolio B (back-end load) and the Balanced
Growth Portfolio C (level load) with a similar investment in a model index
consisting of 60% Standard & Poor's 500 Index ("S&P 500") and 40% Lehman
Brothers Government/Corporate Bond Index, on a cumulative and average annual
total return basis. Returns reflect the reinvestment of income dividends and
capital gains distributions, if any, as well as all fees and expenses.
Performance figures include the maximum applicable sales charge of 5.25% for
Class A shares. The effect of the maximum contingent deferred sales charge for
Class B shares (maximum 5% declining to 0% over six years) is included in Class
B performance. Performance is affected by a 12b-1 Plan which commenced at
inception of each share class.
Total returns reflect the fact that fees and expenses in excess of certain
expense limitations specified in the investment management agreement have been
deferred by the Adviser. Total return results would have been lower had there
been no deferral.
The S&P 500 Index is an unmanaged index containing 500 industrial, 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.
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 indication of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
28
<PAGE>
SCHEDULE OF INVESTMENTS AS OF 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.
- --------------------------------------------------------------------------------
29
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED GROWTH FUND
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS
- ---------------------------------------------------------
<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.
- --------------------------------------------------------------------------------
30
<PAGE>
- -------------------------------------------------------------------
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
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELEPHONE (CONTINUED)
Winstar Communications
0.00%, 10/15/05.......................... $ 225,000 $ 128,250
------------
396,812
------------
TOTAL CORPORATE BONDS
(Cost $4,663,779)........................................ $ 4,776,874
------------
U.S. TREASURY OBLIGATIONS -- 19.6%
- ----------------------------------------------------------------------------
U.S.TREASURY BONDS -- 3.5%
8.125%, 08/15/21......................... 830,000 $ 931,741
U.S.TREASURY NOTES -- 16.1%
7.875%, 04/15/98......................... 180,000 184,883
6.250%, 08/31/00......................... 1,000,000 994,800
7.500%, 11/15/01......................... 1,040,000 1,085,500
7.500%, 05/15/02......................... 1,000,000 1,047,310
7.000%, 07/15/06......................... 750,000 765,855
6.000%, 02/15/26......................... 350,000 307,766
------------
4,386,114
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,480,253)........................................ $ 5,317,855
------------
- ----------------------------------------------------------------------------
AGENCY OBLIGATIONS -- 2.7%
- ----------------------------------------------------------------------------
Tennessee Valley Authority Notes
6.375%, 06/15/05 (Cost $760,580)......... 750,000 720,000
------------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.6%
- ----------------------------------------------------------------------------
Merrill Lynch & Co.
5.85%, 10/01/96
(Cost $430,000).......................... 430,000 430,000
------------
TOTAL INVESTMENTS -- 99.8%
(Cost $23,287,987)....................................... 27,092,084
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.2%.............. 67,599
------------
NET ASSETS -- 100.0%....................................... $ 27,159,683
------------
<FN>
- ---------------
* Non-income producing security.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
31
<PAGE>
GOVERNMENT INCOME FUND
PORTFOLIOS A, B & C
- -------------------------------------------------------------------
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 Government Income Fund seeks to maximize current
income through investment primarily in intermediate-term debt securities of the
U.S. government and its agencies and instrumentalities.*
REVIEW AND OUTLOOK: The Government Income Fund declined slightly from April
through September 1996, because of rising interest rates and falling bond
prices. Reports of a stronger economy, rapid money growth and uncertainty over
the course of U.S. monetary policy all contributed to a temporary sluggishness
in the bond markets.
However, the bond market in general and the Fund in particular delivered
stronger results in the third quarter. By mid-August, more favorable economic
data, including benign inflation reports, sparked a rally. As a result, bonds
surged at quarter's end, allowing the Fund and the industry benchmark, the
Lehman Brothers Government Bond Index, to participate in a solid gain.
One of the Fund's corporate bond holdings, Cigna Corp., though a small
percentage of the overall Fund at 5.1% of assets, fared very well in 1996,
posting a return of 11.4%.
At the end of the period, 35.7% of the Fund's holdings had maturities under
three years, 27.0% had maturities of three to five years, 18.7% had maturities
of five to ten years, and 18.7% had maturities over ten years. The Fund's
average maturity was 8.8 years; the yield to maturity was 6.5%; bond duration
was 5.0 years; and the average quality of securities was AAA.
Looking forward, we believe economic and market conditions offer the potential
of stability and moderate growth, which would be beneficial for shareholders.
- ------------
* The government guarantee of the Fund's portfolio securities does not
guarantee the value of the Fund's shares, which will fluctuate.
- --------------------------------------------------------------------------------
32
<PAGE>
GOVERNMENT INCOME PORTFOLIOS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 3 Years Since Inception
4.71% 1.91% 3.85%
Government Lehman Brothers
Income Government Bond
Portfolio A Index
4/19/1993 $ 9,525 $ 10,000
6/30/1993 9,856 10,250
9/30/1993 10,253 10,582
12/31/1993 10,220 10,546
3/31/1994 9,998 10,229
6/30/1994 9,913 10,112
9/30/1994 9,915 10,154
12/31/1994 9,979 10,191
3/31/1995 10,374 10,670
6/30/1995 11,010 11,332
9/30/1995 11,208 11,532
12/31/1995 11,742 12,059
3/31/1996 11,381 11,785
6/30/1996 11,268 11,841
9/30/1996 11,393 12,041
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year Since Inception
- -3.62% -0.05%
Government Lehman Brothers
Income Government Bond
Portfolio B Index
5/31/1995 $ 10,000 $ 10,000
6/30/1995 10,090 10,077
9/30/1995 10,260 10,255
12/31/1995 10,768 10,723
3/31/1996 10,424 10,480
6/30/1996 10,305 10,529
9/30/1996 9,993 10,707
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 3 Years Since Inception
1.27% 2.93% 4.70%
Lehman Brothers Government
Government Bond Income
Index Portfolio C
04/19/93 $ 10,000 $ 10,000
06/30/93 10,250 10,331
09/30/93 10,582 10,742
12/31/93 10,546 10,690
03/31/94 10,229 10,428
06/30/94 10,112 10,313
09/30/94 10,154 10,307
12/31/94 10,191 10,360
03/31/95 10,670 10,746
06/30/95 11,332 11,386
09/30/95 11,532 11,568
12/31/95 12,059 12,116
03/31/96 11,785 11,734
06/30/96 11,841 11,599
09/30/96 12,041 11,716
</TABLE>
The graphs compare a $10,000 investment in the Government Income Portfolio A
(front load), the Government Income Portfolio B (back-end load) and the
Government Income Portfolio C (level load) with a similar investment in the
Lehman Brothers Government Bond Index, on a cumulative and average annual total
return basis. Returns reflect the reinvestment of income dividends and capital
gains distributions, if any, as well as all fees and expenses. Performance
figures include the maximum applicable sales charge of 5.25% for Class A shares.
The effect of the maximum contingent deferred sales charge for Class B shares
(maximum 5% declining to 0% over six years) is included in Class B performance.
Performance is affected by a 12b-1 Plan which commenced at inception of each
share class.
Total returns reflect the fact that fees and expenses in excess of certain
expense limitations specified in the investment management agreement have been
deferred by the Adviser. Total return results would have been lower had there
been no deferral.
The Lehman Brothers Government Bond Index is an unmanaged index composed of all
publicly issued, non-convertible, domestic debt of the U.S. government or any
agency thereof, quasi-federal corporations or corporate debt guaranteed by the
U.S. government. 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 indication of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
33
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
GOVERNMENT INCOME FUND
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
U. S. TREASURY OBLIGATIONS -- 73.7%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
U. S. TREASURY NOTES
7.875%, 04/15/98................... $1,835,000 $ 1,884,784
6.250%, 08/31/00................... 1,100,000 1,094,280
7.500%, 11/15/01................... 350,000 365,312
7.000%, 07/15/06................... 750,000 765,855
6.000%, 02/15/26................... 775,000 681,481
-----------
TOTAL U. S. TREASURY OBLIGATIONS
(Cost $4,832,243)................................. 4,791,712
-----------
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CORPORATE BONDS -- 20.4%
- --------------------------------------------------------------------
CIGNA CORPORATION -- 5.1%
7.650% , 03/01/23.................. $ 350,000 $ 332,937
LOCKHEED MARTIN -- 15.3%
7.750% , 05/01/26.................. 1,000,000 995,000
-----------
TOTAL CORPORATE BONDS
(Cost $1,304,309)................................. 1,327,937
-----------
- --------------------------------------------------------------------
AGENCY OBLIGATIONS -- 3.7%
- --------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY
6.375%, 06/15/05
(Cost $258,725).................... 250,000 240,000
-----------
TOTAL INVESTMENTS -- 97.8%
(Cost $6,395,277).................. $ 6,359,649
OTHER ASSETS LESS LIABILITIES -- 2.2%............... 140,268
-----------
NET ASSETS -- 100.0%................................ $ 6,499,917
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
34
<PAGE>
MONEY MARKET FUND
MONEY MARKET PORTFOLIO
- -------------------------------------------------------------------
MANAGEMENT TEAM
Claudia L. Bengtson
Portfolio Manager, Money Market Fund
GOAL: The Money Market Fund seeks to obtain a high level of current income
consistent with preservation of capital and maintenance of liquidity. It invests
in high-quality, short-term, U.S. dollar-denominated money market instruments*.
REVIEW AND OUTLOOK: The Fund returned 2.5% between April 1 and September 30,
1996, versus a return of 2.3% for the Lipper Money Market Index. The current SEC
7-day yield as of September 30 was 5.0%.
- ------------
* The Money Market Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able to
maintain a stable net asset value of $1 per share.
- --------------------------------------------------------------------------------
35
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
MONEY MARKET FUND
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
AGENCY OBLIGATIONS -- 8.0%
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FEDERAL FARM CREDIT BANK DISCOUNT NOTES -- 0.4%
5.40%, 11/26/96............................ $ 60,000 $ 59,496
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- 3.9%
5.14%, 10/25/96............................ 100,000 99,657
5.12%, 12/17/96............................ 100,000 98,905
5.56%, 04/30/97............................ 100,000 96,741
5.41%, 05/01/97............................ 150,000 145,221
5.52%, 03/03/97............................ 120,000 117,185
------------
557,709
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.7%
5.40%, 12/13/96............................ 95,000 93,960
5.34%, 05/23/97............................ 150,000 144,794
5.59%, 06/13/97............................ 300,000 288,121
------------
526,875
------------
TOTAL AGENCY OBLIGATIONS
(Cost $1,144,080)........................................ 1,144,080
------------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 33.9%
- ----------------------------------------------------------------------------
ASSOCIATES CORP. -- 1.7%
5.43%, 10/23/96............................ 250,000 249,170
AMERICAN TELEPHONE & TELEGRAPH CO. -- 0.6%
5.38%, 11/12/96............................ 100,000 99,372
AMERICAN TELEPHONE & TELEGRAPH CO. -- 1.0%
5.42%, 10/15/96............................ 140,000 139,705
AVNET, INC. -- 1.2%
5.33%, 10/03/96............................ 170,000 169,950
BELL SOUTH TELECOMMUNICATIONS -- 1.8%
5.32%, 10/04/96............................ 252,000 251,888
CARGILL, INC. -- 1.2%
5.41%, 10/10/96............................ 175,000 174,763
COCA-COLA CO. -- 0.9%
5.40%, 11/05/96............................ 129,000 128,323
DUPONT -- 1.7%
5.40%, 11/22/96............................ 250,000 248,050
GANNETT CO. -- 2.1%
5.43%, 10/17/96............................ 300,000 299,276
GENERAL ELECTRIC CAPITAL CORP. -- 1.8%
5.44%, 10/17/96............................ 250,000 249,396
</TABLE>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
HEINZ CO. -- 1.1%
5.35%, 10/07/96............................ $ 155,000 $ 154,862
HEWLETT PACKARD CO. -- 1.2%
5.41%, 10/11/96............................ 175,000 174,737
INTERNATIONAL LEASE FINANCE CORP. -- 1.8%
5.43%, 10/15/96............................ 250,000 249,472
LACLEDE GAS CO. -- 2.1%
5.50%, 11/13/96............................ 300,000 298,029
MOTOROLA, INC. -- 2.1%
5.42%, 10/02/96............................ 300,000 299,955
NORWEST FINANCIAL, INC. -- 2.1%
5.41%, 01/27/97............................ 300,000 294,680
PHILIP MORRIS CO., INC. -- 1.8%
5.43%, 10/15/96............................ 250,000 249,472
PITNEY BOWES CREDIT CORP. -- 1.8%
5.44%, 10/16/96............................ 250,000 249,433
PROCTER & GAMBLE CO. -- 1.4%
5.33%, 10/08/96............................ 200,000 199,793
SCHERING CORP. -- 2.1%
5.32%, 01/29/97............................ 300,000 294,680
US WEST COMMUNICATIONS, INC. -- 0.7%
5.41%, 10/15/96............................ 100,000 99,790
USAA CAPITAL CORP. -- 1.7%
5.44%, 02/03/97............................ 250,000 245,278
------------
TOTAL COMMERCIAL PAPER(Cost $4,820,074).................... 4,820,074
------------
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 58.5%
- ----------------------------------------------------------------------------
Morgan J. P. & Co. $8,333,000 at 5.65%
(Agreement dated 09/30/96, to be
repurchased at $8,334,308 on 10/01/96;
collateralized by $8,450,000 FNMA 5.25%
due 05/13/98) (Value $8,671,583) (Cost
$8,333,000).............................. 8,333,000 8,333,000
------------
TOTAL INVESTMENTS -- 100.4%
(Cost $14,297,154)....................................... $ 14,297,154
LIABILITIES IN EXCESS OF OTHER ASSETS -- 0.4%.............. (59,888)
------------
NET ASSETS -- 100.0%....................................... $ 14,237,266
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
36
<PAGE>
EMERGING COUNTRIES FUND
PORTFOLIOS A, B & C
- -------------------------------------------------------------------
MANAGEMENT TEAM
Lawrence S. Speidell, CFA
Partner, Director of Global/Systematic Portfolio
Management and Research
Catherine Somhegyi
Partner, Chief Investment Officer,
Global Equity Management
Pedro V. Marcal
Portfolio Manager, Emerging Countries
Ernesto Ramos, Ph.D.
Senior Portfolio Manager, International
Eswar Menon
International Analyst
Aaron M. Harris
International Analyst
GOAL: The Nicholas-Applegate Emerging Countries Fund seeks to provide
long-term capital appreciation through investment in companies in developing
countries around the world.
REVIEW AND OUTLOOK: The Emerging Countries Fund continued to post
exceptionally strong performance during the six-month period from April through
September 1996. Portfolio C shares returned 12.0% in the period, six times the
2.0% return of the IFC Investable Index, the World Bank's benchmark measure of
emerging countries' performance.
At the end of the third quarter, the Fund held about one-third of its assets
in the stocks of companies headquartered in Brazil, Mexico, Thailand, and Hong
Kong. Approximately one-quarter of the Fund's holdings were in the producers and
manufacturing sector and another quarter in the consumer non-durables and
financial services sectors.
We believe the outlook for long-term growth from emerging market companies
remains excellent, with many firms poised to take advantage of opportunities
created by changes in their economic and political environments. We've seen new
building and manufacturing capabilities in Venezuela and Mexico, expansion of
the high-technology sector in Israel, and increasing consumption in China and
Brazil. One of the Fund's representative holdings, Tubos de Acero de Mexico, a
manufacturer of seamless drill pipe, is one of the most profitable steel
companies in the world. Its international competitiveness has gained momentum as
a result of the peso devaluation. Its cash earnings per share increased 198% the
first half of this year compared with 1995, because of increased volume and
lower borrowing costs. Israel-based Nice Systems Ltd. is another technology
holding whose earnings almost doubled for the period. Nice develops,
manufactures, markets and services digital recording and retrieval systems. We
sold shares of San Luis Corp., a Mexican auto parts exporter, and Thai Stanley
Electric, a manufacturer of lighting parts for motorcycles and automobiles. The
strengthening peso created a weaker earnings outlook for San Luis and the
slowdown in the Thai economy affected the demand for autos and their components,
which hurt Thai Stanley's lighting business.
Although we expect fluctuations along the way, as is typical because of
possible currency fluctuations and economic and political uncertainties in
emerging markets such as those experienced this summer, we believe a disciplined
investment plan and a long-term objective will continue to serve investors
seeking GROWTH OVER TIME-Registered Trademark-. The Emerging Countries
Portfolios provide investors with an opportunity to add diversification to their
domestic holdings as well as their other international holdings. It enables
investors to take advantage of the potential for growth and added
diversification offered by emerging markets.
- --------------------------------------------------------------------------------
37
<PAGE>
EMERGING COUNTRIES FUND
PORTFOLIOS A, B & C -- CONTINUED
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
38
<PAGE>
EMERGING COUNTRIES PORTFOLIOS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year Since Inception
12.03% 10.52%
Emerging Countries Portfolio A IFC Investable Index
11/28/94 $ 9,475 $ 10,000
12/31/94 9,052 8,460
3/31/95 8,332 7,234
6/30/95 9,583 7,865
9/30/95 10,166 7,833
12/31/95 9,625 7,761
3/31/96 10,701 8,344
6/30/96 11,784 8,707
9/30/96 12,020 8,510
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year Since Inception
11.56% 15.03%
Emerging Countries Portfolio B IFC Investable Index
5/31/95 $ 10,000 $ 10,000
6/30/95 10,096 10,059
9/30/95 10,696 10,019
12/31/95 10,112 9,926
3/31/96 11,216 10,672
6/30/96 12,336 11,136
9/30/96 12,058 10,884
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year Since Inception
17.52% 11.87%
Emerging Countries Portfolio C IFC Investable Index
11/28/94 $ 10,000 $ 10,000
12/31/94 9,468 8,460
3/31/95 8,620 7,234
6/30/95 9,876 7,865
9/30/95 10,460 7,833
12/31/95 9,900 7,761
3/31/96 10,973 8,344
6/30/96 12,069 8,707
9/30/96 12,293 8,510
</TABLE>
The graphs compare a $10,000 investment in the Emerging Countries Portfolio A
(front load), the Emerging Countries Portfolio B (back-end load) and the
Emerging Countries Portfolio C (level load) with a similar investment in the
International Finance Corporation ("IFC") Investable Index, on a cumulative and
average annual total return basis. Performance returns within are calculated on
a total return basis and reflect all fees and expenses of the Portfolio with
reinvestment of dividends and capital gains, if any. Performance figures include
the maximum applicable sales charge of 5.25% for Class A shares. The effect of
the maximum contingent deferred sales charge for Class B (maximum 5.00%
declining to 0% over six years) is included in Class B performance. Performance
is affected by a 12b-1 Plan which commenced at inception of each share class.
