<PAGE>
NICHOLAS-APPLEGATE-Registered Trademark-
MUTUAL FUNDS SEMI-ANNUAL REPORT
[PICTURE OF GLOBES]
INSTITUTIONAL PORTFOLIOS : SEPTEMBER 30, 1997
<PAGE>
PERHAPS THE SIMPLEST WAY TO
UNDERSTAND THE NATURE OF
TODAY'S INVESTMENT CLIMATE IS
TO EXAMINE A GLOBE.
[PICTURE OF GLOBES]
<PAGE>
[PICTURE OF A GLOBE]
A new era of exploration beckons as the 21st century approaches.
Opportunities for global investors are increasing dramatically as goods,
services, and capital cross international borders more freely than ever.
At the forefront of discovery, Nicholas-Applegate remains poised to take
advantage of opportunities in U.S. and international fixed income and equity
markets. Global investing poses special considerations, such as currency and
political risks, often not found in U.S. markets. At Nicholas-Applegate, we
have the expertise, experience, and resources to address these risks.
Applying our bottom-up equity approach globally, we look beneath the
surface of investments to see their full potential. We pursue the same high
standard for fixed income portfolos through careful analysis of diverse
factors ranging from broad economic trends to issue-specific characteristics.
Our philosophy is the cornerstone of our growing reputation as the global
fund manager of choice.
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION TO SHAREHOLDERS AND TO OTHERS WHEN
PRECEDED OR ACCOMPANIED BY A CURRENTLY EFFECTIVE PROSPECTUS FOR
NICHOLAS-APPLEGATE MUTUAL FUNDS. DISTRIBUTOR: NICHOLAS-APPLEGATE SECURITIES.
<PAGE>
TABLE OF CONTENTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Letter to Shareholders.................................................. 1
Long-Term View of the Global Equity and Bond Markets.................... 2
The Portfolios' Review and Outlook, Performance and the Funds' Schedules
of Investments
Mini Cap Growth....................................................... 3
Emerging Growth....................................................... 8
Core Growth........................................................... 16
Large Cap Growth...................................................... 20
Value................................................................. 23
Income & Growth....................................................... 27
Balanced Growth....................................................... 32
Emerging Countries.................................................... 38
International Small Cap Growth........................................ 44
International Core Growth............................................. 50
Worldwide Growth...................................................... 56
Global Growth & Income................................................ 62
Fully Discretionary Fixed Income...................................... 66
Short-Intermediate Fixed Income....................................... 70
Strategic Income...................................................... 74
High Yield Bond....................................................... 78
The Portfolios'
Financial Highlights.................................................. 82
Statements of Assets and Liabilities.................................. 84
Statements of Operations.............................................. 86
Statements of Changes in Net Assets................................... 88
Notes to the Financial Statements..................................... 94
Notes to the Funds' Financial Statements................................ 109
</TABLE>
- ------------
This report is authorized for distribution to shareholders and to others only
when preceded or accompanied by a currently effective prospectus for
Nicholas-Applegate Institutional Series Portfolios. Distributor: Nicholas-
Applegate Securities.
<PAGE>
LETTER TO SHAREHOLDERS
- ------------------------------------------------------------------------
DEAR FELLOW SHAREHOLDERS,
We are pleased to bring you the semi-annual report for the Nicholas-Applegate
Mutual Funds in the six months ended September 30, 1997. During the period,
equity markets around the world rallied to record levels, while fixed income
markets benefited from the continuing trend of solid economic growth and
disinflation in many parts of the world.
In the United States, dynamic small- and mid-sized companies registered
impressive gains during the period, outpacing larger-capitalization shares. The
Russell 2000 Index advanced 33.5% versus 26.2% for the larger-cap S&P 500 Index.
Given the robust earnings growth prevalent among smaller caps, we believe they
should continue to attract greater recognition.
On the international front, the MSCI World Index gained 18.3%. The economies
of many European nations were restrained by fiscal policies designed to help
them meet European Monetary Union criteria. Encouraged by lower interest rates
resulting from these requirements, investors bid many stock prices higher.
In our Emerging Countries Fund, we maintained an overweighted position in
Latin America relative to the MSCI Emerging Markets Free (EMF) Index as we
continued to identify stocks meeting our investment criteria, and those
benefiting from vigorous economic growth in the region.
Prior to and after the currency market turmoil in South East Asia, our
Emerging Countries Fund was underweighted in the region relative to the MSCI EMF
Index, since few stocks measured up to our investment standards.
Our International Small Cap and International Core Growth Funds had no
exposure to the countries hardest hit by the crisis.
Returns for our fixed income investments were enhanced through sector and
security selection in domestic and international markets, amid the favorable
environment of low interest rates and continued economic growth worldwide.
Further broadening our fund offerings, we recently introduced the
Nicholas-Applegate Global Blue Chip Fund and the Nicholas-Applegate Emerging
Markets Bond Fund. These strategies complement our existing family of U.S. and
international funds and provide new avenues for diversification and appreciation
potential.
Going forward, we remain optimistic in our outlook for worldwide growth
investing. With the goal of helping you find the most promising investments
around the world, we have further enhanced our research capabilities and
expanded our regional coverage of the world's markets through additional offices
in San Francisco, Hong Kong, Singapore, and London.
We look forward to another fruitful year ahead, as we remain confident that
the consistent application of our investment philosophy will reward our
shareholders with long-term appreciation.
Sincerely,
/s/ JOHN D. WYLIE
John D. Wylie
President
Nicholas-Applegate Mutual Funds
- --------------------------------------------------------------------------------
1
<PAGE>
LONG-TERM VIEW OF GLOBAL EQUITY AND BOND MARKETS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
THE GROWTH OF $1.00 INVESTED AT YEAR-END
1969 THROUGH DECEMBER 1996
DEC 1969 $1.00 $1.00 $1.00
<S> <C> <C> <C>
Dec 1970 1.121059215 1.0549164 0.825661484
Dec 1971 1.269371876 1.0903471 0.961892527
Dec 1972 1.341548263 1.1275496 1.004544102
Dec 1973 1.326700092 1.226754 0.694095606
Dec 1974 1.384471488 1.376446 0.555657342
Dec 1975 1.511786318 1.4729922 0.849132107
Dec 1976 1.765084762 1.5438525 1.33634258
Dec 1977 1.752937265 1.64837 1.675467221
Dec 1978 1.732297675 1.7971741 2.068551129
Dec 1979 1.710920777 2.0363232 2.967633147
Dec 1980 1.643397054 2.2887604 4.150984033
Dec 1981 1.67392721 2.4933678 4.727097865
Dec 1982 2.349546704 2.589908 6.050934266
Dec 1983 2.364859959 2.6882263 8.451243074
Dec 1984 2.730867828 2.7945158 7.887625237
Dec 1985 3.576530396 2.8998879 9.832862666
Dec 1986 4.453883483 2.9326524 10.50654155
Dec 1987 4.333002093 3.0619682 9.529705152
Dec 1988 4.752133652 3.1972889 11.70955501
Dec 1989 5.612965247 3.3458762 12.90143612
Dec 1990 5.95998744 3.5501842 10.11974905
Dec 1991 7.11022832 3.6589726 14.63662624
Dec 1992 7.682876394 3.7651067 18.05418764
Dec 1993 9.084266831 3.8685871 21.84168912
Dec 1994 8.378384135 3.9720702 22.52000493
Dec 1995 11.0316799 4.0728976 30.2804398
Dec 1996 10.93 4.21 35.62
Long-Term Government Bonds Inflation Small Company Stock International Stocks
Source: Ibbotson Associates
<CAPTION>
DEC 1969 $1.00 $1.00
<S> <C> <C>
Dec 1970 0.894879897 1.040065616
Dec 1971 1.174150171 1.188927419
Dec 1972 1.615611805 1.414539684
Dec 1973 1.386730661 1.20715054
Dec 1974 1.079598462 0.887643365
Dec 1975 1.480157725 1.217873832
Dec 1976 1.535504278 1.508253479
Dec 1977 1.833772011 1.399900469
Dec 1978 2.462774507 1.491736529
Dec 1979 2.615043053 1.766805621
Dec 1980 3.253885817 2.339593716
Dec 1981 3.220297086 2.224747404
Dec 1982 3.192647959 2.701053085
Dec 1983 3.978387612 3.309163144
Dec 1984 4.291261194 3.516525973
Dec 1985 6.725433675 4.647371699
Dec 1986 11.42914677 5.505765733
Dec 1987 14.27881017 5.793758911
Dec 1988 18.36070287 6.767648768
Dec 1989 20.34295824 8.898838582
Dec 1990 15.6249679 8.616507619
Dec 1991 17.5769639 11.24880574
Dec 1992 15.49396734 12.11161228
Dec 1993 20.59845037 13.32153781
Dec 1994 22.25896356 13.49568968
Dec 1995 24.83012571 18.54706335
Dec 1996 26.41 22.83
Long-Term Government Bonds Large Company Stock
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.
INTERNATIONAL STOCK
International stock data represents the MSCI EAFE Index. The Index is
considered to be a generally accepted benchmark for major overseas markets.
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.
- --------------------------------------------------------------------------------
2
<PAGE>
MINI CAP GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Thomas E. Bleakley,
Portfolio Manager
Ronald J. Krystyniak,
Portfolio Manager
John C. McCraw,
Portfolio Manager
GOAL: The Nicholas-Applegate Mini Cap Growth Fund seeks to maximize long-term
capital appreciation by investing primarily in U.S. companies with less than
$100 million in market capitalization.
REVIEW AND OUTLOOK: Benefiting from the resurgence in smaller-cap stocks, our
Mini Cap Growth Fund delivered outstanding gains from April 1 to September 30,
1997. The Fund rose 58.7% during the period, outperforming the Russell 2000
Growth Index, which was up 37.4%.
Small-capitalization growth stocks enjoyed a sustained upturn in the first six
months of the Fund's fiscal year, amid a backdrop of favorable economic factors
- -- such as a continued moderate economic expansion, subdued inflation, and a
strong dollar -- which often bode well for small stocks. Unlike larger companies
with overseas operations, small-cap stocks are not as susceptible to currency
fluctuations.
After trailing larger-capitalization issues last spring, the small-cap segment
of the market regained investor recognition starting in May. Compelling
valuation levels relative to large caps and superior earnings growth created
greater demand for small stocks.
As a result of our bottom-up approach, the Fund increased its weighting in the
technology, commercial/industrial, and energy sectors during the six-month
period.
The Fund continues to invest in companies with exceptional earnings growth,
and those adapting successfully to a changing favorable economic environment.
One example is Remedy Temp, a full service staffing company with expertise in a
wide range of areas including clerical, office automation, customer service, and
accounting. The company's prospects remain bright, as strong employment demand
and the economy's enduring strength are seen positively impacting Remedy's
bottom line.
Aavid Thermal Technologies, Inc., a leading provider of thermal engineering
and management solutions, was another solid performer within the Fund. Aavid has
successfully established itself as an authority in thermal design across a
variety of markets, from computers and peripherals to power supplies and motor
controls.
Going forward, we remain optimistic about the prospects for mini cap stocks,
as they continue to offer a source of attractive investment opportunities. As of
September 30, 1997, the median earnings growth rate for holdings in the Mini Cap
Growth Fund was 42.1%, versus 20.6% for the Russell 2000 Growth Index.
REPRESENTATIVE HOLDINGS
Aavid Thermal Technologies
Applied Voice Technology
Ashworth
Atlantic Coast Airlines
Basin Exploration
Cornell Corrections
Hanger Orthopedic
Healthcare Financial Partners
Omtool
RemedyTemp
- --------------------------------------------------------------------------------
3
<PAGE>
MINI CAP GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
MINI CAP GROWTH INSTITUTIONAL PORTFOLIO WITH THE RUSSELL 2000 GROWTH INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
45.38% As of 09/30/97 39.54%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MINI CAP GROWTH RUSSELL 2000
INSTITUTIONAL GROWTH
PORTFOLIO INDEX
<S> <C> <C>
12-Jul-95 $ 250,000.00 $ 250,000.00
30-Sep-95 275,600.01 268,240.42
31-Dec-95 287,000.01 272,246.38
31-Mar-96 317,000.01 287,884.97
30-Jun-96 371,600.02 304,705.45
30-Sep-96 359,600.00 302,100.16
31-Dec-96 369,458.15 302,909.82
31-Mar-97 329,371.54 270,930.45
30-Jun-97 408,924.88 318,478.57
30-Sep-97 522,779.15 372,345.50
</TABLE>
This graph compares a $250,000 investment in the Mini Cap Growth Institutional
Portfolio with the Russell 2000 Growth Index, on a cumulative and average annual
total return basis. All return calculations reflect the reinvestment of income
dividends and capital gains distributions, if any, as well as all fees and
expenses.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Russell 2000 Growth Index is an unmanaged index containing those securities
in the Russell 2000 Index with a greater-than-average growth orientation.
Companies in this index generally have higher price-to-book and price-earnings
ratios. The Russell 2000 Index is an unmanaged index and is a widely regarded
small-cap index of the 2,000 smallest securities in the Russell 3000 Index which
comprises the 3,000 largest U.S. securities as determined by total market
capitalization.
Index returns reflect the reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
4
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
MINI-CAP GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
COMMON STOCKS -- 94.0%
- --------------------------------------------------------------------------
AIRLINES -- 1.6%
Atlantic Coast Airlines, Inc.*............. 31,700 $ 681,550
Mesaba Holdings, Inc.*..................... 47,300 978,519
-------------
1,660,069
-------------
APPAREL -- 2.6%
Ashworth, Inc.*............................ 54,300 556,575
Cutter & Buck, Inc.*....................... 32,000 660,000
Genesco, Inc.*............................. 56,500 826,312
Rocky Shoes & Boots, Inc.*................. 33,000 596,062
-------------
2,638,949
-------------
BIOTECHNOLOGY -- 0.5%
Arqule, Inc.*.............................. 26,400 554,400
-------------
BUILDING MATERIALS -- 0.6%
Brunswick Technologies, Inc.*.............. 36,500 584,000
-------------
CATALOG/OUTLET STORES -- 0.4%
DM Management Co.*......................... 32,200 446,775
-------------
CLOTHING CHAINS -- 2.6%
Buckle, Inc.*.............................. 57,600 1,404,000
Pacific Sunwear of California, Inc.*....... 15,400 631,400
Paul Harris Stores, Inc.*.................. 24,600 679,575
-------------
2,714,975
-------------
COMPUTER/OFFICE AUTOMATION -- 2.6%
Apex PC Solutions, Inc.*................... 35,200 1,333,200
Qlogic Corp.*.............................. 32,800 1,373,500
-------------
2,706,700
-------------
CONTRACT DRILLING -- 4.5%
Patterson Energy, Inc.*.................... 28,900 1,513,638
Unit Corp.*................................ 53,800 823,812
UTI Energy Corp.*.......................... 55,500 2,292,844
-------------
4,630,294
-------------
DRUGS/PHARMACEUTICALS -- 0.6%
Inhale Therapeutic Systems Co.*............ 18,300 574,162
-------------
ELECTRONIC DATA PROCESS -- 0.6%
Analytical Surveys, Inc.*.................. 18,000 411,750
TSI International Software, Inc.*.......... 14,300 189,475
-------------
601,225
-------------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 3.5%
Datum, Inc.*............................... 13,000 593,125
Electromagnetic Sciences, Inc.*............ 27,100 765,575
Lecroy Corp.*.............................. 29,700 1,314,225
Molecular Dynamics, Inc.*.................. 33,600 907,200
-------------
3,580,125
-------------
ENTERTAINMENT -- 1.5%
Cinar Films, Inc.*......................... 25,900 987,437
Trans World Entertainment Corp.*........... 20,200 550,450
-------------
1,537,887
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
ENVIRONMENTAL SERVICES -- 1.3%
American Disposal Services, Inc.*.......... 22,900 $ 715,625
Superior Services, Inc.*................... 22,300 635,550
-------------
1,351,175
-------------
FINANCE COMPANIES -- 1.4%
Consumer Portfolio Services, Inc.*......... 42,200 706,850
Jackson Hewitt, Inc.*...................... 7,000 267,750
Southwest Securities Group, Inc............ 21,280 489,440
-------------
1,464,040
-------------
FINANCIAL SERVICES -- 1.0%
NCO Group, Inc.*........................... 26,700 987,900
-------------
FOOD CHAINS -- 0.1%
Wild Oats Markets, Inc.*................... 1,000 29,875
-------------
GROCERY PRODUCTS -- 0.2%
Grist Mill Co.*............................ 23,600 224,200
-------------
HOME FURNISHINGS -- 0.6%
Stanley Furniture, Inc.*................... 23,500 628,625
-------------
INDUSTRIAL ENGINEER/CONSTRUCTION -- 0.5%
Hospitality Worldwide Services*............ 38,800 509,250
-------------
INTEGRATED OIL COMPANIES -- 0.3%
Dawson Geophysical Co.*.................... 14,500 349,812
-------------
LEISURE/GAMING -- 0.4%
Video Lottery Technologies, Inc.*.......... 43,200 421,200
-------------
MACHINERY/EQUIPMENT -- 2.7%
Barringer Technologies, Inc.*.............. 31,800 337,875
Gardner Denver, Inc.*...................... 39,800 1,340,762
Gehl Co.*.................................. 31,700 709,287
Tegal Corp.*............................... 27,500 226,875
Thermedics Detection, Inc.*................ 15,400 175,175
-------------
2,789,974
-------------
MEDICAL SPECIALTIES -- 3.0%
Hanger Orthopedic Group, Inc.*............. 53,500 799,156
Impath, Inc.*.............................. 15,900 465,075
Medical Resource, Inc.*.................... 62,800 1,216,750
Osteotech, Inc.*........................... 31,500 633,937
-------------
3,114,918
-------------
MEDICAL SUPPLIES -- 1.5%
Calypte Biomedical Corp.*.................. 33,400 233,800
Capstone Pharmaceutical Corp.*............. 47,931 578,168
Penederm, Inc.*............................ 34,500 470,062
Vision Twenty-One, Inc.*................... 21,200 286,200
-------------
1,568,230
-------------
MEDICAL/NURSING/HEALTH SERVICES -- 2.3%
Assisted Living Concepts, Inc.*............ 38,700 619,200
Diagnostic Health Services, Inc.*.......... 44,400 671,550
Hooper Holmes, Inc......................... 52,900 644,719
PMR Corp.*................................. 18,900 420,525
-------------
2,355,994
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
5
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
MINI-CAP GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MILITARY DEFENSE TECHNOLOGY -- 0.3%
Aeroflex, Inc.*............................ 33,500 $ 339,187
-------------
OIL/GAS PRODUCTION -- 2.2%
Abraxas Pete Corp.*........................ 37,000 536,500
Basin Exploration, Inc.*................... 27,600 462,300
Carrizo Oil & Gas Co.*..................... 34,800 522,000
Key Production, Inc.*...................... 55,500 721,500
-------------
2,242,300
-------------
OILFIELD SERVICES/EQUIPMENT -- 4.6%
Hvide Marine, Inc.*........................ 41,800 1,337,600
Key Energy Group, Inc.*.................... 38,300 1,247,144
Maverick Tube Corp.*....................... 24,600 1,014,750
Mitcham Industries, Inc.*.................. 29,000 612,625
Superior Energy Services Inc.*............. 54,600 505,050
-------------
4,717,169
-------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 9.1%
A Consulting Team, Inc.*................... 18,700 224,400
Cornell Corrections, Inc.*................. 14,300 225,225
Data Processing Resources Corp.*........... 28,600 715,000
Ecsoft Group, Inc.*........................ 31,100 548,138
Fine Host Corp.*........................... 35,400 1,371,750
Hall Kinion & Associates, Inc.*............ 8,400 177,450
International Total Service................ 44,700 681,675
Kellstrom Industries, Inc.*................ 37,700 777,562
Lamalie Assocs, Inc.*...................... 35,500 745,500
Palex, Inc.*............................... 17,900 275,213
Pro Business Service*...................... 29,300 560,363
Remedytemp, Inc.*.......................... 30,100 707,350
SOS Staffing Services, Inc................. 67,700 1,252,450
Vestcom International, Inc.*............... 33,300 666,000
Warrantech Corp.*.......................... 36,000 409,500
-------------
9,337,576
-------------
OTHER CONSUMER DURABLES -- 0.9%
Movado Group, Inc.......................... 43,425 890,212
-------------
OTHER CONSUMER NON-DURABLES -- 0.5%
Drypers Corp.*............................. 59,900 475,456
-------------
OTHER CONSUMER SERVICES -- 1.2%
Bally Total Fitness Holding Corp.*......... 45,200 779,700
Childrens Comprehensive Services, Inc.*.... 23,400 503,100
-------------
1,282,800
-------------
OTHER FINANCIAL SERVICES -- 0.7%
Healthcare Financial Partners, Inc.*....... 21,800 673,075
-------------
OTHER HEALTH SERVICES -- 2.5%
Medquist, Inc.*............................ 68,200 1,594,175
Sterigenics International, Inc.*........... 28,200 493,500
Orthalliance, Inc.*........................ 29,300 432,175
-------------
2,519,850
-------------
OTHER PRODUCERS/MANUFACTURING -- 0.9%
Atchison Casting Corp.*.................... 18,900 401,625
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
</TABLE>
OTHER PRODUCERS/MANUFACTURING (CONTINUED)
<TABLE>
<S> <C> <C>
Shelby Williams Industries, Inc............ 26,700 $ 528,994
-------------
930,619
-------------
OTHER RETAIL TRADE -- 1.3%
Fred's, Inc................................ 34,300 711,725
RDO Equipment Co.*......................... 28,200 648,600
-------------
1,360,325
-------------
OTHER TECHNOLOGY -- 0.6%
Xionics Document Technologies, Inc.*....... 36,400 632,450
-------------
PAPER -- 0.9%
Fibermark, Inc.*........................... 42,950 893,897
-------------
REAL ESTATE DEVELOPMENT -- 0.5%
Grubb & Ellis Co.*......................... 33,400 486,388
-------------
RECREATION PRODUCTS/SERVICES -- 0.4%
The First Years, Inc.*..................... 15,500 437,875
-------------
REGIONAL/COMMERICAL BANKS -- 0.7%
Sterling Bancorp Co........................ 33,500 762,125
-------------
RENTAL/LEASING COMPANIES -- 1.2%
Rent Way, Inc.*............................ 59,000 1,246,375
-------------
RESTAURANTS -- 0.7%
Logan's Roadhouse, Inc.*................... 17,600 457,600
Sizzler International, Inc.*............... 78,500 289,469
-------------
747,069
-------------
RETAIL TRADE -- 0.1%
Wilmar Industries, Inc..................... 1,000 27,000
-------------
SAVINGS & LOAN ASSOCIATIONS -- 0.8%
SIS Bancorp, Inc........................... 23,300 809,675
-------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 5.9%
Aavid Thermal Technologies, Inc.*.......... 12,800 385,600
Align-Rite International, Inc.*............ 23,000 549,125
Applied Science & Technology, Inc.*........ 33,700 720,337
C.P. Clare Corp.*.......................... 39,300 776,175
Eftc Corp.*................................ 2,400 34,350
JPM Co.*................................... 16,300 393,238
Microsemi Corp.*........................... 43,900 757,275
Nanometrics Inc.*.......................... 25,900 323,750
RF Monolithics, Inc.*...................... 23,300 588,325
Semtech Corp.*............................. 12,900 891,713
STB Systems, Inc.*......................... 18,800 686,200
-------------
6,106,088
-------------
SOAPS/COSMETICS -- 1.2%
Carson, Inc. Class A*...................... 37,900 409,794
Chattem, Inc.*............................. 20,300 355,250
French Fragrances, Inc.*................... 40,600 474,513
-------------
1,239,557
-------------
SOFTWARE -- 5.0%
Credit Management Solutions, Inc.*......... 11,400 208,050
Engineering Animation, Inc.*............... 19,700 751,063
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
6
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
SOFTWARE (CONTINUED)
<TABLE>
<S> <C> <C>
Iteq, Inc.*................................ 69,100 $ 963,081
Omtool, Ltd.*.............................. 45,300 605,888
Peerless Systems Corp.*.................... 35,700 499,800
Simulation Sciences, Inc.*................. 63,400 1,248,188
Tecnomatix Technologies Ltd.*.............. 22,000 841,500
-------------
5,117,570
-------------
SPECIALTY CHAINS -- 1.2%
Finlay Enterprises, Inc.*.................. 20,200 388,850
Funco, Inc.*............................... 15,600 312,000
Party City Corp.*.......................... 4,500 118,125
Shoe Carnival, Inc.*....................... 44,200 397,800
-------------
1,216,775
-------------
TELECOMMUNICATIONS EQUIPMENT -- 7.0%
ACE*COMM Corp.*............................ 27,100 589,425
Applied Voice Technology, Inc.*............ 31,600 904,550
Intelect Communications.................... 40,200 457,275
Microwave Power Devices, Inc.*............. 53,100 471,263
NACT Telecommunications, Inc.*............. 38,600 610,363
Remec, Inc.*............................... 29,100 1,062,150
Spectrain Corp............................. 15,400 987,525
Tollgrade Communications, Inc.*............ 34,950 821,325
World Access, Inc.*........................ 38,600 1,254,500
-------------
7,158,376
-------------
TEXTILES -- 1.2%
Dyersburg Corp............................. 31,200 374,400
Quaker Fabric Corp.*....................... 36,100 816,762
-------------
1,191,162
-------------
TOBACCO PRODUCTS -- 0.6%
General Cigar Holdings, Inc.*.............. 22,900 661,238
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
TRUCKING -- 2.6%
Hub Group Inc.*............................ 11,500 $ 426,937
MS Carriers, Inc.*......................... 22,000 585,750
Simon Transportation Services, Inc.*....... 15,600 368,550
Smithway Motor Xpress Corp.*............... 20,600 288,400
U S Xpress Enterprises, Inc.*.............. 51,200 1,024,000
-------------
2,693,637
-------------
WHOLESALE DISTRIBUTION -- 2.3%
Anicom, Inc.*.............................. 98,300 1,646,525
Home Products International, Inc.*......... 45,400 663,975
-------------
2,310,500
-------------
TOTAL COMMON STOCKS
(Cost $68,754,447)......................... 96,531,080
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- --------------------------------------------------------------------------
COMMERCIAL PAPER -- 5.5%
- --------------------------------------------------------------------------
Associates Corp. of North America
6.370%, 10/01/1997....................... $ 584,000 584,000
J.P. Morgan & Co., Inc.
6.250%, 10/01/1997....................... 5,051,000 5,051,000
-------------
TOTAL COMMERCIAL PAPER
(Cost $5,635,000).......................... 5,635,000
-------------
TOTAL INVESTMENTS -- 99.5%
(Cost $74,389,447)...................................... 102,166,080
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.5%............. 465,441
-------------
NET ASSETS -- 100.0%...................................... $ 102,631,521
-------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
7
<PAGE>
EMERGING GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Thomas E. Bleakley,
Portfolio Manager
Ronald J. Krystyniak,
Portfolio Manager
John C. McCraw,
Portfolio Manager
GOAL: The Nicholas-Applegate Emerging Growth Fund seeks to maximize long-term
capital appreciation through investment primarily in U.S. equity securities of
companies with market capitalizations below $500 million.
REVIEW AND OUTLOOK: Smaller-cap growth stocks turned in impressive returns
during the period April 1 through September 30, 1997. Marking a reversal from
their performance last spring when they significantly trailed larger-capitalized
stocks, small caps bounced back with a vengeance in May and June, continuing
their upward trek in the succeeding months.
For the six-month period ending September 30, the Nicholas-Applegate Emerging
Growth Fund climbed 46.3%, outpacing the Russell 2000 Growth Index, which was up
37.4%.
Key factors positively impacting performance included superior earnings growth
and greater investor recognition of compelling valuation levels among the Fund's
holdings relative to large caps. Expectations that earnings acceleration for
many larger-cap stocks would slow also benefited small caps.
Exceptional stock selection in the technology, financial services, and energy
sectors positively impacted returns.
Maverick Tube Corporation, a manufacturer of tubular products used in the
energy industry, was among the best-performing stocks in the Fund. The company
specializes in the manufacture of products for drilling, production, and
transportation applications in the energy industry, as well as industrial tubing
products used in various industrial applications.
Cost Plus, a leading specialty retailer of casual home living products, was
also a strong performer during the period. The company benefits from its focus
on selling competitively-priced goods, showcasing a wide array of products from
around the world. Cost Plus is expected to post significant earnings growth
through the continued expansion of its West Coast and East Coast stores. In
1996, total sales increased 17% while earnings per share rose 50%.
The Emerging Growth Fund retains solid fundamentals. The projected median
earnings growth rate for the Fund's holdings as of September 30 was 39.7% versus
20.6% for the Russell 2000 Growth index.
Going forward, we believe investors will continue to focus on stocks offering
consistent earnings strength.
In this light, our Emerging Growth portfolio is poised to benefit from its
smaller-cap orientation, and better-than-benchmark earnings growth rates.
REPRESENTATIVE HOLDINGS
American Disposal
Arqule
Assisted Living Concepts
Cost Plus
Digital Microwave
Harbinger
Maverick Tube
Personnel Group of America
Rainforest Cafe
Southern Electronics
- --------------------------------------------------------------------------------
8
<PAGE>
EMERGING GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING GROWTH INSTITUTIONAL PORTFOLIO WITH THE RUSSELL 2000 GROWTH INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/97
1 YEAR 5 YEARS 10 YEARS
22.67% 22.05% 16.03%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING GROWTH RUSSELL 2000
INSTITUTIONAL GROWTH
PORTFOLIO INDEX
<S> <C> <C>
31-Jul-85 $ 250,000.00 $ 250,000.00
31-Dec-85 278,462.87 267,425.23
31-Dec-86 296,384.82 277,003.83
31-Dec-87 285,176.66 247,983.84
31-Dec-88 362,320.08 298,502.11
31-Dec-89 462,329.11 358,702.16
31-Dec-90 423,895.60 296,251.12
31-Dec-91 662,269.68 447,892.55
31-Dec-92 746,967.57 482,694.30
31-Dec-93 867,187.07 547,181.64
31-Dec-94 836,745.77 533,874.94
31-Dec-95 1,137,100.86 699,699.05
31-Dec-96 1,351,841.01 778,506.99
30-Sep-97 1,690,323.66 956,963.29
</TABLE>
This graph compares a $250,000 investment in the Emerging Growth Institutional
Portfolio with the Russell 2000 Growth Index, on a cumulative and average annual
total return basis. All return calculations reflect the reinvestment of income
dividends and capital gains distributions, if any, as well as all fees and
expenses. Performance results reflect the total returns of a predecessor limited
partnership and a pooled trust managed by Nicholas-Applegate Capital Management
prior to the effective date of the Portfolio's registration statement which was
10/1/93. Limited partnership/pooled trust returns are restated to reflect all
fees and expenses applicable to the Portfolio and share class. If the limited
partnership and pooled trust had been registered as investment companies under
the federal securities laws, their performance might have been adversely
affected because of the additional restrictions applicable to registered
investment companies.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Russell 2000 Growth Index is an unmanaged index containing those securities
in the Russell 2000 Index with a greater-than-average growth orientation.
Companies in this index generally have higher price-to-book and price-earnings
ratios. The Russell 2000 Index is an unmanaged index and is a widely regarded
small-cap index of the 2,000 smallest securities in the Russell 3000 Index which
comprises the 3,000 largest U.S. securities as determined by total market
capitalization.
The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
9
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS -- 96.3%
- ----------------------------------------------------------------------------
ADVERTISING -- 0.1%
Abacus Direct Corp.*....................... 29,000 $ 931,625
------------
AEROSPACE -- 0.4%
AAR Corp................................... 68,800 2,296,200
Doncasters PLC Sponsored ADR*.............. 34,800 1,044,000
------------
3,340,200
------------
AGRICULTURE -- 0.7%
Dekalb Genetics Corp. Class B.............. 125,200 5,555,750
------------
AIR FREIGHT/SHIPPING -- 0.9%
Airnet Systems, Inc.*...................... 37,100 895,037
Circle International Group, Inc............ 44,100 1,311,975
Expeditors International Of Washington,
Inc...................................... 116,500 4,878,437
------------
7,085,449
------------
AIRLINES -- 0.1%
Ryanair Holdings PLC Sponsored ADR*........ 26,800 805,256
------------
ALCOHOLIC BEVERAGES -- 0.1%
Canandaigua Wine Co. Class A*.............. 23,900 1,126,287
------------
APPAREL -- 0.8%
Authentic Fitness Corp..................... 66,800 985,300
Big Dog Holdings, Inc.*.................... 15,000 210,000
Cutter & Buck, Inc.*....................... 19,300 398,062
Fossil, Inc.*.............................. 19,100 374,837
Genesco, Inc.*............................. 74,100 1,083,712
Nautica Enterprises, Inc.*................. 44,450 1,250,156
Wolverine World Wide, Inc.................. 67,200 1,696,800
------------
5,998,867
------------
AUTOMOTIVE EQUIPMENT -- 0.0%
Aftermarket Technology Corp.*.............. 15,900 377,625
------------
BIOTECHNOLOGY -- 0.5%
Arqule, Inc.*.............................. 28,400 596,400
BioReliance Corp.*......................... 5,100 133,875
Guilford Pharmaceuticals, Inc.*............ 118,450 3,494,275
------------
4,224,550
------------
BROADCASTING -- 1.3%
Chancellor Media Corp.*.................... 104,250 5,486,156
Emmis Broadcasting Corp. Class A*.......... 63,000 3,008,250
Saga Communications, Inc. Class A*......... 55,277 1,340,467
Westwood One, Inc.......................... 10,200 323,850
------------
10,158,723
------------
BUILDING MATERIALS -- 1.1%
Advance Lighting Technologies, Inc.*....... 25,800 696,600
AFC Cable Systems, Inc..................... 28,100 997,550
Comfort Systems USA, Inc.*................. 132,600 2,535,975
Hexcel Corp.*.............................. 148,500 4,260,094
Triangle Pacific Corp.*.................... 19,500 677,625
------------
9,167,844
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
CATALOG/OUTLET STORES -- 0.4%
Coldwater Creek*........................... 33,700 $ 977,300
Delia's, Inc.*............................. 39,700 888,287
Insight Enterprises, Inc.*................. 43,200 1,431,000
------------
3,296,587
------------
CHEMICALS -- 0.7%
O.M. Group, Inc............................ 83,250 3,324,797
Scotts Co. (The) Class A*.................. 73,700 1,934,625
Spartech Corp.............................. 26,700 400,500
------------
5,659,922
------------
CLOTHING CHAINS -- 2.2%
99 Cents Only Stores*...................... 43,800 1,437,187
Buckle, Inc.*.............................. 19,200 468,000
Goody's Family Clothing, Inc............... 80,500 2,596,125
Men's Wearhouse, Inc.*..................... 93,800 3,494,050
Pacific Sunwear of California*............. 38,700 1,586,700
Paul Harris Stores, Inc.*.................. 24,500 676,812
Stage Stores, Inc.*........................ 108,600 4,683,375
Stein Mart Inc.*........................... 89,400 2,927,850
------------
17,870,099
------------
COAL MINING -- 0.1%
Zeigler Coal Holding Co.................... 45,700 1,068,237
------------
COMPUTER/OFFICE AUTOMATION -- 2.5%
Advanced Digital Information Corp.*........ 78,500 1,599,437
Apex PC Solutions, Inc.*................... 38,800 1,469,550
DAOU Systems, Inc.*........................ 14,000 437,500
Discreet Logic, Inc.*...................... 43,100 1,144,844
Encad, Inc................................. 42,500 1,306,875
Geac Computer Corp. LTD*................... 40,500 2,508,357
Microtouch Systems, Inc.*.................. 54,900 1,530,337
Neomagic Corp.............................. 6,300 127,181
Network Appliance, Inc.*................... 128,900 6,992,825
QLogic Corp.*.............................. 14,800 619,750
Safeguard Scientifics, Inc.*............... 12,600 368,550
Splash Technology Holdings, Inc.*.......... 52,100 2,038,412
------------
20,143,618
------------
CONTAINERS -- 0.1%
Silgan Holdings, Inc.*..................... 27,600 1,104,000
------------
CONTRACT DRILLING -- 2.5%
Atwood Oceanics, Inc.*..................... 41,900 4,718,987
Cliff's Drilling Co.*...................... 84,200 5,862,425
Marine Drilling Co., Inc.*................. 226,800 7,087,500
Patterson Energy, Inc.*.................... 37,200 1,948,350
Unit Corp.*................................ 34,300 525,219
------------
20,142,481
------------
DEPARTMENT/DISCOUNT STORES -- 0.2%
Ames Department Stores, Inc.*.............. 103,600 1,554,000
Tuesday Morning Corp.*..................... 8,950 210,884
------------
1,764,884
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
10
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
DRUGS/PHARMACEUTICALS -- 3.2%
Curative Health Services, Inc.*............ 68,500 $ 2,132,062
Incyte Pharmaceuticals, Inc.*.............. 73,600 6,182,400
Inhale Therapeutic Systems*................ 19,600 614,950
Kos Pharmaceuticals, Inc.*................. 46,900 1,676,675
NBTY, Inc.*................................ 55,300 1,168,212
NCS Healthcare, Inc. Class A*.............. 17,100 436,050
Paraxel International Corp.*............... 82,400 3,254,800
PathoGenesis Corp.*........................ 28,400 1,008,200
Sepracor, Inc.*............................ 110,000 3,616,250
Theragenics Corp.*......................... 101,400 5,031,975
------------
25,121,574
------------
ELECTRONIC DATA PROCESSING -- 0.0%
Factset Research Systems, Inc.*............ 12,800 380,800
------------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 1.8%
Aehr Test Systems*......................... 46,900 829,544
Avid Technology, Inc.*..................... 84,800 2,756,000
Coherent, Inc.*............................ 26,900 1,489,587
Lecroy Corp.*.............................. 29,200 1,292,100
Lo-Jack Corp.*............................. 14,800 210,900
Molecular Dynamics, Inc.*.................. 12,400 334,800
Orbotech Ltd.*............................. 36,800 2,125,200
Plexus Corp.*.............................. 87,100 3,059,387
Southern Electronics Corp.*................ 40,400 787,800
Veeco Instruments, Inc.*................... 22,900 1,446,994
------------
14,332,312
------------
ENTERTAINMENT -- 0.2%
American Classic Voyages Co.*.............. 32,300 565,250
Cinar Films, Inc. Class B*................. 21,100 804,437
------------
1,369,687
------------
ENVIRONMENTAL SERVICES -- 1.4%
American Disposal Services, Inc.*.......... 39,800 1,243,750
Eastern Environmental Services, Inc.*...... 46,000 1,173,000
Newpark Resources, Inc.*................... 93,570 3,678,471
Superior Services, Inc.*................... 56,600 1,613,100
Tetra Tech, Inc.*.......................... 19,300 472,850
USA Waste Services, Inc.*.................. 73,852 2,944,848
------------
11,126,019
------------
FINANCE COMPANIES -- 1.8%
American Capital Strategies Ltd.*.......... 33,900 678,000
Imperial Credit Industries, Inc.*.......... 135,500 3,590,750
Jackson Hewitt, Inc.*...................... 30,600 1,170,450
New Century Financial Corp.*............... 32,100 547,706
Ocwen Financial Corp.*..................... 67,700 2,851,862
Resource Bancshares Mortgage Group, Inc.... 15,800 206,387
Sirrom Capital Corp........................ 92,000 4,772,500
Southwest Securities Group, Inc............ 14,960 344,080
------------
14,161,735
------------
FOOD CHAINS -- 0.1%
Wild Oats Markets, Inc.*................... 19,300 576,587
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
GROCERY PRODUCTS -- 0.6%
Michael Foods, Inc......................... 49,500 $ 1,268,437
Morningstar Group, Inc.*................... 76,100 3,272,300
------------
4,540,737
------------
HOME FURNISHINGS -- 0.7%
Bombay Co., Inc.*.......................... 38,500 295,969
Ethan Allen Interiors, Inc................. 171,000 5,301,000
------------
5,596,969
------------
HOMEBUILDING -- 0.1%
Standard-Pacific Corp...................... 55,500 582,750
------------
HOSPITALS -- 0.2%
National Surgery Centers, Inc.*............ 64,200 1,396,350
------------
INVESTMENT COMPANIES -- 0.4%
AmeriTrade Holding Corp.*.................. 28,900 715,275
Everen Capital Corp........................ 28,600 1,161,875
Ocwen Asset Investment Corp................ 65,000 1,495,000
------------
3,372,150
------------
LIFE INSURERS -- 0.2%
ARM Financial Group, Inc. Class A.......... 54,000 1,285,875
Protective Life Corp....................... 11,600 585,800
------------
1,871,675
------------
LODGING -- 1.7%
Capstar Hotel Co.*......................... 124,850 4,190,278
Signature Resorts, Inc.*................... 118,700 5,638,250
Silverleaf Resorts, Inc.*.................. 35,900 821,212
Suburban Lodges Of America, Inc.*.......... 15,200 400,900
Trendwest Resorts, Inc.*................... 12,000 282,000
Wyndham Hotel Corp.*....................... 43,800 1,938,150
------------
13,270,790
------------
MACHINERY/EQUIPMENT -- 2.8%
Asyst Technologies, Inc.*.................. 53,000 2,353,531
DT Industries, Inc......................... 51,000 1,683,000
Helix Technology, Inc...................... 44,600 2,761,019
Kuhlman Corp............................... 70,100 2,523,600
Magnetek, Inc.*............................ 95,100 2,127,862
Motivepower Industries, Inc.*.............. 98,377 2,557,802
OmniQuip International, Inc................ 50,500 927,937
Regal Beloit Corp.......................... 65,100 2,001,825
Robbins & Myers, Inc....................... 26,200 1,008,700
Terex Corp.*............................... 72,500 1,504,375
Varlen Corp................................ 32,500 1,283,750
Watsco, Inc. Class A....................... 44,250 1,382,812
------------
22,116,213
------------
MANAGED HEALTH CARE/HMO'S/PPO'S -- 0.4%
FPA Medical Management, Inc.*.............. 55,343 1,902,416
Healthcare Recoveries, Inc.*............... 39,300 884,250
Specialty Care Network, Inc.*.............. 19,200 237,600
------------
3,024,266
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
11
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MEDICAL SPECIALTIES -- 1.0%
Hanger Orthopedic Group, Inc.*............. 8,500 $ 126,969
Medical Resources, Inc.*................... 90,900 1,761,187
Urologix, Inc.*............................ 73,900 1,755,125
VISX, Inc.*................................ 86,600 2,208,300
Vivus, Inc.*............................... 55,300 2,073,750
------------
7,925,331
------------
MEDICAL SUPPLIES -- 1.8%
Capstone Pharmacy Services, Inc.*.......... 55,400 668,262
Graham-Field Health Products, Inc.*........ 86,500 1,405,625
Minimed, Inc.*............................. 61,100 2,398,175
Molecular Devices Corp.*................... 41,300 903,437
Penederm, Inc.*............................ 19,700 268,412
Respironics, Inc.*......................... 30,900 849,750
Sabratek Corp.*............................ 53,800 1,956,975
Safeskin Corp.*............................ 85,800 3,807,375
Serologicals Corp.*........................ 29,450 669,987
Spine Tech, Inc............................ 7,200 270,900
Ventana Medical Systems, Inc.*............. 29,500 475,687
Vista Medical Technologies, Inc.*.......... 28,500 423,937
Wesley Jessen VisionCare, Inc.*............ 17,000 480,250
------------
14,578,772
------------
MEDICAL/NURSING/HEALTH SERVICES -- 1.6%
ABR Information Services, Inc.............. 77,400 2,138,175
Alternative Living Services, Inc.*......... 33,500 812,375
Assisted Living Concepts, Inc.*............ 31,800 508,800
Atria Communities, Inc.*................... 20,200 363,600
CareMatrix Corp.*.......................... 38,900 987,087
Centennial Healthcare Corp.*............... 5,300 121,900
Coast Dental Services, Inc.*............... 31,600 940,100
Concentra Managed Care, Inc.*.............. 96,304 3,400,735
Diagnostic Health Services, Inc.*.......... 23,300 352,412
Ocular Sciences, Inc.*..................... 46,100 1,066,062
Sunrise Assisted Living, Inc.*............. 46,800 1,690,650
------------
12,381,896
------------
METALS -- 0.7%
Lone Star Technologies, Inc.*.............. 33,700 1,758,719
Mueller Industries, Inc.*.................. 60,800 2,762,600
Oregon Steel Mills, Inc.................... 34,700 941,237
------------
5,462,556
------------
MILITARY/DEFENSE TECHNOLOGY -- 0.4%
Electromagnetic Sciences, Inc.*............ 28,500 805,125
Tracor, Inc.*.............................. 67,800 2,084,850
------------
2,889,975
------------
MULTI-LINE INSURERS -- 0.1%
Delphi Financial Group, Inc. Class A*...... 26,452 1,135,783
------------
OCEAN FREIGHT/SHIPPING -- 0.2%
Kirby Corp................................. 14,500 278,219
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
OCEAN FREIGHT/SHIPPING (CONTINUED)
<TABLE>
<S> <C> <C>
OMI Corp.*................................. 111,800 $ 1,397,500
------------
1,675,719
------------
OIL REFINING/MARKETING -- 0.1%
Tesoro Petroleum Corp.*.................... 27,900 503,944
------------
OIL/GAS PRODUCTION -- 1.7%
Abraxas Petroleum Corp.*................... 28,200 408,900
Harken Energy Corp.*....................... 271,800 1,732,725
KCS Energy, Inc............................ 52,600 1,551,700
Nuevo Energy Co.*.......................... 34,200 1,637,325
Petsec Energy Ltd.*........................ 63,600 1,637,700
St. Mary Land & Exploration Co............. 52,400 2,377,650
Swift Energy Co.*.......................... 93,500 2,635,531
Vintage Petroleum, Inc..................... 25,700 1,265,725
------------
13,247,256
------------
OILFIELD SERVICES/EQUIPMENT -- 7.4%
Cal Dive International, Inc.*.............. 47,500 1,769,375
Camco International, Inc................... 24,000 1,674,000
Eagle Geophysical, Inc.*................... 7,500 148,125
EVI, Inc................................... 63,100 4,038,400
Friede Goldman International, Inc.*........ 40,400 2,424,000
Global Industries Ltd.*.................... 112,200 4,473,975
Gulfmark Offshore, Inc.*................... 11,700 403,650
Hvide Marine, Inc. Class A*................ 46,800 1,497,600
Maverick Tube Corp.*....................... 19,100 787,875
Oceaneering International, Inc.*........... 98,600 2,347,912
Pool Energy Services Co.*.................. 109,100 3,695,762
Pride International, Inc.*................. 166,900 5,674,600
Seacor Holdings, Inc.*..................... 65,000 4,030,000
Seitel, Inc.*.............................. 10,000 443,750
Stolt Comex Seaway S.A.*................... 33,900 2,120,869
Superior Energy Services, Inc.*............ 81,900 757,575
Trico Marine Services, Inc.*............... 113,600 3,947,600
Tuboscope Vetco International Corp.*....... 245,800 7,711,975
UNIFAB International, Inc.*................ 5,000 163,750
Varco International, Inc.*................. 137,500 6,668,750
Veritas DGC, Inc.*......................... 108,300 4,609,519
------------
59,389,062
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 7.2%
Administaff, Inc.*......................... 45,100 1,048,575
Affiliated Computer Services, Inc. Class
A*....................................... 89,400 2,212,650
ASE Test Ltd.*............................. 10,200 864,450
Billing Information Concepts*.............. 76,700 2,684,500
Computer Task Group, Inc................... 177,200 7,431,325
Data Processing Resources Corp.*........... 64,800 1,620,000
Fine Host Corp.*........................... 33,000 1,278,750
Forrester Research, Inc.*.................. 57,100 1,548,837
G & K Services, Inc. Class A............... 22,950 797,512
Getty Communications PLC ADR*.............. 22,000 407,000
Hall Kinion & Associates, Inc.*............ 27,400 578,825
Host Marriott Services Corp.*.............. 30,800 458,150
Information Management Resources, Inc.*.... 91,800 2,616,300
Kellstrom Industries, Inc.*................ 12,700 261,937
Lason Holdings, Inc.*...................... 54,300 1,500,037
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
12
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES (CONTINUED)
<TABLE>
<S> <C> <C>
Meta Group, Inc.*.......................... 14,000 $ 346,500
Metro Information Services, Inc.*.......... 37,500 820,313
Metzler Group, Inc.*....................... 75,900 3,045,488
NCO Group, Inc.*........................... 29,300 1,084,100
Norrell Corp.*............................. 63,400 2,179,375
Nova Corp.*................................ 22,200 564,712
On Assignment, Inc.*....................... 31,600 1,437,800
Personnel Group of America, Inc.*.......... 75,500 2,585,875
PMT Services, Inc.*........................ 104,350 1,617,425
Romac International, Inc.*................. 85,900 3,747,388
RWD Technologies, Inc.*.................... 23,600 542,800
Source Services Corp.*..................... 21,000 624,750
StaffMark, Inc.*........................... 33,400 1,273,375
Steiner Leisure Ltd.*...................... 11,600 426,300
Syntel, Inc.*.............................. 34,200 542,925
Technology Solutions Co.*.................. 87,300 2,815,425
Vestcom International, Inc.*............... 8,500 170,000
Vincam Group, Inc.*........................ 36,400 1,046,500
Warrantech Corp.*.......................... 93,000 1,057,875
Whittman-Hart, Inc.*....................... 186,900 5,700,450
Youth Services International, Inc.*........ 27,700 455,319
------------
57,393,543
------------
OTHER CONSUMER DURABLES -- 0.4%
Action Performance Cos., Inc.*............. 114,100 3,323,163
------------
OTHER CONSUMER NON-DURABLES -- 0.2%
Helen of Troy Ltd.*........................ 72,400 1,429,900
------------
OTHER CONSUMER SERVICES -- 0.5%
Bally Total Fitness Holding Corp.*......... 22,200 382,950
Equity Corp. International*................ 22,800 531,525
MemberWorks, Inc.*......................... 25,300 566,088
Strayer Education, Inc.*................... 51,500 2,343,250
Travel Services International, Inc.*....... 4,300 89,225
------------
3,913,038
------------
OTHER FINANCIAL SERVICES -- 0.1%
Healthcare Financial Partners, Inc.*....... 29,900 923,163
------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 0.6%
Access Health Market, Inc.*................ 57,600 1,987,200
Envoy Corp.*............................... 83,200 2,376,400
MedQuist, Inc.*............................ 18,450 431,269
------------
4,794,869
------------
OTHER PRODUCERS/MANUFACTURING -- 1.2%
Chicago Miniature Lamp, Inc.*.............. 63,500 2,111,375
Encore Wire Corp.*......................... 63,750 2,047,969
Griffon Corp.*............................. 70,000 1,137,500
Interface, Inc............................. 50,300 1,464,988
Libbey, Inc................................ 35,900 1,281,181
Rexel, Inc.*............................... 40,500 870,750
Special Metals Corp.*...................... 17,900 335,625
------------
9,249,388
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
OTHER RETAIL TRADE -- 0.4%
Cost Plus, Inc.*........................... 43,100 $ 1,249,900
Fred's, Inc................................ 27,600 572,700
RDO Equipment Co. Class A*................. 25,600 588,800
Renters Choice, Inc.*...................... 37,100 842,866
------------
3,254,266
------------
OTHER TECHNOLOGY -- 0.9%
CHS Electronics, Inc.*..................... 65,700 1,798,538
Computer Products, Inc.*................... 73,500 2,186,625
Henry(Jack) & Associates................... 88,650 2,338,144
Pegasus Systems, Inc.*..................... 6,000 108,750
Xionics Document Technologies, Inc.*....... 30,700 533,413
------------
6,965,470
------------
OTHER TRANSPORTATION -- 0.2%
Coach USA, Inc.*........................... 46,000 1,382,875
------------
PRINTING/FORMS -- 1.3%
Applied Graphics Technologies, Inc.*....... 66,300 3,729,375
Consolidated Graphics, Inc.*............... 85,200 4,238,700
Mail-Well, Inc.*........................... 98,900 2,682,663
------------
10,650,738
------------
PUBLISHING -- 0.2%
Scholastic Corp.*.......................... 50,000 1,975,000
------------
RECREATIONAL PRODUCTS -- 0.0%
Swisher International Group, Inc. Class
A*....................................... 18,500 334,156
------------
REAL ESTATE INVESTMENT TRUSTS -- 1.6%
American General Hospitality Corp.......... 31,100 905,788
FelCor Suite Hotels, Inc................... 27,800 1,141,538
Golf Trust Of America, Inc................. 48,600 1,312,200
Health Care Real Estate Investment Trust... 43,500 1,196,250
Innkeepers USA Trust....................... 118,400 2,035,000
Kilroy Realty Corp......................... 107,825 2,911,275
Price Real Estate Investment Trust......... 9,000 361,688
Storage USA, Inc........................... 34,700 1,409,688
Walden Residential Properties, Inc......... 43,600 1,100,900
------------
12,374,327
------------
REAL ESTATE BROKERS/SERVICES -- 0.4%
CB Commercial Real Estate Services Group,
Inc.*.................................... 34,200 1,094,400
Grubb & Ellis Co.*......................... 20,900 304,356
Lasalle Partners, Inc.*.................... 46,100 1,613,500
------------
3,012,256
------------
REGIONAL BANKS -- 0.9%
Bay View Capital Corp...................... 50,400 1,379,700
Peoples Heritage Financial Group, Inc...... 68,200 2,885,713
Provident Bankshares Corp.................. 50,585 2,883,345
------------
7,148,758
------------
RENTAL/LEASING COMPANIES -- 0.1%
Avis Rent A Car, Inc.*..................... 18,000 429,750
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
13
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
RESTAURANTS -- 2.3%
CKE Restaurants, Inc....................... 199,650 $ 8,385,300
Foodmaker, Inc.*........................... 159,000 2,991,188