Total returns reflect the fact that fees and expenses in excess of certain
expense limits specified in the investment management agreement have been
deferred by the Adviser. Total return results would have been lower had there
been no deferral.
The IFC Investable Index measures the performance of more than 1,100 stocks that
are legally and practically available in 25 emerging market countries of the
world. The Index is unmanaged. Index returns reflect the reinvestment of
dividends and capital gains distributions, if any, but does not reflect fees,
brokerage commissions, or other expenses of investing.
Past performance is no indication of future performance. Investment returns and
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.
- --------------------------------------------------------------------------------
39
<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
Korea Mobile Telecommunications Corp....... 440 481,298
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
KOREA (CONTINUED)
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
Elektrim Spolda Akcyjna S.A................ 65,000 636,234
Mostosal-Export S.A........................ 196,000 558,106
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
40
<PAGE>
- -------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
POLAND (CONTINUED)
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
Grupo Industrial Maseca S.A. (Mexico)...... 41,900 790,862
</TABLE>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA+ (CONTINUED)
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.
- --------------------------------------------------------------------------------
41
<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.
- --------------------------------------------------------------------------------
42
<PAGE>
INTERNATIONAL GROWTH FUND
PORTFOLIOS A, B & C
- -------------------------------------------------------------------
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 Portfolios rewarded shareholders
with strong relative gains from April through September 1996 as the Fund's
individual holdings in health, technology, and producers and manufacturing
companies enabled the Fund to handily outpace the performance benchmark, the
Morgan Stanley Capital International Europe, Australasia, and Far East Index
(EAFE-Registered Trademark-). Portfolio C shares returned 4.7% for the period,
compared with a 1.3% return for EAFE.
Stabilizing interest rates, a strong dollar, and solid corporate earnings
prompted investors to favor domestic stocks over international equities during
the period, causing international performance to lag that of domestic stocks. We
held true to our disciplined investment process through the period, investing
the International Growth Fund in foreign companies displaying strong, positive
fundamental change and earnings growth. Investors should know that international
investing involves additional risks such as currency fluctuations and political
and economic uncertainties. We believe that, in the long term, foreign stocks
offer opportunities for superior returns as well as reductions of risk. Since
international markets are growing economically, socially, and politically, the
global impact cannot be ignored. For example, since 1970, Hong Kong's stock
market has grown almost twice as fast as the U.S. stock market. We seek to take
advantage of such accelerations and their attendant opportunities by exercising
superior stock selection.
Our holdings in The Netherlands, Mexico, Germany, and Ireland performed well
in the period in comparison to the Index's holdings in those nations. Increased
exposure to such industry sectors as producers and manufacturing, technology,
health technology, consumer durables and nondurables, and energy enhanced
returns for the period and lifted returns well above the EAFE benchmark in those
sectors. One of our consumer non-durables stocks, Gucci Group, designs,
produces, and distributes personal luxury accessories. The stock almost doubled
in price during the period as sales grew significantly. We sold our positions in
Adidas because of slowing earnings growth and extended valuation compared to
competitors Fila and Nike.
We remain optimistic about the long-term opportunities for international
investing. As we continue 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.
- --------------------------------------------------------------------------------
43
<PAGE>
INTERNATIONAL GROWTH FUND
PORTFOLIOS A, B & C -- CONTINUED
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
44
<PAGE>
INTERNATIONAL GROWTH PORTFOLIOS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years Since Inception
5.96% 5.91% 3.16%
International Growth MSCI EAFE
Portfolio A Index
6/7/90 $ 9,475 $ 10,000
6/30/90 9,604 9,912
9/30/90 7,482 7,810
12/31/90 7,793 8,633
3/31/91 8,462 9,275
6/30/91 8,018 8,769
9/30/91 8,653 9,521
12/31/91 8,664 9,680
3/31/92 7,867 8,532
6/30/92 8,194 8,712
9/30/92 7,873 8,844
12/31/92 7,551 8,502
3/31/93 8,324 9,522
6/30/93 9,398 10,480
9/30/93 9,814 11,175
12/31/93 9,465 11,271
3/31/94 10,171 11,664
6/30/94 10,557 12,260
9/30/94 10,667 12,272
12/31/94 10,300 12,146
3/31/95 10,047 12,368
6/30/95 10,195 12,459
9/30/95 10,885 12,960
12/31/95 10,867 13,485
3/31/96 11,599 13,874
6/30/96 12,323 14,094
9/30/96 12,173 14,058
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 5 Years Since Inception
5.48% 5.76% 3.23%
International Growth MSCI EAFE
Portfolio B Index
6/7/90 $ 10,000 $ 10,000
6/30/90 10,130 9,912
9/30/90 7,878 7,810
12/31/90 8,193 8,633
3/31/91 8,882 9,275
6/30/91 8,402 8,769
9/30/91 9,053 9,521
12/31/91 9,050 9,680
3/31/92 8,204 8,532
6/30/92 8,531 8,712
9/30/92 8,183 8,844
12/31/92 7,835 8,502
3/31/93 8,624 9,522
6/30/93 9,721 10,480
9/30/93 10,135 11,175
12/31/93 9,759 11,271
3/31/94 10,470 11,664
6/30/94 10,850 12,260
9/30/94 10,950 12,272
12/31/94 10,474 12,146
3/31/95 10,201 12,368
6/30/95 10,326 12,459
9/30/95 11,013 12,960
12/31/95 10,971 13,485
3/31/96 11,691 13,874
6/30/96 12,394 14,094
9/30/96 12,227 14,058
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/96
<S> <C> <C>
1 Year 5 Years Since Inception
11.17% 6.25% 3.28%
International Growth MSCI EAFE
Portfolio C Index
6/7/90 $ 10,000 $ 10,000
6/30/90 10,130 9,912
9/30/90 7,878 7,810
12/31/90 8,193 8,633
3/31/91 8,882 9,275
6/30/91 8,402 8,769
9/30/91 9,053 9,521
12/31/91 9,050 9,680
3/31/92 8,204 8,532
6/30/92 8,531 8,712
9/30/92 8,183 8,844
12/31/92 7,835 8,502
3/31/93 8,624 9,522
6/30/93 9,721 10,480
9/30/93 10,135 11,175
12/31/93 9,759 11,271
3/31/94 10,470 11,664
6/30/94 10,850 12,260
9/30/94 11,032 12,272
12/31/94 10,615 12,146
3/31/95 10,157 12,368
6/30/95 10,337 12,459
9/30/95 11,028 12,960
12/31/95 10,994 13,485
3/31/96 11,712 13,874
6/30/96 12,421 14,094
9/30/96 12,259 14,058
</TABLE>
The graphs compare a $10,000 investment in the International Growth Portfolio A
(front load), the International Growth Portfolio B (back-end load) and the
International Growth Portfolio C (level load) with a similar investment in the
Morgan Stanley Capital International ("MSCI") EAFE Index, on a cumulative and
average annual total return basis. Returns reflect the reinvestment of income
dividends and capital gains distributions, if any, as well as all fees and
expenses. Performance figures include the maximum applicable sales charge of
5.25% for Class A shares. The effect of the maximum contingent deferred sales
charge for Class B shares (maximum 5.00% declining to 0% over six years) is
included in Class B performance. Performance is affected by a 12b-1 Plan which
commenced at inception of each share class.
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 on 12/31/93. Limited
partnership returns are restated to reflect all fees and expenses applicable to
each share class. If the limited partnership had been registered as an
investment company under federal securities laws, its performance might have
been adversely affected because of the additional restrictions applicable to
registered investment companies.
Total returns reflect the fact that fees and expenses in excess of certain
expense limitations specified in the investment management agreement have been
deferred by the Adviser. Total return results would have been lower had there
been no deferral.
The MSCI EAFE Index is an unmanaged index that is a generally accepted benchmark
for major overseas markets. The Index weightings represent the relative
capitalization of the major overseas markets including in the Index on a U.S.
dollar adjusted basis. 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 indication of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
45
<PAGE>
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.
- --------------------------------------------------------------------------------
46
<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
------------
<FN>
- ---------------
* Non-Income Producing Securities.
+ Certain securities issued by foreign companies are classified as United States
securities as their underlying currency is the U.S. Dollar.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
47
<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.
- --------------------------------------------------------------------------------
48
<PAGE>
WORLDWIDE GROWTH FUND
PORTFOLIOS A, B & C
- -------------------------------------------------------------------
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 Portfolios delivered solid relative
performance from April through September 30, 1996, on the strength of the Fund's
individual stock holdings in the energy, consumer durable goods, and retail
trade sectors. For example, Portfolio C shares gained 6.6% during the period,
compared with a 4.2% gain in the Morgan Stanley Capital International World
Index, the Fund's performance benchmark.
The Worldwide Growth Fund seeks a strategic mix of foreign and domestic
stocks, based on our global, bottom-up selection process. One of the best-
performing stocks in the Fund during the period was Robert Half International,
the world's largest provider of flexible staffing services. Shares rose sharply
during the period because of exceptional annual sales and earnings growth.
In the technology sector, Netherlands-based Baan Company, which produces
open-system client/server-based planning software, is one of our largest
holdings at 0.8% of assets. Its shares rose dramatically during the period, on
the strength of expansion in the United States and Asia. We sold our position in
Adidas, the athletic shoe and apparel manufacturer, because of slowing earnings
growth and extended valuation compared to competitors, Fila and Nike. We also
sold Italy-based Safilo, which manufactures and sells eyeglass frames,
sunglasses and optical equipment. Management disclosed that profits would be
flat for the year due to increased costs of integrating two recently-acquired
companies.
As of September 30, approximately 34% of the Fund's net assets were invested
in U.S. companies, 20% in Japanese firms, and 12% in United Kingdom companies;
20% of assets were held in the technology sector, 14% in producers and
manufacturing and 8% in health technology.
International stocks, as represented by the Morgan Stanley Europe,
Australasia, and Far East Index, declined slightly at the end of the period due
to strengthening of the U.S. dollar; even so, United Kingdom and German stocks
were up 11% and 3%, respectively. This helped boost the Fund's performance. The
world's emerging countries
- --------------------------------------------------------------------------------
49
<PAGE>
WORLDWIDE GROWTH FUND
PORTFOLIOS A, B & C -- CONTINUED
- --------------------------------------------------------------------------------
continue to show robust growth and a generally favorable investment environment;
we believe international valuations are still very attractive. In the last two
decades, the ten best-performing stock markets, on average, have been foreign
markets. This is why we continue to search for and invest in the best growth
companies wherever they are located. We believe this will help deliver superior
returns for our shareholders over the long term.
REPRESENTATIVE HOLDINGS
Daiichi Corp., Japan
Asatsu, Inc., Japan
Rolls Royce PLC, United Kingdom
Hennes & Mauritz AB, Sweden
Baan Company, Netherlands
CAP Gemini Sogeti S.A., France
Jones Medical Industries, Inc., United States
Volkswagen AG, Germany
Commercial International Bank, Egypt
Robert Half International, Inc., United States
- --------------------------------------------------------------------------------
50
<PAGE>
WORLDWIDE GROWTH PORTFOLIOS
- -------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 3 Years Since Inception
5.00% 8.17% 11.08%
Worldwide Growth MSCI World
Date Portfolio A Index
4/19/1993 $ 9,475 $ 10,000
6/30/1993 9,975 10,283
9/30/1993 10,756 10,766
12/31/1993 10,809 10,941
3/31/1994 11,325 11,007
6/30/1994 11,127 11,338
9/30/1994 11,681 11,582
12/31/1994 11,074 11,498
3/31/1995 11,223 12,018
6/30/1995 11,867 12,530
9/30/1995 12,966 13,212
12/31/1995 12,706 13,840
3/31/1996 13,444 14,403
6/30/1996 14,369 14,821
9/30/1996 14,369 15,000
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year Since Inception
4.51% 12.67%
Worldwide Growth MSCI World
Portfolio B Index
05/31/95 $ 10,000 $ 10,000
06/30/95 10,168 9,995
09/30/95 11,104 10,539
12/31/95 10,848 11,039
03/31/96 11,472 11,489
06/30/96 12,240 11,822
09/30/96 11,727 11,965
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 09/30/96
<S> <C> <C>
1 Year 3 Years Since Inception
10.13% 9.45% 12.13%
MSCI World Worldwide Growth
Index Portfolio C
04/19/93 $ 10,000 $ 10,000
06/30/93 10,283 10,520
09/30/93 10,766 11,320
12/31/93 10,941 11,352
03/31/94 11,007 11,888
06/30/94 11,338 11,656
09/30/94 11,582 12,224
12/31/94 11,498 11,565
03/31/95 12,018 11,711
06/30/95 12,530 12,352
09/30/95 13,212 13,479
12/31/95 13,840 13,182
03/31/96 14,403 13,930
06/30/96 14,821 14,869
09/30/96 15,000 14,844
</TABLE>
The graphs compare a $10,000 investment in the Worldwide Growth Portfolio A
(front load), the Worldwide Growth Portfolio B (back-end load) and the Worldwide
Growth Portfolio C (level load) with a similar investment in the Morgan Stanley
Capital International ("MSCI") World Index, on a cumulative and average annual
total return basis. Performance returns within are calculated on a total return
basis and reflect all fees and expenses of the Portfolio with reinvestment of
dividends and capital gains, if any. Performance figures include the maximum
applicable sales charge of 5.25% for Class A shares. The effect of the maximum
contingent deferred sales charge for Class B shares (maximum 5.00% declining to
0% over six years) is included in Class B performance. Performance is affected
by a 12b-1 Plan which commenced at inception of each share class.
Total returns reflect the fact that fees and expenses in excess of certain
expense limitations specified in the investment management agreement have been
deferred by the Adviser. Total return results would have been lower had there
been no deferral.
The 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. 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 indication of future performance. Investment returns and
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.
- --------------------------------------------------------------------------------
51
<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.
- --------------------------------------------------------------------------------
52
<PAGE>
- -------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
53
<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>
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
------------
<FN>
- ---------------
* Non-Income Producing Security.
+ Certain securities issued by companies are classified as United States securi-
ties as their underlying currency is the U.S. Dollar.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
54
<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.
- --------------------------------------------------------------------------------
55
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DISTRIBUTIONS
VALUES AT INVESTMENT AND UNREALIZED FROM NET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT DISTRIBUTIONS FROM
OF PERIOD (DEFICIT) ON INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
EMERGING GROWTH(1)
Portfolio A (For the period
ended 09/30/96)#.......... $17.93 $(0.12) $2.32 -- --
Portfolio A (For the year
ended 03/31/96)........... 13.06 (0.20) 5.09 -- $(0.02)
Portfolio A (For the year
ended 03/31/95)........... 12.10 (0.16) 1.12 -- --
Portfolio A (For the period
ended 03/31/94)........... 12.50 (0.04) (0.36) -- --
CORE GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 18.37 (0.10) 2.09 -- --
Portfolio A (For the year
ended 03/31/96)........... 13.61 (0.18) 4.94 -- --
Portfolio A (For the year
ended 03/31/95)........... 13.25 (0.10) 0.46 -- --
Portfolio A (For the period
ended 03/31/94)........... 12.50 (0.07) 0.86 -- (0.04)
INCOME & GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 15.68 0.24 1.10 $(0.24) --
Portfolio A (For the year
ended 03/31/96)........... 12.86 0.48 2.82 (0.48) --
Portfolio A (For the year
ended 03/31/95)........... 14.16 0.49 (0.89) (0.49) (0.41)
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.32 2.15 (0.32) (0.49)
BALANCED GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 16.16 0.16 1.40 (0.16) --
Portfolio A (For the year
ended 03/31/96)........... 13.74 0.34 2.42 (0.34) --
Portfolio A (For the year
ended 03/31/95)........... 13.52 0.21 0.22 (0.21) --
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.15 1.02 (0.15) --
GOVERNMENT INCOME(2)
Portfolio A (For the period
ended 09/30/96)#.......... 12.74 0.33 (0.32) (0.33) --
Portfolio A (For the year
ended 03/31/96)........... 12.29 0.75 0.45 (0.75) --
Portfolio A (For the year
ended 03/31/95)........... 12.51 0.63 (0.19) (0.63) (0.03)
Portfolio A (For the period
ended 03/31/94)........... 12.50 0.29 0.34 (0.29) (0.33)
MONEY MARKET FUND(2)
Portfolio A (For the period
ended 09/30/96)#.......... 1.00 0.02 -- (0.02) --
Portfolio A (For the year
ended 03/31/96)........... 1.00 0.05 -- (0.05) --
Portfolio A (For the year
ended 03/31/95)........... 1.00 0.05 -- (0.05) --
Portfolio A (For the period
ended 03/31/94)........... 1.00 0.01 -- (0.01) --
EMERGING COUNTRIES(3)
Portfolio A (For the period
ended 09/30/96)#.......... 14.03 (0.01) 1.74 -- --
Portfolio A (For the year
ended 03/31/96)........... 11.00 (0.04) 3.15 (0.02) (0.06)
Portfolio A (For the period
ended 03/31/95)........... 12.50 0.04 (1.54) -- --
INTERNATIONAL GROWTH(4)
Portfolio A (For the period
ended 09/30/96)#.......... 13.15 (0.01) 0.66 -- --
Portfolio A (For the year
ended 03/31/96)........... 11.51 (0.02) 1.79 (0.13) --
Portfolio A (For the period
ended 03/31/95)........... 12.50 -- (0.98) (0.01) --
WORLDWIDE GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 16.57 (0.25) 1.39 -- --
Portfolio A (For the year
ended 03/31/96)........... 14.29 (0.07) 2.86 (0.12) (0.39)
Portfolio A (For the year
ended 03/31/95)........... 14.94 (0.05) (0.09) (0.02) (0.49)
Portfolio A (For the period
ended 03/31/94)........... 12.50 (0.07) 2.51 -- --
</TABLE>
- ---------------
(1)Commenced operations on December 27, 1993.