Logan's Roadhouse, Inc.*................... 21,800 566,800
NPC International, Inc..................... 29,400 371,175
PJ America, Inc.*.......................... 11,000 189,750
Rainforest Cafe, Inc.*..................... 108,400 3,495,900
Sonic Corp.*............................... 76,700 2,147,600
Star Buffet, Inc.*......................... 12,000 189,000
------------
18,336,713
------------
RETAIL/FOOD DISTRIBUTION -- 0.4%
Suiza Foods Corp.*......................... 55,600 2,863,400
------------
SAVINGS & LOAN ASSOCIATIONS -- 0.1%
MAF Bancorp, Inc........................... 30,550 989,056
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 10.8%
3Dlabs, Inc. Ltd........................... 16,300 525,675
Aavid Thermal Technologies, Inc.*.......... 32,700 985,088
ACT Manufacturing, Inc.*................... 42,200 1,403,150
Ade Corp.*................................. 55,900 2,242,987
Advanced Energy Industries, Inc.*.......... 39,200 1,109,850
Advanced Technology Materials, Inc.*....... 43,900 1,613,325
Anadigics, Inc.*........................... 51,314 2,530,422
Benchmark Electronics, Inc.*............... 38,400 1,082,400
Burr-Brown Corp.*.......................... 21,300 710,888
C.P. Clare Corp.*.......................... 14,200 280,450
Credence Systems Corp.*.................... 55,300 2,695,875
DII Group, Inc.*........................... 129,800 4,255,006
Electroglas, Inc.*......................... 59,600 2,026,400
General Scanning, Inc.*.................... 54,600 1,900,763
JPM Co.*................................... 30,300 730,988
Kulicke & Soffa Industries, Inc.*.......... 104,100 4,821,131
Micrel, Inc.*.............................. 59,800 2,530,288
MRV Communications, Inc.*.................. 65,500 2,390,750
Photronics, Inc.*.......................... 106,400 6,443,850
PMC-Sierra, Inc.*.......................... 112,200 2,861,100
Radisys Corp.*............................. 50,400 2,532,600
Sawtek, Inc.*.............................. 65,400 3,024,750
Semitool, Inc.*............................ 29,300 736,163
Semtech Corp.*............................. 40,000 2,765,000
Sipex Corp.*............................... 160,200 5,086,350
Speedfam International, Inc.*.............. 109,600 6,617,100
STB Systems, Inc.*......................... 44,600 1,627,900
Stormedia, Inc.*........................... 89,000 517,313
Tower Semiconductor Ltd.*.................. 81,700 1,623,788
Ultratech Stepper, Inc.*................... 93,200 3,168,800
Uniphase Corp.*............................ 65,500 5,207,250
Vitesse Semiconductor, Inc.*............... 153,700 7,617,756
Zygo Corp.*................................ 90,200 2,706,000
------------
86,371,156
------------
SOFTWARE -- 7.8%
Advantage Learning Systems, Inc.*.......... 15,000 378,750
American Software, Inc. Class A*........... 78,700 1,150,988
Applied Voice Technology, Inc.*............ 41,300 1,182,213
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
SOFTWARE (CONTINUED)
<TABLE>
<S> <C> <C>
Aspen Technology, Inc.*.................... 53,800 $ 1,889,725
CBT Group PLC Sponsored ADR*............... 72,300 5,802,075
CCC Information Services Group*............ 79,600 1,691,500
Computer Learning Centers, Inc.*........... 53,700 2,094,300
Credit Management Solutions, Inc.*......... 5,300 96,725
Documentum, Inc.*.......................... 47,600 1,582,700
Geotel Communications Corp.*............... 21,100 398,263
Harbinger Corp.*........................... 130,550 4,748,756
HPR, Inc................................... 15,400 336,875
Hyperion Software Corp.*................... 58,200 1,815,113
Imnet Systems, Inc......................... 38,500 1,034,688
Industri-Matematik International Corp.*.... 29,100 712,950
ITEQ, Inc.*................................ 42,200 588,162
Manugistics Group, Inc.*................... 54,100 1,934,075
Memco Software Ltd.*....................... 42,300 930,600
National Instruments Corp.*................ 88,500 4,104,188
Open Text Corp.*........................... 87,100 1,219,400
Peerless Systems Corp.*.................... 7,400 103,600
Pegasystems, Inc.*......................... 69,300 2,104,988
Peregrine Systems, Inc.*................... 17,600 312,400
Peritus Software Services, Inc.*........... 29,400 753,375
Pervasive Software, Inc.*.................. 27,000 310,500
QAD, Inc.*................................. 53,600 998,300
QuickResponse Services, Inc.*.............. 21,200 726,100
Rogue Wave Software, Inc................... 21,700 298,375
Summit Design, Inc.*....................... 88,200 1,565,550
Tecnomatix Technologies Ltd.*.............. 9,700 371,025
Veritas Software Co.*...................... 110,400 4,850,700
Viasoft, Inc.*............................. 51,600 2,554,200
Visio Corp.*............................... 167,200 6,980,600
Walker Interactive Systems, Inc.*.......... 52,700 925,544
Wind River Systems, Inc.*.................. 129,800 5,354,250
------------
61,901,553
------------
SPECIALTY CHAINS -- 3.3%
Budget Group, Inc.*........................ 29,000 957,000
Children's Place Retail Stores, Inc.*...... 20,100 291,450
Claire's Stores, Inc....................... 31,000 693,625
Cole National Corp. Class A*............... 29,200 1,213,625
Cort Business Services Corp.*.............. 96,700 3,861,956
Garden Ridge Corp.*........................ 62,800 918,450
Guitar Center, Inc.*....................... 63,100 1,561,725
Linens 'N Things, Inc.*.................... 131,700 4,411,950
Party City Corp.*.......................... 14,100 370,125
Petco Animal Supplies, Inc.*............... 80,400 2,522,550
Pier 1 Imports, Inc........................ 252,300 4,525,631
Rental Service Corp.*...................... 71,200 1,597,550
Williams-Sonoma, Inc.*..................... 78,300 3,347,325
------------
26,272,962
------------
SPECIALTY INSURERS -- 0.1%
International Alliance Services, Inc.*..... 66,600 657,675
------------
TELECOMMUNICATIONS EQUIPMENT -- 5.4%
Cidco, Inc.*............................... 38,400 739,200
Comverse Technology, Inc.*................. 48,500 2,558,375
Davox Corp.*............................... 75,250 2,520,875
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
14
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT (CONTINUED)
<TABLE>
<S> <C> <C>
Digital Microwave Corp.*................... 140,300 $ 6,278,425
Gilat Satellite Networks Ltd.*............. 67,200 2,479,050
IFR Systems, Inc........................... 38,500 1,270,500
Innova Corp.*.............................. 50,900 1,202,513
Intelect Communications Systems Ltd........ 48,600 552,825
Natural Microsystems Corp.*................ 81,700 3,104,600
Nice Systems Ltd. ......................... 49,900 2,806,875
P-COM, Inc.*............................... 105,800 2,532,588
Premisys Communications, Inc.*............. 69,600 1,770,450
Remec, Inc.*............................... 57,950 2,115,175
RF Micro Devices, Inc.*.................... 5,300 98,713
Spectrain Corp.*........................... 35,000 2,244,375
Stanford Telecommunications, Inc.*......... 47,300 1,034,688
Superior TeleCom, Inc.*.................... 38,300 1,508,063
Tekelec*................................... 82,600 2,813,563
Teledata Communications Ltd.*.............. 96,700 4,363,588
World Access, Inc.*........................ 28,000 910,000
------------
42,904,441
------------
TELECOMMUNICATIONS SERVICES -- 0.3%
Dycom Industries, Inc.*.................... 42,500 942,969
Pacific Gateway Exchange, Inc.*............ 45,900 1,795,838
------------
2,738,807
------------
TEXTILES -- 0.4%
Culp, Inc.................................. 68,300 1,417,225
Novel Demim Holdings Ltd................... 45,200 1,220,400
Quaker Fabric Corp.*....................... 14,300 323,538
------------
2,961,163
------------
TOBACCO PRODUCTS -- 0.2%
General Cigar Holdings, Inc.*.............. 57,100 1,648,763
------------
TRUCKING -- 1.6%
Arkansas Best Corp.*....................... 99,900 1,130,119
Consolidated Freightways Corp.*............ 149,500 2,634,938
Knight Transportation, Inc.*............... 9,100 254,800
M.S. Carriers, Inc.*....................... 20,000 532,500
Roadway Express, Inc....................... 60,700 1,661,663
Swift Transportation Co., Inc.*............ 46,800 1,480,050
U S Xpress Enterprises, Inc. Class A*...... 700 14,000
USFreightways Corp......................... 73,600 2,474,800
Yellow Corp.*.............................. 85,300 2,777,581
------------
12,960,451
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
WHOLESALE DISTRIBUTION -- 2.1%
Anicom, Inc.*.............................. 63,700 $ 1,066,975
Aviall, Inc.*.............................. 83,800 1,283,188
Brightpoint, Inc.*......................... 115,750 5,360,672
CellStar Corp.*............................ 125,700 5,845,050
Inacom Corp.*.............................. 36,400 1,353,625
Industrial Distribution Group, Inc.*....... 6,300 132,300
MicroAge, Inc.*............................ 47,100 1,365,900
------------
16,407,710
------------
TOTAL COMMON STOCKS
(Cost $506,299,513)...................................... 767,421,422
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- 4.0%
- --------------------------------------------------------------------------------
Associates Corp. of North America 6.370%, 10/1/97... $28,864,000 28,864,000
-------------
J.P. Morgan & Co., Inc.
6.250%, 10/1/97................................... 3,171,000 3,171,000
-------------
TOTAL COMMERCIAL PAPER
(Cost $32,035,000)............................................. 32,035,000
-------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.2%
- --------------------------------------------------------------------------------
J.P. Morgan & Co., Inc. $9,210,000 at 6.250%,
(Agreement dated 9/30/97; to be repurchased at
$9,211,527 on 10/01/97: collateralized by
$8,640,000 FNMA Notes, 7.125% due 04/30/26) (VALUE
$9,652,500)
(Cost $9,210,000)................................. 9,210,000 9,210,000
-------------
TOTAL INVESTMENTS -- 101.4%
(Cost $547,544,513)............................................ 808,666,422
LIABILITIES IN EXCESS OF OTHER ASSETS (1.4%)..................... (11,437,890)
-------------
NET ASSETS 100.0%................................................ $ 797,228,532
-------------
</TABLE>
- ------------
* Non-Income Producing Security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
15
<PAGE>
CORE GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Jack C. Marshall, Jr.,
Partner, Chief Investment Officer,
Mid/Large Cap Equities
Andrew B. Gallagher,
Portfolio Manager
Maren Lindstrom,
Portfolio Manager
Thomas J. Sullivan,
Assistant Portfolio Manager
GOAL: The Nicholas-Applegate Core Growth Fund seeks to maximize long-term
capital appreciation by investing primarily in U.S. companies with more than
$500 million in market capitalization.
REVIEW AND OUTLOOK: Following an extended period of large-cap outperformance,
investors returned their attention to mid-cap stocks in May. They were attracted
by the compelling earnings growth rates and valuations in the segment relative
to large caps.
The strict adherence to our investment philosophy rewarded shareholders with
significant appreciation. The Fund gained 30.5% in the six-month period ending
September 30. The Russell Midcap Growth Index was up 30.8% while the S&P 500
Index was up 26.2%.
Superior stock selection in the technology sector was a major contributor to
the Fund's performance for the period. Applying our bottom-up approach, we
identified the stocks of many technology companies that have benefited from an
overall trend among domestic businesses to enhance and redesign their technology
infrastructures.
For example, ASM Lithography, a manufacturer of components integral in the
fabrication of semiconductors, was one of the best performers for the Fund
during the period. Reflecting increasing demand for its products, the company
earned a $170 million order from Hyundai Electronics. ASM Lithography continues
to gain market share in Korea from Nikon, which used to be Hyundai's sole
provider. In addition, ASM is the primary supplier to Samsung, the largest chip
maker in Korea. Hyundai is the second largest.
The Fund also benefited from superior stock selection in the wireless
telecommunications industry. Nextel Communications increased its market share
and showed growth well ahead of expectations. Nextel is a leading provider of
wireless communications in the United States and has built the largest
all-digital wireless network in the country. Digital subscriber projections for
the company continue to grow. Teleport Communications, a telecommunications
services provider for businesses in more than 55 major markets in 32 states,
climbed more than 75% in the period.
The outlook for mid-cap stocks remains bright as a result of various factors:
- strong earnings growth potential, especially relative to large-cap stocks;
- attractive relative valuations; and
- the potential benefits of the capital-gains tax cut.
REPRESENTATIVE HOLDINGS
Advanced Fibre Communication
Airborne Freight
Allied Waste Industries
BMC Software
CKE Restaurants
Four Season Hotel
Jones Apparel Group
Price/Costco
Robert Half International
Teleport Communications
- --------------------------------------------------------------------------------
16
<PAGE>
CORE GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
CORE GROWTH INSTITUTIONAL PORTFOLIO WITH THE RUSSELL MID CAP GROWTH INDEX AND
THE S&P 400 MID CAP INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/97
1 YEAR 5 YEARS 10 YEARS
19.44% 19.89% 15.41%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE GROWTH
INSTITUTIONAL
PORTFOLIO RUSSELL MID CAP GROWTH INDEX S&P 400 MID CAP INDEX
<S> <C> <C> <C>
09-30-85 $ 250,000.00 $250,000.00 $ 250,000.00
12-31-85 $ 311,844.71 $250,000.00 $ 294,134.41
12-31-86 $ 414,298.60 $293,875.99 $ 341,839.70
12-31-87 $ 429,184.05 $301,984.30 $ 334,867.53
12-31-88 $ 483,552.01 $341,012.60 $ 404,748.71
12-31-89 $ 647,589.51 $448,379.58 $ 548,608.87
12-31-90 $ 652,317.71 $425,364.42 $ 520,521.75
12-31-91 $ 1,014,500.39 $625,418.63 $ 781,391.53
12-31-92 $ 1,151,987.77 $679,904.76 $ 874,552.09
12-31-93 $ 1,379,773.32 $756,008.21 $ 996,549.24
12-31-94 $ 1,234,653.54 $739,632.42 $ 960,767.97
12-31-95 $ 1,710,920.31 $991,040.20 $ 1,258,115.42
12-31-96 $ 1,992,544.95 $1,164,278.99 $ 1,499,549.40
09-30-97 $ 2,389,864.27 $1,467,588.84 $ 1,965,576.00
</TABLE>
This graph compares a $250,000 investment in Core Growth Institutional Portfolio
with the Russell Mid Cap Growth Index and the S&P 400 Mid-Cap Index, on a
cumulative and average annual total return basis. All return calculations
reflect the reinvestment of income dividends and capital gains distributions, if
any, as well as all fees and expenses. Performance results reflect the total
returns of a predecessor limited partnership managed by Nicholas-Applegate
Capital Management prior to the effective date of the Portfolio's registration
statement which was 4/19/93. Limited partnership returns are restated to reflect
all fees and expenses applicable to the Portfolio. If the limited partnership
had been registered as an investment company under the federal securities laws,
its performance might have been adversely affected because of the additional
restrictions applicable to registered investment companies.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Russell Mid Cap Growth Index measures the performance of those companies
among the 800 smallest companies in the Russell 1000 Index with higher than
average price-to-book ratios and forecasted growth. The average market
capitalization is $4 billion. The Russell Mid Cap Growth Index is considered
generally representative of the U.S. market for mid cap stocks.
The S&P 400 Index is an unmanaged index considered generally representative of
the market for the stocks of mid-sized U.S. companies. It consists of 400
domestic stocks chosen for market size (median market capitalization of about
$610 million), liquidity, and industry group representation.
In future annual reports, Nicholas-Applegate will compare the Core Growth Fund
only to the Russell Mid Cap Growth for purposes of showing annualized total
returns. We believe this shift in benchmark measures is appropriate since the
composition of the Fund more closely matches the composition of the Russell Mid
Cap Growth Index.
Index returns reflect the reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
17
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
CORE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMON STOCKS -- 93.9%
- ---------------------------------------------------------------------------------
AIRFREIGHT/SHIPPING -- 1.8%
Airborne Freight Corp...................... 150,300 $ 9,102,544
-------------
APPAREL -- 1.9%
Jones Apparel Group, Inc.*................. 172,100 9,293,400
-------------
BIOTECHNOLOGY -- 3.6%
Biochem Pharma, Inc.*...................... 200,000 6,300,000
Centocor, Inc.*............................ 156,700 7,453,044
Guilford Pharmaceuticals, Inc.*............ 135,000 3,982,500
-------------
17,735,544
-------------
BROADCASTING -- 3.5%
Chancellor Media Corp.*.................... 148,000 7,788,500
Clear Channel Communications, Inc.*........ 146,800 9,523,650
-------------
17,312,150
-------------
CLOTHING CHAINS -- 1.3%
TJX Companies, Inc......................... 220,100 6,726,806
-------------
COMPUTER/OFFICE AUTOMATION -- 2.9%
Computer Horizons Corp.*................... 182,650 6,621,062
Sterling Commerce, Inc.*................... 215,100 7,730,156
-------------
14,351,218
-------------
CONTAINERS -- 1.3%
Owens-Illinois, Inc.*...................... 190,000 6,448,125
-------------
CONTRACT DRILLING -- 1.0%
Diamond Offshore Drilling, Inc............. 93,800 5,176,588
-------------
DEPARTMENT/DISCOUNT STORES -- 6.1%
Consolidated Stores Corp.*................. 205,906 8,622,314
Costco Companies, Inc.*.................... 228,800 8,608,600
Fred Meyer, Inc............................ 128,400 6,837,300
Kohls Corp.*............................... 84,100 5,971,100
-------------
30,039,314
-------------
DRUGS/PHARMACEUTICALS -- 1.8%
Elan Corp. PLC-Sponsored ADR*.............. 175,800 8,800,987
-------------
ELECTRIC UTILITIES -- 2.3%
AES Corp.*................................. 261,400 11,436,250
-------------
ELECTRONIC DATA PROCESSING -- 2.3%
Fiserv, Inc*............................... 136,300 5,980,162
E*Trade Group, Inc.*....................... 120,000 5,640,000
-------------
11,620,162
-------------
ELECTRONICS/MUSIC CHAINS -- 1.0%
CompUSA, Inc.*............................. 138,100 4,833,500
-------------
ENVIRONMENTAL SERVICES -- 3.0%
USA Waste Services, Inc.................... 172,165 6,865,079
Allied Waste Industries, Inc.*............. 407,500 7,793,438
-------------
14,658,517
-------------
GAMING -- 1.9%
Carnival Corp. -- Class A.................. 200,000 9,250,000
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
HOMEBUILDING -- 0.7%
Centex Construction Products, Inc.......... 60,100 $ 3,508,337
-------------
HOSPITALS -- 2.7%
Healthsouth Corp.*......................... 300,000 8,006,250
Vencor, Inc.*.............................. 127,400 5,255,250
-------------
13,261,500
-------------
INDUSTRIAL ENGINEERING/CONSTRUCTION -- 0.8%
Empresas ICA Sociedad Controlladora S.A. de
C.V.-ADR................................. 227,500 3,995,469
-------------
LODGING -- 2.9%
Four Seasons Hotel, Inc.................... 118,100 4,842,100
Host Marriott Corp......................... 427,100 9,716,525
-------------
14,558,625
-------------
MANAGED HEALTH CARE/HMO'S/PPO'S -- 1.6%
Wellpoint Health Networks, Inc.*........... 135,000 7,821,562
-------------
MEDICAL/HEALTH SERVICES -- 0.6%
Concentra Managed Care, Inc.*.............. 82,600 2,916,812
-------------
MEDICAL SUPPLIES -- 0.9%
Sybron International Corp.*................ 104,700 4,495,556
-------------
MULTI-LINE INSURERS -- 1.5%
Provident Companies, Inc................... 105,000 7,343,437
-------------
OIL/GAS PRODUCTION -- 4.1%
Devon Energy Corp.......................... 199,900 8,795,600
Santa Fe Energy Resources, Inc............. 440,400 5,505,000
Valero Energy Corp......................... 185,500 6,086,719
-------------
20,387,319
-------------
OILFIELD SERVICES/EQUIPMENT -- 4.1%
Camco International, Inc................... 90,000 6,277,500
Global Industries, Ltd.*................... 154,800 6,172,650
Smith International, Inc.*................. 100,000 7,768,750
-------------
20,218,900
-------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 4.4%
Information Management Resources, Inc.*.... 155,000 4,417,500
Mastec, Inc.*.............................. 84,400 3,692,500
Robert Half International, Inc.*........... 210,000 8,688,750
Tyco International Limited................. 60,000 4,923,750
-------------
21,722,500
-------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 1.9%
McKesson Corp.............................. 91,750 9,352,766
-------------
OTHER PRODUCERS/MANUFACTURING -- 1.1%
Knoll, Inc.*............................... 170,000 5,695,000
-------------
OTHER TRANSPORTATION -- 1.3%
GATX Corp.................................. 92,700 6,263,044
-------------
PAPER -- 1.3%
Fort James Corp............................ 62,662 2,870,703
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
18
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
PAPER (CONTINUED)
<TABLE>
<S> <C> <C>
Jefferson Smurfit Corp.*................... 185,000 $ 3,700,000
-------------
6,570,703
-------------
PRINTING/FORMS -- 1.2%
Applied Graphics Technologies, Inc.*....... 110,000 6,187,500
-------------
PUBLISHING -- 1.3%
Valassis Communications, Inc............... 195,000 6,215,625
-------------
RENTAL/LEASING COMPANIES -- 1.0%
Comdisco, Inc.*............................ 150,000 4,884,375
-------------
RESTAURANTS -- 1.6%
CKE Restaurants, Inc....................... 190,000 7,980,000
-------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 4.0%
Analog Devices, Inc.*...................... 193,300 6,475,550
ASM Lithography Holding NV................. 23,800 2,350,250
Integrated Process Equipment Corp.*........ 223,100 8,226,813
PRI Automation, Inc.*...................... 45,500 2,661,750
-------------
19,714,363
-------------
SOAPS/COSMETICS -- 1.6%
Revlon, Inc. -- Class A*................... 160,600 7,959,738
-------------
SOFTWARE -- 5.5%
BMC Software, Inc .*....................... 121,500 7,867,125
Compuware Corp.*........................... 134,900 8,161,450
Electronics for Imaging, Inc.*............. 131,400 6,701,400
Qad, Inc. -- Class A*...................... 128,900 2,400,763
Visio Corp.*............................... 50,000 2,087,500
-------------
27,218,238
-------------
SPECIALTY CHAINS -- 2.5%
Borders Group, Inc.*....................... 346,900 9,539,750
Zale Corp.................................. 100,000 2,593,750
-------------
12,133,500
-------------
SPECIALTY INSURERS -- 1.6%
MGIC Investment Corp.*..................... 137,600 7,886,200
-------------
TELECOMMUNICATIONS EQUIPMENT -- 4.1%
Advanced Fibre Communications, Inc.*....... 178,200 7,306,200
Nokia Corp.-Sponsored ADR -- Class A....... 65,800 6,172,863
Pairgain Technologies, Inc.*............... 243,800 6,948,300
-------------
20,427,363
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
TELEPHONE -- 1.8%
Nextlink Communications, Inc............... 47,000 $ 1,128,000
Teleport Communications Group, Inc. --
Class A*................................. 170,100 7,633,238
-------------
8,761,238
-------------
TRUCKING -- 1.1%
Consolidated Freightways, Inc.............. 130,200 5,671,837
-------------
WHOLESALE DISTRIBUTION -- 1.0%
Danka Business Systems-Sponsored ADR....... 107,200 4,770,400
-------------
TOTAL COMMON STOCKS
(Cost $370,517,777)......................................... 464,707,012
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.6%
- ---------------------------------------------------------------------------------
Associates Corp. of North America
6.370%, 10/01/97......................... $ 6,871,000 6,871,000
J.P. Morgan & Co., Inc.
6.250%, 10/01/97......................... 984,000 984,000
-------------
TOTAL COMMERCIAL PAPER
(Cost $7,855,000)........................................... 7,855,000
-------------
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 4.8%
- ---------------------------------------------------------------------------------
J.P. Morgan & Co., Inc. $23,516,000 at
5.970%, (Agreement dated 9/30/97; to be
repurchased at $23,519,000 on 10/01/97;
collateralized by $24,080,000 FNMA Notes,
6.30% due 9/25/02) (VALUE $24,019,198)
(Cost $23,516,000)....................... 23,516,000 23,516,000
-------------
TOTAL INVESTMENTS -- 100.3%
(Cost $401,888,777)......................................... 496,078,012
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.3%)............... (1,316,671)
-------------
NET ASSETS -- 100.0%.......................................... $ 494,761,341
-------------
</TABLE>
- ---------------
* Non-Income Producing Security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
19
<PAGE>
LARGE CAP GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Jack C. Marshall, Jr.,
Partner, Chief Investment Officer,
Mid/Large Cap Equities
Andrew B. Gallagher,
Portfolio Manager
GOAL: The Nicholas-Applegate Large Cap Growth Fund seeks to maximize long-term
capital appreciation through investment primarily in U.S. companies generally
over $3 billion in market capitalization.
REVIEW AND OUTLOOK: As the stocks of large companies climbed to all-time highs
several times during the period April 1 through September 30, 1997, the Large
Cap Growth Fund was up 38.3% versus a 26.2% gain for the S&P 500 Index.
The Fund's outperformance is the direct result of stock selection. U.S.
corporations continue to reap the benefits of improved efficiencies, especially
as a result of retooling their technological infrastructures.
Additionally, the worldwide personal computer market is experiencing extremely
high growth. As a result, the Fund holds several large-cap technology stocks
that are benefiting from such growth.
Relative to the S&P 500 Index, the Fund had a higher weighting in the
technology sector during the third quarter. Telecommunications and computers/
office automation stocks were the best performing holdings within the Fund.
For example, Nokia, a major supplier of telecommunications systems and the
world's largest maker of mobile phones, delivered strong results. Nokia is well
positioned to benefit from potential deregulation around the world. Because of
its commitment to Latin American markets, Nokia is poised to capitalize on the
strong growth expected in the region. Nextel Communications, another solid
performer, recorded brisk sales for its wireless communications products.