(2)Commenced operations on April 19, 1993.
(3)Commenced operations on November 28, 1994.
(4)Commenced operations on August 31, 1994.
*Annualized.
**Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
#Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
56
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO
NET ASSET AVERAGE NET ASSETS, RATIO OF EXPENSES TO
VALUES AT END NET ASSETS AT AFTER EXPENSE AVERAGE NET ASSETS, BEFORE
OF PERIOD TOTAL RETURN END OF PERIOD REIMBURSEMENT** EXPENSE REIMBURSEMENT**
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH(1)
Portfolio A (For the period
ended 09/30/96)#.......... $20.13 12.27% $156,437,735 1.66%* 1.66%*
Portfolio A (For the year
ended 03/31/96)........... 17.93 37.48% 138,155,390 1.74% 1.74%
Portfolio A (For the year
ended 03/31/95)........... 13.06 7.93% 106,725,077 1.86% 1.84%
Portfolio A (For the period
ended 03/31/94)........... 12.10 (3.20%) 104,838,285 1.73%* 1.80%*
CORE GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 20.36 10.83% 85,207,901 1.60%* 1.51%*
Portfolio A (For the year
ended 03/31/96)........... 18.37 35.07% 77,275,060 1.58% 1.56%
Portfolio A (For the year
ended 03/31/95)........... 13.61 2.72% 65,291,541 1.59% 1.63%
Portfolio A (For the period
ended 03/31/94)........... 13.25 6.27% 70,512,167 1.57%* 1.71%*
INCOME & GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 16.78 8.57% 30,112,861 1.60%* 1.72%*
Portfolio A (For the year
ended 03/31/96)........... 15.68 26.00% 31,712,051 1.60% 1.76%
Portfolio A (For the year
ended 03/31/95)........... 12.86 (2.64%) 31,150,481 1.60% 1.76%
Portfolio A (For the period
ended 03/31/94)........... 14.16 19.65% 30,447,446 1.59%* 1.83%*
BALANCED GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 17.56 9.67% 6,693,704 1.60%* 2.95%*
Portfolio A (For the year
ended 03/31/96)........... 16.16 20.16% 5,902,210 1.60% 3.30%
Portfolio A (For the year
ended 03/31/95)........... 13.74 3.22% 4,979,593 1.60% 2.78%
Portfolio A (For the period
ended 03/31/94)........... 13.52 9.35% 6,445,901 1.59%* 3.28%*
GOVERNMENT INCOME(2)
Portfolio A (For the period
ended 09/30/96)#.......... 12.42 0.10% 1,420,580 0.90%* 8.76%*
Portfolio A (For the year
ended 03/31/96)........... 12.74 9.71% 1,297,458 0.93% 9.58%
Portfolio A (For the year
ended 03/31/95)........... 12.29 3.68% 925,074 1.10% 8.40%
Portfolio A (For the period
ended 03/31/94)........... 12.51 4.97% 819,919 1.10%* 20.28%*
MONEY MARKET FUND(2)
Portfolio A (For the period
ended 09/30/96)#.......... 1.00 2.52% 14,143,417 0.45%* 3.44%*
Portfolio A (For the year
ended 03/31/96)........... 1.00 5.47% 3,129,223 0.45% 5.78%
Portfolio A (For the year
ended 03/31/95)........... 1.00 4.58% 2,995,847 0.31% 2.49%
Portfolio A (For the period
ended 03/31/94)........... 1.00 1.72% 47,975 0.54%* 323.24%*
EMERGING COUNTRIES(3)
Portfolio A (For the period
ended 09/30/96)#.......... 15.76 12.33% 13,292,974 2.25%* 3.39%*
Portfolio A (For the year
ended 03/31/96)........... 14.03 28.43% 4,717,767 2.25% 6.72%
Portfolio A (For the period
ended 03/31/95)........... 11.00 (11.98%) 1,197,361 2.25%* 6.15%*
INTERNATIONAL GROWTH(4)
Portfolio A (For the period
ended 09/30/96)#.......... 13.80 4.94% 2,599,970 1.95%* 4.94%*
Portfolio A (For the year
ended 03/31/96)........... 13.15 15.46% 1,055,809 1.95% 10.06%
Portfolio A (For the period
ended 03/31/95)........... 11.51 (7.85%) 610,176 1.95%* 9.77%*
WORLDWIDE GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 17.71 6.88% 23,826,652 1.85%* 2.15%*
Portfolio A (For the year
ended 03/31/96)........... 16.57 19.79% 23,480,586 1.85% 2.17%
Portfolio A (For the year
ended 03/31/95)........... 14.29 (0.90%) 22,207,775 1.85% 2.18%
Portfolio A (For the period
ended 03/31/94)........... 14.94 19.52% 20,194,105 1.85%* 2.23%*
<CAPTION>
RATIO OF NET
NET ASSETS, AFTER INCOME (DEFICIT) TO
EXPENSE AVERAGE NET ASSETS, BEFORE
REIMBURSEMENT** EXPENSE REIMBURSEMENT**
<S> <C> <C>
- ------------------------------
EMERGING GROWTH(1)
Portfolio A (For the period
ended 09/30/96)#.......... (1.22%)* (1.22%)*
Portfolio A (For the year
ended 03/31/96)........... (1.20%) (1.20%)
Portfolio A (For the year
ended 03/31/95)........... (1.27%) (1.25%)
Portfolio A (For the period
ended 03/31/94)........... (1.44%)* (1.51%)*
CORE GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... (1.05%)* (0.96%)*
Portfolio A (For the year
ended 03/31/96)........... (0.91%) (0.89%)
Portfolio A (For the year
ended 03/31/95)........... (0.66%) (0.70%)
Portfolio A (For the period
ended 03/31/94)........... (0.68%)* (0.82%)*
INCOME & GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 2.79%* 2.64%*
Portfolio A (For the year
ended 03/31/96)........... 3.29% 3.12%
Portfolio A (For the year
ended 03/31/95)........... 3.71% 3.55%
Portfolio A (For the period
ended 03/31/94)........... 2.83%* 2.59%*
BALANCED GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... 1.93%* 0.88%*
Portfolio A (For the year
ended 03/31/96)........... 2.16% 0.88%
Portfolio A (For the year
ended 03/31/95)........... 1.44% 0.26%
Portfolio A (For the period
ended 03/31/94)........... 1.30%* (0.39%)*
GOVERNMENT INCOME(2)
Portfolio A (For the period
ended 09/30/96)#.......... 5.38%* (0.48%)*
Portfolio A (For the year
ended 03/31/96)........... 5.78% (0.75%)
Portfolio A (For the year
ended 03/31/95)........... 5.18% (2.12%)
Portfolio A (For the period
ended 03/31/94)........... 3.07%* (16.11%)*
MONEY MARKET FUND(2)
Portfolio A (For the period
ended 09/30/96)#.......... 4.98%* 3.46%*
Portfolio A (For the year
ended 03/31/96)........... 5.35% 2.77%
Portfolio A (For the year
ended 03/31/95)........... 4.60% 2.42%
Portfolio A (For the period
ended 03/31/94)........... 1.85%* (320.85%)*
EMERGING COUNTRIES(3)
Portfolio A (For the period
ended 09/30/96)#.......... (0.49%)* (1.63%)*
Portfolio A (For the year
ended 03/31/96)........... (0.35%) (3.61%)
Portfolio A (For the period
ended 03/31/95)........... 1.09%* (4.99%)*
INTERNATIONAL GROWTH(4)
Portfolio A (For the period
ended 09/30/96)#.......... (0.61%)* (3.57%)*
Portfolio A (For the year
ended 03/31/96)........... (0.27%) (7.75%)
Portfolio A (For the period
ended 03/31/95)........... (0.07%)* (7.89%)*
WORLDWIDE GROWTH(2)
Portfolio A (For the period
ended 09/30/96)#.......... (0.76%)* (0.99%)*
Portfolio A (For the year
ended 03/31/96)........... (0.35%) (0.61%)
Portfolio A (For the year
ended 03/31/95)........... (0.42%) (0.75%)
Portfolio A (For the period
ended 03/31/94)........... (0.69%)* (1.07%)*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
57
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
SERIES B 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>
- -------------------------------------------------------------------------------------------------------------
EMERGING GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... $16.69 $(0.11) $2.06 -- --
Portfolio B (For the period
ended 03/31/96)........... 12.50 (0.14) 4.33 -- --
CORE GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 16.25 (0.36) 2.07 -- --
Portfolio B (For the period
ended 03/31/96)........... 12.50 (0.09) 3.84 -- --
INCOME & GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 14.96 0.14 1.10 $(0.14) --
Portfolio B (For the period
ended 03/31/96)........... 12.50 0.24 2.46 (0.24) --
BALANCED GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 14.18 0.08 1.26 (0.08) --
Portfolio B (For the period
ended 03/31/96)........... 12.50 0.12 1.68 (0.12) --
GOVERNMENT INCOME+
Portfolio B (For the period
ended 09/30/96)#.......... 12.53 0.24 (0.25) (0.24) --
Portfolio B (For the period
ended 03/31/96)........... 12.50 0.48 0.04 (0.48) $(0.01)
EMERGING COUNTRIES+
Portfolio B (For the period
ended 09/30/96)#.......... 14.02 (0.03) 1.71 -- --
Portfolio B (For the period
ended 03/31/96)........... 12.50 (0.04) 1.56 -- --
INTERNATIONAL GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 13.96 (0.06) 0.70 -- --
Portfolio B (For the period
ended 03/31/96)........... 12.50 (0.02) 1.48 -- --
WORLDWIDE GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 14.34 (0.06) 0.99 -- --
Portfolio B (For the period
ended 03/31/96)........... 12.50 (0.05) 1.89 -- --
</TABLE>
- -------------
+All Series B Portfolios commenced operations on May 31, 1995.
*Annualized.
**Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
#Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
58
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF EXPENSES RATIO OF EXPENSES
NET ASSET TO AVERAGE NET TO AVERAGE NET
VALUES AT ASSETS, AFTER ASSETS, BEFORE
END OF NET ASSETS AT EXPENSE EXPENSE
PERIOD TOTAL RETURN END OF PERIOD REIMBURSEMENT** REIMBURSEMENT**
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... $18.64 11.68% $ 25,290,382 2.60%* 2.77%*
Portfolio B (For the period
ended 03/31/96)........... 16.69 33.52% 13,625,738 2.58%* 3.26%*
CORE GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 17.96 10.52% 21,159,857 2.25%* 2.81%*
Portfolio B (For the period
ended 03/31/96)........... 16.25 30.00% 11,185,978 2.22%* 3.39%*
INCOME & GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 16.06 8.22% 6,336,088 2.25%* 3.72%*
Portfolio B (For the period
ended 03/31/96)........... 14.96 21.72% 2,125,077 2.25%* 7.08%*
BALANCED GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 15.44 9.45% 1,888,997 2.25%* 7.03%*
Portfolio B (For the period
ended 03/31/96)........... 14.18 14.45% 672,934 2.25%* 13.05%*
GOVERNMENT INCOME+
Portfolio B (For the period
ended 09/30/96)#.......... 12.28 (0.14%) 990,425 1.30%* 15.75%*
Portfolio B (For the period
ended 03/31/96)........... 12.53 4.16% 127,528 1.33%* 86.12%*
EMERGING COUNTRIES+
Portfolio B (For the period
ended 09/30/96)#.......... 15.70 11.98% 10,091,495 2.90%* 4.06%*
Portfolio B (For the period
ended 03/31/96)........... 14.02 12.16% 3,557,080 2.90%* 7.58%*
INTERNATIONAL GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 14.60 4.58% 2,596,996 2.60%* 5.65%*
Portfolio B (For the period
ended 03/31/96)........... 13.96 11.68% 1,486,794 2.60%* 16.15%*
WORLDWIDE GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 15.27 6.49% 3,520,418 2.50%* 5.20%*
Portfolio B (For the period
ended 03/31/96)........... 14.34 14.72% 1,972,242 2.50%* 9.50%*
<CAPTION>
RATIO OF NET
(DEFICIT) TO AVERAGE TO AVERAGE
NET ASSETS, NET ASSETS,
AFTER EXPENSE BEFORE EXPENSE
REIMBURSEMENT** REIMBURSEMENT**
<S> <C> <C>
- ------------------------------
EMERGING GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... (2.14%)* (2.31%)*
Portfolio B (For the period
ended 03/31/96)........... (2.09%)* (2.76%)*
CORE GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... (1.68%)* (2.24%)*
Portfolio B (For the period
ended 03/31/96)........... (1.61%)* (2.77%)*
INCOME & GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 2.29%* 0.79%*
Portfolio B (For the period
ended 03/31/96)........... 2.59%* (2.22%)*
BALANCED GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... 1.34%* (3.13%)*
Portfolio B (For the period
ended 03/31/96)........... 1.38%* (8.86%)*
GOVERNMENT INCOME+
Portfolio B (For the period
ended 09/30/96)#.......... 5.18%* (7.28%)*
Portfolio B (For the period
ended 03/31/96)........... 5.14%* (67.73%)*
EMERGING COUNTRIES+
Portfolio B (For the period
ended 09/30/96)#.......... (1.16%)* (2.33%)*
Portfolio B (For the period
ended 03/31/96)........... (1.05%)* (5.44%)*
INTERNATIONAL GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... (1.22%)* (4.26%)*
Portfolio B (For the period
ended 03/31/96)........... (0.64%)* (13.26%)*
WORLDWIDE GROWTH+
Portfolio B (For the period
ended 09/30/96)#.......... (1.46%)* (4.08%)*
Portfolio B (For the period
ended 03/31/96)........... (1.28%)* (8.12%)*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
59
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DISTRIBUTIONS
VALUES AT INVESTMENT AND UNREALIZED FROM NET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT DISTRIBUTIONS FROM
OF PERIOD (DEFICIT) ON INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
EMERGING GROWTH(1)
Portfolio C (For the period
ended 09/30/96)#.......... $17.62 $ 0.23 $1.87 -- --
Portfolio C (For the year
ended 03/31/96)........... 12.96 (0.29) 5.03 -- $(0.08)
Portfolio C (For the year
ended 03/31/95)........... 12.07 (0.22) 1.11 -- --
Portfolio C (For the period
ended 03/31/94)........... 12.50 (0.06) (0.37) -- --
CORE GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 18.06 (0.18) 2.08 -- --
Portfolio C (For the year
ended 03/31/96)........... 13.45 (0.27) 4.88 -- --
Portfolio C (For the year
ended 03/31/95)........... 13.18 (0.17) 0.44 -- --
Portfolio C (For the period
ended 03/31/94)........... 12.50 (0.11) 0.80 -- (0.01)
INCOME & GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 15.90 0.18 1.12 $(0.18) --
Portfolio C (For the year
ended 03/31/96)........... 13.03 0.40 2.86 (0.40) --
Portfolio C (For the year
ended 03/31/95)........... 14.28 0.41 (0.89) (0.41) (0.36)
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.24 2.11 (0.24) (0.33)
BALANCED GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 16.20 0.11 1.40 (0.11) --
Portfolio C (For the year
ended 03/31/96)........... 13.76 0.24 2.44 (0.24) --
Portfolio C (For the year
ended 03/31/95)........... 13.54 0.11 0.22 (0.11) --
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.08 1.04 (0.08) --
GOVERNMENT INCOME(2)
Portfolio C (For the period
ended 09/30/96)#.......... 12.63 0.29 (0.31) (0.29) --
Portfolio C (For the year
ended 03/31/96)........... 12.27 0.77 0.36 (0.77) --
Portfolio C (For the year
ended 03/31/95)........... 12.56 0.63 (0.28) (0.63) (0.01)
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.25 0.29 (0.25) (0.23)
EMERGING COUNTRIES(3)
Portfolio C (For the period
ended 09/30/96)#.......... 13.71 (0.03) 1.68 -- --
Portfolio C (For the year
ended 03/31/96)........... 10.79 (0.05) 2.97 -- --
Portfolio C (For the period
ended 03/31/95)........... 12.50 -- (1.70) (0.01) --
INTERNATIONAL GROWTH(4)
Portfolio C (For the period
ended 09/30/96)#.......... 13.05 (0.05) 0.66 -- --
Portfolio C (For the year
ended 03/31/96)........... 11.32 0.01 1.72 -- --
Portfolio C (For the period
ended 03/31/95)........... 12.50 (0.04) (1.12) (0.02) --
WORLDWIDE GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 16.76 (0.16) 1.26 -- --
Portfolio C (For the year
ended 03/31/96)........... 14.44 (0.21) 2.92 (0.01) (0.38)
Portfolio C (For the year
ended 03/31/95)........... 14.86 (0.15) (0.08) -- (0.19)
Portfolio C (For the period
ended 03/31/94)........... 12.50 0.14 2.22 -- --
</TABLE>
- ---------------
(1)Commenced operations on December 27, 1993.
(2)Commenced operations on April 19, 1993.
(3)Commenced operations on November 28, 1994.
(4)Commenced operations on August 31, 1994.
*Annualized.
**Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
#Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
60
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF EXPENSES TO
NET ASSET AVERAGE NET ASSETS, RATIO OF EXPENSES TO
VALUES AT END NET ASSETS AT AFTER EXPENSE AVERAGE NET ASSETS, BEFORE
OF PERIOD TOTAL RETURN END OF PERIOD REIMBURSEMENT** EXPENSE REIMBURSEMENT**
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH(1)
Portfolio C (For the period
ended 09/30/96)#.......... $19.72 11.92% $239,229,912 2.29%* 2.29%*
Portfolio C (For the year
ended 03/31/96)........... 17.62 37.18% 207,332,005 2.35% 2.35%
Portfolio C (For the year
ended 03/31/95)........... 12.96 7.37% 157,292,246 2.44% 2.44%
Portfolio C (For the period
ended 03/31/94)........... 12.07 (3.44%) 142,874,310 2.34%* 2.34%*
CORE GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 19.96 10.52% 186,703,699 2.11%* 2.11%*
Portfolio C (For the year
ended 03/31/96)........... 18.06 34.28% 177,461,331 2.14% 2.14%
Portfolio C (For the year
ended 03/31/95)........... 13.45 2.05% 143,389,656 2.24% 2.24%
Portfolio C (For the period
ended 03/31/94)........... 13.18 5.54% 141,488,561 2.17%* 2.17%*
INCOME & GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 17.02 8.18% 61,777,766 2.25%* 2.26%*
Portfolio C (For the year
ended 03/31/96)........... 15.89 25.24% 58,997,309 2.25% 2.28%
Portfolio C (For the year
ended 03/31/95)........... 13.03 (3.26%) 61,791,573 2.25% 2.29%
Portfolio C (For the period
ended 03/31/94)........... 14.28 18.76% 69,264,807 2.22%* 2.23%*
BALANCED GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 17.60 9.33% 17,718,207 2.25%* 2.82%*
Portfolio C (For the year
ended 03/31/96)........... 16.20 19.58% 16,586,339 2.25% 3.01%
Portfolio C (For the year
ended 03/31/95)........... 13.76 2.47% 16,469,510 2.25% 2.60%
Portfolio C (For the period
ended 03/31/94)........... 13.54 8.91% 16,248,130 2.24%* 2.73%*
GOVERNMENT INCOME(2)
Portfolio C (For the period
ended 09/30/96)#.......... 12.32 (0.16%) 3,987,045 1.30%* 5.86%*
Portfolio C (For the year
ended 03/31/96)........... 12.63 9.20% 2,968,287 1.33% 5.77%
Portfolio C (For the year
ended 03/31/95)........... 12.27 2.96% 4,278,140 1.50% 2.67%
Portfolio C (For the period
ended 03/31/94)........... 12.56 4.28% 7,345,300 1.50%* 3.86%*
EMERGING COUNTRIES(3)
Portfolio C (For the period
ended 09/30/96)#.......... 15.36 12.04% 12,325,316 2.90%* 3.39%*
Portfolio C (For the year
ended 03/31/96)........... 13.71 27.30% 4,344,744 2.90% 6.23%
Portfolio C (For the period
ended 03/31/95)........... 10.79 (13.64%) 59,366 2.90%* 242.59%**
INTERNATIONAL GROWTH(4)
Portfolio C (For the period
ended 09/30/96)#.......... 13.66 4.67% 2,321,308 2.60%* 4.39%*
Portfolio C (For the year
ended 03/31/96)........... 13.05 15.30% 933,422 2.60% 16.15%
Portfolio C (For the period
ended 03/31/95)........... 11.32 (9.25%) 24,066 2.61%* 75.37%*
WORLDWIDE GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 17.86 6.56% 70,693,942 2.50%* 2.58%*
Portfolio C (For the year
ended 03/31/96)........... 16.76 18.95% 71,155,027 2.50% 2.57%
Portfolio C (For the year
ended 03/31/95)........... 14.44 (1.49%) 71,200,715 2.50% 2.57%
Portfolio C (For the period
ended 03/31/94)........... 14.86 18.88% 66,576,743 2.44%* 2.44%*
<CAPTION>
RATIO OF NET
NET ASSETS, AFTER INCOME (DEFICIT) TO
EXPENSE AVERAGE NET ASSETS, BEFORE
REIMBURSEMENT** EXPENSE REIMBURSEMENT**
<S> <C> <C>
- ------------------------------
EMERGING GROWTH(1)
Portfolio C (For the period
ended 09/30/96)#.......... (0.19%)* (0.19%)*
Portfolio C (For the year
ended 03/31/96)........... (1.81%) (1.81%)
Portfolio C (For the year
ended 03/31/95)........... (1.85%) (1.85%)
Portfolio C (For the period
ended 03/31/94)........... (2.04%)* (2.04%)*
CORE GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... (1.56%)* (1.56%)*
Portfolio C (For the year
ended 03/31/96)........... (1.47%) (1.47%)
Portfolio C (For the year
ended 03/31/95)........... (1.30%) (1.30%)
Portfolio C (For the period
ended 03/31/94)........... (1.30%)* (1.30%)*
INCOME & GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 2.15%* 2.10%*
Portfolio C (For the year
ended 03/31/96)........... 2.64% 2.61%
Portfolio C (For the year
ended 03/31/95)........... 3.05% 3.01%
Portfolio C (For the period
ended 03/31/94)........... 2.28%* 2.27%*
BALANCED GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... 1.28%* 1.02%*
Portfolio C (For the year
ended 03/31/96)........... 1.53% 1.19%
Portfolio C (For the year
ended 03/31/95)........... 0.83% 0.48%
Portfolio C (For the period
ended 03/31/94)........... 0.61%* 0.12%*
GOVERNMENT INCOME(2)
Portfolio C (For the period
ended 09/30/96)#.......... 4.98%* 2.41%*
Portfolio C (For the year
ended 03/31/96)........... 5.46% 3.13%
Portfolio C (For the year
ended 03/31/95)........... 4.58% 3.41%
Portfolio C (For the period
ended 03/31/94)........... 2.70%* 0.34%*
EMERGING COUNTRIES(3)
Portfolio C (For the period
ended 09/30/96)#.......... (1.12%)* (1.62%)*
Portfolio C (For the year
ended 03/31/96)........... (1.06%) (4.15%)
Portfolio C (For the period
ended 03/31/95)........... (0.04%)** (239.73%)*
INTERNATIONAL GROWTH(4)
Portfolio C (For the period
ended 09/30/96)#.......... (1.30%)* (3.07%)*
Portfolio C (For the year
ended 03/31/96)........... (1.02%) (13.95%)
Portfolio C (For the period
ended 03/31/95)........... (0.76%)* (73.52%)*
WORLDWIDE GROWTH(2)
Portfolio C (For the period
ended 09/30/96)#.......... (1.41%)* (1.41%)*
Portfolio C (For the year
ended 03/31/96)........... (0.99%) (1.00%)
Portfolio C (For the year
ended 03/31/95)........... (1.06%) (1.13%)
Portfolio C (For the period
ended 03/31/94)........... (1.24%)* (1.24%)*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
61
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME &
GROWTH GROWTH GROWTH
<S> <C> <C> <C>
------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 156,579,102 $ 85,308,130 $ 30,336,108
Receivable for shares of
beneficial interest
sold...................... 314,089 96,887 13,515
Receivable for investments
sold in Master Trust
Fund...................... 89,035 245,219 34
Due from adviser............ -- -- 4,533
Deferred organization
costs..................... 4,929 13,644 11,081
Prepaid expenses and other
assets.................... 769 414 164
------------------------------------------------
Total assets.............. 156,987,924 85,664,294 30,365,435
------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 314,089 96,887 13,515
Payable for shares of
beneficial interest
repurchased............... 89,035 245,219 34
Due to adviser.............. -- 37,530 --
Dividend payable............ -- -- 202,639
Accrued expenses............ 147,065 76,757 36,386
------------------------------------------------
Total liabilities......... 550,189 456,393 252,574
------------------------------------------------
NET ASSETS.................... $ 156,437,735 $ 85,207,901 $ 30,112,861
------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 99,204,257 $ 56,705,436 $ 24,701,699
Accumulated undistributed
net investment income
(deficit)................. (4,044,185) (1,856,964) 253
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. 19,075,759 9,244,836 1,086,063
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- --
Net unrealized appreciation
(depreciation) on
investments............... 42,201,904 21,114,593 4,324,846
------------------------------------------------
Net assets................ $ 156,437,735 $ 85,207,901 $ 30,112,861
------------------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 7,773,118 4,185,945 1,794,314
------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/Outstanding shares
of beneficial interest)... $ 20.13 $ 20.36 $ 16.78
------------------------------------------------
MAXIMUM OFFERING PRICE PER
SHARE OF ($20.13/94.75%,
$20.36/94.75%,
$16.78/94.75%, $17.56/94.75,
$12.42/95.25%,
$15.76/94.75%,
$13.80/94.75%,
$17.71/94.75%,
respectively)............... $ 21.25 $ 21.49 $ 17.71
------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 97,057,649 $ 55,030,396 $ 19,199,135
------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
62
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED GOVERNMENT EMERGING INTERNATIONAL WORLDWIDE
GROWTH INCOME MONEY MARKET COUNTRIES GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 6,724,282 $ 1,456,048 $ 14,198,775 $ 13,292,953 $ 2,606,431 $ 23,818,087
Receivable for shares of
beneficial interest
sold...................... -- -- -- 90,400 2,369 3,271
Receivable for investments
sold in Master Trust
Fund...................... -- -- -- -- -- 46,116
Due from adviser............ 5,497 6,042 13,476 10,373 4,664 5,080
Deferred organization
costs..................... 9,971 9,593 8,071 5,045 -- 10,430
Prepaid expenses and other
assets.................... 30 5 12,464 22 2 121
---------------------------------------------------------------------------------------------------
Total assets.............. 6,739,780 1,471,688 14,232,786 13,398,793 2,613,466 23,883,105
---------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... -- -- -- 90,400 2,369 3,271
Payable for shares of
beneficial interest
repurchased............... -- -- -- -- -- 46,116
Due to adviser.............. -- -- -- -- -- --
Dividend payable............ 30,517 6,861 39,685 -- -- --
Accrued expenses............ 15,559 44,247 49,684 15,419 11,127 7,066
---------------------------------------------------------------------------------------------------
Total liabilities......... 46,076 51,108 89,369 105,819 13,496 56,453
---------------------------------------------------------------------------------------------------
NET ASSETS.................... $ 6,693,704 $ 1,420,580 $ 14,143,417 $ 13,292,974 $ 2,599,970 $ 23,826,652
---------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 5,352,356 $ 1,447,608 $ 14,143,785 $ 12,095,266 $ 2,416,591 $ 18,096,424
Accumulated undistributed
net investment income
(deficit)................. 176 22 (368) (29,950) (7,312) (380,196)
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. 438,544 (14,746) -- 118,278 14,661 2,589,749
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- -- -- (13,598) (3,416) 497
Net unrealized foreign
exchange gain (loss)...... -- -- -- 399 (42) (1,573)
Net unrealized appreciation
(depreciation) on
investments............... 902,628 (12,304) -- 1,122,579 179,488 3,521,751
---------------------------------------------------------------------------------------------------
Net assets................ $ 6,693,704 $ 1,420,580 $ 14,143,417 $ 13,292,974 $ 2,599,970 $ 23,826,652
---------------------------------------------------------------------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 381,170 114,344 14,143,785 843,268 188,372 1,345,644
---------------------------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/Outstanding shares
of beneficial interest)... $ 17.56 $ 12.42 $ 1.00 $ 15.76 $ 13.80 $ 17.71
---------------------------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER
SHARE OF ($20.13/94.75%,
$20.36/94.75%,
$16.78/94.75%, $17.56/94.75,
$12.42/95.25%,
$15.76/94.75%,
$13.80/94.75%,
$17.71/94.75%,
respectively)............... $ 18.53 $ 13.04 $ 1.00 $ 16.63 $ 14.56 $ 18.69
---------------------------------------------------------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 4,940,333 $ 1,303,367 $ 14,027,866 $ 12,032,038 $ 2,402,876 $ 16,121,464
---------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
63
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME &
GROWTH GROWTH GROWTH
<S> <C> <C> <C>
------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 25,342,800 $ 23,771,436 $ 6,948,480
Receivable for shares of
beneficial interest
sold...................... 391,386 328,468 153,613
Receivable for investments
sold in Master Trust
Fund...................... 10,190 -- --
Due from adviser............ 3,799 5,445 4,767
Deferred organization
costs..................... 730 730 731
Prepaid expenses and other
assets.................... 1,548 615 196
------------------------------------------------
Total assets.............. 25,750,453 24,106,694 7,107,787
------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 392,860 329,030 153,800
Payable for shares of
beneficial interest
repurchased............... 10,190 -- --
Dividend payable............ -- -- 30,534
Accrued expenses............ 57,021 73,101 41,640
------------------------------------------------
Total liabilities......... 460,071 402,131 225,974
------------------------------------------------
NET ASSETS.................... $ 25,290,382 $ 23,704,563 $ 6,881,813
------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 21,931,190 $ 21,261,398 $ 6,371,943
Accumulated undistributed
net investment income
(deficit)................. (330,271) (205,594) (52)
Accumulated undistributed
net realized (loss) from
security transactions..... (340,730) (3,250) (58,546)
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- --
Net unrealized appreciation
on investments............ 4,030,193 2,652,009 568,468
------------------------------------------------
Net assets................ $ 25,290,382 $ 23,704,563 $ 6,881,813
------------------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 1,356,575 1,320,111 428,584
------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest
(Net assets/Outstanding
shares of beneficial
interest)................. $ 18.64 $ 17.96 $ 16.06
------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 21,751,568 $ 21,159,857 $ 6,336,088
------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
64
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED GOVERNMENT EMERGING INTERNATIONAL WORLDWIDE
GROWTH INCOME COUNTRIES GROWTH GROWTH
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 2,026,960 $ 1,005,672 $ 10,903,306 $ 2,765,779 $ 3,803,621
Receivable for shares of
beneficial interest
sold...................... 26,500 -- 249,789 33,991 63,532
Receivable for investments
sold in Master Trust
Fund...................... -- -- -- -- --
Due from adviser............ 4,986 4,229 6,978 5,321 7,129
Deferred organization
costs..................... 730 730 741 730 730
Prepaid expenses and other
assets.................... 6,288 29,575 13 67 8
----------------------------------------------------------------------------------
Total assets.............. 2,065,464 1,040,206 11,160,827 2,805,888 3,875,020
----------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 26,500 -- 249,789 34,055 63,532
Payable for shares of
beneficial interest
repurchased............... -- -- -- -- --
Dividend payable............ 5,234 3,496 -- -- --
Accrued expenses............ 28,342 38,650 31,800 22,450 33,613
----------------------------------------------------------------------------------
Total liabilities......... 60,076 42,146 281,589 56,505 97,145
----------------------------------------------------------------------------------
NET ASSETS.................... $ 2,005,388 $ 998,060 $ 10,879,238 $ 2,749,383 $ 3,777,875
----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 1,893,950 $ 998,384 $ 10,123,684 $ 2,596,996 $ 3,520,418
Accumulated undistributed
net investment income
(deficit)................. 84 14 (49,276) (14,414) (27,973)
Accumulated undistributed
net realized (loss) from
security transactions..... (63,401) (2,771) (28,249) (2,194) 21,041
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- -- (7,817) (3,694) (6,284)
Net unrealized foreign
exchange gain (loss)...... -- -- 323 -- 210
Net unrealized appreciation
on investments............ 174,755 2,433 840,573 172,689 270,463
----------------------------------------------------------------------------------
Net assets................ $ 2,005,388 $ 998,060 $ 10,879,238 $ 2,749,383 $ 3,777,875
----------------------------------------------------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 129,883 81,303 692,739 188,259 247,332
----------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest
(Net assets/Outstanding
shares of beneficial
interest)................. $ 15.44 $ 12.28 $ 15.70 $ 14.60 $ 15.27
----------------------------------------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 1,888,997 $ 990,425 $ 10,091,495 $ 2,596,996 $ 3,520,418
----------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
65
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1996 (UNAUDITED)
- ------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME &
GROWTH GROWTH GROWTH
<S> <C> <C> <C>
------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 239,535,726 $ 186,946,015 $ 62,173,836
Receivable for shares of
beneficial interest
sold...................... 661,149 141,530 7,724
Receivable for investments
sold in Master Trust
Fund...................... 638,068 266,518 48,848
Due from adviser............ -- -- 2,608
Deferred organization
costs..................... 4,929 13,972 11,184
Prepaid expenses and other
assets.................... 1,193 1,931 309
------------------------------------------------
Total assets.............. 240,841,065 187,369,966 62,244,509
------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 661,149 141,530 7,724
Payable for shares of
beneficial interest
repurchased............... 638,068 266,518 48,848
Dividend payable............ -- -- 316,115
Accrued expenses and other
payables.................. 311,936 258,219 94,056
------------------------------------------------
Total liabilities......... 1,611,153 666,267 466,743
------------------------------------------------
NET ASSETS.................... $ 239,229,912 $ 186,703,699 $ 61,777,766
------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 158,196,614 $ 126,314,874 $ 52,021,416
Accumulated undistributed
net investment income
(deficit)................. (8,714,724) (6,800,041) 101
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. 27,922,811 19,361,761 1,337,064
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- --
Net unrealized appreciation
(depreciation) on
investments............... 61,825,211 47,827,105 8,419,185
------------------------------------------------
Net assets................ $ 239,229,912 $ 186,703,699 $ 61,777,766
------------------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 12,134,024 9,352,106 3,630,299
------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest
(Net assets/Outstanding
shares of beneficial
interest)................. $ 19.72 $ 19.96 $ 17.02
------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 151,660,200 $ 120,248,850 $ 41,754,269
------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
66
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED GOVERNMENT EMERGING INTERNATIONAL WORLDWIDE
GROWTH INCOME COUNTRIES GROWTH GROWTH
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 17,786,759 $ 4,036,977 $ 12,332,829 $ 2,337,965 $ 70,750,301
Receivable for shares of
beneficial interest
sold...................... -- 74 164,510 4,958 55,233
Receivable for investments
sold in Master Trust
Fund...................... 139,356 12 9,137 -- 89,847
Due from adviser............ 4,102 5,956 3,566 3,388 1,403
Deferred organization
costs..................... 10,194 9,724 1,779 -- 11,266
Prepaid expenses and other
assets.................... 88 16 17 2 370
----------------------------------------------------------------------------------
Total assets.............. 17,940,499 4,052,759 12,511,838 2,346,313 70,908,420
----------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... -- 74 164,510 4,958 55,233
Payable for shares of
beneficial interest
repurchased............... 139,356 12 9,137 -- 89,847
Dividend payable............ 57,369 17,800 -- -- --
Accrued expenses and other
payables.................. 25,567 47,828 12,875 20,047 69,398
----------------------------------------------------------------------------------
Total liabilities......... 222,292 65,714 186,522 25,005 214,478
----------------------------------------------------------------------------------
NET ASSETS.................... $ 17,718,207 $ 3,987,045 $ 12,325,316 $ 2,321,308 $ 70,693,942
----------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 13,742,802 $ 4,213,858 $ 11,310,605 $ 2,244,266 $ 53,966,687
Accumulated undistributed
net investment income
(deficit)................. 637 183 (65,195) (16,835) (2,392,129)
Accumulated undistributed
net realized gain (loss)
from security
transactions.............. 1,329,470 (201,236) 10,980 (49,754) 7,890,512
Accumulated undistributed
net realized foreign
exchange gain (loss)...... -- -- (11,308) (1,690) 519,246
Net unrealized foreign
exchange gain (loss)...... -- -- 370 4 (5,090)
Net unrealized appreciation
(depreciation) on
investments............... 2,645,298 (25,760) 1,079,864 145,317 10,714,716
----------------------------------------------------------------------------------
Net assets................ $ 17,718,207 $ 3,987,045 $ 12,325,316 $ 2,321,308 $ 70,693,942
----------------------------------------------------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 1,006,480 323,564 802,532 169,960 3,959,259
----------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest
(Net assets/Outstanding
shares of beneficial
interest)................. $ 17.60 $ 12.32 $ 15.36 $ 13.66 $ 17.86
----------------------------------------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 12,566,754 $ 3,485,158 $ 11,241,538 $ 2,243,663 $ 48,581,096
----------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
67
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME &
GROWTH GROWTH GROWTH
<S> <C> <C> <C>
------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ (500,816) $ (133,756) $ 523,266
------------------------------------------------
EXPENSES
Accounting fees........... 15,600 15,715 15,600
Administration fees....... 2,500 3,282 4,344
Audit & tax fees.......... 3,206 3,548 3,884
Distribution fees......... 190,373 102,727 37,985
Insurance................. 2,101 1,143 460
Legal fees................ 20,533 11,090 4,101
Miscellaneous............. 1,148 620 230
Organization costs........ 1,073 4,551 3,584
Registration fees......... 10,574 5,707 2,119
Shareholder reporting
fees.................... 14,974 10,229 2,346
Shareholder servicing
fees.................... 75,941 41,091 15,194
Transfer agent fees....... 90,722 59,775 31,844
Trustees' fee............. 2,368 1,279 473
------------------------------------------------
Total expenses.......... 431,113 260,757 122,164
Reimbursement to (from)
advisor................. -- 37,530 (23,403)
------------------------------------------------
Net expenses............ 431,113 298,287 98,761
------------------------------------------------
Net investment income
(deficit)........... (931,929) (432,043) 424,505
------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions.............. 15,037,900 5,907,809 1,925,674
Net realized foreign
exchange loss............. -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 3,497,755 2,832,153 200,429
------------------------------------------------
Net gain (loss) on
investments........... 18,535,655 8,739,962 2,126,103
------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 17,603,726 $ 8,307,919 $ 2,550,608
------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
68
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
Balanced Government Emerging International Worldwide
Growth Income Money Market Countries Growth Growth
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ 78,709 $ 34,645 $ 158,063 $ 7,156 $ (43) $ (13,355)
---------------------------------------------------------------------------------------------------
EXPENSES
Accounting fees........... 7,800 7,800 7,800 15,600 7,800 15,600