Stock selection in the energy sector also contributed to the Fund's
outperformance. Santa Fe International, an oil and gas contract-drilling
company, was one of the Fund's best performers. The company has shown tremendous
growth, boosting second quarter earnings by more than 166% versus the prior-year
period. Operating drilling rigs in 16 countries, Santa Fe is well positioned to
capitalize on accelerating worldwide land and offshore drilling activity.
Reflecting the strength of our stock selection, all of the Fund's holdings
reported second quarter earnings results which met or exceeded analysts'
consensus expectations.
We remain optimistic about the outlook for the Large Cap Growth Fund as we
continue to find promising stocks meeting our criteria in this segment.
REPRESENTATIVE HOLDINGS
Bay Networks
Compuware
Ford Motor
Home Depot
Lucent Technologies
Nokia
Santa Fe International
Schlumberger
Time Warner
Westinghouse
- --------------------------------------------------------------------------------
20
<PAGE>
LARGE CAP GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
LARGE CAP GROWTH INSTITUTIONAL PORTFOLIO WITH THE RUSSELL 1000 GROWTH INDEX.
<TABLE>
<S> <C> <C>
TOTAL RETURN
SINCE INCEPTION
As of 09/30/97
43.84%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LARGE CAP GROWTH INSTITUTIONAL PORTFOLIO RUSSELL 1000 GROWTH INDEX
27-Dec-96 $ 250,000.00 $ 250,000.00
<S> <C> <C>
31-Jan-97 $ 272,399.99 $ 263,452.07
28-Feb-97 $ 267,800.00 $ 261,660.59
31-Mar-97 $ 260,000.00 $ 247,499.52
30-Apr-97 $ 269,999.99 $ 263,933.49
31-May-97 $ 300,200.00 $ 282,981.57
30-Jun-97 $ 311,400.01 $ 294,300.83
31-Jul-97 $ 350,200.02 $ 320,317.03
31-Aug-97 $ 342,200.02 $ 301,578.48
30-Sep-97 $ 359,600.02 $ 316,419.16
</TABLE>
This graph compares a $250,000 investment in the Large Cap Growth Institutional
Portfolio with the Russell 1000 Growth Index, on a cumulative and average annual
total return basis. All return calculations reflect the reinvestment of income
dividends and capital gains distributions, if any, as well as all fees and
expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Russell 1000 Growth Index is an unmanaged index containing those companies
among the Russell 1000 Index securities with higher than average price-to-book
ratios and forecasted growth. The Russell 1000 Index contains the top 1,000
securities of the Russell 3000 Index, which comprises the 3,000 largest U.S.
securities as determined by total market capitalization. The Russell 1000 Growth
Index is considered generally representative of the U.S. market for large cap
stocks.
The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
21
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
LARGE CAP GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ------------------------------------------------------------------------
COMMON STOCKS -- 97.0%
- ------------------------------------------------------------------------
APPAREL -- 0.4%
Polo Ralph Lauren Corp. Class A*........... 500 $ 13,094
------------
AUTOMOBILES -- 3.5%
Ford Motor Co.............................. 2,700 122,175
------------
BIOTECHNOLOGY -- 3.3%
Centocor, Inc.*............................ 2,400 114,150
------------
BROADCASTING -- 3.0%
Tele-Communications TCI Ventures Grp Class
A (Investment Co.)....................... 1,855 38,259
Tele-Communications, Inc. Class A*......... 3,245 66,522
------------
104,781
------------
BUILDING MATERIALS CHAINS -- 2.4%
Home Depot,Inc............................. 1,600 83,400
------------
CLOTHING CHAINS -- 2.9%
Nordstrom, Inc............................. 1,600 102,000
------------
COMPUTER/OFFICE AUTOMATION -- 5.6%
Bay Networks, Inc.*........................ 2,700 104,287
Cisco Systems, Inc .*...................... 700 51,144
Sun Microsystems, Inc.*.................... 800 37,450
------------
192,881
------------
CONTRACTING DRILLING -- 4.4%
Noble Drilling Corp.*...................... 3,700 119,325
Santa Fe International Corp.*.............. 700 32,550
------------
151,875
------------
DEPARTMENT/DISCOUNT STORES -- 9.1%
CVS Corp................................... 2,000 113,750
Dayton-Hudson Corp......................... 1,800 107,887
Wal-Mart Stores, Inc....................... 2,600 95,225
------------
316,862
------------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 0.3%
Teradyne, Inc.............................. 200 10,762
------------
ENTERTAINMENT -- 3.3%
Time Warner, Inc........................... 2,100 113,794
------------
ENVIRONMENTAL SERVICES -- 2.6%
USA Waste Services, Inc.*.................. 2,300 91,712
------------
FINANCE COMPANIES -- 2.1%
American Express Co........................ 900 73,687
------------
HOSPITALS -- 1.0%
Healthsouth Corp.*......................... 1,300 34,694
------------
OIL/GAS PRODUCTION -- 8.2%
Anadarko Petroleum Corp.................... 1,500 107,719
Apache Corp................................ 2,800 120,050
Enron Oil & Gas Co......................... 2,600 57,850
------------
285,619
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ------------------------------------------------------------------------
OILFIELD SERVICES/EQUIPMENT -- 3.4%
Schlumberger LTD........................... 1,400 $ 117,862
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 2.0%
Robert Half International, Inc.*........... 1,650 68,269
------------
OTHER CONSUMER SERVICES -- 0.7%
At Home Corp. Series A*.................... 1,000 23,125
------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 3.3%
HBO & Co................................... 3,000 113,250
------------
OTHER PRODUCERS/MANUFACTURING -- 2.4%
Tyco International LTD..................... 1,000 82,062
------------
OTHER TECHNOLOGY -- 3.6%
Westinghouse Electric Corp................. 4,600 124,488
------------
SOFTWARE -- 3.5%
Compuware Corp.*........................... 2,000 121,000
------------
SPECIALTY CHAINS -- 3.5%
Gap, Inc................................... 2,400 120,150
------------
SPECIALTY INSURERS -- 3.6%
MGIC Investment Corp....................... 2,200 126,088
------------
TELECOMMUNICATIONS EQUIPMENT -- 11.2%
Boston Technology, Inc.*................... 2,500 84,688
CIENA Corp................................. 1,300 64,391
Lucent Technologies, Inc................... 600 48,825
MAS Technology LTD Sponsored ADR*.......... 500 11,375
Newbridge Networks Corp.*.................. 1,300 77,838
Nokia Corp.-Sponsored ADR Class A.......... 1,100 103,194
------------
390,311
------------
TELECOMMUNICATIONS SERVICES -- 5.7%
Nextel Communications, Inc. Class A*....... 3,800 109,725
Paging Network, Inc.*...................... 7,000 88,813
------------
198,538
------------
TOBACCO PRODUCTS -- 2.0%
Philip Morris Cos., Inc.................... 1,700 70,656
------------
TOTAL COMMON STOCKS
(Cost $3,190,902)...................................... 3,367,285
------------
TOTAL INVESTMENTS -- 97.0%
(Cost $3,190,902)...................................... 3,367,285
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.0%............ 105,119
------------
NET ASSETS -- 100.0%..................................... $ 3,472,404
------------
</TABLE>
- ------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
22
<PAGE>
VALUE FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic
Portfolio Management
John J. Kane,
Partner, Senior Portfolio Manager
Mark Stuckelman,
Portfolio Manager
GOAL: The Nicholas-Applegate Value Fund seeks to provide total return through
long-term capital appreciation plus dividend income. Holdings reflect a
diversified portfolio comprised predominantly of U.S. companies with larger
market capitalizations.
REVIEW AND OUTLOOK: The "new economy" paradigm of continued moderate economic
growth and subdued inflation propelled larger-capitalization stocks to higher
ground during the period April 1 through September 30, 1997.
The Nicholas-Applegate Value Fund delivered superior returns, climbing 35.3%
during the period. The Fund outperformed the S&P 500 Index and the Russell 1000
Value Index, each up 26.2%.
In managing the Fund, we look for attractively valued companies where we can
confirm improving prospects and underlying business strength. Valuation measures
such as low price-to-earnings and price-to-book ratios, and above-market
dividend yields are some of the characteristics of the Fund's holdings.
In the six-month period, stock selection in the technology, financial
services, and insurance services sectors contributed significantly to the Fund's
outperformance. Most of our technology holdings, including Compaq, Dell,
Microsoft, and Western Digital are focused on the personal computer industry.
Stronger-than-expected demand for PCs at both consumer and business levels has
enabled these companies to enjoy greater-than-expected earnings growth. Direct
distribution and build-to-order manufacturing models at Dell and Compaq have
lowered costs, enabling price cuts which continue to stimulate demand for their
products.
Compaq's acquisition of Tandem resulted in cost savings. Compaq's and Dell's
increased emphasis on the enterprise area should cushion the potential impact of
a weakness in the consumer market and allow more stable earnings going forward.
In the producers/manufacturing sector, Caterpillar was among the Fund's top
picks. A leading manufacturer of construction and mining equipment, Caterpillar
reported higher-than-expected earnings in the first and second quarters of 1997.
The firm benefits from the continued strength in the U.S. market, as well as
signs of economic recovery in Europe.
The Fund continues to find stocks with attractive P/E ratios and the potential
for strong earnings growth. We are confident that strict adherence to our
objectives and our bottom-up stock selection approach should reward shareholders
with long-term capital appreciation and current income.
REPRESENTATIVE HOLDINGS
BankAmerica
Bell Atlantic
Caterpillar
Compaq Computer
Entergy
Equitable
Ford Motor
McKesson
Phillips Petroleum
Southdown
- --------------------------------------------------------------------------------
23
<PAGE>
VALUE INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
VALUE INSTITUTIONAL PORTFOLIO WITH THE S&P/BARRA VALUE INDEX AND THE S&P 500
INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
53.76% As of 09/30/97 46.43%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
VALUE INSTITUTIONAL S&P/BARRA
PORTFOLIO S&P 500 INDEX VALUE INDEX
<S> <C> <C> <C>
30-Apr-97 $250,000.00 $250,000 $250,000.00
30-Jun-96 263,799.99 257,424.51 252,556.88
30-Sep-96 278,799.98 265,382.62 259,214.42
30-Dec-96 310,622.01 287,516.03 283,745.01
30-Mar-97 316,935.45 295,184.39 288,766.94
30-Jun-97 369,757.99 346,593.29 330,542.50
30-Sep-97 428,683.58 372,584.81 360,823.90
</TABLE>
This graph compares a $250,000 investment in the Value Institutional Portfolio
with the S&P/BARRA Value Index and the S&P 500 Index, on a cumulative and
average annual total return basis. All return calculations reflect the
reinvestment of income dividends and capital gains distributions, if any, as
well as all fees and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The S&P/BARRA Value Index is an unmanaged index containing those securities
within the S&P 500 with low price to book ratios. The S&P 500 Index containing
500 industrial, transportation, utility and financial companies andis considered
to be 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.
In future annual reports, Nicholas-Applegate will compare the Value
Institutional Portfolio only to the S&P 500 for purposes of showing annualized
total returns. We believe this shift in benchmark measures is appropriate since
the composition of the Fund more closely matches the composition of the S&P 500
Index.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
24
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
VALUE FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS -- 99.3%
- -------------------------------------------------------------------------------
AIRLINES -- 2.5%
AMR Corp. *................................ 1,400 $ 154,962
Delta Air Lines, Inc....................... 700 65,931
------------
220,893
------------
ALCOHOLIC BEVERAGES -- 1.1%
Canandaigua Brands Inc., Class A *......... 2,100 98,962
------------
AUTOMOBILES -- 5.0%
Ford Motor Co.............................. 6,600 298,650
General Motors Corp........................ 2,000 133,875
------------
432,525
------------
BEVERAGES/SOFT DRINKS -- 0.4%
Coca-Cola Co............................... 600 36,562
------------
BUILDING MATERIALS -- 1.7%
Southdown, Inc............................. 2,700 147,487
------------
CHEMICALS -- 5.0%
Dexter Corp................................ 1,500 60,094
Dow Chemical Co............................ 2,500 226,719
Rohm & Haas Co............................. 400 38,375
Wellman, Inc............................... 4,800 111,300
------------
436,488
------------
CLOTHING CHAINS -- 0.6%
TJX Cos., Inc.............................. 1,800 55,012
------------
COMPUTER/OFFICE AUTOMATION -- 7.9%
Compaq Computer Corp. *.................... 3,200 239,200
Dell Computer Corp. *...................... 2,700 261,562
Stratus Computer, Inc. *................... 2,400 116,100
Western Digital Corp....................... 1,800 72,113
------------
688,975
------------
DEPARTMENT/DISCOUNT STORES -- 3.6%
Dayton-Hudson Corp......................... 3,700 221,769
Shopko Stores, Inc......................... 3,600 93,600
------------
315,369
------------
DRUGS/PHARMACEUTICALS -- 4.1%
Bristol-Myers Squibb Co.................... 1,700 140,675
Merck & Co., Inc........................... 600 59,962
Warner-Lambert Co.......................... 1,200 161,925
------------
362,562
------------
ELECTRIC UTILITIES -- 4.8%
Central Hudson Gas & Electric.............. 1,300 46,556
Consolidated Edison Co. of New York,
Inc...................................... 1,500 51,000
Entergy Corp............................... 6,300 164,194
Public Service Enterprise Group, Inc....... 6,100 157,075
------------
418,825
------------
FINANCE COMPANIES -- 0.9%
American Express Co........................ 500 40,937
Fannie Mae................................. 700 32,900
------------
73,837
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
GAS UTILITIES -- 1.0%
Laclede Gas Co............................. 3,500 $ 85,313
------------
GROCERY PRODUCTS -- 0.3%
ConAgra, Inc............................... 400 26,400
------------
HOME FURNISHINGS -- 0.5%
Kimball International, Inc. Class B........ 1,100 46,200
------------
HOMEBUILDING -- 1.1%
Continental Homes Holding Corp............. 1,500 43,969
U S Home Corp. *........................... 1,300 50,212
------------
94,181
------------
INVESTMENTS -- 2.9%
Bear Stearns Cos., Inc..................... 5,770 253,880
------------
LIFE INSURERS -- 2.6%
Equitable Cos., Inc........................ 5,500 225,844
------------
MACHINERY/EQUIPMENT -- 2.8%
Caterpillar, Inc........................... 4,500 242,719
------------
METALS -- 4.0%
Asarco, Inc................................ 1,600 51,200
Inland Steel Industries, Inc............... 1,500 32,812
LTV Corp................................... 3,000 38,062
Phelps Dodge Corp.......................... 700 54,337
Timken Co.................................. 2,200 88,137
USX-US Steel Group, Inc.................... 2,500 86,875
------------
351,423
------------
MONEY-CENTER BANKS -- 7.5%
BankAmerica Corp........................... 3,900 285,919
Bankers Trust New York Corp................ 2,400 294,000
Republic New York Corp..................... 700 79,538
------------
659,457
------------
MULTI-LINE INSURERS -- 2.4%
Cigna Corp................................. 800 149,000
Travelers Group, Inc....................... 866 59,105
------------
208,105
------------
OIL/GAS PRODUCTION -- 8.0%
Chevron Corp............................... 1,300 108,144
Exxon Corp................................. 2,800 179,375
Imperial Oil LTD........................... 3,700 212,750
Phillips Petroleum Co...................... 2,000 103,250
USX-Marathon Group......................... 2,600 96,688
------------
700,207
------------
OIL REFINING/MARKETING -- 1.3%
Tesoro Petroleum Corp. *................... 6,200 111,988
------------
OTHER CONSUMER NON-DURABLES -- 0.4%
Procter & Gamble Co........................ 500 34,531
------------
OTHER HEALTH SERVICES -- 2.7%
McKesson Corp.............................. 2,300 234,456
------------
OTHER INSURANCE SERVICES -- 0.9%
First American Financial Corp.............. 1,300 78,000
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
25
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
VALUE FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS -- 99.3% (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER PRODUCERS/MANUFACTURING -- 4.4%
General Electric Co........................ 1,000 $ 68,063
Parker-Hannifin Corp....................... 4,100 184,500
Premark International, Inc................. 4,000 128,000
------------
380,563
------------
OTHER TRANSPORTATION -- 0.9%
GATX Corp.................................. 1,100 74,319
------------
PROPERTY-CASUALTY INSURERS -- 0.6%
Orion Capital Corp......................... 1,200 54,375
------------
REGIONAL BANKS -- 2.7%
First Chicago NBD Corp..................... 1,600 120,400
Southtrust Corp............................ 2,400 118,200
------------
238,600
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 3.8%
Intel Corp................................. 1,400 129,369
Texas Instruments, Inc..................... 1,500 202,688
------------
332,057
------------
SOFTWARE -- 2.4%
Compuware Corp. *.......................... 1,300 78,650
Microsoft Corp. *.......................... 1,000 132,313
------------
210,963
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
SPECIALTY INSURERS -- 2.0%
Exel Limited *............................. 2,900 $ 172,731
------------
TELEPHONE -- 4.4%
Bell Atlantic Corp......................... 1,400 112,613
Telefonica de Espana-Sponsored ADR......... 800 75,300
US West Communications Group............... 5,200 200,200
------------
388,113
------------
TOBACCO PRODUCTS -- 2.1%
Philip Morris Cos., Inc.................... 2,400 99,750
Universal Corp............................. 2,300 83,375
------------
183,125
------------
TOTAL COMMON STOCKS
(Cost $7,380,263).......................................... 8,675,047
------------
TOTAL INVESTMENTS -- 99.3%
(Cost $7,380,263).......................................... 8,675,047
LIABILITIES IN EXCESS OF ASSETS -- 0.7%...................... 61,636
------------
NET ASSETS -- 100.0%......................................... $ 8,736,683
------------
</TABLE>
- ---------------
*Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
26
<PAGE>
INCOME & GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Sandra K. Durn,
Portfolio Manager
Stan Rogers,
Portfolio Manager
GOAL: The Nicholas-Applegate Income & Growth Fund seeks to maximize total
return by investing primarily in convertible and equity securities of U.S.
companies.
REVIEW AND OUTLOOK: A buoyant bond market and the equity market's
record-breaking ascent bolstered returns for our Income & Growth Fund from April
1 through September 30, 1997. The Fund rose 21.6% during the six-month period,
versus a 19.7% gain for the First Boston Convertible Index. Issue selection and
the strong gains among smaller-cap stocks contributed to its outperformance.
The Fund is comprised primarily of convertible bonds issued by small- and
mid-cap companies. Reflecting the smaller-cap nature of the convertible market,
of the total number of firms issuing convertible bonds, about two-thirds have
market capitalizations less than $2 billion.
The Fund continued to deliver returns reflecting asymmetrical market
participation capturing approximately 70% to 80% of the upside performance of
the underlying equities with only 50% or less of the downside exposure. Over the
first six months of the fiscal year, the Fund participated in 81.0% of the gain
of the S&P 500 Index, which was up 26.2% in the period.
As an example of downside protection, when the S&P 500 Index dipped 5.6% in
August amid the downturn in the large- and mid-cap segments of the market, the
Income & Growth Fund was off just 1.2% -- a participation rate of less than 22%.
During the first six months of the fiscal year, we increased the Fund's
allocation among select issues in the technology, retail trade, and
commercial/industrial sectors.
Among the Fund's best-performing holdings was Airtouch Communications, a major
wireless telecommunications holding company, with significant cellular interests
in the United States, Europe, and Asia. The company is one of the largest
providers of paging services in the United States, and is forecast to benefit
from the projected growth in infrastructure and technology development.
Ahmanson, one of the largest thrift institutions in the country, also made a
positive contribution to the Fund during the period. Forecasts of strong
earnings for the company, combined with its recent acquisition of Coast Savings
Financial, which is expected to result in significant cost savings, should
further enhance Ahmanson's attractiveness.
We believe convertibles continue to provide investors with appreciation
potential and downside protection. Looking ahead, we remain confident of our
bottom-up approach and our ability to reward shareholders with long-term results
and limited downside risk.
REPRESENTATIVE HOLDINGS
Ahmanson
Airtouch Communications
Baker Hughes
Continental Airlines
Costco
Diamond Offshore Drilling
Hilton Hotels
Omnicom
Penn Treaty American
Worldcom
- --------------------------------------------------------------------------------
27
<PAGE>
INCOME & GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
INCOME & GROWTH INSTITUTIONAL PORTFOLIO WITH THE CS FIRST BOSTON CONVERTIBLE
INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/97
1 YEAR 5 YEARS 10 YEARS
27.70% 18.46% 15.25%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME & FIRST BOSTON
GROWTH INSTITUTIONAL CONVERTIBLE
PORTFOLIO INDEX
<S> <C> <C>
12-31-86 $ 250,000.00 $ 250,000.00
12-31-87 242,192.20 249,438.54
12-31-88 290,338.67 282,892.46
12-31-89 372,774.53 321,822.20
12-31-90 379,633.21 299,660.78
12-31-91 525,253.10 386,904.65
12-31-92 576,920.28 454,915.53
12-31-93 733,125.90 539,287.59
12-31-94 677,475.98 513,857.47
12-31-95 828,248.30 635,736.19
12-31-96 1,002,323.52 723,744.87
09-30-97 1,235,812.83 870,433.94
</TABLE>
This graph compares a $250,000 investment in Income & Growth Institutional
Portfolio with the CS First Boston Convertible ("First Boston Convertible")
Index, on a cumulative and average annual total return basis. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses. Performance results
reflect the total returns of a predecessor limited partnership managed by
Nicholas-Applegate Capital Management prior to the effective date of the
Portfolio's registration statement which was 4/19/93. Limited partnership
returns are restated to reflect all fees and expenses applicable to the
Portfolio. If the limited partnership had been registered as an investment
company under the federal securities laws, its performance might have been
adversely affected because of the additional restrictions applicable to
registered investment companies.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The First Boston Convertible Index is an unmanaged market weighted index
representing the universe of convertible securities whether they are convertible
preferred stocks or convertible bonds.
The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
28
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
INCOME & GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS -- 8.8%
- ----------------------------------------------------------------------------
ELECTRIC UTILITIES -- 0.0%
Pacific Gas and Electric Corp.............. 1 $ 23
------------
GAS UTILITIES -- 1.1%
MCN Energy Group, Inc...................... 69,530 2,224,960
------------
MACHINERY/EQUIPMENT -- 0.7%
Cooper Industries, 6.00%, "WYMN"........... 57,100 1,313,300
------------
OIL/GAS PRODUCTION -- 0.0%
Valero Energy Corp......................... 2 66
------------
REAL ESTATE INVESTMENT TRUSTS -- 6.0%
Bay Apartment Communities, Inc............. 32,286 1,289,422
Cali Realty Corp........................... 40,730 1,695,386
CCA Prison Realty Trust.................... 12,500 471,875
CenterPoint Properties Corp................ 42,700 1,550,544
Crescent Real Estate Equities Co........... 45,160 1,812,045
Equity Residential Properties Trust........ 27,040 1,475,370
FelCor Suite Hotels, Inc................... 20,800 854,100
Reckson Associates Realty Corp............. 69,866 1,860,182
Spieker Properties, Inc.................... 34,021 1,379,977
------------
12,388,901
------------
SPECIALTY INSURERS -- 1.0%
Merrill, 6.50%, "MTG" (Strypes)............ 21,900 2,113,350
------------
TOTAL COMMON STOCKS
(Cost $13,545,165)....................................... 18,040,600
------------
- ----------------------------------------------------------------------------
PREFERRED STOCKS -- 31.4%
- ----------------------------------------------------------------------------
BROADCASTING -- 2.4%
Chancellor Media Corp.,* Series A,
12.25%................................... 11,700 1,602,900
Evergreen Media Corp., 6.00%............... 41,310 2,463,108
Sinclair Broadcast Group, 6.00%............ 14,100 761,400
------------
4,827,408
------------
DRUGS/PHARMACEUTICALS -- 2.1%
McKesson Corp., 144A $2.50................. 60,700 4,385,575
------------
ELECTRIC UTILITIES -- 3.7%
AES Trust I, Series A, 5.375%.............. 67,920 4,635,540
Calenergy Capital Trust, 6.25%............. 44,440 2,877,490
------------
7,513,030
------------
FINANCE COMPANIES -- 3.4%
Finova Finance Trust, 5.50%................ 46,920 3,090,855
H.F. Ahmanson, Series D, 6.00%............. 32,398 3,790,566
------------
6,881,421
------------
LODGING -- 2.0%
Host Marriott Financial Trust,
6.75%, 144A.............................. 52,725 3,585,300
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
LODGING (CONTINUED)
<TABLE>
<S> <C> <C>
Host Marriott Financial Trust, $13.375..... 8,010 $ 544,680
------------
4,129,980
------------
MULTI-LINE INSURERS -- 1.5%
American Bankers Insurance, Series B,
$3.125................................... 37,580 3,081,560
------------
OIL REFINING/MARKETING -- 1.4%
Tosco Financing Trust, 144A................ 41,400 2,546,100
Tosco Corp., Series F, $4.3750............. 6,400 393,600
------------
2,939,700
------------
OIL/GAS PRODUCTION -- 1.7%
Devon Financing Trust, $3.25 Pfd Cv........ 5,700 458,850
Devon Financing Trust, $6.50, 144A......... 37,876 3,053,752
------------
3,512,602
------------
OTHER CONSUMER NON-DURABLES -- 0.9%
Ralston Purina Co., 7.00%.................. 28,300 1,906,712
------------
OTHER PRODUCERS/MANUFACTURING -- 1.1%
Corning Delaware LP, 6.00%................. 29,200 2,188,175
------------
OTHER TRANSPORTATION -- 1.2%
Hvide Capital Trust, 6.50%................. 38,600 2,557,250
------------
PIPELINES -- 1.1%
Williams Companies, $3.50.................. 20,600 2,278,875
------------
PUBLISHING -- 1.3%
Houston Industries, Inc., 7.00%............ 52,800 2,745,600
------------
SAVINGS & LOAN/THRIFTS -- 0.7%
Sovereign Bancorp, Series B, 6.25%......... 13,200 1,404,150
------------
TELECOMMUNICATIONS EQUIPMENT -- 1.8%
LM Ericcson Telephone Co., ADR............. 550,470 3,646,864
------------
TELECOMMUNICATION SERVICES -- 3.9%
Airtouch Communications, Series C, 4.25%... 51,718 2,918,835
SBC Communications, Inc., 7.75%............ 51,000 2,492,625
Worldcom, Inc., 8.00%...................... 20,240 2,489,520
------------
7,900,980
------------
TRUCKING -- 1.2%
CNF Trust I, Series A, 5.00%............... 39,000 2,510,625
------------
TOTAL PREFERRED STOCKS
(Cost $53,412,622)....................................... 64,410,507
------------
<CAPTION>
PAR
VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
CORPORATE BONDS -- 56.6%
- ----------------------------------------------------------------------------
ADVERTISING -- 2.2%
Omnicom Group
4.250%, 01/03/07 $3,441,000 4,473,300
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
29
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
INCOME & GROWTH FUND
<TABLE>
<CAPTION>
PAR
VALUE VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
AEROSPACE -- 0.9%
Morgan Stanley Group, Series MTNC 0.000%,
09/30/00 $1,440,000 $ 1,864,800
------------
AIRLINES -- 0.3%
Continental Airlines
6.750%, 04/15/06......................... 480,000 680,400
------------
AUTOMOTIVE EQUIPMENT -- 1.0%
Tower Automotive, Inc.