Administration fees....... 3,795 3,439 2,500 3,287 603 3,721
Audit & tax fees.......... 4,044 4,079 4,110 4,075 4,092 3,951
Distribution fees......... 7,622 1,525 4,761 32,675 1,973 29,921
Insurance................. 88 24 6 56 -- 346
Legal fees................ 822 165 861 1,176 213 3,234
Miscellaneous............. 46 9 48 66 12 181
Organization costs........ 3,221 3,104 2,649 725 0 3,371
Registration fees......... 530 85 443 605 109 1,665
Shareholder reporting
fees.................... 1,182 497 1,543 1,806 481 2,779
Shareholder servicing
fees.................... 3,049 611 3,174 4,357 787 11,968
Transfer agent fees....... 19,613 16,245 20,310 13,622 12,071 28,261
Trustees' fee............. 95 19 99 136 25 373
---------------------------------------------------------------------------------------------------
Total expenses.......... 51,907 37,602 48,304 78,186 28,166 105,371
Reimbursement to (from)
advisor................. (32,090) (35,772) (48,304) (49,867) (23,429) (27,577)
---------------------------------------------------------------------------------------------------
Net expenses............ 19,817 1,830 -- 28,319 4,737 77,794
---------------------------------------------------------------------------------------------------
Net investment income
(deficit)........... 58,892 32,815 158,063 (21,163) (4,780) (91,149)
---------------------------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions.............. 266,726 (43,423) (46) 100,782 25,066 1,728,939
Net realized foreign
exchange loss............. -- -- -- (6,540) (3,540) (35,305)
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 238,688 15,761 -- 754,665 62,560 (33,767)
---------------------------------------------------------------------------------------------------
Net gain (loss) on
investments........... 505,414 (27,662) (46) 848,907 84,086 1,659,867
---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 564,306 $ 5,153 $ 158,017 $ 827,744 $ 79,306 $ 1,568,718
---------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
69
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING INCOME &
GROWTH CORE GROWTH GROWTH
<S> <C> <C> <C>
------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ (65,194) $ (27,051) $ 74,123
------------------------------------------------
EXPENSES
Accounting fees........... 15,340 15,340 15,340
Administration fees....... 2,500 695 590
Audit & tax fees.......... 3,914 3,914 3,914
Distribution fees......... 76,337 65,479 15,486
Insurance................. 191 132 29
Legal fees................ 2,744 2,355 557
Miscellaneous............. 2,856 2,426 559
Organization costs........ 106 107 106
Registration fees......... 8,754 8,729 8,398
Shareholder reporting
fees.................... 17,511 34,519 5,673
Shareholder servicing
fees.................... 25,376 21,827 5,162
Transfer agent fees....... 13,180 12,134 992
Trustees' fee............. 1,085 1,085 1,085
------------------------------------------------
Total expenses.......... 169,894 168,742 57,891
Less: Reimbursement from
advisor................. (17,129) (49,026) (31,049)
------------------------------------------------
Net expenses............ 152,765 119,716 26,842
------------------------------------------------
Net investment income
(deficit)........... (217,959) (146,767) 47,281
------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions.............. (111,571) (1,798) (52,957)
Net realized foreign
exchange loss............. -- -- --
Change in net unrealized
appreciation of
investments and foreign
currency.................. 2,249,148 1,795,809 433,895
------------------------------------------------
Net gain on
investments........... 2,137,577 1,794,011 380,938
------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 1,919,618 $ 1,647,244 $ 428,219
------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
70
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED GOVERNMENT EMERGING INTERNATIONAL WORLDWIDE
GROWTH INCOME COUNTRIES GROWTH GROWTH
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ 17,358 $ 13,160 $ 4,787 $ 264 $ (2,312)
----------------------------------------------------------------------------------
EXPENSES
Accounting fees........... 10,140 11,440 15,340 10,140 15,340
Administration fees....... 814 1,108 2,562 794 457
Audit & tax fees.......... 3,914 3,914 3,915 3,914 3,914
Distribution fees......... 4,924 1,119 25,769 7,730 10,983
Insurance................. 15 1 33 7 23
Legal fees................ 177 60 929 279 396
Miscellaneous............. 180 56 933 288 409
Organization costs........ 106 107 106 106 106
Registration fees......... 8,346 8,319 8469 8,392 8,395
Shareholder reporting
fees.................... 1,951 771 10089 3,912 6,482
Shareholder servicing
fees.................... 1,642 560 8589 2,569 3,661
Transfer agent fees....... 4,643 907 6919 4,943 6,214
Trustees' fee............. 1,085 1,085 1085 1,085 1,085
----------------------------------------------------------------------------------
Total expenses.......... 37,937 29,447 84,738 44,159 57,465
Less: Reimbursement from
advisor................. (29,402) (27,881) (40,071) (31,276) (38,428)
----------------------------------------------------------------------------------
Net expenses............ 8,535 1,566 44,667 12,883 19,037
----------------------------------------------------------------------------------
Net investment income
(deficit)........... 8,823 11,594 (39,880) (12,619) (21,349)
----------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions.............. (56,329) (3,173) 14,503 7,018 54,599
Net realized foreign
exchange loss............. -- -- (4,919) (3,697) (5,115)
Change in net unrealized
appreciation of
investments and foreign
currency.................. 149,520 4,814 666,301 85,945 133,789
----------------------------------------------------------------------------------
Net gain on
investments........... 93,191 1,641 675,885 89,266 183,273
----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 102,014 $ 13,235 $ 636,005 $ 76,647 $ 161,924
----------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
71
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE INCOME &
GROWTH GROWTH GROWTH
<S> <C> <C> <C>
------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ (749,940) $ (301,282) $ 1,031,728
------------------------------------------------
EXPENSES
Accounting fees........... 15,600 15,600 15,600
Administration fees....... 2,500 7,358 8,559
Audit & tax fees.......... 2,793 2,895 3,574
Distribution fees......... 853,308 690,656 224,359
Insurance................. 3,293 2,708 865
Legal fees................ 30,683 24,858 8,080
Miscellaneous............. 1,715 1,389 452
Organization costs........ 1,072 4,513 3,618
Registration fees......... 15,795 12,789 4,163
Shareholder reporting
fees.................... 15,233 15,793 4,517
Shareholder servicing
fees.................... 283,659 230,219 74,786
Transfer agent fees....... 124,267 122,384 52,524
Trustees' fee............. 3,539 2,867 932
------------------------------------------------
Total expenses.......... 1,353,457 1,134,029 402,029
Less: Reimbursement from
advisor................. -- -- (13,139)
------------------------------------------------
Net expenses............ 1,353,457 1,134,029 388,890
------------------------------------------------
Net investment income
(deficit)........... (2,103,397) (1,435,311) 642,838
------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions.............. 22,073,499 13,600,148 3,616,303
Net realized foreign
exchange loss............. -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 4,799,781 6,140,360 479,597
------------------------------------------------
Net gain (loss) on
investments............. 26,873,280 19,740,508 4,095,900
------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 24,769,883 $ 18,305,197 $ 4,738,738
------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
72
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED GOVERNMENT EMERGING INTERNATIONAL WORLDWIDE
GROWTH INCOME COUNTRIES GROWTH GROWTH
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ 227,384 $ 87,747 $ 7,735 $ (498) $ (39,502)
----------------------------------------------------------------------------------
EXPENSES
Accounting fees........... 7,800 7,800 15,600 7,800 15,600
Administration fees....... 10,974 8,575 3,331 762 11,134
Audit & tax fees.......... 3,949 4,052 4,084 4,084 3,615
Distribution fees......... 66,044 7,730 33,029 7,622 268,655
Insurance................. 247 55 37 -- 1,033
Legal fees................ 2,379 419 1,190 277 8,175
Miscellaneous............. 132 23 66 15 542
Organization costs........ 3,297 3,142 256 -- 3,642
Registration fees......... 1,224 215 709 180 4,989
Shareholder reporting
fees.................... 1,554 643 678 662 7,022
Shareholder servicing
fees.................... 22,014 3,865 11,010 2,534 89,551
Transfer agent fees....... 17,945 13,864 8,767 6,784 51,996
Trustees' fee............. 274 48 137 24 1,117
----------------------------------------------------------------------------------
Total expenses.......... 137,833 50,431 78,894 30,744 467,071
Less: Reimbursement from
advisor................. (23,358) (39,610) (21,646) (18,042) (1,403)
----------------------------------------------------------------------------------
Net expenses............ 114,475 10,821 57,248 12,702 465,668
----------------------------------------------------------------------------------
Net investment income
(deficit)........... 112,909 76,926 (49,513) (13,200) (505,170)
----------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions.............. 803,415 (87,553) 59,942 (38,557) 5,327,357
Net realized foreign
exchange loss............. -- -- (6,716) (2,395) (106,264)
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 636,154 17,521 810,411 70,960 (155,031)
----------------------------------------------------------------------------------
Net gain (loss) on
investments............. 1,439,569 (70,032) 863,637 30,008 5,066,062
----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 1,552,478 $ 6,894 $ 814,124 $ 16,808 $ 4,560,892
----------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
73
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING GROWTH
--------------------------------
FOR THE PERIOD
ENDED
SEPTEMBER 30, FOR THE
1996 YEAR ENDED
(UNAUDITED) MARCH 31, 1996
<S> <C> <C>
--------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (931,929) $ (1,467,001)
Net realized gain from
security transactions..... 15,037,900 17,157,012
Net realized foreign
exchange gain (loss)...... -- --
Change in net unrealized
appreciation on
investments............... 3,497,755 22,567,484
--------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 17,603,726 38,257,495
--------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital gain*............... -- (179,082)
Net investment income*...... -- --
--------------------------------
Total distributions..... -- (179,082)
--------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 98,096,919 37,959,926
Proceeds from shares issued
for distribution
reinvestment.............. -- 28,673
Cost of shares
repurchased............... (97,418,300) (44,636,699)
--------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 678,619 (6,648,100)
--------------------------------
Total increase
(decrease) in net
assets................ 18,282,345 31,430,313
NET ASSETS:
BEGINNING OF PERIOD......... 138,155,390 106,725,077
--------------------------------
END OF PERIOD............... $ 156,437,735 $ 138,155,390
--------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 7,704,965 8,170,194
Shares sold................. 5,180,187 2,374,005
Shares issued for
distributions
reinvested................ -- 1,774
Shares repurchased.......... (5,112,034) (2,841,008)
--------------------------------
Ending balance.......... 7,773,118 7,704,965
--------------------------------
</TABLE>
- ------------
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
74
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH INCOME & GROWTH BALANCED GROWTH
--------------------------------- --------------------------------- ---------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
ENDED ENDED 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 OPERATIONS
Net investment income
(deficit)................. $ (432,043) $ (641,957) $ 424,505 $ 1,014,246 $ 58,892
Net realized gain from
security transactions..... 5,907,809 11,262,503 1,925,674 3,025,096 266,726
Net realized foreign
exchange gain (loss)...... -- -- -- -- --
Change in net unrealized
appreciation on
investments............... 2,832,153 10,033,989 200,429 3,076,767 238,688
---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 8,307,919 20,654,535 2,550,608 7,116,109 564,306
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital gain*............... -- -- -- -- --
Net investment income*...... -- -- (427,961) (1,011,296) (58,811)
---------------------------------------------------------------------------------------
Total distributions..... -- -- (427,961) (1,011,296) (58,811)
---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 9,429,315 13,279,964 2,831,635 3,034,140 1,350,768
Proceeds from shares issued
for distribution
reinvestment.............. -- -- 86,532 359,472 6,545
Cost of shares
repurchased............... (9,804,393) (21,950,980) (6,640,004) (8,936,855) (1,071,314)
---------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ (375,078) (8,671,016) (3,721,837) (5,543,243) 285,999
---------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 7,932,841 11,983,519 (1,599,190) 561,570 791,494
NET ASSETS:
BEGINNING OF PERIOD......... 77,275,060 65,291,541 31,712,051 31,150,481 5,902,210
---------------------------------------------------------------------------------------
END OF PERIOD............... $ 85,207,901 $ 77,275,060 $ 30,112,861 $ 31,712,051 $ 6,693,704
---------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 4,207,526 4,798,906 2,022,208 2,422,113 365,215
Shares sold................. 485,777 812,501 176,176 209,464 79,961
Shares issued for
distributions
reinvested................ -- -- 5,378 24,649 385
Shares repurchased.......... (507,358) (1,403,881) (409,448) (634,018) (64,391)
---------------------------------------------------------------------------------------
Ending balance.......... 4,185,945 4,207,526 1,794,314 2,022,208 381,170
---------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
MARCH 31, 1996
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 120,127
Net realized gain from
security transactions..... 688,324
Net realized foreign
exchange gain (loss)...... 86,789
Change in net unrealized
appreciation on
investments............... 188,570
Net increase (decrease)
in net assets
resulting from
operations............ 997,021
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital gain*............... --
Net investment income*...... (120,078)
Total distributions..... (120,078)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 1,158,459
Proceeds from shares issued
for distribution
reinvestment.............. 19,024
Cost of shares
repurchased............... (1,131,809)
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 45,674
Total increase
(decrease) in net
assets................ 922,617
NET ASSETS:
BEGINNING OF PERIOD......... 4,979,593
END OF PERIOD............... $ 5,902,210
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 362,417
Shares sold................. 75,429
Shares issued for
distributions
reinvested................ 1,215
Shares repurchased.......... (73,846)
Ending balance.......... 365,215
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
75
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- Continued
- --------------------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
GOVERNMENT INCOME MONEY MARKET
-------------------------------- ---------------------------------
FOR THE PERIOD FOR THE PERIOD
ENDED 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 OPERATIONS
Net investment income
(deficit)................. $ 32,815 $ 65,740 $ 158,063 $ 199,306
Net realized gain from
security transactions..... (43,423) 74,049 (46) (322)
Net realized foreign
exchange gain (loss)...... -- -- -- --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 15,761 (44,744) -- --
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net increase (decrease)
in net assets
resulting from
operations............ 5,153 95,045 158,017 198,984
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital gain*............... -- -- -- --
Net investment income*...... (32,829) (65,742) (158,063) (199,306)
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total distributions..... (32,829) (65,742) (158,063) (199,306)
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 462,780 789,251 95,254,793 22,041,605
Proceeds from shares issued
for distribution
reinvestment.............. 8,138 21,274 115,060 180,368
Cost of shares
repurchased............... (320,120) (467,444) (84,355,613) (22,088,275)
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 150,798 343,081 11,014,240 133,698
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total increase
(decrease) in net
assets................ 123,122 372,384 11,014,194 133,376
NET ASSETS:
BEGINNING OF PERIOD......... 1,297,458 925,074 3,129,223 2,995,847
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
END OF PERIOD............... $ 1,420,580 $ 1,297,458 $ 14,143,417 $ 3,129,223
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 101,818 75,262 3,129,545 2,995,847
Shares sold................. 37,196 60,991 95,254,793 22,041,605
Shares issued for
distributions
reinvested................ 658 1,648 115,060 180,368
Shares repurchased.......... (25,328) (36,083) (84,355,613) (22,088,275)
<CAPTION>
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ending balance.......... 114,344 101,818 14,143,785 3,129,545
<CAPTION>
--------------------------------------------------------------------
</TABLE>
- ---------------
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
76
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE
EMERGING COUNTRIES INTERNATIONAL GROWTH GROWTH
--------------------------------- --------------------------------- ---------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
ENDED ENDED 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 OPERATIONS
Net investment income
(deficit)................. $ (21,163) $ (8,681) $ (4,780) $ (2,260) $ (91,149)
Net realized gain from
security transactions..... 100,782 75,094 25,066 2,128 1,728,939
Net realized foreign
exchange gain (loss)...... (6,540) (7,219) (3,540) 8,121 (35,305)
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 754,665 445,582 62,560 113,582 (33,767)
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net increase (decrease)
in net assets
resulting from
operations............ 827,744 504,776 79,306 121,571 1,568,718
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital gain*............... -- (12,591) -- -- --
Net investment income*...... -- (3,691) -- (9,359) --
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total distributions..... -- (16,282) 0 (9,359) --
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 8,152,980 3,534,443 1,606,898 462,321 857,558
Proceeds from shares issued
for distribution
reinvestment.............. -- 2,935 -- 4,744 --
Cost of shares
repurchased............... (405,517) (505,466) (142,043) (133,644) (2,080,210)
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 7,747,463 3,031,912 1,464,855 333,421 (1,222,652)
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total increase
(decrease) in net
assets................ 8,575,207 3,520,406 1,544,161 445,633 346,066
NET ASSETS:
BEGINNING OF PERIOD......... 4,717,767 1,197,361 1,055,809 610,176 23,480,586
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
END OF PERIOD............... $ 13,292,974 $ 4,717,767 $ 2,599,970 $ 1,055,809 $ 23,826,652
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 336,371 108,885 80,298 52,991 1,416,819
Shares sold................. 533,443 264,950 116,514 37,660 48,893
Shares issued for
distributions
reinvested................ -- 237 -- 392 --
Shares repurchased.......... (26,546) (37,701) (8,440) (10,745) (120,068)
<CAPTION>
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ending balance.......... 843,268 336,371 188,372 80,298 1,345,644
<CAPTION>
---------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
MARCH 31, 1996
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (79,808)
Net realized gain from
security transactions..... 1,986,079
Net realized foreign
exchange gain (loss)...... 186,789
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 2,024,229
<S> <C>
Net increase (decrease)
in net assets
resulting from
operations............ 4,117,289
<S> <C>
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital gain*............... (548,948)
Net investment income*...... (164,263)
<S> <C>
Total distributions..... (713,211)
<S> <C>
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 2,695,773
Proceeds from shares issued
for distribution
reinvestment.............. 89,275
Cost of shares
repurchased............... (4,916,315)
<S> <C>
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ (2,131,267)
<S> <C>
Total increase
(decrease) in net
assets................ 1,272,811
NET ASSETS:
BEGINNING OF PERIOD......... 22,207,775
<S> <C>
END OF PERIOD............... $ 23,480,586
<S> <C>
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 1,553,541
Shares sold................. 172,676
Shares issued for
distributions
reinvested................ 5,816
Shares repurchased.......... (315,214)
<S> <C>
Ending balance.......... 1,416,819
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
77
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------
SERIES B PORTFOLIOS+
<TABLE>
<CAPTION>
EMERGING GROWTH
--------------------------------
FOR THE PERIOD
ENDED
SEPTEMBER 30, FOR THE
1996 YEAR ENDED
(UNAUDITED) MARCH 31, 1996
<S> <C> <C>
--------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (217,959) $ (112,312)
Net realized gain (loss)
from security
transactions.............. (111,571) (229,159)
Net realized foreign
exchange gain (loss)...... -- --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 2,249,148 1,781,045
--------------------------------
Net increase in net
assets resulting from
operations............ 1,919,618 1,439,574
--------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... -- --
Net investment income*...... -- --
--------------------------------
Total distributions..... -- --
--------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 12,343,633 12,483,997
Proceeds from shares issued
for distribution
reinvestment.............. -- --
Cost of shares
repurchased............... (2,598,607) (298,833)
--------------------------------
Increase in net assets
derived from
transactions in shares
of beneficial
interest................ 9,745,026 12,185,164
--------------------------------
Total increase in net
assets................ 11,664,644 13,624,738
NET ASSETS:
BEGINNING OF PERIOD......... 13,625,738 1,000
--------------------------------
END OF PERIOD............... $ 25,290,382 $ 13,625,738
--------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 816,643 80
Shares sold................. 687,201 835,910
Shares issued for
distributions
reinvested................ -- --
Shares repurchased.......... (147,269) (19,347)
--------------------------------
Ending balance.......... 1,356,575 816,643
--------------------------------
</TABLE>
- ------------
+ Commenced operations on May 31, 1995.