5.000%, 08/01/04......................... 1,960,000 2,107,000
------------
BUILDING MATERIALS -- 1.3%
Cemex SA Euro,
4.250%, 11/01/97......................... 920,000 915,400
Hexcel Corp.
7.000%, 08/01/03......................... 844,000 1,654,240
------------
2,569,640
------------
BUILDING MATERIALS CHAINS -- 2.2%
Home Depot, Inc.
3.250%, 10/01/01......................... 3,621,000 4,490,040
------------
CLOTHING CHAINS -- 0.4%
The Men's Wearhouse, Inc.
5.250%, 03/01/03......................... 681,000 850,399
------------
COMPUTERS/OFFICE AUTOMATION -- 7.9%
Adaptec, Inc.
4.750%, 02/01/04......................... 994,000 1,120,735
Adaptec, Inc., 144A
4.750%, 02/01/04......................... 984,000 1,109,460
C-Cube Microsystems, Inc.
5.875%, 11/01/05......................... 500,000 608,125
Comverse Technology, Inc.
5.750%, 10/01/06......................... 1,408,000 1,860,320
Data General Corp.
6.000%, 05/15/04......................... 723,000 896,520
EMC Corp.
3.250%, 03/15/02......................... 2,780,000 3,898,949
Safeguard Scientifics
6.000%, 02/01/06......................... 1,245,000 1,301,025
Wind River Systems, Inc.
5.000%, 08/01/02......................... 1,727,000 1,770,175
Xerox Credit Corp., Series MTNE
2.875%, 07/01/02......................... 3,539,000 3,654,017
------------
16,219,326
------------
CONTRACT DRILLING -- 2.8%
Diamond Offshore Drilling
3.750%, 02/15/07......................... 858,000 1,231,230
Loews Corp.
3.125%, 09/15/07......................... 2,474,000 2,576,053
Nabors Industries, Inc.
5.000%, 05/15/06......................... 898,000 2,004,785
------------
5,812,068
------------
<CAPTION>
PAR
VALUE VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
DEPARTMENT/DISCOUNT STORES -- 3.0%
Costco Companies, Inc.
0.000%, 08/19/17......................... $6,678,000 $ 3,597,772
Federated Department Stores
5.000%, 10/01/03......................... 1,861,000 2,533,286
------------
6,131,058
------------
DRUG CHAINS -- 1.4%
Rite Aid Corp.
5.250%, 09/15/02......................... 2,883,000 2,951,471
------------
DRUGS/PHARMACEUTICALS -- 4.1%
Elan International Finance
0.000%, 10/16/12......................... 2,284,000 2,503,835
Sandoz Capital BVI LTD.
2.000%, 10/06/02......................... 900,000 1,320,750
Sandoz Capital BVI LTD. Euro,
2.000%, 10/06/02......................... 1,470,000 2,162,811
Sepracor, Inc. Euro,
7.000%, 12/01/02......................... 649,000 1,138,995
Sepracor, Inc.
7.000%, 12/01/02......................... 685,000 1,202,175
------------
8,328,566
------------
ELECTRONIC DATA PROCESSING -- 2.3%
Automatic Data Processing
0.000%, 02/20/12......................... 5,177,000 3,365,050
National Data Corp.
5.000%, 11/01/03......................... 1,360,000 1,411,000
------------
4,776,050
------------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 3.4%
ADT Operations, Inc.
0.000%, 07/06/10......................... 3,358,000 3,731,577
SCI Systems, Inc.
5.000%, 05/01/06......................... 1,545,000 3,144,075
------------
6,875,652
------------
ENVIRONMENTAL SERVICES -- 2.5%
United Waste Systems, Inc., 144A
4.500%, 06/01/01......................... 45,000 63,394
US Filter Corp.
4.500%, 12/15/01......................... 897,000 1,111,159
USA Waste Services, Inc.
4.000%, 02/01/02......................... 3,498,000 3,839,055
------------
5,013,608
------------
INDUSTRIAL BONDS -- 0.9%
Tecnomatix Technologies
5.250%, 08/15/04......................... 1,612,000 1,791,335
------------
INDUSTRIAL ENGINEERING/CONSTRUCTION -- 1.2%
Empresas ICA Sociedad
5.000%, 03/15/04......................... 3,044,000 2,522,715
------------
LIFE INSURERS -- 0.7%
Penn Treaty American Corp.
6.250%, 12/01/03......................... 1,026,000 1,368,427
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
30
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
VALUE VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
LODGING -- 3.9%
ARV Assisted Living
6.750%, 04/01/06......................... $1,000,000 $ 946,250
Carematrix Corp.
6.250%, 08/15/04......................... 1,014,000 1,079,910
Hilton Hotels Corp.
5.000%, 05/15/06......................... 3,219,000 3,830,610
Marriott International
0.000%, 03/25/11......................... 1,312,000 864,280
Signature Resorts, Inc.
5.750%, 01/15/07......................... 999,000 1,193,805
------------
7,914,855
------------
MACHINERY/EQUIPMENT -- 1.9%
Thermo Electron Corp.
4.250%, 01/01/03......................... 3,329,000 3,919,898
------------
MANAGED HEALTHCARE/HMO'S/PPO'S -- 1.1%
Tenet Healthcare
6.000%, 12/01/05......................... 1,879,000 2,271,241
------------
OILFIELD SERVICES/EQUIPMENT -- 1.9%
Baker Hughes, Inc.
0.000%, 05/05/08......................... 2,198,000 1,865,553
Key Energy Group, Inc.
5.000%, 09/15/04......................... 732,000 742,980
Pride Petroleum Services, Inc.
6.250%, 02/15/06......................... 414,000 1,188,698
------------
3,797,231
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 1.0%
Corestaff, Inc.
2.940%, 08/15/04......................... 2,315,000 2,109,544
------------
OTHER PRODUCERS/MANUFACTURING -- 2.9%
Alfa S.A. DE C.V. Euro,
8.000%, 09/15/00......................... 1,180,000 2,340,790
Alfa S.A. DE C.V.
8.000%, 09/15/00......................... 1,000,000 1,960,000
Halter Marine Group, Inc.
4.500%, 09/15/04......................... 1,451,000 1,659,581
------------
5,960,371
------------
<CAPTION>
PAR
VALUE VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 2.5%
Analog Devices
3.500%, 12/01/00......................... $1,179,000 $ 1,974,825
National Semiconductor
6.500%, 10/01/02......................... 1,450,000 1,671,125
Xilinx, Inc.
5.250%, 11/01/02......................... 1,304,000 1,519,160
------------
5,165,110
------------
SPECIALTY CHAINS -- 1.7%
Staples, Inc.
4.500%, 10/01/00......................... 2,544,000 3,339,000
Staples Inc. Euro,
4.500%, 10/01/00......................... 150,000 198,375
------------
3,537,375
------------
TELECOMMUNICATIONS EQUIPMENT -- 0.7%
Motorola, Inc.
0.000%, 09/27/13......................... 1,619,000 1,380,198
------------
TELECOMMUNICATIONS SERVICES -- 0.5%
Smartalk Teleservices
5.750%, 09/15/04......................... 1,028,000 1,117,950
------------
TOTAL CORPORATE BONDS
(Cost $99,284,536)....................................... 115,999,628
------------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 3.9%
- ----------------------------------------------------------------------------
Associates Corp. of North America
6.370%, 10/01/97
(Cost $8,001,000)........................ 8,001,000 8,001,000
------------
TOTAL INVESTMENTS -- 100.7%
(Cost $174,243,323)...................................... 206,451,735
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.7%)............ (1,365,288)
------------
NET ASSETS -- 100.0%....................................... $205,086,447
------------
</TABLE>
- ---------------
* Non-Income Producing Security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
31
<PAGE>
BALANCED GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Fred S. Robertson,
Partner, Chief Investment Officer,
Fixed Income Management
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic
Portfolio Management
John J. Kane,
Partner, Senior Portfolio Manager
James E. Kellerman,
Partner, Portfolio Manager
Malcom S. Day, CFA,
Portfolio Manager
Susan Malone,
Portfolio Manager
GOAL: The 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 Fund climbed 29.7% for the six-month period ending
September 30 versus an 18.4% gain for a balanced index comprised of 60% S&P 500
Index and 40% Lehman Government/ Corporate Bond Index.
A resurgence among small- and mid-cap stocks as well as gains among the Fund's
technology holdings contributed to its advance in the period.
Among the Fund's top performers were Avid Technology, Inc., a supplier of
video, film, and audio editing systems, and Tekelec, a manufacturer of wireless
communication systems.
Avid Technology's digital systems are designed for faster, easier, and more
cost-effective editing over traditional, analog tape-based systems.
U.S. and international wireless service providers continue to show strong
interest in Tekelec's switching systems, prompting analysts to revise revenue
and earnings projections upward.
With respect to our fixed income holdings, for much of the period, the U.S.
bond market remained balanced between opposite poles. On one hand, reports of
benign inflation buttressed investor confidence and boosted bond prices. On the
other hand, tight capacity in the labor market and concerns that smoldering wage
inflation could ignite broader price hikes pulled bond prices lower.
Economic activity, as measured by monthly reports of Gross Domestic Product
(GDP), showed little evidence of a discernible trend. Rather than provide
insight into the direction and magnitude of the U.S. economy, fluctuations in
GDP growth contributed to heightened market volatility.
Our long-term outlook for the U.S. fixed income market remains positive based
upon solid fundamentals including our long-term positive expectations for
inflation, the strength of the U.S. dollar; and the improved federal budget
deficit.
We are confident that the combination of our disciplined style of selecting
dynamic growth stocks and the benefits of diversification offered by fixed-
income securities will continue to deliver favorable long-term results.
REPRESENTATIVE HOLDINGS
Airborne Freight
Compaq Computer
Dell Computer
North Fork Bancorporation
Robert Half International
TJX Companies
Australian Govt. Debenture 9.50 8/15/03
Cox Communications Debenture 6.69 9/20/04
General Electric Note 7.50 8/21/35
United States Treasury Note 6.25 1/31/02
- --------------------------------------------------------------------------------
32
<PAGE>
BALANCED GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
BALANCED GROWTH INSTITUTIONAL PORTFOLIO WITH A MODEL INDEX CONSISTING OF 60% S&P
500 INDEX/40% LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/97 SINCE
1 YEAR 3 YEARS INCEPTION
26.54% 21.02% 13.68%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BALANCED GROWTH
INSTITUTIONAL
PORTFOLIO BALANCED 60/40 INDEX
<S> <C> <C>
09-30-93 $ 250,000.00 $ 250,000.00
12-31-93 242,780.00 253,187.41
03-31-94 235,857.76 244,253.39
06-30-94 224,276.36 243,688.82
09-30-94 235,449.76 251,327.67
12-31-94 231,594.88 251,732.94
03-31-95 246,605.66 271,448.75
06-30-95 270,814.50 294,027.63
09-30-95 292,723.78 310,269.58
12-31-95 288,577.37 327,298.65
03-31-96 299,511.83 334,617.52
06-30-96 317,756.71 344,237.69
09-30-96 329,813.21 353,229.61
12-31-96 338,809.17 375,249.72
03-31-97 321,860.70 380,105.86
06-30-97 363,660.81 424,832.04
9/30/97 417,349.62 450,136.78
</TABLE>
This graph compares a $250,000 investment in the Balanced Growth Institutional
Portfolio with a model index consisting of 60% Standard & Poor's ("S&P") 500
Index and 40% Lehman Brothers Government/Corporate Bond Index, on a cumulative
and average annual total return basis. All return calculations reflect the
reinvestment of income dividends and capital gains distributions, if any, as
well as all fees and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred
by Nicholas-Applegate Capital Management. Total return results would have been
lower had there been no deferral of fees and expenses in excess of expense
limitations.
The S&P 500 Index is an unmanaged index containing 500 industrial,
transportation, utility and financial companies regarded as generally
representative of the U.S. stock market.
The Lehman Brothers Government/Corporate Bond Index is an unmanaged
market-weighted index consisting of all public obligations of the U.S.
Government, its agencies and instrumentalities and all corporation issuers of
fixed rate, non-convertible, investment grade U.S. dollar denominated bonds
having maturities of greater than one year. It is generally regarded as
representative of the market for domestic bonds.
Each index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
33
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
BALANCED GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS -- 63.3%
- ----------------------------------------------------------------------------
AIR FREIGHT/SHIPPING -- 1.5%
Airborne Freight Corp...................... 3,700 $ 224,081
Expeditors International Of Washington,
Inc...................................... 5,800 242,875
------------
466,956
------------
AIRLINES -- 0.6%
Continental Airlines Holding, Inc. *....... 4,700 185,062
------------
ALCOHOLIC BEVERAGES -- 0.7%
Canandaigua Wine Co........................ 4,800 226,200
------------
APPAREL -- 1.8%
Jones Apparel Group, Inc. *................ 3,700 199,800
Kellwood Co................................ 5,900 209,081
Stride Rite Corp........................... 11,100 150,544
------------
559,425
------------
AUTOMOTIVE EQUIPMENT -- 1.4%
Federal-Mogul Corp......................... 5,200 193,050
SPX Corp................................... 4,000 234,500
------------
427,550
------------
BROADCASTING -- 0.0%
Optel, Inc. *.............................. 225 2
------------
BUILDING MATERIALS CHAINS -- 0.6%
Centex Construction Products, Inc.......... 6,600 195,525
------------
CATALOG/OUTLET STORES -- 0.5%
Lands' End, Inc............................ 4,900 150,981
------------
CLOTHING CHAINS -- 2.8%
Burlington Coat Factory, Inc............... 8,900 188,013
Ross Stores, Inc........................... 11,400 389,025
TJX Companies, Inc......................... 9,200 281,175
------------
858,213
------------
COAL MINING -- 0.2%
Zeigler Coal Holding Co.................... 2,700 63,112
------------
COMPUTERS/OFFICE AUTOMATION -- 6.0%
Compaq Computer Corp. *.................... 5,750 429,812
Creative Tecchnology Ltd. *................ 5,600 143,150
Dell Computer Corp. *...................... 4,600 445,625
EMC Corp. *................................ 4,400 256,850
Quantum Corp. *............................ 7,000 268,187
Western Digital Corp. *.................... 7,200 288,450
------------
1,832,074
------------
CONTRACT DRILLING -- 3.3%
Cliff's Drilling Co. *..................... 4,400 306,350
Global Marine, Inc. *...................... 11,100 369,075
Marine Drilling Co., Inc. *................ 10,700 334,375
------------
1,009,800
------------
DEPARTMENT/DISCOUNT STORES -- 2.3%
Family Dollar Stores, Inc.................. 9,600 219,000
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
DEPARTMENT/DISCOUNT STORES (CONTINUED)
<TABLE>
<S> <C> <C>
MacFrugals Bargains Close-Outs, Inc. *..... 6,800 $ 207,400
Shopko Stores, Inc......................... 6,500 169,000
Woolworth Corp............................. 4,300 95,137
------------
690,537
------------
ELECTRONIC INSTRUMENTS -- 1.4%
Avid Technology, Inc. *.................... 6,900 224,250
Orbotech, Ltd.............................. 3,700 213,675
------------
437,925
------------
FINANCE COMPANIES -- 1.5%
Green Tree Financial Corp.................. 1,500 70,500
MBNA Corp.................................. 3,100 125,550
Student Loan Marketing Association......... 1,800 278,100
------------
474,150
------------
GROCERY PRODUCTS -- 2.0%
Dean Foods Corp............................ 4,000 185,000
Interstate Bakeries Corp................... 3,800 260,537
Smithfield Foods, Inc. *................... 6,000 180,000
------------
625,537
------------
HOME FURNISHINGS -- 1.8%
Bed Bath and Beyond, Inc. *................ 1,500 52,687
Ethan Allen Interiors, Inc................. 8,800 272,800
Furniture Brands International, Inc. *..... 11,200 211,400
------------
536,887
------------
HOSPITALS -- 0.2%
Health Management Associates, Inc. -- Class
A *...................................... 1,700 53,762
------------
INVESTMENT COMPANIES -- 0.4%
Bear Stearns Co............................ 2,820 124,080
------------
LIFE INSURERS -- 0.2%
Conseco, Inc............................... 1,400 68,337
------------
MANAGED HEALTHCARE/HMO'S/PPO'S -- 0.9%
Oxford Health Plan, Inc. *................. 3,800 284,525
------------
METALS -- 0.5%
Bethlehem Steel Corp....................... 15,500 159,844
------------
MILITARY/DEFENSE TECHNOLOGY -- 0.8%
Rohr, Inc. *............................... 7,900 244,406
------------
MONEY-CENTER BANKS -- 0.8%
North Fork Bancorporation, Inc............. 8,000 232,000
------------
MULTI-LINE INSURERS -- 0.6%
Torchmark Corp............................. 5,000 196,250
------------
OILFIELD SERVICES/EQUIPMENT -- 4.8%
Camco International, Inc................... 4,700 327,825
Cooper Cameron Corp. *..................... 4,400 315,975
EVI, Inc................................... 4,600 294,400
Rowan Cos., Inc. *......................... 2,900 103,313
Tidewater, Inc............................. 2,200 130,350
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
34
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
OILFIELD SERVICES/EQUIPMENT (CONTINUED)
<TABLE>
<S> <C> <C>
Varco International, Inc. *................ 5,900 $ 286,150
------------
1,458,013
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 0.3%
Robert Half International, Inc. *.......... 2,400 99,300
------------
OTHER FINANCIAL SERVICES -- 1.1%
Sunamerica, Inc............................ 8,700 340,931
------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 0.9%
HBO & Co................................... 7,200 271,800
------------
OTHER PRODUCERS/MANUFACTURING -- 1.6%
Crane Co................................... 4,300 176,837
Herman Miller, Inc......................... 5,800 310,300
------------
487,137
------------
PAPER -- 1.1%
Fort James Corp............................ 7,300 334,431
------------
PROPERTY-CASUALTY INSURERS -- 0.8%
Orion Capital Corp......................... 5,400 244,688
------------
PUBLISHING -- 1.4%
Central Newspapers, Inc.................... 3,000 222,750
Valassis Communication, Inc................ 6,200 197,625
------------
420,375
------------
REGIONAL/COMMERCIAL BANKS -- 0.6%
Provident Financial Group.................. 3,600 170,325
------------
RESTAURANTS -- 0.7%
Foodmaker, Inc. *.......................... 11,500 216,344
------------
SAVINGS & LOAN ASSOCIATIONS -- 0.7%
Greenpoint Financial Corp.................. 3,500 221,813
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 4.4%
Altera Corp. *............................. 2,000 102,500
Dallas Semiconductor Corp.................. 4,700 210,325
Jabil Circuit, Inc. *...................... 7,400 484,700
Unitrode Corp. Commo....................... 2,500 185,313
Vitesse Semiconductor, Inc. *.............. 7,650 379,153
------------
1,361,991
------------
SOFTWARE -- 6.5%
BMC Software, Inc . *...................... 5,400 349,650
Cadence Design Systems, Inc. *............. 1,800 96,300
Compuware Corp. *.......................... 6,100 369,050
Keane, Inc. *.............................. 8,800 279,400
McAfee Associates, Inc. *.................. 6,300 333,900
Microsoft Corp. *.......................... 1,600 211,700
Peoplesoft, Inc. *......................... 5,400 322,650
------------
1,962,650
------------
SPECIALTY CHAINS -- 1.2%
Michaels Stores, Inc. *.................... 5,900 180,319
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
SPECIALTY CHAINS (CONTINUED)
<TABLE>
<S> <C> <C>
Payless Shoesource, Inc. *................. 3,000 $ 179,062
------------
359,381
------------
SPECIALTY IMPORTS -- 0.6%
Pier 1 Imports, Inc........................ 10,500 188,344
------------
TELEPHONE -- 0.6%
Airtouch Communictions, Inc. *............. 5,300 187,819
------------
TELECOMMUNICATIONS EQUIPMENT -- 2.5%
CellStar Corp. *........................... 7,600 353,400
Tekelec, Inc. *............................ 6,600 224,813
Tellabs, Inc. *............................ 3,800 195,700
------------
773,913
------------
TEXTILES -- 0.7%
Carlisle Cos., Inc......................... 4,500 199,969
------------
TOTAL COMMON STOCKS
(Cost $12,147,100)....................................... 19,402,364
------------
- ----------------------------------------------------------------------------
PREFERRED STOCK -- 0.8%
- ----------------------------------------------------------------------------
BROADCASTING -- 0.4%
Chancellor Media Corp. Series A, 12.250%
*........................................ 1,000 137,000
OTHER COMMUNICATION/INDUSTRIAL SERVICES -- 0.4%
IXC Communications, Inc. *................. 1,000 116,000
------------
TOTAL PREFERRED STOCKS
(Cost $234,000).......................................... 253,000
------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ----------------------------------------------------------------------------
CORPORATE BONDS -- 9.1%
- ----------------------------------------------------------------------------
AUTOMOBILES -- 0.3%
Chrysler Corp.
7.450%, 02/01/49......................... $ 100,000 101,344
------------
BANKS -- 0.8%
First Union Corp.
6.875%, 09/15/05......................... 225,000 226,758
------------
COMMERCIAL/INDUSTRIAL SERVICES -- 0.2%
Drypers Corp.
10.25%, 06/15/07......................... 50,000 50,375
------------
ELECTRONIC DATA PROCESSING -- 0.1%
Electronic Retailing Systems, Inc.
0.000%, 02/01/04......................... 50,000 33,500
------------
FINANCIAL SERVICES -- 3.6%
American Resource Corp. Services B
7.450%, 12/15/26......................... 225,000 232,020
Credit Suisse First Boston-London
7.900%, 04/29/49......................... 95,000 100,344
General Electric Capital Services
7.500%, 08/21/35......................... 200,000 213,770
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
35
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED GROWTH FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
<TABLE>
<S> <C> <C>
Hartford Life, Inc.
7.650%, 06/15/27......................... $ 125,000 $ 130,425
Ocwen Financial Corp.
11.875%, 10/01/03........................ 75,000 84,094
Resource America, Inc.
12.000%, 08/01/04........................ 50,000 52,250
Signature Resorts, Inc.*
9.750%, 10/01/07......................... 100,000 101,000
Suntrust Capital II
7.900%, 06/15/27......................... 200,000 204,640
------------
1,118,543
------------
INDUSTRIAL ENGINEERING/CONSTRUCTION -- 1.1%
Cox Communications Inc
6.690%, 09/20/04......................... 125,000 124,406
Highway Master Comm
13.750%, 09/15/05........................ 75,000 78,750
Musicland Group
9.000%, 06/15/03......................... 150,000 135,000
------------
338,156
------------
MISCELLANEOUS ASSETS -- 0.4%
Arauco
6.950%, 09/15/06......................... 125,000 124,538
------------
MONEY-CENTER BANKS -- 0.5%
ABN Amro Bank NV
7.125%, 06/18/07......................... 150,000 153,797
------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 0.7%
Associated Materials, Inc.
11.500%, 08/15/03........................ 100,000 106,750
Interlake Corp.
12.125%, 03/01/02........................ 100,000 104,500
------------
211,250
------------
RENTAL/LEASING COMPANIES -- 0.4%
Railcar Leasing LLC
7.125%, 01/15/13......................... 125,000 128,438
------------
RESTAURANTS -- 0.2%
Foodmaker, Inc. *
9.250%, 03/01/99......................... 71,000 72,864
------------
TELEPHONE -- 0.8%
Bellsouth Cap.
7.120%, 07/15/47......................... 100,000 100,000
Nextel Communications, Inc. Sr. Disc. Notes
0.000%, 09/01/03......................... 150,000 145,500
------------
245,500
------------
TOTAL CORPORATE BONDS
(Cost $2,743,504)........................................ 2,805,063
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
FOREIGN BONDS -- 6.1%
- ----------------------------------------------------------------------------
AUSTRALIAN -- 1.3%
Australian Government
9.500%, 08/15/03......................... $ 475,000 $ 406,877
------------
CANADIAN -- 0.8%
Canadian Government
6.250%, 09/15/98......................... 310,000 228,468
------------
DENMARK -- 1.6%
Kingdom of Denmark
8.000%, 11/15/01......................... 730,000 120,108
Kingdom of Denmark
8.000%, 05/15/03......................... 2,250,000 376,516
------------
496,624
------------
GERMAN -- 2.4%
Global Federal National Mortgage
Association
5.000%, 02/16/01......................... 1,300,000 742,248
------------
TOTAL FOREIGN BONDS
(Cost $1,905,029)........................................ 1,874,217
------------
- ----------------------------------------------------------------------------
CMO'S AND ASSET BACKED SECURITIES -- 4.7%
- ----------------------------------------------------------------------------
BANKS -- 0.4%
Bank Boston Marine Trust
6.570%, 11/15/09......................... 120,000 120,563
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 2.4%
Federal National Mortgage Association
6.500%, 06/25/23......................... 350,000 345,516
Federal National Mortgage Association
6.500%, 07/25/23......................... 400,000 386,500
------------
732,016
------------
FINANCE COMPANIES -- 0.7%
Standard Credit Card Master Trust
5.900%, 02/07/01......................... 200,000 199,813
------------
FINANCIAL SERVICES -- 1.2%
EQCC Home Equity Loan Trust
6.470%, 08/15/10......................... 255,000 255,956
Honda Auto Receivables Corp. Grantor Trust
5.850%, 02/15/03......................... 55,889 55,854
Signet Credit Card Master Trust
5.400%, 02/15/02......................... 65,000 64,533
------------
376,343
------------
TOTAL CMO'S AND ASSET BACKED SECURITIES
(Cost $695,161).......................................... 1,428,735
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
36
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 13.4%
- ----------------------------------------------------------------------------
U.S. TREASURY BONDS -- 3.9%
10.625%, 08/15/15.......................... $ 205,000 $ 295,272
6.625%, 02/15/27........................... 890,000 911,502
------------
1,206,774
------------
U.S. TREASURY NOTES -- 9.5%
5.625%, 11/30/98........................... 400,000 399,676
6.250%, 03/31/99........................... 75,000 75,553
6.375%, 03/31/01........................... 780,000 790,085
6.250%, 01/31/02........................... 1,480,000 1,493,779
7.875%, 11/15/04........................... 130,000 142,997
------------
2,902,090
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $4,046,890)........................................ 4,108,864
------------
- ----------------------------------------------------------------------------
MUTUAL FUND -- 1.7%
- ----------------------------------------------------------------------------
Blackrock 2001 Term
(Cost $505,050).......................... 60,000 510,000
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.4%
- ----------------------------------------------------------------------------
J.P. Morgan & Co., Inc.