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
78
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH INCOME & GROWTH BALANCED GROWTH
--------------------------------- --------------------------------- ---------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
ENDED SEPTEMBER FOR THE ENDED SEPTEMBER FOR THE ENDED SEPTEMBER
30, 1996 YEAR ENDED 30, 1996 YEAR ENDED 30, 1996
(UNAUDITED) MARCH 31, 1996 (UNAUDITED) MARCH 31, 1996 (UNAUDITED)
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (146,767) $ (58,827) $ 47,281 $ 18,883 $ 8,823
Net realized gain (loss)
from security
transactions.............. (1,798) (1,452) (52,957) (5,589) (56,329)
Net realized foreign
exchange gain (loss)...... -- -- -- -- --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 1,795,809 856,200 433,895 134,573 149,520
---------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 1,647,244 795,921 428,219 147,867 102,014
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... -- -- -- -- --
Net investment income*...... -- -- (47,554) (18,662) (8,735)
---------------------------------------------------------------------------------------
Total distributions..... -- -- (47,554) (18,662) (8,735)
---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 11,731,759 11,229,429 4,496,073 1,989,445 1,321,013
Proceeds from shares issued
for distribution
reinvestment.............. -- -- 11,787 13,947 2,734
Cost of shares
repurchased............... (860,418) (840,372) (131,789) (8,520) (84,572)
---------------------------------------------------------------------------------------
Increase in net assets
derived from
transactions in shares
of beneficial
interest................ 10,871,341 10,389,057 4,376,071 1,994,872 1,239,175
---------------------------------------------------------------------------------------
Total increase in net
assets................ 12,518,585 11,184,978 4,756,736 2,124,077 1,332,454
NET ASSETS:
BEGINNING OF PERIOD......... 11,185,978 1,000 2,125,077 1,000 672,934
---------------------------------------------------------------------------------------
END OF PERIOD............... $ 23,704,563 $ 11,185,978 $ 6,881,813 $ 2,125,077 $ 2,005,388
---------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 688,351 80 142,026 80 47,473
Shares sold................. 682,814 743,523 294,536 141,568 87,881
Shares issued for
distributions
reinvested................ -- -- 769 963 183
Shares repurchased.......... (51,054) (55,252) (8,747) (592) (5,654)
---------------------------------------------------------------------------------------
Ending balance.......... 1,320,111 688,351 428,584 142,019 129,883
---------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
MARCH 31, 1996
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 4,767
Net realized gain (loss)
from security
transactions.............. (7,072)
Net realized foreign
exchange gain (loss)...... --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 25,235
Net increase in net
assets resulting from
operations............ 22,930
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... --
Net investment income*...... (4,771)
Total distributions..... (4,771)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 701,091
Proceeds from shares issued
for distribution
reinvestment.............. 2,978
Cost of shares
repurchased............... (50,294)
Increase in net assets
derived from
transactions in shares
of beneficial
interest................ 653,775
Total increase in net
assets................ 671,934
NET ASSETS:
BEGINNING OF PERIOD......... 1,000
END OF PERIOD............... $ 672,934
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 80
Shares sold................. 50,735
Shares issued for
distributions
reinvested................ 215
Shares repurchased.......... (3,557)
Ending balance.......... 47,473
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
79
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- Continued
- --------------------------------------------------------------------------------
SERIES B PORTFOLIOS+
<TABLE>
<CAPTION>
GOVERNMENT INCOME
--------------------------------
FOR THE PERIOD
ENDED
SEPTEMBER 30, FOR THE
1996 YEAR ENDED
(UNAUDITED) MARCH 31, 1996
<S> <C> <C>
--------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 11,594 $ 2,096
Net realized gain (loss)
from security
transactions.............. (3,173) 445
Net realized foreign
exchange gain (loss)...... -- --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 4,814 (2,381)
--------------------------------
Net increase in net
assets resulting from
operations............ 13,235 160
--------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... -- (43)
Net investment income*...... (11,588) (2,088)
--------------------------------
Total distributions..... (11,588) (2,131)
--------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 1,231,768 186,853
Proceeds from shares issued
for distribution
reinvestment.............. 4,008 1,394
Cost of shares
repurchased............... (366,891) (59,748)
--------------------------------
Increase in net assets
derived from
transactions in shares
of beneficial
interest................ 868,885 128,499
--------------------------------
Total increase in net
assets................ 870,532 126,528
NET ASSETS:
BEGINNING OF PERIOD......... 127,528 1,000
--------------------------------
END OF PERIOD............... $ 998,060 $ 127,528
--------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 10,174 80
Shares sold................. 100,560 14,683
Shares issued for
distributions
reinvested................ 330 110
Shares repurchased.......... (29,761) (4,699)
--------------------------------
Ending balance.......... 81,303 10,174
--------------------------------
</TABLE>
- ------------
+ Commenced operations on May 31, 1995.
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
80
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE
EMERGING COUNTRIES INTERNATIONAL GROWTH GROWTH
--------------------------------- --------------------------------- ---------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
ENDED SEPTEMBER FOR THE ENDED SEPTEMBER FOR THE ENDED SEPTEMBER
30, 1996 YEAR ENDED 30, 1996 YEAR ENDED 30, 1996
(UNAUDITED) MARCH 31, 1996 (UNAUDITED) MARCH 31, 1996 (UNAUDITED)
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (39,880) $ (9,396) $ (12,619) $ (1,795) $ (21,349)
Net realized gain (loss)
from security
transactions.............. 14,503 (42,752) 7,018 (9,212) 54,599
Net realized foreign
exchange gain (loss)...... (4,919) (2,898) (3,697) 3 (5,115)
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 666,301 174,595 85,945 86,744 133,789
---------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 636,005 119,549 76,647 75,740 161,924
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... -- -- -- -- --
Net investment income*...... -- -- -- -- --
---------------------------------------------------------------------------------------
Total distributions..... -- -- -- -- --
---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 6,842,943 3,604,854 1,316,083 1,436,777 1,661,550
Proceeds from shares issued
for distribution
reinvestment.............. -- -- -- -- --
Cost of shares
repurchased............... (156,790) (168,323) (130,141) (26,723) (17,841)
---------------------------------------------------------------------------------------
Increase in net assets
derived from
transactions in shares
of beneficial
interest................ 6,686,153 3,436,531 1,185,942 1,410,054 1,643,709
---------------------------------------------------------------------------------------
Total increase in net
assets................ 7,322,158 3,556,080 1,262,589 1,485,794 1,805,633
NET ASSETS:
BEGINNING OF PERIOD......... 3,557,080 1,000 1,486,794 1,000 1,972,242
---------------------------------------------------------------------------------------
END OF PERIOD............... $ 10,879,238 $ 3,557,080 $ 2,749,383 $ 1,486,794 $ 3,777,875
---------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 253,773 80 106,534 80 137,552
Shares sold................. 449,355 265,757 90,767 108,479 110,947
Shares issued for
distributions
reinvested................ -- -- -- -- --
Shares repurchased.......... (10,389) (12,064) (9,042) (2,025) (1,167)
---------------------------------------------------------------------------------------
Ending balance.......... 692,739 253,773 188,259 106,534 247,332
---------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
MARCH 31, 1996
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ (6,624)
Net realized gain (loss)
from security
transactions.............. (33,558)
Net realized foreign
exchange gain (loss)...... (1,169)
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 136,884
Net increase in net
assets resulting from
operations............ 95,533
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... --
Net investment income*...... --
Total distributions..... --
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 1,875,734
Proceeds from shares issued
for distribution
reinvestment.............. --
Cost of shares
repurchased............... (25)
Increase in net assets
derived from
transactions in shares
of beneficial
interest................ 1,875,709
Total increase in net
assets................ 1,971,242
NET ASSETS:
BEGINNING OF PERIOD......... 1,000
END OF PERIOD............... $ 1,972,242
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 80
Shares sold................. 137,474
Shares issued for
distributions
reinvested................ --
Shares repurchased.......... (2)
Ending balance.......... 137,552
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
81
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- Continued
- --------------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING GROWTH CORE GROWTH
-------------------------------- --------------------------------
FOR THE PERIOD FOR THE PERIOD
ENDED 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 OPERATIONS
Net investment income
(deficit)................. $ (2,103,397) $ (3,277,713) $ (1,435,311) $ (2,371,066)
Net realized gain (loss)
from security
transactions.............. 22,073,499 25,025,135 13,600,148 25,076,226
Net realized foreign
exchange gain (loss)...... -- -- -- --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 4,799,781 33,698,001 6,140,360 23,755,815
-------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 24,769,883 55,445,423 18,305,197 46,460,975
-------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... -- (934,772) -- --
Net Investment Income*...... -- -- -- --
-------------------------------------------------------------------
Total distributions..... -- (934,772) -- --
-------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 29,311,644 34,428,228 12,335,829 28,016,055
Proceeds from shares issued
for distribution
reinvestment.............. -- 70,462 -- --
Cost of shares
repurchased............... (22,183,620) (38,969,582) (21,398,658) (40,405,355)
-------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 7,128,024 (4,470,892) (9,062,829) (12,389,300)
-------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 31,897,907 50,039,759 9,242,368 34,071,675
NET ASSETS:
BEGINNING OF PERIOD......... 207,332,005 157,292,246 177,461,331 143,389,656
-------------------------------------------------------------------
END OF PERIOD............... $ 239,229,912 $ 207,332,005 $ 186,703,699 $ 177,461,331
-------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 11,765,386 12,138,614 9,825,753 10,660,454
Shares sold................. 1,562,571 2,229,275 645,864 1,736,793
Shares issued for
distributions
reinvested................ -- 4,429 -- --
Shares repurchased.......... (1,193,933) (2,606,932) (1,119,511) (2,571,494)
-------------------------------------------------------------------
Ending balance.......... 12,134,024 11,765,386 9,352,106 9,825,753
-------------------------------------------------------------------
</TABLE>
- -------------
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
82
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT
INCOME & GROWTH BALANCED GROWTH INCOME
--------------------------------- --------------------------------- ---------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
ENDED ENDED 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 OPERATIONS
Net investment income
(deficit)................. $ 642,838 $ 1,577,283 $ 112,909 $ 249,565 $ 76,926
Net realized gain (loss)
from security
transactions.............. 3,616,303 6,045,361 803,415 2,116,964 (87,553)
Net realized foreign
exchange gain (loss)...... -- -- -- -- --
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 479,597 5,862,603 636,154 505,781 17,521
---------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 4,738,738 13,485,247 1,552,478 2,872,310 6,894
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... -- -- -- -- --
Net Investment Income*...... (646,408) (1,579,024) (112,335) (250,682) (76,845)
---------------------------------------------------------------------------------------
Total distributions..... (646,408) (1,579,024) (112,335) (250,682) (76,845)
---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 3,928,834 5,125,006 1,516,316 2,569,236 2,132,978
Proceeds from shares issued
for distribution
reinvestment.............. 30,516 118,288 6,287 28,551 10,953
Cost of shares
repurchased............... (5,271,223) (19,943,781) (1,830,878) (5,102,586) (1,073,222)
---------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ (1,311,873) (14,700,487) (308,275) (2,504,799) 1,070,709
---------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 2,780,457 (2,794,264) 1,131,868 116,829 1,000,758
NET ASSETS:
BEGINNING OF PERIOD......... 58,997,309 61,791,573 16,586,339 16,469,510 2,986,287
---------------------------------------------------------------------------------------
END OF PERIOD............... $ 61,777,766 $ 58,997,309 $ 17,718,207 $ 16,586,339 $ 3,987,045
---------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 3,712,379 4,741,312 1,023,861 1,196,550 236,490
Shares sold................. 241,244 353,167 89,894 163,082 172,523
Shares issued for
distributions
reinvested................ 1,873 8,002 369 1,833 893
Shares repurchased.......... (325,197) (1,390,102) (107,644) (337,604) (86,342)
---------------------------------------------------------------------------------------
Ending balance.......... 3,630,299 3,712,379 1,006,480 1,023,861 323,564
---------------------------------------------------------------------------------------
<CAPTION>
EMERGING COUNTRIES
--------------------------------
FOR THE PERIOD
ENDED
FOR THE SEPTEMBER 30, FOR THE
YEAR ENDED 1996 YEAR ENDED
MARCH 31, 1996 (UNAUDITED) MARCH 31, 1996
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 195,107 $ (49,513) $ (15,679)
Net realized gain (loss)
from security
transactions.............. 288,875 59,942 (48,875)
Net realized foreign
exchange gain (loss)...... -- (6,716) (4,594)
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. (128,268) 810,411 268,676
Net increase in net
assets resulting from
operations............ 355,714 814,124 199,528
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... -- -- --
Net Investment Income*...... (195,316) -- --
Total distributions..... (195,316) -- --
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 2,475,860 7,949,755 4,602,574
Proceeds from shares issued
for distribution
reinvestment.............. 37,183 -- --
Cost of shares
repurchased............... (3,965,294) (783,307) (516,724)
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ (1,452,251) 7,166,448 4,085,850
Total increase
(decrease) in net
assets................ (1,291,853) 7,980,572 4,285,378
NET ASSETS:
BEGINNING OF PERIOD......... 4,278,140 4,344,744 59,366
END OF PERIOD............... $ 2,986,287 $ 12,325,316 $ 4,344,744
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 348,596 316,899 5,503
Shares sold................. 192,231 538,151 350,179
Shares issued for
distributions
reinvested................ 2,908 -- --
Shares repurchased.......... (307,245) (52,518) (38,783)
Ending balance.......... 236,490 802,532 316,899
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
83
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
- --------------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH WORLDWIDE GROWTH
-------------------------------- --------------------------------
FOR THE PERIOD FOR THE PERIOD
ENDED 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 OPERATIONS
Net investment income
(deficit)................. $ (13,200) $ (3,506) $ (505,170) $ (703,331)
Net realized gain (loss)
from security
transactions.............. (38,557) (10,145) 5,327,357 5,902,488
Net realized foreign
exchange gain (loss)...... (2,395) 660 (106,264) 571,253
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency.................. 70,960 74,223 (155,031) 6,582,211
-------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 16,808 61,232 4,560,892 12,352,621
-------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Capital Gain*............... -- -- -- (1,617,540)
Net Investment Income*...... -- (75) -- (38,714)
-------------------------------------------------------------------
Total distributions..... -- (75) -- (1,656,254)
-------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares sold... 1,509,430 894,986 3,554,629 9,990,990
Proceeds from shares issued
for distribution
reinvestment.............. -- 53 -- 248,301
Cost of shares
repurchased............... (138,352) (46,840) (8,576,606) (20,981,346)
-------------------------------------------------------------------
Increase (decrease) in net
assets derived from
transactions in shares
of beneficial
interest................ 1,371,078 848,199 (5,021,977) (10,742,055)
-------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 1,387,886 909,356 (461,085) (45,688)
NET ASSETS:
BEGINNING OF PERIOD......... 933,422 24,066 71,155,027 71,200,715
-------------------------------------------------------------------
END OF PERIOD............... $ 2,321,308 $ 933,422 $ 70,693,942 $ 71,155,027
-------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 71,526 2,126 4,244,437 4,932,460
Shares sold................. 108,781 73,086 203,311 627,728
Shares issued for
distributions
reinvested................ -- 5 -- 15,968
Shares repurchased.......... (10,347) (3,691) (488,489) (1,331,719)
-------------------------------------------------------------------
Ending balance.......... 169,960 71,526 3,959,259 4,244,437
-------------------------------------------------------------------
</TABLE>
- -------------
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
84
<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 investments 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.
OTHER ASSETS
Other Assets for the Balanced Growth Portfolio B and Government Income
Portfolio includes cash received from the adviser for expense reimbursements.
- --------------------------------------------------------------------------------
85
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENTS
The investment adviser to the Master Trust is Nicholas-Applegate Capital
Management ("Nicholas-Applegate" or "Investment Adviser"). The advisory fee is
computed daily for the Funds based upon the percentage of each Fund's average
daily net assets.
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
The Trust has approved a distribution plan whereby Nicholas Applegate
Securities (the "Distributor"), an affiliate of Nicholas-Applegate, is
compensated for distribution-related expenses at an annual rate, payable
monthly, of 0.25%, 0.75% and 0.75% of Series A , B and C Portfolios average
daily net assets, respectively, except for Government Income B and C Portfolios,
which is 0.50% and 0.50%, respectively.
The Money Market Portfolio compensates the Distributor at the rate of .15% of
average daily net assets.
Under a distribution agreement, the Distributor who is the principal
underwriter for the sale of shares of the Portfolios, retains a portion of any
contingent deferred sales load on redemptions for the Portfolios, and retains a
portion of the initial sales load imposed on purchases of shares of the Series A
Portfolios. This agreement may be terminated by either party upon 60 days'
written notice.
The Trust has approved a shareholder service plan under which the Distributor
is also compensated for non-distribution related expenses as follows: .10%, .25%
and .25% of the average daily net asset value of the Series A (including Money
Market Portfolio), Series B, and Series C Portfolios, respectively.
EXPENSE LIMITATIONS
Nicholas-Applegate and the Trust have undertaken to limit the Portfolios'
expenses to the following annual levels through March 31, 1997. In subsequent
years, overall operating expenses for each Portfolio will not fall below the
applicable percentage limitation until the Investment Adviser has been fully
reimbursed for fees foregone or expenses paid by the Investment Adviser under
this agreement, as each Portfolio will reimburse the Investment Adviser in
subsequent years when operating expenses (before reimbursement) are less than
the applicable percentage limitation.
<TABLE>
<CAPTION>
A B C
--------- --------- ---------
<S> <C> <C> <C>
Emerging Growth
Portfolios................ 1.95% 2.60% 2.60%
Core Growth Portfolios...... 1.60% 2.25% 2.25%
Income & Growth
Portfolios................ 1.60% 2.25% 2.25%
Balanced Growth
Portfolios................ 1.60% 2.25% 2.25%
Government Income
Portfolios................ 0.90% 1.30% 1.30%
Money Market Portfolio...... 1.10% -- --
Worldwide Growth
Portfolios................ 1.85% 2.50% 2.50%
International Growth
Portfolios................ 1.95% 2.60% 2.60%
Emerging Countries
Portfolios................ 2.25% 2.90% 2.90%
</TABLE>
During the period from November 22, 1993 to September 30, 1996,
Nicholas-Applegate, at its discretion, paid for all of the Money Market
Portfolio
- --------------------------------------------------------------------------------
86
<PAGE>
- -------------------------------------------------------------------
expenses. Nicholas-Applegate may continue to make such additional payments for
expenses within the limitation at its discretion.
These percentages are based on the average net assets of the Portfolios,
exclusive of interest, taxes, brokerage commissions and other costs incurred in
connection with portfolio securities transactions, capital expenditures, and
extraordinary expenses.
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>
<CAPTION>
A B C
-------- -------- --------
<S> <C> <C> <C>
Emerging Growth Portfolios.............. -- $53,364 --
Core Growth Portfolios.................. $43,348 91,553 --
Income & Growth Portfolios.............. 173,443 66,174 $63,587
Balanced Growth Portfolios.............. 248,378 65,052 188,042
Government Income Portfolios............ 247,428 59,934 252,693
Money Market Portfolio.................. 294,833 -- --
Emerging Countries Portfolios........... 170,818 79,552 105,955
International Growth Portfolios......... 106,198 67,305 78,860
Worldwide Growth Portfolios............. 210,072 74,118 60,172
</TABLE>
Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of September 30, 1996, the following Portfolios have amounts due to
Nicholas-Applegate for organizational costs advanced:
<TABLE>
<S> <C>
Emerging Growth Portfolio B.......... $ 1,013
Core Growth Portfolio B.............. 1,013
Income & Growth Portfolio B.......... 1,013
Balanced Growth Portfolio B.......... 1,013
Government Income Portfolio A........ 30,779
Government Income Portfolio B........ 1,013
Government Income Portfolio C........ 30,779
Money Market Portfolio............... 26,503
Emerging Countries Portfolio B....... 1,025
International Growth Portfolio B..... 1,013
Worldwide Growth Portfolio B......... 1,013
</TABLE>
RELATED PARTIES
Certain officers of the Trust and the Master Trust are also officers of the
investment advisor and the distributor.
- --------------------------------------------------------------------------------
87
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the respective Master Trust
Funds for the fiscal year ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
--------- -----------
<S> <C> <C>
Emerging Growth Portfolio A.......... $ 98,097 $ 97,862
Emerging Growth Portfolio B.......... 12,357 2,770
Emerging Growth Portfolio C.......... 29,312 23,562
Core Growth Portfolio A.............. 9,429 10,080
Core Growth Portfolio B.............. 11,783 1,015
Core Growth Portfolio C.............. 12,336 22,540
Income & Growth Portfolio A.......... 2,867 7,040
Income & Growth Portfolio B.......... 4,496 140
Income & Growth Portfolio C.......... 3,942 6,342
Balanced Growth Portfolio A.......... 1,401 1,162
Balanced Growth Portfolio B.......... 1,321 86
Balanced Growth Portfolio C.......... 1,550 2,060
Government Income Portfolio A........ 516 382
Government Income Portfolio B........ 1,232 371
Government Income Portfolio C........ 2,181 1,193
Money Market Portfolio............... 96,760 85,732
Emerging Countries Portfolio A....... 8,192 492
Emerging Countries Portfolio B....... 6,878 224
Emerging Countries Portfolio C....... 7,966 868
International Growth Portfolio A..... 1,607 142
International Growth Portfolio B..... 1,316 130
International Growth Portfolio C..... 1,509 138
Worldwide Growth Portfolio A......... 893 2,205
Worldwide Growth Portfolio B......... 1,661 18
Worldwide Growth Portfolio C......... 3,555 9,099
</TABLE>
- --------------------------------------------------------------------------------
88
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
89
<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>
EMERGING CORE INCOME &
GROWTH GROWTH GROWTH
FUND FUND FUND
<S> <C> <C> <C>
---------------------------------------------------
ASSETS
Investments, at value *..... $ 610,921,587 $ 501,507,845 $ 120,339,331
Foreign currencies, at
value**................... -- -- --
Cash........................ -- 4,046 900
Receivable for investment
securities sold........... 4,455,633 4,402,001 1,701,034
Receivable for interests
sold...................... 1,367,624 566,885 323,581
Dividends receivable........ 79,563 56,430 215,769
Interest receivable......... 262 -- 621,033
Due from adviser............ -- -- --
Deferred organization
costs..................... 18,693 24,091 11,947
Other assets................ 3,879 25,137 532
---------------------------------------------------
Total assets.............. 616,847,241 506,586,435 123,214,127
---------------------------------------------------
LIABILITIES
Payable for investment
securities purchased...... -- -- --
Payable for interests
repurchased............... 7,426,621 7,012,750 2,792,669
Due to adviser.............. 743,930 534,968 48,882
Accrued expenses and other
liabilities............... 734,179 396,561 104,065
---------------------------------------------------
Total liabilities......... 8,904,730 7,944,279 2,945,616
---------------------------------------------------
NET ASSETS.................... $ 607,942,511 $ 498,642,156 $ 120,268,511
---------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 355,184,425 $ 343,504,966 $ 81,533,055
Accumulated net investment
income (deficit).......... (8,203,977) (1,423,696) 13,587,460
Accumulated net realized
gain (loss)............... 87,904,363 47,256,935 9,362,281
Accumulated net realized
foreign exchange gain
(loss).................... -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- --
Net unrealized appreciation
(depreciation) on
investments............... 173,057,700 109,303,951 15,785,715
---------------------------------------------------
Net assets................ $ 607,942,511 $ 498,642,156 $ 120,268,511
---------------------------------------------------
* Investments, at cost..... $ 437,863,887 $ 392,203,894 $ 104,553,616
---------------------------------------------------
** Foreign currencies, at
cost...................... -- -- --
---------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
90
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED GOVERNMENT MONEY EMERGING INTERNATIONAL
GROWTH INCOME MARKET COUNTRIES GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value *..... $ 27,092,084 $ 6,359,649 $ 14,297,154 $ 62,453,184 $ 45,289,261
Foreign currencies, at
value**................... -- -- -- 346,142 1,429,378
Cash........................ 651 33,349 1,194 666 --
Receivable for investment
securities sold........... 1,110,525 -- -- 935,576 41,818
Receivable for interests
sold...................... 26,500 74 -- 507,199 1,431,833
Dividends receivable........ 3,759 -- -- 46,169 110,535
Interest receivable......... 204,673 138,781 1,308 -- --
Due from adviser............ -- -- 5,238 -- --
Deferred organization
costs..................... 8,522 7,839 7,022 -- 679
Other assets................ 61 9 100 2,800 1,032
---------------------------------------------------------------------------------------
Total assets.............. 28,446,775 6,539,701 14,312,016 64,291,736 48,304,536
---------------------------------------------------------------------------------------
LIABILITIES
Payable for investment
securities purchased...... -- -- 41,605 2,764,775 3,039,586
Payable for interests
repurchased............... 1,126,250 -- -- 9,137 --
Due to adviser.............. 139,356 90 -- -- --
Accrued expenses and other
liabilities............... 21,486 39,694 33,145 90,199 178,371
---------------------------------------------------------------------------------------
Total liabilities......... 1,287,092 39,784 74,750 2,864,111 3,217,957
---------------------------------------------------------------------------------------
NET ASSETS.................... $ 27,159,683 $ 6,499,917 $ 14,237,266 $ 61,427,625 $ 45,086,579
---------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 19,872,942 $ 5,780,066 $ 14,237,637 $ 56,430,674 $ 40,848,416
Accumulated net investment
income (deficit).......... 1,740,133 891,155 -- 84,234 119,725
Accumulated net realized
gain (loss)............... 1,742,511 (135,676) (371) (134,561) 349,175
Accumulated net realized
foreign exchange gain
(loss).................... -- -- -- (57,873) 95,152
Net unrealized foreign
exchange gain (loss)...... -- -- -- 1,842 (2,254)
Net unrealized appreciation
(depreciation) on
investments............... 3,804,097 (35,628) -- 5,103,309 3,676,365
---------------------------------------------------------------------------------------
Net assets................ $ 27,159,683 $ 6,499,917 $ 14,237,266 $ 61,427,625 $ 45,086,579
---------------------------------------------------------------------------------------
* Investments, at cost..... $ 23,287,987 $ 6,395,277 $ 14,297,154 $ 57,349,875 $ 41,612,896
---------------------------------------------------------------------------------------
** Foreign currencies, at
cost...................... -- -- -- $ 345,999 $ 1,439,151
---------------------------------------------------------------------------------------
<CAPTION>
WORLDWIDE
GROWTH
FUND
<S> <C>
ASSETS
Investments, at value *..... $ 100,021,160
Foreign currencies, at
value**................... 2,666,936
Cash........................ 530
Receivable for investment
securities sold........... 1,969,837
Receivable for interests
sold...................... 122,036
Dividends receivable........ 201,917
Interest receivable......... --
Due from adviser............ --
Deferred organization
costs..................... 9,703
Other assets................ 351
Total assets.............. 104,992,470
LIABILITIES
Payable for investment
securities purchased...... 3,978,944
Payable for interests
repurchased............... 135,963
Due to adviser.............. --
Accrued expenses and other
liabilities............... 119,116
Total liabilities......... 4,234,023
NET ASSETS.................... $ 100,758,447
COMPOSITION OF NET ASSETS
Paid-in capital............. $ 69,608,120
Accumulated net investment
income (deficit).......... 488,560
Accumulated net realized
gain (loss)............... 14,898,238
Accumulated net realized
foreign exchange gain
(loss).................... 757,906
Net unrealized foreign
exchange gain (loss)...... (6,857)
Net unrealized appreciation
(depreciation) on
investments............... 15,012,480
Net assets................ $ 100,758,447
* Investments, at cost..... $ 85,008,680
** Foreign currencies, at
cost...................... $ 2,691,094
</TABLE>
- --------------------------------------------------------------------------------
91
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
FOR THE YEAR ENDED SEPTEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
EMERGING CORE GROWTH INCOME &
GROWTH FUND FUND GROWTH FUND
<S> <C> <C> <C>
------------------------------------------
INVESTMENT INCOME:
Dividends................... $ 465,839 $ 535,873 $ 749,168
Interest.................... 847,900 719,415 1,736,898
------------------------------------------
Total income................ 1,313,739 1,255,288 2,486,066
------------------------------------------
EXPENSES:
Advisory fee................ 3,017,321 1,712,555 423,507
Accounting fee.............. 92,788 80,662 39,399
Administration fee.......... 17,500 70,223 17,372
Audit & tax fees............ 75,900 57,549 14,237
Custodian fee............... 67,232 38,123 11,582
Insurance................... 7,775 2,861 668
Legal fee................... 3,402 2,579 638
Miscellaneous............... 25,752 19,904 4,830
Organization costs.......... 4,269 7,792 3,865
Trustees' fee............... 3,564 3,564 3,564
------------------------------------------
Total expense............... 3,315,503 1,995,812 519,662
Reimbursement to (from)
adviser................... -- -- 16,780
------------------------------------------
Net expenses................ 3,315,503 1,995,812 536,442
------------------------------------------
Net investment income
(deficit)................. (2,001,764) (740,524) 1,949,624
------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
from security
transactions.............. 63,561,561 28,329,596 6,413,257
Net realized foreign
exchange loss............. -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currencies................ 12,427,523 20,550,277 1,520,523
------------------------------------------
Net gain (loss) on
investments............... 75,989,084 48,879,873 7,933,780
------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 73,987,320 $ 48,139,349 $ 9,883,404
------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
92
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING
BALANCED GOVERNMENT MONEY MARKET COUNTRIES INTERNATIONAL WORLDWIDE
GROWTH FUND INCOME FUND FUND FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends................... $ 30,032 -- -- $ 323,642 $ 244,293 $ 507,538
Interest.................... 422,677 $ 149,963 $ 173,628 59,829 30,185 42,376
----------------------------------------------------------------------------------
Total income................ 452,709 149,973 173,628 383,471 274,478 549,914
----------------------------------------------------------------------------------
EXPENSES:
Advisory fee................ 96,012 9,588 8,015 271,596 196,401 505,580
Accounting fee.............. 37,500 37,500 37,500 45,266 37,500 37,733
Administration fee.......... 3,937 736 981 6,654 6,031 15,562
Audit & tax fees............ 3,228 606 811 5,481 4,954 12,757
Custodian fee............... 11,681 7,278 7,791 12,202 17,797 60,163
Insurance................... 91 110 31 132 168 735
Legal fee................... 145 27 37 246 222 572
Miscellaneous............... 1,095 207 275 1,859 1,681 4,328
Organization costs.......... 2,758 2,536 2,469 -- 150 3,156
Trustees' fee............... 3,564 3,564 3,564 3,564 3,564 3,564
----------------------------------------------------------------------------------
Total expense............... 160,011 62,152 61,474 347,000 268,468 644,150
Reimbursement to (from)
adviser................... (38,396) (47,770) (47,047) 642 (3,327) (37,454)
----------------------------------------------------------------------------------
Net expenses................ 121,615 14,382 14,427 347,642 265,141 606,696
----------------------------------------------------------------------------------
Net investment income
(deficit)................. 331,094 135,591 159,201 35,829 9,337 (56,782)
----------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
from security
transactions.............. 1,032,726 (134,140) (46) 121,909 538,673 7,403,797
Net realized foreign
exchange loss............. -- -- -- (33,016) (70,052) (149,957)
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currencies................ 1,059,501 38,130 -- 3,726,624 1,140,702 (124,779)
----------------------------------------------------------------------------------
Net gain (loss) on
investments............... 2,092,227 (96,010) (46) 3,815,517 1,609,323 7,129,061
----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 2,423,321 $ 39,581 $ 159,155 $ 3,851,346 $ 1,618,660 $ 7,072,279
----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
93
<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 GROWTH FUND CORE GROWTH FUND
--------------------------------- ---------------------------------
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 OPERATIONS
Net investment income
(deficit)................. $ (2,001,764) $ (2,945,373) $ (740,524) $ (752,357)
Net realized gain (loss)
from security transactions
and foreign exchange...... 63,561,561 78,797,996 28,329,596 50,587,998
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 12,427,523 91,635,716 20,550,277 52,583,826
---------------------------------------------------------------------
Net increase in net
assets from
operations............ 73,987,320 167,488,339 48,139,349 102,419,467
---------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 151,775,458 107,044,506 72,503,285 113,757,799
Withdrawals by partners..... (201,906,649) (161,495,614) (42,543,081) (79,489,585)