6.250%, 10/01/97
(Cost $430,000).......................... $ 430,000 $ 430,000
------------
- ----------------------------------------------------------------------------
WARRANTS -- 0.0%
- ----------------------------------------------------------------------------
ELECTRONIC INSTRUMENTS -- 0.0%
Electronic Retailing Systems, Inc.
(Cost $2,036)............................ 50 3,000
------------
TOTAL INVESTMENTS -- 100.5%
(Cost $23,395,200)....................................... 30,815,243
LIABILITES IN EXCESS OF ASSETS -- (0.5%)................... (147,344)
------------
NET ASSETS -- 100.0%....................................... $ 30,667,899
------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
37
<PAGE>
EMERGING COUNTRIES FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic Portfolio
Management and Research
Pedro V. Marcal,
Senior Portfolio Manager
Aaron M. Harris,
Portfolio Manager
Eswar Menon,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior Portfolio Manager
Jon Borchardt,
Assistant Portfolio Manager
Jessica Hilinski,
Assistant Portfolio Manager
Aylin Uckunkaya,
Investment Analyst
GOAL: The Emerging Countries Fund seeks to provide long-term capital
appreciation through investing in companies of developing countries around the
world.
REVIEW AND OUTLOOK: The Emerging Countries Fund delivered outstanding results
during the period April 1 through September 30, 1997 based on the strength of
stock selection. Notwithstanding the currency market debacle that sent equity
prices lower in South East Asia, the Fund rose 19.3%, while its benchmark, the
MSCI Emerging Markets Free Index, declined 1.2%.
Applying our bottom-up approach, we select stocks based on their potential to
benefit from positive changes in some of the world's fastest developing
countries.
Due to the currency turmoil in the region, few stocks met our investment
criteria in South East Asia. The Fund was underweighted in the region relative
to the benchmark. During the period, we continued to pick stocks that are poised
to grow despite the unfavorable economic environment, such as export-oriented
companies that generate their revenues in U.S. dollars. For example, we own PT
Daya Guna Samudera, Indonesia's largest fully-integrated fishing company which
exports its products. The company generates 95% of its revenues in U.S. dollars
and is a direct beneficiary of the rupiah's devaluation.
Another solid performer was Peak International, a Hong Kong-based
precision-packaging materials producer with manufacturing facilities in China.
The company is a leading low-cost provider of protective packages used for
shipping integrated circuits.
Our overweighting in Latin America relative to the benchmark was a major
factor contributing to the Fund's gains in the period. We identified companies
in the region benefiting from the ongoing trend toward privatization,
deregulation, and infrastructure development. Companies including steel producer
Siderugica Venezola benefited from Venezuela's infrastructure recovery. In
Mexico, entertainment firm Corporacion Interamericana de Entretenimiento was a
strong performer as the company continues to benefit from a consumer-led
economic recovery.
Eastern European stocks also performed well in the period. Gedeon Richter, a
Hungarian pharmaceutical company, and the Portuguese cement company, Cimpor
Cimentos, contributed significantly to the Fund's performance.
REPRESENTATIVE HOLDINGS
Banco Bradesco SA, Brazil
CIA Energetica De Minas, Brazil
Corporacion Interamericana de Entretenimiento, Mexico
Disco SA, Argentina
Ferreyros SA, Peru
Gedeon Richter, Hungary
Gulf Indonesia Resources, Indonesia
Nice Systems, Israel
NIIT, India
Peak International, China
- --------------------------------------------------------------------------------
38
<PAGE>
EMERGING COUNTRIES INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING COUNTRIES INSTITUTIONAL PORTFOLIO WITH THE MSCI EMERGING MARKETS FREE
INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
32.93% As of 09/30/97 20.25%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING COUNTRIES MSCI EMF
INSTITUTIONAL
PORTFOLIO INDEX
<S> <C> <C>
28-Nov-94 $ 250,000.00 $ 250,000.00
31-Dec-94 $ 237,014.39 $ 218,040.00
31-Mar-95 $ 218,397.55 $ 190,998.80
30-Jun-95 $ 251,427.43 $ 210,822.59
30-Sep-95 $ 267,041.55 $ 209,469.00
31-Dec-95 $ 253,510.76 $ 206,645.60
31-Mar-96 $ 281,857.34 $ 219,517.82
30-Jun-96 $ 310,807.03 $ 228,680.27
30-Sep-96 $ 317,441.35 $ 220,416.86
31-Dec-96 $ 324,696.06 $ 219,117.48
31-Mar-97 $ 353,679.52 $ 237,659.83
30-Jun-97 $ 406,782.12 $ 257,998.91
30-Sep-97 $ 421,983.24 $ 234,867.12
</TABLE>
This graph compares a $250,000 investment in the Emerging Countries
Institutional Portfolio with the MSCI Emerging Markets Free Index ("EMF"), on a
cumulative and average annual total return basis. All return calculations
reflect the reinvestment of income dividends and capital gains distributions, if
any, as well as all fees and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The MSCI EMF is a market capitalization weighted index composed of companies
representative of the market structure of 22 Emerging Market countries in
Europe, Latin America, and the Pacific Basin. The Index excludes closed markets
and those shares in otherwise free markets which are not purchasable by
foreigners.
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 guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
39
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
EMERGING COUNTRIES FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
COMMON STOCKS -- 94.7%
- --------------------------------------------------------------------------
ARGENTINA -- 5.6%
Banco de Galicia Y Buenos Aires S.A. de
C.V. -- ADR.............................. 22,700 $ 672,487
Banco Frances del Rio de la Plata S.A. --
ADR...................................... 29,600 967,550
Disco S.A. -- ADR*......................... 37,400 1,720,400
Perez Companc S.A.......................... 352,274 2,828,762
Siderar S.A.I.C. -- A...................... 342,836 1,902,740
Siderca S.A. -- A.......................... 1,306,714 3,920,141
YPF Sociedad Anonima -- ADR................ 75,300 2,776,687
-------------
14,788,767
-------------
BRAZIL -- 10.4%
Banco Brasileiro de Decontos SA............ 60,528,000 629,924
Centrais Eletricas Brasileiras S.A. --
ADR...................................... 137,700 3,827,234
Companhia Energetica de Minas Gerais PN.... 85,715,000 4,710,647
Companhia Energetica de Sao Paulo -- ADR... 22,000 548,196
Companhia Energetica de Sao Paulo -- SP
ADR...................................... 28,000 697,704
Companhia Paulista de Forca de Luz......... 13,614,700 2,423,650
Compania Riograndense Telecom PFA.......... 741,000 968,022
Ericsson Telecomunicacoes SA............... 29,024,000 1,391,054
Petroleo Brasiliero S.A. -- ADR............ 134,800 3,789,767
Telecomunicacoes Brasileiras SA -- ADR..... 29,229 3,763,234
Telecomunicacoes de Sao Paulo SA --
Preferred................................ 6,299,966 1,926,683
Telecomunicacoes do Parana SA --
Preferred................................ 2,643,628 1,954,846
Uniao de Bancos Brasileiros S.A. -- GDR.... 22,400 820,400
-------------
27,451,361
-------------
CHILE -- 4.3%
Chilgener S.A. -- ADR...................... 93,493 2,565,214
CIA de Telecomunicaciones de Chile S.A. --
ADR...................................... 30,300 980,963
Compania Cervecerias Unidos S.A. -- ADR.... 100,400 2,886,500
Enersis S.A. -- ADR........................ 48,200 1,786,412
Laboratorio Chile -- ADR................... 62,200 1,671,625
Vina Concha y Toro S.A. -- ADR............. 42,000 1,296,750
-------------
11,187,464
-------------
CHINA -- 4.4%
Beijing Datang Power Generation Co.,
Ltd.*.................................... 2,242,000 1,260,364
China Merchants Holdings International Co.,
Ltd...................................... 606,000 1,401,835
China Resources Enterprise Ltd............. 286,000 1,197,519
Chongqing Changan Automobile Co., Ltd...... 88,500 42,660
Guangdong Kelon Electric Holdings.......... 445,000 575,084
Hutchison Whampoa Ltd...................... 30,000 295,619
Kowloon Motor Bus Co., Ltd................. 695,900 1,861,609
Peak International Ltd..................... 62,800 1,499,350
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
</TABLE>
CHINA (CONTINUED)
<TABLE>
<S> <C> <C>
Qingling Motors Co......................... 163,000 $ 103,218
Shanghai Industrial Holdings Ltd........... 298,000 1,852,391
Zhejiang Southeast Electric Power Co.,
Ltd...................................... 3,741,000 1,346,760
-------------
11,436,409
-------------
COLOMBIA -- 0.5%
Banco Ganadero S.A. -- ADR................. 43,400 1,253,175
-------------
EGYPT -- 2.4%
Al-Ahram Beverages Co. S.A.E. -- GDR....... 2,600 81,900
Al-Ahram Beverages Co. S.A.E. -- GDR
144A*.................................... 43,000 1,354,500
Ameriya Cement Co.......................... 42,498 1,058,244
Arabian International Construction Co...... 29,500 697,194
Commercial International Bank of Egypt --
GDR*..................................... 53,100 1,274,400
Commercial International Bank of Egypt --
SP GDR*.................................. 3,000 72,000
Helwan Portland Cement Co.................. 19,800 428,873
Paints & Chemical Industries -- GDR
144A*.................................... 110,200 1,283,830
-------------
6,250,941
-------------
GREECE -- 3.4%
Aktor S.A.................................. 113,640 1,471,747
Attica Enterprises S.A..................... 111,200 1,394,332
Hellenic Technodomiki S.A.................. 120,800 1,614,244
Sarantis S.A............................... 88,960 1,144,149
Titan Cement Co. S.A....................... 22,600 1,364,275
Titan Cement Co. S.A. -- Preferred......... 39,600 1,857,070
-------------
8,845,817
-------------
HUNGARY -- 3.0%
Danubius Hotel and Spa Rt.................. 6,500 210,113
Gedeon Richter Rt.......................... 42,491 4,509,427
Gedeon Richter -- GDR 144A*................ 5,300 562,314
Graboplast Rt.............................. 12,560 743,104
Matav Rt................................... 1,439 619,718
Mol Magyar Olaj-Es Gazipari Rt............. 52,300 1,147,624
Tigaz Rt................................... 27,400 191,048
-------------
7,983,348
-------------
INDIA -- 6.6%
Bharat Heavy Electricals Ltd............... 45,000 450,995
BSES Ltd. -- GDR*.......................... 42,000 866,250
BSES Ltd. -- GDR 144A*..................... 30,000 618,750
Hindalco Industries Ltd. -- ADR............ 24,900 862,162
Hindalco Industries Ltd. -- GDR............ 53,200 1,842,050
ITC Limited -- GDR......................... 66,200 1,340,550
ITC Limited -- 144A*....................... 20,500 415,125
Larsen & Toubro Ltd. -- GDR................ 3,100 40,300
Larsen & Toubro Ltd. -- GDR Reg S.......... 21,500 279,500
Mahindra & Mahindra Ltd. -- ADR............ 12,500 146,875
Mahindra & Mahindra Ltd. -- GDR*........... 64,000 752,000
NIIT Ltd................................... 128,000 2,179,043
Oriental Bank of Commerce Ltd.............. 418,000 745,397
Punjab Tractors Ltd........................ 25,000 489,356
Reliance Industries -- GDR................. 55,600 1,275,325
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
40
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
INDIA (CONTINUED)
<TABLE>
<S> <C> <C>
State Bank of India Ltd.................... 125,000 $ 956,421
State Bank of India -- ADR................. 63,600 1,478,700
State Bank of India -- GDR*................ 38,000 883,500
Videsh Sanchar Nigam Ltd. -- GDR*.......... 3,000 50,625
Videsh Sanchar Nigam Ltd. -- GDR 144A*..... 99,000 1,670,625
-------------
17,343,549
-------------
INDONESIA -- 0.5%
PT Bank Bira TBK -- Foreign................ 660,000 191,802
PT Daya Guna Samudera -- Foreign........... 600,000 1,000,306
PT Indofood Sukses Makmur -- Foreign....... 25,200 30,642
-------------
1,222,750
-------------
ISRAEL -- 7.6%
Bank Leumi Le-Israel....................... 1,176,000 1,935,233
Elbit Systems Ltd.......................... 92,100 1,266,375
Formula Systems (1985) Ltd................. 111,406 3,388,253
Gilat Satellite Networks Ltd.*............. 76,900 2,836,889
Makhteshim Chemical Works Ltd.............. 186,414 1,287,552
New Dimension Software Ltd................. 51,900 1,070,438
NICE-Systems Ltd. -- ADR*.................. 45,900 2,581,875
Tecnomatix Technologies Ltd.*.............. 65,500 2,505,375
Tefron Ltd................................. 36,600 732,000
Teledata Communications Ltd.*.............. 38,800 1,750,850
Teva Pharmaceutical Industries Ltd. --
ADR...................................... 13,000 724,750
-------------
20,079,590
-------------
KOREA -- 2.7%
Housing & Commercial Bank of Korea......... 310 5,327
LG Information & Communication Ltd......... 9,844 956,200
LG Semiconductor Co........................ 36,000 1,216,991
Pohang Iron & Steel Co..................... 23,520 1,886,040
Pohang Iron & Steel Co., Ltd. -- ADR....... 3,700 95,275
Samsung Electronics Co..................... 23,222 2,339,022
SK Telecom Co., Ltd........................ 10,570 648,516
-------------
7,147,371
-------------
MEXICO -- 14.8%
Alfa SA de C.V............................. 447,000 4,245,637
Cemex S.A. de C.V. -- B.................... 421,800 2,508,000
Cifra S.A. de C.V. -- A.................... 1,242,859 2,719,254
Cifra S.A. de C.V. -- B.................... 1,399 3,284
Cifra S.A. de C.V. -- C.................... 97,200 210,162
Coca-Cola Femsa S.A. -- ADR................ 23,000 1,335,438
Consorcio ARA S.A. de C.V.*................ 228,000 947,799
Corparacion Geo S.A. de C.V. -- B*......... 173,097 1,076,008
Corporacion Interamericana de
Entertenimiento S.A.*.................... 1,052,600 6,367,079
Fomento Economico Mexicano
S.A. -- B................................ 308,000 2,655,856
Grupo S.A. de C.V. -- B.................... 533,000 120,731
Grupo Cementos de Chihuahua S.A. de C.V.... 1,400,000 1,917,117
Grupo Elektra S.A. de C.V.................. 174,900 2,827,212
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
</TABLE>
MEXICO (CONTINUED)
<TABLE>
<S> <C> <C>
Grupo Financiero Bancomer S.A. de C.V...... 2,508,600 $ 1,711,143
Grupo Modelo S.A. de C.V................... 276,600 2,616,487
Organizacion Soriana S.A. de C.V. -- B..... 671,500 2,679,086
Pasteleria Francesa S.A.................... 2,744,000 1,151,279
Pepsi-Gemex S.A. -- GDR.................... 82,100 1,400,831
TV Azteca S.A. de C.V. -- ADR*............. 111,000 2,497,500
-------------
38,989,903
-------------
PAKISTAN -- 0.7%
Hub Power Co.*............................. 635,000 849,648
Pakistan State Oil Co., Ltd................ 54,970 573,198
SUI Northern Gas Pipelines*................ 465,750 371,726
-------------
1,794,572
-------------
PERU -- 1.4%
Cementos Lima S.A.......................... 54,400 1,107,308
Cementos Norte Pacasmayo S.A............... 1 1
Cervecercia Backus & Johnston S.A.......... 1,339,704 1,320,229
Enrique Ferreyros S.A...................... 532,598 583,173
Luz del Sur Servicios S.A. -- B............ 480,800 584,548
-------------
3,595,259
-------------
PHILIPPINES -- 0.9%
Metropolitan Bank & Trust Co............... 1,437 12,996
Music Corporation*......................... 5,155,000 2,312,169
Selecta Dairy Products, Inc................ 50,000 2,941
-------------
2,328,106
-------------
POLAND -- 2.4%
Amica Wronki S.A........................... 64,100 1,295,139
Debica S.A................................. 44,000 1,281,991
Elektrim Spolka Akcyjna S.A................ 125,800 1,410,876
Okocimskie Zaklady Piwowarskie S.A......... 52,200 320,996
Polish National Investment Fund............ 30,200 1,277,862
Zaklady Przemyslu Cukierniczego Jutrzenka
S.A...................................... 26,700 664,568
-------------
6,251,432
-------------
PORTUGAL -- 3.3%
BPI-SGPS, SA............................... 49,000 1,115,573
Cimpor-Cimentos de Portugal, SGPS, SA...... 95,900 2,592,079
Portugal Telecom SA........................ 112,475 4,878,261
-------------
8,585,913
-------------
RUSSIA -- 4.1%
First NIS Regional Fund.................... 15,000 292,500
Kubanelectrosvyaz.......................... 43,700 937,365
Kuzbassenergo.............................. 932,000 745,600
Lukoil Holding -- ADR...................... 15,400 1,512,665
Moscow City Tele Network -- RDC 144A*...... 554 1,301,900
Tatneft -- ADR 144A*....................... 11,700 1,858,440
Unified Energy Systems -- GDR.............. 6,159,000 2,463,600
Vimpel Communications -- ADR*.............. 39,300 1,640,775
-------------
10,752,845
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
41
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING COUNTRIES FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SINGAPORE -- 2.4%
Advanced Systems Automation Ltd............ 383,000 $ 1,096,646
Creative Technology Ltd.................... 87,000 2,223,938
Datacraft Asia Ltd......................... 292,500 930,150
Elec & Eltek International Co., Ltd........ 160,000 1,408,000
Parkway Holdings Ltd....................... 188,000 761,979
-------------
6,420,713
-------------
SOUTH AFRICA -- 2.3%
ABSA Group Ltd............................. 99,300 676,489
Barlow Ltd................................. 84,800 968,909
Bidvest Group Ltd.......................... 41,086 334,999
Dimension Data Holdings Ltd.*.............. 263,000 1,100,418
First SA Food Holdings Ltd................. 640,200 695,078
First South Africa Corp., Ltd.............. 62,500 546,875
Liberty Life Association of Africa Ltd..... 330 9,630
Meikles Africa Ltd......................... 30,000 65,250
South African Breweries Ltd.*.............. 59,334 1,721,902
-------------
6,119,550
-------------
SRI LANKA -- 0.7%
Ceylon Brewery Ltd......................... 125,700 158,180
John Keells Holdings Ltd................... 238,000 1,357,718
National Development Bank.................. 82,000 364,597
-------------
1,880,495
-------------
TAIWAN -- 2.1%
ASE Test Ltd.*............................. 30,500 2,584,875
China Steel Co. -- GDR*.................... 33,825 680,728
Compal Electronics Inc..................... 98,800 352,364
ROC Taiwan Fund*........................... 45,000 545,625
Siliconware Precision Industries -- GDR.... 21,200 377,572
Siliconware Precision Industries -- SP
GDR...................................... 39,000 694,590
Taiwan Fund Inc............................ 14,450 366,669
-------------
5,602,423
-------------
TURKEY -- 2.8%
Akbank T.A.S............................... 17,500,000 1,353,093
Aksa Akrilik Kimya Sanayii A.S............. 15,010,000 1,482,947
Aksigorta A.S.............................. 5,813,000 391,196
Brisa Bridgestone Sabanci Lastik San Ve Tic
A.S...................................... 3,066,000 1,352,131
Haci Omer Sabanci Holding A.S.*............ 27,321,000 1,204,878
Vestel Elektronik Sanayi Ve Ticaret A.S.... 16,173,000 1,482,062
-------------
7,266,307
-------------
UNITED KINGDOM -- 0.3%
Billiton PLC............................... 174,200 671,678
-------------
UNITED STATES OF AMERICA -- 1.3%
800-Jr Cigar, Inc.* 17,800 623,000
Comverse Technology, Inc.*................. 21,000 1,107,750
Harken Energy Corp.*....................... 258,900 1,650,487
-------------
3,381,237
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
VENEZUELA -- 3.8%
Bancaracas Mercados de Capitales S.A....... 541,705 $ 837,576
Banco Provincial S.A....................... 334,326 728,401
C.A. La Electricidad de Caracas S.A.C.A.... 810,833 1,305,799
Compania Anonima Nacional Telefonos de
Venezuela -- ADR......................... 27,600 1,262,700
Corimon C.A. S.A.C.A....................... 35,445,000 1,088,973
Corimon C.A. S.A.C.A. -- ADR............... 21,300 163,744
Corporacion Venezolana de Cementos
S.A.C.A.................................. 311,133 724,727
Siderurgica Venezolana Sivensa, Saica
S.A.C.A. -- ADR.......................... 436,100 2,568,193
Sudamtex de Venezuela -- 144A*............. 77,350 1,242,473
-------------
9,922,586
-------------
TOTAL COMMON STOCKS
(Cost $216,724,814)..................................... 248,553,561
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- --------------------------------------------------------------------------
CORPORATE BONDS -- 0.2%
- --------------------------------------------------------------------------
UNITED STATES OF AMERICA
Siliconware Precision Industries
(Cost $610,000)
0.500%, 7/21/2004........................ $ 610,000 652,700
-------------
- --------------------------------------------------------------------------
COMMERCIAL PAPER -- 5.5%
- --------------------------------------------------------------------------
Associates Corp. of North America
6.370%, 10/01/1997....................... 12,964,000 12,964,000
J.P. Morgan & Co., Inc.
6.250%, 10/01/1997....................... 1,581,000 1,581,000
-------------
TOTAL COMMERCIAL PAPER
(Cost $14,545,000)...................................... 14,545,000
-------------
<CAPTION>
NUMBER
OF SHARES
<S> <C> <C>
- --------------------------------------------------------------------------
RIGHTS/WARRANTS -- 0.1%
- --------------------------------------------------------------------------
HONG KONG -- 0.1%
Guangnan Holdings -- Warrants
(Cost $3,872)............................ 84,857 35,092
-------------
TOTAL INVESTMENTS -- 100.5%
(Cost $231,883,686)..................................... 263,786,353
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5%)...........
(1,302,072)
-------------
NET ASSETS -- 100%........................................ $ 262,484,281
-------------
</TABLE>
- ---------------
* Non-Income Producing Security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
42
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
EMERGING COUNTRIES FUND
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Alcoholic Beverages......................... 5.4%
Apparel..................................... 0.3
Automotive.................................. 0.4
Automotive Equipment........................ 1.0
Beverages/Soft Drinks....................... 1.2
Broadcasting................................ 0.9
Building Materials.......................... 6.2
Chemicals................................... 1.0
Closed End/Country Funds.................... 0.9
Computers/Office Automation................. 1.4
Consumer Electrical......................... 0.8
Department/Discount Stores.................. 2.2
Drugs/Pharmaceuticals....................... 2.8
Electric Utilities.......................... 10.1
Electronics/Music Chains.................... 1.6
Entertainment............................... 2.4
Finance Companies........................... 1.1
Food Chains................................. 1.4
Gas Pipelines............................... 0.1
Gas Utilities............................... 0.1
Grocery Products............................ 1.1
Homebuilding................................ 0.4
Industrial Engineering/Construction......... 1.7
Integrated Oil Companies.................... 3.6
Investment Companies........................ 0.4
Life Insurers............................... 0.0
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Lodging..................................... 0.1%
Machinery/Equipment......................... 1.4
Metals...................................... 4.5
Miliary/Defense............................. 0.5
Money Center Banks.......................... 0.8
Oil/Gas Production.......................... 2.6
Other Commercial/Industrial Services........ 1.3
Other Consumer Non-Durables................. 0.7
Other Consumer Services..................... 0.4
Other Energy................................ 0.3
Other Production/Manufacturing.............. 4.7
Other Transportation........................ 1.2
Property-Casualty Insurance................. 0.1
Real Estate Development/Investment.......... 0.9
Regional/Commercial Banks................... 5.3
Semiconductors/Electric Companies........... 3.6
Soaps/Cosmetics............................. 0.4
Software.................................... 3.5
Telecommunication Equipment................. 3.7
Telecommunication Services.................. 1.9
Telephone................................... 6.7
Textiles.................................... 1.0
Tobacco Products............................ 0.9
Short Term Obligations...................... 5.5
Liabilities in Excess of Other Assets....... (0.5)
-----
NET ASSETS.................................. 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
43
<PAGE>
INTERNATIONAL SMALL CAP GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic Portfolio
Management and Research
Melisa Grigolite,
Portfolio Manager
Aaron Harris,
Portfolio Manager
Pedro V. Marcal,
Senior Portfolio Manager
Eswar Menon,
Portfolio Manager
Loretta J. Morris,
Senior Portfolio Manager
Alex Muromcew,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior Portfolio Manager
John Tribolet,
Investment Analyst
GOAL: The International Small Cap Growth Fund seeks to maximize long-term
capital appreciation through investment in a portfolio of equity securities
primarily of small non-U.S. companies.
REVIEW AND OUTLOOK: The International Small Cap Growth Fund delivered strong
results for the period April 1 through September 30, 1997, outperforming its
benchmark, the Salomon EPAC/EMI (Europe Pacific Australasia Composite/Extended
Market Index), on the strength of its superior stock selection. The Fund
advanced 21.0% versus a 1.3% increase for the benchmark.
Nicholas-Applegate invests for the International Small Cap Fund utilizing our
bottom-up method of selecting the stocks of smaller-sized companies based on
their potential to benefit from positive changes in countries around the world.
The Fund's strong performance during the period can be attributed primarily to
holdings in the technology sector.
In the Netherlands, ASM Lithography and Baan, companies expected to benefit
from the robust growth in the technology industry, were among the
best-performing holdings in the Fund. ASM Lithography is forecast to enjoy
continued progress as it participates in a consortium of leading technology
firms that will develop lithography tools designed to support the next
generation of computer equipment.
Ibiden, a producer of next-generation plastic packages for Intel
microprocessors, was one of the Fund's top-performing holdings in Japan. The
company is a direct beneficiary of Intel's continued strong growth prospects.
The July 1 handover of Hong Kong to China provided many excellent
opportunities during the period. The Fund benefited from stock selection in many
"red chips," stocks of mainland Chinese companies listed in Hong Kong.
South East Asia's currency crisis presented a negative environment during the
period. However, as a result of our bottom-up approach, we virtually eliminated
our exposure to the Philippines, Malaysia, Indonesia, and Thailand prior to the
crisis and did not find stocks meeting our criteria through the end of the
period.
Despite the challenges faced by a number of the world's markets, our
International Small Cap Growth Fund continues to uncover opportunities fertile
in regions across the globe.