---------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in
interests............. (50,131,191) (54,451,108) 29,960,204 34,268,214
---------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 23,856,129 113,037,231 78,099,553 136,687,681
NET ASSETS
BEGINNING OF PERIOD......... 584,086,382 471,049,151 420,542,603 283,854,922
---------------------------------------------------------------------
END OF PERIOD............... $ 607,942,511 $ 584,086,382 $ 498,642,156 $ 420,542,603
---------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
94
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT
INCOME & GROWTH FUND BALANCED GROWTH FUND INCOME FUND
--------------------------------- --------------------------------- ---------------
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 OPERATIONS
Net investment income
(deficit)................. $ 1,949,624 $ 4,142,172 $ 331,094 $ 638,909 $ 135,591
Net realized gain (loss)
from security transactions
and foreign exchange...... 6,413,257 10,319,301 1,032,726 2,837,068 (134,140)
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 1,520,523 10,732,341 1,059,501 742,010 38,130
---------------------------------------------------------------------------------------
Net increase in net
assets from
operations............ 9,883,404 25,193,814 2,423,321 4,217,987 39,581
---------------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 14,602,221 15,608,507 4,474,202 4,914,004 3,928,620
Withdrawals by partners..... (15,975,050) (35,130,807) (3,582,391) (7,102,941) (1,946,278)
---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in
interests............. (1,372,829) (19,522,300) 891,811 (2,188,937) 1,982,342
---------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 8,510,575 5,671,514 3,315,132 2,029,050 2,021,923
NET ASSETS
BEGINNING OF PERIOD......... 111,757,936 106,086,422 23,844,551 21,815,501 4,477,994
---------------------------------------------------------------------------------------
END OF PERIOD............... $ 120,268,511 $ 111,757,936 $ 27,159,683 $ 23,844,551 $ 6,499,917
---------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
MARCH 31, 1996
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 291,713
Net realized gain (loss)
from security transactions
and foreign exchange...... 363,388
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. (175,424)
Net increase in net
assets from
operations............ 479,677
TRANSACTIONS IN INTERESTS
Contributions by partners... 3,577,045
Withdrawals by partners..... (4,912,231)
Net increase (decrease)
in net assets from
transactions in
interests............. (1,335,186)
Total increase
(decrease) in net
assets................ (855,509)
NET ASSETS
BEGINNING OF PERIOD......... 5,333,503
END OF PERIOD............... $ 4,477,994
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
95
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST --
Continued
<TABLE>
<CAPTION>
MONEY MARKET FUND
---------------------------------
FOR THE
PERIOD ENDED
SEPTEMBER 30, FOR THE
1996 YEAR ENDED
(UNAUDITED) MARCH 31, 1996
<S> <C> <C>
---------------------------------
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 159,201 $ 200,767
Net realized gain (loss)
from security transactions
and foreign exchange...... (46) (325)
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. -- --
---------------------------------
Net increase (decrease)
in net assets from
operations............ 159,155 200,442
---------------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income....... (159,201) (200,767)
---------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 96,795,508 22,265,784
Withdrawals by partners..... (85,732,043) (22,108,039)
---------------------------------
Net increase (decrease)
in net assets from
transactions in
interests............. 11,063,465 143,452
---------------------------------
Total increase
(decrease) in net
assets................ 11,063,419 143,127
NET ASSETS
BEGINNING OF PERIOD......... 3,173,847 3,030,720
---------------------------------
END OF PERIOD............... $ 14,237,266 $ 3,173,847
---------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
96
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLDWIDE
EMERGING COUNTRIES FUND INTERNATIONAL GROWTH FUND GROWTH FUND
--------------------------------- --------------------------------- ---------------
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 OPERATIONS
Net investment income
(deficit)................. $ 35,829 $ 26,122 $ (56,782) $ 73,015 $ (56,782)
Net realized gain (loss)
from security transactions
and foreign exchange...... 88,893 (61,164) 7,253,840 259,455 7,253,840
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 3,726,624 1,751,439 (124,779) 2,584,830 (124,779)
---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from
operations............ 3,851,346 1,716,397 7,072,279 2,917,300 7,072,279
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income....... -- -- -- -- --
---------------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners... 39,571,901 16,175,253 6,500,703 6,044,445 6,500,703
Withdrawals by partners..... (1,894,608) (1,272,742) (13,157,561) (2,768,514) (13,157,561)
---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from
transactions in
interests............. 37,677,293 14,902,511 (6,656,858) 3,275,931 (6,656,858)
---------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets................ 41,528,639 16,618,908 415,421 6,193,231 415,421
NET ASSETS
BEGINNING OF PERIOD......... 19,898,986 3,280,078 23,805,628 17,612,397 100,343,026
---------------------------------------------------------------------------------------
END OF PERIOD............... $ 61,427,625 $ 19,898,986 $ 45,086,579 $ 23,805,628 $ 100,758,447
---------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
MARCH 31, 1996
<S> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS
Net investment income
(deficit)................. $ 299,362
Net realized gain (loss)
from security transactions
and foreign exchange...... 9,015,557
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 9,091,917
Net increase (decrease)
in net assets from
operations............ 18,406,836
DISTRIBUTIONS TO PARTNERS
Net investment income....... --
TRANSACTIONS IN INTERESTS
Contributions by partners... 17,650,729
Withdrawals by partners..... (33,276,911)
Net increase (decrease)
in net assets from
transactions in
interests............. (15,626,182)
Total increase
(decrease) in net
assets................ 2,780,654
NET ASSETS
BEGINNING OF PERIOD......... 97,562,372
END OF PERIOD............... $ 100,343,026
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
97
<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:
Emerging Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in equity securities of U.S. companies with less than $500
million in market capitalization.
Core Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in U.S. companies, generally over $500 million in total
stock market value.
Income & Growth Fund seeks to maximize total return through investment
primarily in convertible and equity securities of U.S. companies.
Balance Growth Fund seeks to provide a balance of long-term capital
appreciation and current income by investing approximately 60% of its total
assets in equity and convertible securities of primarily U.S. companies and 40%
of its total assets in debt securities, money market instruments and other
short-term investments.
Government Income Fund seeks to maximize current income through investment
primarily in intermediate-term debt securities of the U.S. government and its
agencies and instrumentalities.
Money Market Fund seeks to achieve a high level of current income consistent
with preservation of capital and maintenance of liquidity through investment in
investment grade securities with an average maturity of 90 days.
Worldwide Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in growth stocks of U.S. and foreign companies.
International Growth Fund seeks to maximize long-term capital appreciation
through investment primariily in equity securities of non-U.S. companies.
Emerging Countries Fund seeks to maximize long-term capital appreciation
through investment primarily in equity securities of companies in developing
countries of the world.
Pursuant to Rule 24f-2 under the Investment Company Act, the Trust has elected
to register an indefinite number of shares. The Trust commenced operations on
April 19, 1993.
SECURITIES TRANSACTIONS
Equity securities are valued at the last sale price (for exchange-listed
securities) or the mean between the last bid and asked price (if lacking any
sales and for over-the-counter securities). Debt securities generally are valued
at the mean between the last bid and asked prices. Securities with 60 days or
less remaining to maturity are valued on an amortized cost basis which
approximates market value.
Securities for which market quotations are not readily available are valued at
fair value determined in good faith by or under the direction of the Master
Trust's Board of Trustees.
Securities transactions are recognized on the trade date. Realized gains and
losses from securities transactions are calculated using the first-in, first-out
method. Dividend income is recognized on the ex-dividend date, and interest
income is recorded on the accrual basis. Discounts and premiums on securities
purchased are amortized over the life of the respective securities. The
prospectus for Nicholas-Applegate
- --------------------------------------------------------------------------------
98
<PAGE>
- -------------------------------------------------------------------
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
FUND MILLION MILLION $1 BILLION
- --------------------- ------------- ----------- -----------
<S> <C> <C> <C>
Emerging Growth
Fund................ 1.00% 1.00% 1.00%
Core Growth Fund..... 0.75% 0.675% 0.65%
Income & Growth
Fund................ 0.75% 0.675% 0.65%
Balanced Growth
Fund................ 0.75% 0.675% 0.65%
Government Income
Fund................ 0.40% 0.35% 0.35%
Money Market Fund.... 0.25% 0.2275% 0.2275%
Emerging Countries
Fund................ 1.25% 1.25% 1.25%
International Growth
Fund................ 1.00% 0.90% 0.85%
Worldwide Growth
Fund................ 1.00% 0.90% 0.85%
</TABLE>
The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Funds, during the period from inception (respectively) to September 30,
1996, are as follows:
<TABLE>
<CAPTION>
FUND
- ---------------------------------------------
<S> <C>
Income & Growth Fund......................... $ 20,720
Balanced Growth Fund......................... 283,267
Government Income Fund....................... 303,447
Money Market Fund............................ 328,948
Emerging Countries Fund...................... 111,131
International Growth Fund.................... 198,984
Worldwide Growth Fund........................ 271,377
</TABLE>
Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of September 30, 1996, the following Funds have amounts due to
Nicholas-Applegate for organizational costs advanced:
<TABLE>
<S> <C>
Government Income Fund.............. $ 24,688
Money Market Fund................... 24,688
</TABLE>
- --------------------------------------------------------------------------------
99
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
C. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investment securities, other than
short-term obligations, for the period ended September 30, 1996, were as follows
(in 000's):
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ----------------------------------- --------- ---------
<S> <C> <C>
Emerging Growth Fund............... 268,714 344,899
Core Growth Fund................... 281,890 248,636
Income & Growth Fund............... 87,859 84,911
Balanced Growth Fund............... 20,119 18,083
Government Income Fund............. 6,392 4,092
Emerging Countries Fund............ 63,858 26,898
International Growth Fund.......... 51,800 31,043
Worldwide Growth Fund.............. 76,814 84,240
</TABLE>
At September 30, 1996, the net unrealized appreciation (depreciation) based on
the cost of investments for Federal income tax purposes was as follows (in
000's):
<TABLE>
<CAPTION>
GROSS GROSS NET
TAX COST OF UNREALIZED UNREALIZED UNREALIZED
FUND INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
- ------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Emerging
Growth
Fund....... $ 437,864 $ 182,579 $ 9,521 $ 173,058
Core Growth
Fund....... 392,204 115,777 6,473 109,304
Income &
Growth
Fund....... 104,554 16,211 425 15,786
Balanced
Growth
Fund....... 23,288 4,216 412 3,804
Government
Income
Fund....... 6,395 44 79 (35)
Money Market
Fund....... 14,297 -- -- --
Emerging
Countries
Fund....... 57,350 7,307 2,204 5,103
International
Growth
Fund....... 41,613 4,656 980 3,676
Worldwide
Growth
Fund....... 85,009 16,885 1,873 15,012
</TABLE>
D. OFF BALANCE SHEET RISKS
The Nicholas-Applegate Mutual Funds' investment in foreign securities may
entail risks due to the potential of political and economic instability in the
countries where the securities are being offered. In addition, foreign exchange
fluctuations could affect the value of positions held. It is the Master Trust's
policy to continuously monitor its exposure to these risks.
- --------------------------------------------------------------------------------
100
<PAGE>
- -------------------------------------------------------------------
E. SELECTED RATIO DATA
<TABLE>
<CAPTION>
RATIO OF RATIO OF RATIO OF NET
EXPENSES TO EXPENSES TO INVESTMENT RATIO OF NET
AVERAGE NET AVERAGE NET INCOME INVESTMENT
ASSETS, ASSETS, (DEFICIT) TO INCOME (DEFICIT)
AFTER BEFORE AVERAGE NET TO AVERAGE NET
EXPENSE EXPENSE ASSETS, AFTER ASSETS, BEFORE
REIMBURSEMENTS REIMBURSEMENTS EXPENSE EXPENSE PORTFOLIO
(RECOUPMENT) (RECOUPMENT) REIMBURSEMENTS REIMBURSEMENTS TURNOVER RATE
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH(2)
For the period ended
09/30/96*#..................... 1.10% 1.10% (0.66%) (0.66%) 46.42%
For the year ended 03/31/96...... 1.11% 1.11% (0.57%) (0.57%) 129.59%
For the year ended 03/31/95...... 1.12% 1.11% (0.53%) (0.52%) 100.46%
For the period ended 03/31/94*... 1.12% 1.16% (0.80%) (0.84%) 50.51%
CORE GROWTH(3)
For the period ended
09/30/96*#..................... 0.87% 0.87% (0.32%) (0.32%) 57.67%
For the year ended 03/31/96...... 0.89% 0.89% (0.22%) (0.22%) 114.48%
For the year ended 03/31/95...... 0.89% 0.89% 0.05% 0.05% 98.09%
For the period ended 03/31/94*... 0.92% 0.92% (0.03%) (0.03%) 84.84%
INCOME & GROWTH(3)
For the period ended
09/30/96*#..................... 0.95% 0.92% 3.45% 3.48% 77.49%
For the year ended 03/31/96...... 0.95% 0.94% 3.94% 3.94% 144.97%
For the year ended 03/31/95...... 0.93% 0.95% 4.37% 4.35% 125.51%
For the period ended 03/31/94*... 0.94% 0.97% 3.51% 3.48% 177.52%
BALANCED GROWTH(3)
For the period ended
09/30/96*#..................... 0.95% 1.25% 2.59% 2.29% 73.43%
For the year ended 03/31/96...... 0.95% 1.37% 2.83% 2.37% 197.19%
For the year ended 03/31/95...... 0.95% 1.33% 2.13% 1.75% 110.40%
For the period ended 03/31/94*... 0.94% 1.37% 1.93% 1.50% 85.43%
GOVERNMENT INCOME FUND(3)
For the period ended
09/30/96*#..................... 0.60% 2.59% 5.66% 3.66% 86.79%
For the year ended 03/31/96...... 0.60% 2.72% 6.12% 4.00% 190.47%
For the year ended 03/31/95...... 0.80% 2.21% 5.32% 3.91% 258.72%
For the period ended 03/31/94*... 0.80% 2.80% 3.43% 1.43% 159.17%
MONEY MARKET FUND(3)
For the period ended
09/30/96*#..................... 0.45% 1.92% 4.97% 3.50%
For the year ended 03/31/96...... 0.45% 3.20% 5.34% 2.59% n/a
For the year ended 03/31/95...... 0.31% 3.23% 4.61% 1.69% n/a
For the period ended 03/31/94*... 0.24% 151.02% 2.12% (148.66%) n/a
EMERGING COUNTRIES FUND(4)
For the period ended
09/30/96*#..................... 1.60% 1.60% 0.16% 0.17% 60.16%
For the year ended 03/31/96...... 1.60% 2.80% 0.30% (0.90%) 118.21%
For the period ended 03/31/95*... 1.60% 1.81% 1.73% 1.52% 60.79%
INTERNATIONAL GROWTH FUND(5).......
For the period ended
09/30/96*#..................... 1.35% 1.37% 0.05% 0.03% 82.38%
For the year ended 03/31/96...... 1.35% 1.98% 0.39% (0.24%) 141.02%
For the year ended 03/31/95...... 1.35% 1.85% 0.24% (0.26%) 74.88%
For the period ended 03/31/94*... 1.35% 2.28% 0.41% (0.52%) 23.71%
WORLDWIDE GROWTH FUND(3)
For the period ended
09/30/96*#..................... 1.20% 1.27% (0.11%) (0.19%) 78.42%
For the year ended 03/31/96...... 1.20% 1.26% 0.31% 0.25% 132.20%
For the year ended 03/31/95...... 1.20% 1.30% 0.24% 0.14% 98.54%
For the period ended 03/31/94*... 1.20% 1.36% 0.01% (0.15%) 95.09%
<CAPTION>
BROKER
COMMISSIONS
PER SHARE
<S> <C>
- -----------------------------------
EMERGING GROWTH(2)
For the period ended
09/30/96*#..................... $0.0551
For the year ended 03/31/96...... $0.0523
For the year ended 03/31/95...... --
For the period ended 03/31/94*... --
CORE GROWTH(3)
For the period ended
09/30/96*#..................... $0.0567
For the year ended 03/31/96...... $0.0593
For the year ended 03/31/95...... --
For the period ended 03/31/94*... --
INCOME & GROWTH(3)
For the period ended
09/30/96*#..................... $0.0569
For the year ended 03/31/96...... $0.0597
For the year ended 03/31/95...... --
For the period ended 03/31/94*... --
BALANCED GROWTH(3)
For the period ended
09/30/96*#..................... $0.0593
For the year ended 03/31/96...... $0.0594
For the year ended 03/31/95...... --
For the period ended 03/31/94*... --
GOVERNMENT INCOME FUND(3)
For the period ended
09/30/96*#..................... --
For the year ended 03/31/96...... --
For the year ended 03/31/95...... --
For the period ended 03/31/94*... --
MONEY MARKET FUND(3)
For the period ended
09/30/96*#..................... --
For the year ended 03/31/96...... --
For the year ended 03/31/95...... --
For the period ended 03/31/94*... --
EMERGING COUNTRIES FUND(4)
For the period ended
09/30/96*#..................... $0.0015
For the year ended 03/31/96...... $0.0022
For the period ended 03/31/95*... --
INTERNATIONAL GROWTH FUND(5).......
For the period ended
09/30/96*#..................... $0.0208
For the year ended 03/31/96...... $0.0128
For the year ended 03/31/95...... --
For the period ended 03/31/94*... --
WORLDWIDE GROWTH FUND(3)
For the period ended
09/30/96*#..................... $0.0173
For the year ended 03/31/96...... $0.0187
For the year ended 03/31/95...... --
For the period ended 03/31/94*... --
</TABLE>
- -----------------
(1) Commenced operations on July 12, 1995.
(2) Commenced operations on October 1, 1993.
(3) Commenced operations on April 19, 1993.
(4) Commenced operations on November 28, 1994.
(5) Commenced operations on January 3, 1994.
* Annualized
# Unaudited
- --------------------------------------------------------------------------------
101
<PAGE>
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<PAGE>
NICHOLAS|APPLEGATE-Registered Trademark- MUTUAL FUNDS
- --------------------------------------------------------------------------------
600 West Broadway BULK RATE
San Diego, California 92101 U.S. POSTAGE
800-551-8043 P A I D
MERRILL/MAY, INC.
SAN996ABC