REPRESENTATIVE HOLDINGS
Ares-Serono, Switzerland
Petroleum Geo Services, Norway
Tomra Systems, Norway
Raision Tehtaat, Finland
Porsche, Germany
Coflexip, France
Terumo, Japan
Ibiden, Japan
Siderar, Argentina
Ryanair Hldgs, Ireland
- --------------------------------------------------------------------------------
44
<PAGE>
INTERNATIONAL SMALL CAP GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
INTERNATIONAL SMALL CAP GROWTH INSTITUTIONAL PORTFOLIO WITH THE SALOMON EPAC EMI
INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/97
1 YEAR 5 YEARS SINCE INCEPTION
32.54% 15.75% 7.94%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP SALOMON EPAC
GROWTH INSTITUTIONAL PORTFOLIO EMI INDEX
<S> <C> <C>
6-07-90 $250,000.00 $250,000.00
6-30-90 253,508.33 253,375.00
9-30-90 231,247.58 197,004.81
12-31-90 209,211.19 207,595.54
3-31-91 232,916.60 226,284.88
6-30-91 225,592.75 212,795.64
9-30-91 214,702.23 225,827.01
12-31-91 220,956.09 221,428.65
3-31-92 222,705.65 199,182.45
6-30-92 225,491.10 208,235.89
9-30-92 215,074.36 197,668.92
12-31-92 199,945.80 187,284.92
3-31-93 206,967.85 214,853.78
6-30-93 258,884.82 236,985.21
9-30-93 272,863.17 252,308.97
12-31-93 238,402.04 244,111.79
3-31-94 279,780.70 267,336.25
6-30-94 279,984.47 278,219.91
9-30-94 294,452.37 275,454.43
12-31-94 279,984.47 267,145.81
3-31-95 259,723.33 265,142.37
6-30-95 277,882.19 264,344.48
9-30-95 289,236.98 274,867.89
12-31-95 285,933.80 279,947.91
3-31-96 300,952.43 295,856.35
6-30-96 330,318.73 309,413.14
9-30-96 322,612.69 301,482.61
12-31-96 346,843.24 298,064.13
3-31-97 361,267.00 292,165.66
6-30-97 409,436.85 313,224.92
9-30-97 437,242.05 295,996.76
</TABLE>
This graph compares a $250,000 investment in the International Small Cap Growth
Institutional Portfolio with the Salomon EPAC EMI Index, on a cumulative and
average annual total return basis. All return calculations reflect the
reinvestment of income dividends and capital gains distributions, if any, as
well as all fees and expenses. Performance results reflect the total returns of
a predecessor limited partnership managed by Nicholas-Applegate Capital
Management prior to the effective date of the Portfolio's registration statement
which was 12/31/93. Limited partnership returns are restated to reflect all fees
and expenses applicable to the Portfolio. If the limited partnership had been
registered as an investment company under the federal securities laws, its
performance might have been adversely affected because of the additional
restrictions applicable to registered investment companies.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Salomon EPAC Extended Market Index ("EMI") is an unmanaged index. It is a
top-down, float capitalization-weighted index that includes shares of about
2,821 companies in 22 countries excluding Canada and the United States.
Companies within the Index are smaller capitalization companies with available
float market capitalizations greater than U.S. $100 million. Only issues that
are legally and practically available to outside investors are included in the
Index.
The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
45
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
INTERNATIONAL SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------
COMMON STOCKS -- 97.3%
- ---------------------------------------------------------------------------
ARGENTINA -- 2.2%
Banco Frances del Rio de la Plata
S.A.-ADR................................. 7,015 $ 229,303
Disco S.A.-ADR*............................ 8,300 381,800
Siderar-A*................................. 101,232 561,838
Siderca S.A.-A............................. 94,689 284,067
-----------
1,457,008
-----------
BELGIUM -- 0.8%
Barco N.V.................................. 2,465 516,386
-----------
BRAZIL -- 2.0%
Compania Riograndense Telecom PFA.......... 379,200 495,376
Telecomunicacoes do Parna S/A-Preferred.... 652,021 482,141
Uniao de Bancos Brasileiros S.A.-GDR....... 8,600 314,975
-----------
1,292,492
-----------
CANADA -- 5.6%
ATI Technologies, Inc.*.................... 36,000 763,186
Canadian Natural Resources Ltd.*........... 31,500 928,750
Four Seasons Hotels, Inc................... 9,500 389,500
Newcourt Credit Group, Inc ................ 23,500 883,312
Suncor Energy Inc.......................... 8,400 305,101
Yogen Fruz World Wide Inc.*................ 69,800 414,123
-----------
3,683,972
-----------
CHINA -- 0.3%
China Merchants Holdings International Co.,
Ltd...................................... 52,000 120,289
Qingling Motors Co......................... 108,000 68,390
-----------
188,679
-----------
FINLAND -- 2.7%
Huhtamaki Group............................ 6,700 263,435
Oy Nokia Ab-ADR............................ 7,100 666,069
Raision Tehtaat Oy......................... 7,300 833,481
-----------
1,762,985
-----------
FRANCE -- 8.6%
Atos (Ex-Axime) S.A.*...................... 6,500 703,295
Bertrand Faure S.A......................... 13,193 862,487
Cap Gemini Sogeti SA....................... 12,200 791,607
Coflexip S.A.-ADR.......................... 15,000 843,750
Compagnie Generale de Geophysique, SA-
ADR...................................... 32,700 895,162
Dassault Systemes SA....................... 7,300 467,515
Genset SA-ADR*............................. 27,400 578,825
Zodiac S.A................................. 2,300 552,372
-----------
5,695,013
-----------
GERMANY -- 3.8%
Pfeiffer Vacuum Technology AG-ADR*......... 14,000 434,000
Porsche AG................................. 500 865,776
Schmalbach Lubeca AG....................... 2,000 435,152
Sixt AG.................................... 5,000 478,158
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------
</TABLE>
GERMANY (CONTINUED)
<TABLE>
<S> <C> <C>
Sixt AG-Preferred*......................... 3,860 $ 279,583
-----------
2,492,669
-----------
GREECE -- 0.5%
Titan Cement Company S.A................... 5,250 316,922
-----------
HONG KONG -- 2.6%
China Aerospace Intl. Hldg. Ltd............ 261,000 173,708
CNPC Hong Kong Ltd.*....................... 450,000 258,788
Cosco International Holdings Ltd.*......... 305,200 343,143
Gitic Enterprises Ltd.*.................... 530,000 333,904
Lippo China Resources...................... 352,000 322,977
Novel Denim Holdings Ltd.*................. 14,200 383,400
-----------
1,815,920
-----------
HUNGARY -- 0.6%
Gedeon Richter-GDR 144A*................... 3,800 403,169
-----------
INDIA -- 1.0%
Hindalco Industries Ltd.-GDR............... 10,000 346,250
State Bank of India-GDR*................... 12,900 299,925
-----------
646,175
-----------
IRELAND -- 0.9%
Ryanair Holdings PLC-ADR*.................. 20,700 621,970
-----------
ISRAEL -- 0.4%
Tecnomatix Technologies Ltd.*.............. 6,400 244,800
-----------
ITALY -- 4.7%
Credito Italiano SpA....................... 253,000 684,477
La Rinascente SpA.......................... 122,000 935,770
Pininfarina SpA............................ 41,800 772,482
Telecom Italia Mobile SpA.................. 176,000 698,433
-----------
3,091,162
-----------
JAPAN -- 17.6%
Circle K Japan Co., Ltd.................... 9,600 438,912
Fuji Soft ABC Inc.......................... 25,090 827,086
Fujimi Inc................................. 8,300 493,593
Hirose Electric Ltd........................ 9,900 728,960
Ibiden Co., Ltd............................ 38,000 679,836
Keyence Corp............................... 4,300 601,897
Matsumotokiyoshi Co........................ 15,000 641,073
Meitec Corp................................ 22,000 705,181
Mitsui Toatsu Chemicals, Inc............... 200,000 308,113
Net One Systems Co., Ltd................... 6,000 357,808
Nichiei Co., Ltd........................... 6,000 571,500
NTT Data Corp.............................. 160 724,893
Orix Corp.................................. 8,600 653,895
Rohm Co., Ltd.............................. 6,000 705,678
Sumitomo Realty & Development.............. 92,000 727,709
Takeda Chemical Industries................. 24,000 719,592
Terumo Corp................................ 39,000 723,568
Tokyo Seimitsu Co., Ltd.................... 16,000 430,695
Union Tool Co.............................. 23,000 611,505
-----------
11,651,494
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
46
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
KOREA -- 0.4%
LG Information & Communication Ltd......... 2,681 $ 260,420
-----------
MEXICO -- 3.4%
Cifra S.A. de C.V.-A....................... 239,619 524,263
Cifra S.A. de C.V.-B....................... 22 52
Consorcio ARA S.A. de C.V.*................ 94,500 392,838
Corporacion Interamericana de
Entretenimiento S.A.*.................... 89,200 539,562
Organizacion Soriana S.A. de C.V.-B........ 198,800 793,153
-----------
2,249,868
-----------
NETHERLANDS -- 6.2%
ASM Lithography Holding NV*................ 10,100 1,015,532
Baan Co., NV*.............................. 10,500 757,123
Fugro NV................................... 11,000 384,152
Internatio-Muller NV....................... 22,550 727,456
Smit International NV...................... 28,000 879,353
Volker Wessels Stevin NV................... 11,140 359,372
-----------
4,122,988
-----------
NEW ZEALAND -- 0.7%
MAS Technology Ltd.-ADR*................... 19,300 439,075
-----------
NORWAY -- 3.9%
Awilco ASA................................. 50,000 696,889
Petroleum Geo-Services ASA-ADR*............ 14,800 1,000,850
Tomra Systems ASA.......................... 38,900 895,417
-----------
2,593,156
-----------
PAKISTAN -- 0.5%
Hub Power Co., Ltd.*....................... 254,000 339,859
-----------
PHILIPPINES -- 0.4%
Music Corporation*......................... 661,000 296,478
-----------
PORTUGAL -- 0.9%
Portugal Telecom SA........................ 14,400 624,556
-----------
RUSSIA -- 1.0%
Lukoil Oil Co.-ADR......................... 2,975 292,219
Vimpel-Communications-ADR*................. 9,600 400,800
-----------
693,019
-----------
SINGAPORE -- 2.8%
Datacraft Asia Ltd......................... 106,000 337,080
Electronic Resources Ltd................... 313,500 569,739
Lindeteves-Jacoberg Ltd.................... 204,000 326,731
MMI Holdings Ltd.*......................... 479,600 294,714
Sunright Ltd............................... 179,000 291,371
-----------
1,819,635
-----------
SOUTH AFRICA -- 0.5%
Dimension Data Holdings Ltd.*.............. 71,800 300,418
Liberty Life Association of Africa Ltd..... 84 2,451
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------
</TABLE>
SOUTH AFRICA (CONTINUED)
<TABLE>
<S> <C> <C>
South African Breweries Ltd.*.............. 175 $ 5,079
-----------
307,948
-----------
SPAIN -- 3.5%
Cortefiel SA............................... 13,195 559,965
Fomento De Construcciones y Contratas
S.A...................................... 4,700 724,725
Tele Pizza S.A.*........................... 14,700 1,024,940
-----------
2,309,630
-----------
SWEDEN -- 2.8%
Ortivus AB-B*.............................. 11,800 512,881
Pricer AB*................................. 24,400 710,237
Spectra Physics AB-A....................... 20,000 608,503
-----------
1,831,621
-----------
SWITZERLAND -- 4.9%
Adecco SA.................................. 1,560 627,605
Ares Serono Group.......................... 610 1,099,099
Kuoni Reisen Holdings AG................... 200 796,369
Selectra Group*............................ 5,000 725,535
-----------
3,248,608
-----------
TAIWAN -- 1.6%
ASE Test, Ltd.*............................ 10,900 923,775
Siliconware Precision Industries Co.*...... 40,600 138,409
-----------
1,062,184
-----------
TURKEY -- 1.1%
Akbank T.A.S............................... 5,250,000 405,928
Haci Omer Sabanci Holding A.S.*............ 6,937,000 305,927
-----------
711,855
-----------
UNITED KINGDOM -- 7.2%
British Aerospace PLC...................... 155 4,160
Capita Group PLC........................... 127,000 582,909
Dixons Group PLC........................... 57,200 595,211
Doncasters PLC-ADR*........................ 21,600 648,000
Dr. Solomon's Group PLC*................... 8,200 208,075
Ecsoft Group PLC-ADR*...................... 30,600 539,325
Getty Communications PLC-ADR*.............. 16,700 308,950
GKN PLC.................................... 215 4,856
Johnson Matthey PLC........................ 69,400 757,430
Next PLC................................... 41,100 481,718
Pilkington PLC............................. 249,400 631,701
-----------
4,762,335
-----------
UNITED STATES OF AMERICA -- 0.6%
Comverse Technology, Inc.*................. 7,000 369,250
-----------
VENEZUELA -- 0.6%
C.A. La Electricidad de Caracas............ 233,333 375,769
-----------
TOTAL COMMON STOCKS
(Cost $52,712,403)....................................... 64,299,070
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
47
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS -- 0.1%
- ---------------------------------------------------------------------------
SINGAPORE -- 0.1%
Lindeteves-Jacoberg Ltd. Loan Stock
07/28/2002
(Cost $25,771)........................... $ 85,000 $ 40,008
-----------
- ---------------------------------------------------------------------------
COMMERCIAL PAPER -- 0.7%
- ---------------------------------------------------------------------------
J.P. Morgan & Co., Inc.
6.250%, 10/01/1997
(Cost $478,000).......................... 478,000 478,000
-----------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------
WARRANTS/RIGHTS -- 0.2%
- ---------------------------------------------------------------------------
SINGAPORE -- 0.2%
Lindeteves-Jacoberg -- Warrants (Cost
$32,760)................................. 85,000 $ 93,352
-----------
TOTAL INVESTMENTS -- 98.3%
(Cost $53,248,934)....................................... 64,910,430
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.7%.............. 1,151,579
-----------
NET ASSETS -- 100.0%....................................... $66,062,009
-----------
</TABLE>
- ------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
48
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
INTERNATIONAL SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Aerospace................................... 1.3%
Airlines.................................... 0.9
Alcoholic Beverages......................... 0.0
Automotive.................................. 2.6
Automotive Equipment........................ 1.3
Biotechnology............................... 2.5
Building Materials.......................... 2.1
Chemicals................................... 1.6
Clothing Chains............................. 0.8
Computers/Office Automation................. 2.1
Containers.................................. 0.7
Department/Discount Stores.................. 2.0
Drugs/Pharmaceuticals....................... 0.6
Electric Utilities.......................... 1.1
Electronic Instruments...................... 3.5
Electronics/Music Chains.................... 0.9
Entertainment............................... 0.8
Finance Companies........................... 2.2
Food Chains................................. 2.2
Grocery Products............................ 1.7
Homebuilding................................ 0.6
Industrial Engineering/Construction......... 3.3
Integrated Oil Companies.................... 0.5
Investment Companies........................ 0.5
Life Insurers............................... 0.0
Lodging..................................... 0.6
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Machinery/Equipment......................... 2.8%
Medical Supplies............................ 1.9
Metals...................................... 1.8
Money Center Banks.......................... 2.0
Oil/Gas Production.......................... 2.2
Oilfield Services/Equipment................. 3.8
Other Commercial/Industrial Services........ 7.5
Other Consumer Services..................... 1.6
Other Production/Manufacturing.............. 3.5
Other Retail Trade.......................... 2.5
Other Transportation........................ 1.3
Real Estate Development/Investment.......... 2.1
Regional/Commercial Banks................... 0.9
Rental/Leasing Companies.................... 2.1
Restaurants................................. 1.6
Semiconductors/Electric Companies........... 7.2
Software.................................... 6.1
Specialty Chains............................ 1.4
Telecommunication Equipment................. 2.2
Telecommunication Services.................. 1.4
Telephone................................... 2.7
Textiles.................................... 0.6
Wholesale Distribution...................... 1.8
Short Term Obligations...................... 0.9
Other Assets in Excess of Liabilities....... 1.7
-----
NET ASSETS.................................. 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
49
<PAGE>
INTERNATIONAL CORE GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic Portfolio
Management and Research
Melisa Grigolite,
Portfolio Manager
Aaron Harris,
Portfolio Manager
Pedro V. Marcal,
Senior Portfolio Manager
Eswar Menon,
Portfolio Manager
Loretta J. Morris,
Senior Portfolio Manager
Alex Muromcew,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior Portfolio Manager
John Tribolet,
Investment Analyst
GOAL: The International Core Growth Fund seeks to maximize long-term capital
appreciation through investment in a portfolio of equity securities primarily of
larger-sized non-U.S. companies.
REVIEW AND OUTLOOK: Our International Core Growth Fund delivered outstanding
returns during the period April 1 through September 30, 1997. The Fund
registered an increase of 26.9%, far outpacing its benchmark, the MSCI EAFE/EMF
Index, up 11.7%.
Nicholas-Applegate's bottom-up stock selection approach, combined with the
Fund's underweighted position in South East Asia relative to the Index, were key
to the portfolio's strong advance during the period.
Our stock selection led us to discover companies that enjoy strong earnings
growth. One example is ASE Test, a Taiwan-based provider of circuit testing for
semiconductor manufacturers. The company, one of the Fund's best performers in
the first six months of the fiscal year, is forecast to generate increased
revenues from the expected expansion in technology spending worldwide.
In Japan, a number of holdings in the technology sector were strong
contributors to the Fund's gains. Nokia Corp., a leading supplier of
telecommunications equipment, and Minebea, a manufacturer of ball bearings for
computer keyboards, delivered solid returns.
In Hong Kong, we found many exciting opportunities as the former British-ruled
peninsula was handed over to China in July. The Fund's stock selection among
"red chips," stocks of mainland Chinese companies listed in Hong Kong, benefited
the portfolio.
South East Asia's currency crisis presented a negative environment during the
period. However, as a result of our bottom-up approach, we virtually eliminated
our exposure to the Philippines, Malaysia, Indonesia, and Thailand prior to the
crisis and did not find stocks meeting our criteria through the end of the
period.
Nicholas-Applegate believes prospects for larger-cap stocks in developed
international markets are attractive. In Europe, for example, management teams
are emulating the cost-cutting efficiencies achieved recently in the United
States. Improved earnings growth and escalating stock prices are potential
benefits of the restructuring trend.
REPRESENTATIVE HOLDINGS
ASM Lithography, Netherlands
British Aerospace, United Kingdom
Cap Gemini, France
Deutsche Bank, Germany
Ericsson, Sweden
Lloyds TSB, United Kingdom
Northern Telecom, Canada
Sony, Japan
Telecom Italia, Italy
Telecomunicacoes Brasileiras, Brazil
- --------------------------------------------------------------------------------
50
<PAGE>
INTERNATIONAL CORE GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
INTERNATIONAL CORE GROWTH INSTITUTIONAL PORTFOLIO WITH THE MSCI EAFE INDEX.
<TABLE>
<S> <C> <C>
TOTAL RETURN
SINCE INCEPTION
As of 9/30/97
43.44%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL CORE GROWTH INSTITUTIONAL
PORTFOLIO MSCI EAFE INDEX
12-27-96 $250,000.00 $250,000.00
01-31-97 274,599.99 240,743.38
<S> <C> <C>
02-28-97 277,199.99 244,691.57
03-31-97 282,599.98 245,572.46
04-30-97 286,599.99 246,873.99
05-31-97 313,199.99 262,945.49
06-30-97 331,200.00 277,433.78
07-31-97 352,400.02 281,928.21
08-31-97 334,000.01 260,868.17
09-30-97 358,600.01 275,476.79
</TABLE>
This graph compares a $250,000 investment in the International Core Growth
Institutional Portfolio with the MSCI EAFE Index, on a cumulative and average
annual total return basis. All return calculations reflect the reinvestment of
income dividends and capital gains distributions, if any, as well as all fees
and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Morgan Stanley Capital International ("MSCI") Europe, Australia, Far East
("EAFE") Index is an unmanaged index that is a generally accepted benchmark for
major overseas markets. The Index weightings represent the relative
capitalizations of the major overseas markets included 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 does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
51
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
INTERNATIONAL CORE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS -- 101.0%
- ----------------------------------------------------------------------------
ARGENTINA -- 1.8%
Banco de Galicia y Buenos Aires S.A. de
C.V. -- ADR.............................. 9,200 $ 272,550
Perez Companc SA........................... 11,077 88,945
Siderar S.A.I.C. -- A...................... 27,200 150,960
Siderca S.A. -- A.......................... 64,739 194,218
YPF Sociedad Anonima -- ADR................ 3,000 110,625
------------
817,298
------------
AUSTRALIA -- 1.6%
Colonial Ltd.*............................. 114,500 377,926
Westpac Banking Corp., Ltd.*............... 56,000 353,658
------------
731,584
------------
BELGIUM -- 0.4%
Banque Bruxelles Lambert SA................ 660 169,931
------------
BRAZIL -- 1.8%
Centrais Eletricas Brasileiras SA -- ADR... 11,300 314,072
Petroleo Brasiliero SA -- ADR.............. 8,300 233,346
Telecomunicacoes Brasileiras SA -- ADR..... 400 51,500
Uniao de Bancos Brasileiros S.A. -- GDR.... 6,200 227,075
------------
825,993
------------
CANADA -- 6.3%
ATI Technologies, Inc.*.................... 16,000 339,194
Canadian Natural Resources Ltd.*........... 21,400 630,960
Four Seasons Hotel, Inc.................... 8,000 328,000
Newbridge Networks Corp.*.................. 8,000 479,000
Newcourt Credit Group, Inc................. 13,900 522,469
Northern Telecom Ltd....................... 3,300 342,994
Suncor Energy, Inc......................... 5,700 207,033
------------
2,849,650
------------
CHILE -- 0.1%
Laboratorio Chile -- ADR................... 2,100 56,438
------------
CHINA -- 2.9%
China Resources Enterprise Ltd............. 53,000 221,918
Hutchison Whampoa Ltd...................... 42,000 413,867
Novel Demim Holdings Ltd.*................. 11,200 302,400
Qingling Motors Co......................... 279,000 176,674
Shanghai Industrial Holdings Ltd........... 32,000 198,914
------------
1,313,773
------------
FINLAND -- 2.2%
Oy Nokia Corp. AB -- ADR................... 5,250 492,516
Raision Tehtaat Oy......................... 4,200 479,537
------------
972,053
------------
FRANCE -- 6.6%
Cap Gemini Sogeti SA....................... 8,600 558,018
Compagnie Generale de Geophysique SA --
ADR...................................... 7,100 194,362
Dassault Systemes S.A...................... 5,700 365,046
Schneider SA............................... 7,000 441,813
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
FRANCE (CONTINUED)
<TABLE>
<S> <C> <C>
Elf Aquitaine SA........................... 4,600 $ 614,005
Synthelabo SA.............................. 3,400 402,258
Usinor SA.................................. 20,000 404,146
------------
2,979,648
------------
GERMANY -- 5.2%
Bayerische Motoren Werke AG................ 290 246,316
Deutsche Bank AG........................... 8,400 589,407
Deutsche Lufthansa AG...................... 19,500 383,446
Mannesmann AG.............................. 1,100 522,861
RWE AG..................................... 12,600 611,034
------------
2,353,064
------------
GREECE -- 0.5%
Titan Cement Co. S.A....................... 3,600 217,318
------------
INDIA -- 0.4%
State Bank of India -- GDR*................ 8,700 202,275
------------
IRELAND -- 1.6%
Bank of Ireland............................ 26,700 332,518
Ryanair Holdings PLC -- ADR*............... 13,300 399,623
------------
732,141
------------
ISRAEL -- 1.1%
Bank Leumi Le-Isreal....................... 50,000 82,280
New Dimension Software Ltd.*............... 8,800 181,500
Tecnomatix Technologies Ltd.*.............. 2,400 91,800
Teva Pharmaceutical Industries Ltd. --
ADR...................................... 2,200 122,650
------------
478,230
------------
ITALY -- 4.9%
Assicurazioni Generali SpA................. 19,700 445,095
Credito Italiano SpA....................... 144,600 391,207
La Rinascente SpA.......................... 35,300 270,760
Pininfarina SpA............................ 14,000 258,726
Telecom Italia Mobile SpA.................. 75,900 301,199
Telecom Italia SpA......................... 84,400 562,292
------------
2,229,279
------------
JAPAN -- 20.7%
Advantest Corp............................. 5,300 522,384
Bridgestone Corp........................... 18,000 432,352
Canon, Inc................................. 13,000 380,089
Fujitsu Ltd................................ 35,000 437,736
Hirose Electric, Ltd....................... 4,000 294,529
Ibiden Co., Ltd............................ 30,000 536,713
Keyence Corp............................... 2,500 349,940
Mitsui Fudosan Co., Ltd.................... 25,000 304,386
Mitsui Toatsu Chemicals, Inc............... 140,000 215,679
Nichiei Co., Ltd........................... 4,100 390,525
Nintendo Co., Ltd.......................... 5,000 467,967
NTT Data Corp.............................. 80 362,447
Orix Corp.................................. 5,300 402,982
Rohm Co., Ltd.............................. 4,000 470,452
Seven-Eleven Japan Co., Ltd................ 5,000 375,202
SMC Corp................................... 3,500 333,375
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
52
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
JAPAN (CONTINUED)
<TABLE>
<S> <C> <C>
Sony Corp.................................. 6,400 $ 604,299
Sumitomo Bank, Ltd......................... 32,000 482,379
Takeda Chemical Industries................. 16,000 479,728
TDK Corp................................... 6,000 536,713
Terumo Corp................................ 23,000 426,720
Tokyo Electron Ltd......................... 9,000 549,385
------------
9,355,982
------------
MEXICO -- 4.7%
Alfa S.A. de C.V. -- A..................... 76,000 721,853
Cifra S.A. de C.V. -- A.................... 207,527 454,049
Cifra S.A. de C.V. -- B.................... 21 49
Cifra S.A. de C.V. -- C.................... 19,200 41,514
Corporacion Interamericana de
Entretenimiento S.A.*.................... 74,000 447,619
Organizacion Soriana S.A. de C.V. -- B..... 80,400 320,772
TV Azteca S.A. de C.V. -- ADR*............. 5,800 130,500
------------
2,116,356
------------
NETHERLANDS -- 7.2%
Aegon NV................................... 8 641
AKZO Nobel NV.............................. 2,400 410,150
ASM Lithography Holding NV*................ 4,400 442,410
Baan Co., NV*.............................. 3,180 229,300
ING Groep NV............................... 3,100 142,375
Internati -- Muller NV..................... 4,400 141,943
KLM Royal Dutch Airlines NV................ 10,085 352,197
Philips Electronics NV..................... 8,700 736,184
PolyGram NV................................ 6,400 370,795
Royal Dutch Petroleum Co................... 8,000 444,000
------------
3,269,995
------------
NORWAY -- 0.9%
Petroleum Geo-Services ASA -- ADR*......... 6,250 422,656
------------
PHILIPPINES -- 0.4%
Music Corporation*......................... 449,000 201,390
------------
POLAND -- 0.2%
Elektrim Spolka Akcyjna S.A................ 7,100 79,628
------------
PORTUGAL -- 1.3%
BPI-SGPS, SA............................... 6,300 143,431
Cimpor-Cimentos de Portugal, SGPS, SA...... 4,900 132,442
Portugal Telecom SA........................ 6,750 292,761
------------
568,634
------------
RUSSIA -- 0.6%
Lukoil Oil Co. -- ADR...................... 2,975 292,219
------------
SINGAPORE -- 1.8%
Datacraft Asia Ltd......................... 61,000 193,980
Electronic Resources Ltd................... 156,000 283,507
MMI Holding Ltd.*.......................... 118,200 72,634
Parkway Holdings Ltd....................... 31,000 125,646
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
SINGAPORE (CONTINUED)
<TABLE>
<S> <C> <C>
Sunright Ltd............................... 81,000 $ 131,849
------------
807,616
------------
SOUTH AFRICA -- 0.7%
Barlow Ltd................................. 10,400 118,828
Dimension Data Holdings Ltd.*.............. 48,800 204,184
------------
323,012
------------
SPAIN -- 3.7%
Banco Central Hispano Americano SA......... 2,200 91,888
Cortefiel SA............................... 10,100 428,620
Fomento de Construcciones y Contratas SA... 1,300 200,456
Tabacalera SA -- A......................... 8,900 624,718
Tele Pizza S.A.*........................... 4,500 313,757
------------
1,659,439
------------
SWEDEN -- 2.0%
ABB AB -- A................................ 19,000 269,019
Pricer AB*................................. 10,900 317,278
Telefonaktiebolaget LM Ericsson -- ADR..... 6,600 316,388
------------
902,685
------------
SWITZERLAND -- 5.0%
Adecco SA.................................. 970 390,241
Ares-Serono Group.......................... 320 576,577
Kuoni Reisen Holdings AG................... 120 477,821
Nestle SA.................................. 300 417,990
Novartis AG................................ 150 230,039
Swiss Reinsurance Co....................... 100 149,990
------------
2,242,658
------------
TAIWAN -- 0.7%
Ase Test Ltd.*............................. 3,500 296,625
------------
TURKEY -- 0.4%
Haci Omer Sabanci Holding AS*.............. 4,685,000 206,612
------------
UNITED KINGDOM -- 12.3%
Bank of Ireland............................ 10,000 124,305
Barclays PLC............................... 17,500 472,757
British Aerospace PLC...................... 15,600 418,661
BTR PLC.................................... 68,000 275,907
Dixons Group PLC........................... 40,600 422,475
Doncoasters PLC -- ADR*.................... 12,600 378,000
Glaxo Wellcome PLC......................... 18,000 404,954
J. Sainsbury PLC........................... 46,000 344,714
Johnson Matthey PLC........................ 59,700 651,564
Ladbroke Group PLC......................... 96,600 424,677
Lloyds TSB Group PLC....................... 34,300 461,780
Misys (Jersey) Ltd.*....................... 1,771 44,429
Misys PLC.................................. 14,000 353,474
Next PLC................................... 28,300 331,694
Pilkington PLC............................. 171,900 435,402
------------
5,544,793
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
53
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
INTERNATIONAL CORE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA -- 0.5%
Syntel Inc.*............................... 12,900 $ 204,788
------------
VENEZUELA -- 0.5%
Compania Anonima Nacional Telefonos de
Venezuela -- ADR......................... 3,100 141,825
Siderurgica Venezolana S.A.C.A............. 16,600 97,757
------------
239,582
------------
TOTAL COMMON STOCKS
(Cost $41,720,975)....................................... 45,663,345
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 0.6%
- ----------------------------------------------------------------------------
J.P. Morgan & Co., Inc. 6.250%,
10/01/97
(Cost $277,000).......................... $ 277,000 $ 277,000
------------
TOTAL INVESTMENTS -- 101.6%
(Cost $41,997,975)....................................... 45,940,345
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.6%)............ (741,112)
------------
NET ASSETS -- 100.0%....................................... $ 45,199,233
------------
</TABLE>
- ------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
54
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
INTERNATIONAL CORE GROWTH FUND
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Aerospace................................... 0.7%
Airlines.................................... 2.0
Automotive.................................. 1.3
Automotive Equipment........................ 0.5
Biotechnology............................... 0.7
Broadcasting................................ 1.4
Building Materials.......................... 2.9
Chemicals................................... 1.2
Clothing Chains............................. 0.1
Computers/Office Automation................. 2.9
Consumer Electrical......................... 1.1
Department/Discount Stores.................. 3.6
Drugs/Pharmaceuticals....................... 6.0
Electric Utilities.......................... 0.8
Electric Products Miscellaneous............. 0.2
Electronic Instruments...................... 4.2
Electronics/Music Chains.................... 0.9
Entertainment............................... 0.6
Finance Companies........................... 0.5
Food Chains................................. 1.0
Grocery Products............................ 1.5
Industrial Engineering/Construction......... 0.6
Integrated Oil Companies.................... 4.0
Investment Companies........................ 1.8
Leisure/Gaming.............................. 0.6
Lodging..................................... 1.2
Machinery/Equipment......................... 2.1
Medical Supplies............................ 0.9
Metals...................................... 2.7
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Money Center Banks.......................... 8.2%
Multi-Line Insurers......................... 0.6
Oil/Gas Production.......................... 3.8
Oilfield Services/Equipment................. 0.1
Other Commercial/Industrial Services........ 2.9
Other Consumer Non-Durables................. 1.0
Other Consumer Services..................... 0.5
Other Energy................................ 0.3
Other Financial Services.................... 0.3
Other Production/Manufacturing.............. 5.8
Real Estate Development/Investment.......... 0.6
Regional/Commercial Banks................... 2.8
Rental/Leasing Companies.................... 0.3
Reinsurance................................. 0.3
Restaurants................................. 0.4
Retail/Food Distribution.................... 1.1
Savings & Loans/Thrifts..................... 0.4
Semiconductors/Electric Companies........... 7.3
Software.................................... 4.5
Specialty Chains............................ 0.9
Telecommunication Equipment................. 3.3
Telecommunication Services.................. 4.3
Textiles.................................... 1.5
Tobacco Products............................ 1.0
Toys........................................ 0.5
Wholesale Distribution...................... 0.3
Short Term Obligations...................... 0.6
Liabilities in Excess of Other Assets....... (1.6)
-----
NET ASSETS.................................. 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
55
<PAGE>
WORLDWIDE GROWTH FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic
Portfolio Management
John J. Kane,
Partner, Senior Portfolio Manager
Melisa Grigolite,
Portfolio Manager
Aaron Harris,
Portfolio Manager
Pedro V. Marcal,
Senior Portfolio Manager
Eswar Menon,
Portfolio Manager
Loretta J. Morris,
Senior Portfolio Manager
Alex Muromcew,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior Portfolio Manager
Mark Stuckelman,
Portfolio Manager
John Tribolet,
Investment Analyst
GOAL: The Nicholas-Applegate Worldwide Growth Fund seeks to maximize long-term
capital appreciation through investing in a portfolio of growth stocks of U.S.
and international companies.
REVIEW AND OUTLOOK: The Worldwide Growth Fund registered a 26.4% increase
during the period April 1 through September 30, 1997, outperforming its
benchmark, the MSCI World Index, up 18.3%. Stock selection, particularly within
the technology sector in the United States and overseas, bolstered returns for
the portfolio.
As businesses around the world invest in technology infrastructure and
purchase large amounts of computer hardware and software, we continued to
identify many companies benefiting from this trend. Some of the Fund's strongest
performers during the first six months of the fiscal year were U.S.-based
technology companies Dell Computer, Intel, and Compaq Computer.
Reflecting the dramatic increase in demand for high-tech products, technology
spending as a percentage of U.S. gross domestic product has tripled during the
last five years. Other industrialized economies are expected to experience a
similar trend.
In the Netherlands, some of our best-performing holdings were also in
technology. ASM Lithography benefited from an increased demand in the
semiconductor industry, and Baan registered increased sales for its business
management software products.
Elsewhere in the world, we unearthed exciting stock picks in Japan, Taiwan,
Italy, and Spain. Despite Japan's economic troubles during the period,
Nicholas-Applegate's bottom-up stock selection approach helped us identify
stocks which continue to thrive despite the unfavorable domestic climate.
Healthcare shares, such as Takeda, a pharmaceutical company, and Terumo, a
medical equipment exporter, were some of the contributors to the Fund's gains.
Japan's healthcare industry is expected to benefit from an aging Japanese
population.
As we continue to find many excellent opportunities around the world using our
bottom-up method of stock selection, our outlook for the Fund remains very
positive.
REPRESENTATIVE HOLDINGS
Advantest, Japan
Ares-Serono SA, Switzerland
British Aerospace, United Kingdom
Compaq Computer, United States
Dell Computer, United States
Deutsche Bank, Germany
Lufthansa, Germany
Petroleum Geo Services, Norway
Sony, Japan
Telecom Italia, Italy
- --------------------------------------------------------------------------------
56
<PAGE>
WORLDWIDE GROWTH INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
WORLDWIDE GROWTH INSTITUTIONAL PORTFOLIO WITH THE MSCI WORLD INDEX.
<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 09/30/97 SINCE
1 YEAR 3 YEARS INCEPTION
33.60% 18.36% 15.92%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WORLDWIDE GROWTH MSCI WORLD
INSTITUTIONAL
PORTFOLIO INDEX
<S> <C> <C>
19-Apr-93 $250,000.00 $250,000.00
31-Dec-93 250,600.00 254,061.23
31-Mar-94 263,000.00 255,609.44
30-Jun-94 258,600.00 263,296.68
30-Sep-94 272,200.00 268,946.15
31-Dec-94 258,091.09 267,012.17
31-Mar-95 262,104.94 279,072.01
30-Jun-95 277,357.61 290,978.78
30-Sep-95 303,648.39 306,816.19
31-Dec-95 297,700.90 321,380.29
31-Mar-96 315,501.56 334,459.71
30-Jun-96 337,394.33 344,170.41
30-Sep-96 337,803.52 348,762.29
31-Dec-96 352,799.84 364,721.36
31-Mar-97 357,071.62 365,767.30
30-Jun-97 410,594.64 420,804.27
31-Sep-97 451,302.33 432,841.01
</TABLE>
This graph compares a $250,000 investment in the Worldwide Growth Institutional
Portfolio with the Morgan Stanley Capital International ("MSCI") World Index, on
a cumulative and average annual total return basis. The Portfolio calculates its
performance based upon the historical performance of its corresponding series
("Fund") of Nicholas-Applegate Investment Trust, adjusted to reflect sales
charges and Portfolio operating expenses. The effective date of the
Institutional Portfolio's registration statement was on 10/1/93. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses applicable to the
Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
MSCI World Index consists of more than 1,400 securities listed on exchanges in
the U.S., Europe, Canada, Australia, New Zealand, and the Far East. The Index is
a market-value weighted combination of countries and is unmanaged.
The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
57
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS -- 98.0%
- ----------------------------------------------------------------------------
ARGENTINA -- 1.1%
Banco Frances del Rio de la Plata S.A. --
ADR...................................... 16,100 $ 526,269
Perez Companc S.A.......................... 47,637 382,529
Siderar S.A.I.C. -- A...................... 7,728 42,890
Siderca S.A. -- A.......................... 197,566 592,698
------------
1,544,386
------------
AUSTRALIA -- 0.3%
Australian Gas & Light Co., Ltd............ 3,170 21,584
Colonial Ltd.*............................. 103,600 341,949
------------
363,533
------------
BRAZIL -- 1.2%
Centrais Electricas Brasileiras SA -- ADR.. 25,000 694,850
Telecomunicacoes Brasileiras SA -- ADR..... 1,700 218,875
Telecomunicacoes do Parana SA --
Preferred................................ 487,554 360,525
Uniao de Bancos Brasileiros S.A. -- GDR.... 11,900 435,838
------------
1,710,088
------------
CANADA -- 3.9%
Canadian Natural Resources Ltd.*........... 33,500 987,718
Four Seasons Hotels, Inc................... 14,000 574,000
Newbridge Networks Corp. -- ADR*........... 16,000 958,000
Newcourt Credit Group, Inc................. 32,500 1,221,601
Northern Telecom Ltd. -- ADR............... 10,000 1,039,375
Suncor, Inc................................ 17,800 646,523
------------
5,427,217
------------
CHINA -- 1.8%
China Resources Enterprise Ltd............. 110,000 460,584
Hutchison Whampoa Ltd...................... 118,600 1,168,681
Qingling Motors Co. Ltd.................... 500,000 316,619
Shanghai Industrial Holdings Ltd........... 81,000 503,502
------------
2,449,386
------------
FINLAND -- 2.1%
Oy Nokia Ab -- ADR......................... 16,200 1,519,763
Raision Tehtaat Oy......................... 13,000 1,484,282
------------
3,004,045
------------
FRANCE -- 4.4%
AXA-UAP.................................... 8,000 536,614
Cap Gemini Sogeti SA....................... 21,000 1,362,602
Dassault Systemes S.A...................... 10,900 698,070
Elf Aquitaine SA........................... 7,300 974,400
Schneider SA............................... 14,000 883,627
Synthelabo SA.............................. 7,000 828,179
Usinor Sacilor S.A......................... 40,000 808,292
------------
6,091,784
------------
GERMANY -- 4.4%
Bayerische Motoren Werke AG................ 2,000 1,698,732
Deutsche Bank AG........................... 18,100 1,270,032
Deutsche Lufthansa AG...................... 71,000 1,396,135
Mannesmann AG.............................. 1,700 808,058
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
GERMANY (CONTINUED)
<TABLE>
<S> <C> <C>
RWE AG..................................... 21,200 $ 1,028,090
------------
6,201,047
------------
GREECE -- 0.4%
Titan Cement Co. S.A....................... 8,300 501,039
------------
INDIA -- 0.8%
Bombay Suburban Electric Supply Co.,
Ltd...................................... 8,100 43,277
HDFC Bank Ltd.............................. 250,000 480,370
State Bank of India -- GDR*................ 24,400 567,300
------------
1,090,947
------------
IRELAND -- 0.6%
Bank of Ireland............................ 65,000 807,981
------------
ISRAEL -- 1.0%
Bank Leumi Le-Israel....................... 204,000 335,704
Makhteshim Chemical Works, Ltd............. 44,700 308,741
Tecnomatix Technologies Ltd. -- ADR*....... 12,000 459,000
Teva Pharmaceutical Industries Ltd. --
ADR...................................... 4,400 245,300
------------
1,348,745
------------
ITALY -- 3.7%
Assicurazioni Generali SpA................. 40,000 903,745
Credito Italiano SpA....................... 602,000 1,628,677
Telecom Italia SpA......................... 209,300 1,394,404
Telecom Italia Mobile SpA.................. 322,300 1,279,005
------------
5,205,831
------------
JAPAN -- 12.9%
Advantest Corp............................. 17,600 1,734,708
Bank of Tokyo-Mitsubishi Ltd............... 2,000 38,100
Bridgestone Corp........................... 37,000 888,723
Canon, Inc................................. 38,000 1,111,028
Fujitsu Ltd................................ 90,000 1,125,606
Hirose Electric Ltd........................ 11,000 809,956
Ibiden Co., Ltd............................ 77,000 1,377,562
Mitsui Fudosan Co., Ltd.................... 70,000 852,280
Mitsui Toatsu Chemicals, Inc............... 300,000 462,169
Nichiei Co., Ltd........................... 15,600 1,485,899
Nintendo Co., Ltd.......................... 10,900 1,020,168
Orix Corp.................................. 19,800 1,505,479
Sony Corp.................................. 16,000 1,510,747
Sumitomo Bank, Ltd......................... 61,000 919,535
Takeda Chemical Industries................. 21,000 629,643
TDK Corp................................... 13,000 1,162,877
Terumo Corp................................ 80,000 1,484,242
------------
18,118,722
------------
MEXICO -- 0.9%
TV Azteca S.A. de C.V. -- ADR*............. 57,300 1,289,250
------------
NETHERLANDS -- 4.3%
AKZO Nobel NV.............................. 6,000 1,025,376
Baan Co., NV*.............................. 16,300 1,157,300
Philips Electronics NV..................... 13,600 1,150,817
Polygram NV................................ 12,000 695,241
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
58
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
NETHERLANDS (CONTINUED)
<TABLE>
<S> <C> <C>
Royal Dutch Petroleum Co................... 24,000 $ 1,343,450
Volker Wessels Stevin NV................... 22,112 713,326
------------
6,085,510
------------
NORWAY -- 1.6%
Petroleum Geo-Services ASA -- ADR*......... 18,300 1,237,538
Tomra Systems ASA.......................... 44,500 1,024,321
------------
2,261,859
------------
PAKISTAN -- 0.2%
Hub Power Co., Ltd.*....................... 194,000 259,577
------------
POLAND -- 0.2%
Elektrim Spolka Akcyjna S.A................ 29,650 332,531
------------
PORTUGAL -- 1.3%
BPI-SGPS, S.A.............................. 26,000 591,937
Portugal Telecom SA........................ 29,000 1,257,787
------------
1,849,724
------------
RUSSIA -- 0.4%
Lukoil Oil Co. -- ADR...................... 5,950 584,439
------------
SINGAPORE -- 0.8%
Lindeteves-Jacoberg Ltd.................... 343,000 549,356
Parkway Holdings Ltd....................... 151,000 612,015
------------
1,161,371
------------
SOUTH AFRICA -- 0.0%
Liberty Life Association of Africa Ltd..... 277 8,083
South African Breweries Ltd.*.............. 175 5,079
------------
13,162
------------
SPAIN -- 2.2%
Banco Central Hispanoamericano SA.......... 14,300 597,271
Fomento de Construcciones y Contratas
S.A...................................... 7,500 1,156,476
Tabacalera SA -- A......................... 18,300 1,284,533
------------
3,038,280
------------
SWEDEN -- 1.7%
ABB AB -- A................................ 60,000 849,534
Astra AB................................... 133 2,361
Telefonaktiebolaget LM Ericsson -- ADR..... 32,000 1,534,000
------------
2,385,895
------------
SWITZERLAND -- 3.8%
Adecco SA.................................. 2,200 885,084
Ares-Serono Group.......................... 980 1,765,766
Nestle SA.................................. 600 835,981
Novartis AG................................ 525 805,137
Swiss Reinsurance Co....................... 650 974,933
------------
5,266,901
------------
TAIWAN -- 1.2%
ASE Test Ltd.*............................. 17,500 1,483,125
Siliconware Precision Industries Co.*...... 40,600 138,409
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
TAIWAN (CONTINUED)
<TABLE>
<S> <C> <C>
Tuntex Distinct Corp.*..................... 6,131 $ 35,158
------------
1,656,692
------------
UNITED KINGDOM -- 7.3%
Barclays PLC............................... 53,500 1,445,287
British Aerospace PLC...................... 33,887 909,434
British Airways PLC........................ 526 5,758
BTR PLC.................................... 140,000 568,043
Dixons Group PLC........................... 67,900 706,553
GKN PLC.................................... 1,807 40,813
Glaxo Wellcome PLC......................... 39,000 877,401
Johnson Matthey PLC........................ 93,000 1,015,000
Ladbroke Group PLC......................... 16,800 73,857
Lloyds TSB Group PLC....................... 100,000 1,346,299
Misys (Jersey) Ltd. PLC*................... 3,285 82,410
Misys PLC.................................. 26,000 656,452
Next PLC................................... 75,300 882,563
Pilkington PLC............................. 359,500 910,571
J. Sainsbury PLC........................... 95,000 711,909
------------
10,232,350
------------
UNITED STATES OF AMERICA -- 32.7%
AirTouch Communications, Inc.*............. 26,800 949,725
AmSouth Bancorporation..................... 16,900 818,594
Applied Materials, Inc.*................... 5,900 561,975
Avid Technology, Inc.*..................... 14,200 461,500
BankAmerica Corp........................... 20,500 1,502,906
BMC Software, Inc.*........................ 8,900 576,275
Bristol-Myers Squibb Co.................... 11,700 968,175
Caterpillar, Inc........................... 21,400 1,154,262
Comerica, Inc.............................. 8,400 663,075
Compaq Computer Corp.*..................... 22,000 1,644,500
Compuware Corp.*........................... 8,600 520,300
Corning, Inc............................... 22,300 1,053,675
Costco Companies, Inc.*.................... 12,000 451,500
Dayton Hudson Corp......................... 8,800 527,450
Dell Computer Corp.*....................... 15,300 1,482,187
Electronics for Imaging, Inc.*............. 8,900 453,900
Ensco International, Inc.*................. 20,800 820,300
Exxon Corp................................. 23,800 1,524,687
Fannie Mae................................. 11,800 554,600
Federal-Mogul Corp......................... 9,200 341,550
Ford Motor Co.............................. 33,600 1,520,400
Gannett Co., Inc........................... 9,600 1,036,200
General Electric Co........................ 9,400 639,787
Home Depot, Inc............................ 20,700 1,078,987
Intel Corp................................. 4,900 452,331
International Specialty Products, Inc.*.... 15,500 231,531
Interstate Bakeries Corp................... 12,500 857,031
Jabil Circuit, Inc.*....................... 17,600 1,152,800
Liz Claiborne, Inc......................... 7,500 412,032
MBNA Corp.................................. 19,700 797,850
McAfee Associates, Inc.*................... 6,000 318,000
Merck & Co., Inc........................... 14,500 1,449,094
Microsoft Corp.*........................... 9,700 1,283,431
NBTY, Inc.*................................ 11,100 234,487
New York Bancorp, Inc...................... 1,800 53,887
Oxford Health Plans, Inc.*................. 12,200 913,475
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
59
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
UNITED STATES OF AMERICA (CONTINUED)
<TABLE>
<S> <C> <C>
Praxair, Inc............................... 6,700 $ 342,956
Premark International, lnc................. 10,800 345,600
QLogic Corp.*.............................. 16,000 670,000
Quaker Oats Co............................. 15,100 760,663
Robert Half International, Inc.*........... 14,100 583,388
Ross Stores, Inc........................... 27,200 928,200
SLM Holding Corp........................... 2,900 448,050
Smithfield Foods, Inc.*.................... 26,000 780,000
State Street Corp.......................... 22,600 1,377,188
Systems & Computer Technology Corp.*....... 11,900 536,244
Tekelec, Inc. *............................ 11,600 395,125
Tellabs, Inc.*............................. 3,100 159,650
Tesoro Petroleum Corp. *................... 25,600 462,400
Texas Instruments, Inc..................... 8,200 1,108,025
The Equitable Cos., Inc.................... 33,900 1,392,019
The Procter & Gamble Co.................... 19,800 1,367,438
Travelers Group, Inc....................... 15,000 1,023,750
United Technologies Corp................... 14,400 1,166,400
USX-Marathon Group......................... 30,900 1,149,094
UTI Energy Corp. *......................... 12,700 524,669
Wellpoint Health Networks, Inc.*........... 11,000 637,312
------------
45,620,630
------------
VENEZUELA -- 0.8%
C.A. La Electricidad de Caracas............ 437,500 704,568
Compania Anonima Nacional Telefonos de
Venezuela -- ADR......................... 10,500 480,375
------------
1,184,943
------------
TOTAL COMMON STOCKS
(Cost $107,799,957)......................................
137,087,865
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
CONVERTIBLE BONDS -- 0.0%
- -------------------------------------------------------------------------------
SINGAPORE
Lindeteves-Jacoberg Ltd. Loan Stock
1.500%, 7/28/02
(Cost $30,319)........................... $ 100,000 $ 47,068
------------
- -------------------------------------------------------------------------------
COMMERCIAL PAPER -- 3.1%
- -------------------------------------------------------------------------------
J.P. Morgan & Co., Inc.
6.250%, 10/1/97
(Cost $4,341,000)........................ 4,341 4,341,000
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
<S> <C> <C>
- -------------------------------------------------------------------------------
WARRANTS/RIGHTS -- 0.1%
- -------------------------------------------------------------------------------
SINGAPORE
Lindeteves-Jacoberg -- Warrants
(Cost $38,541) 100,000 109,825
------------
TOTAL INVESTMENTS -- 101.2%
(Cost $112,209,817)........................................
141,585,758
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.2%).............. (1,671,810)
------------
NET ASSETS -- 100.0%......................................... $139,913,948
------------
</TABLE>
- ---------------
* Non-Income Producing Security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
60
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Aerospace................................... 1.5%
Airlines.................................... 1.0
Alcoholic Beverages......................... 0.1
Apparel..................................... 0.3
Automotive.................................. 2.5
Automotive Equipment........................ 0.9
Biotechnology............................... 1.3
Broadcasting................................ 0.9
Building Materials.......................... 1.8
Chemicals................................... 1.7
Clothing Chains............................. 0.7
Computers/Office Automation................. 4.3
Consumer Electrical......................... 1.1
Contract Drilling........................... 0.4
Department/Discount Stores.................. 0.7
Drugs/Pharmaceuticals....................... 4.3
Electric Utilities.......................... 1.2
Electronic Data Process..................... 0.4
Electronic Instruments...................... 2.7
Entertainment............................... 0.5
Finance Companies........................... 3.2
Gas Utilities............................... 0.1
Grocery Products............................ 3.4
Industrial Engineering/Construction......... 1.3
Investment Companies........................ 0.4
Leisure/Gaming.............................. 0.1
Life Insurers............................... 1.0
Machinery/Equipment......................... 3.8
Managed Health Care/HMOs.................... 1.1
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Medical Supplies............................ 1.1%
Metals...................................... 1.0
Lodging..................................... 0.4
Money Center Banks.......................... 5.3
Multi-Line Insurers......................... 1.8
Oil/Gas Production.......................... 5.4
Oilfield Services/Equipment................. 1.5
Oil Refining Marketing...................... 0.3
Other Commercial/Industrial Services........ 2.5
Other Consumer Non-Durables................. 1.3
Other Energy................................ 0.7
Other Financial Services.................... 0.3
Other Production/Manufacturing.............. 4.1
Publishing.................................. 0.7
Real Estate Development/Investment.......... 0.9
Recreational Products....................... 0.7
Regional/Commercial Banks................... 4.3
Rental/Leasing Companies.................... 1.1
Retail/Food Distribution.................... 0.5
Savings & Loans/Thrifts..................... 0.7
Semiconductors/Electric Companies........... 4.7
Software.................................... 5.4
Specialty Chains............................ 0.6
Telecommunication Equipment................. 4.0
Telephone................................... 4.2
Textiles.................................... 1.0
Tobacco Products............................ 0.9
Short Term Obligations...................... 3.1
Liabilities in Excess of Other Assets....... (1.2)
-----
NET ASSETS.................................. 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
61
<PAGE>
GLOBAL GROWTH & INCOME FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic Portfolio
Management and Research
Sandra K. Durn,
Portfolio Manager
Melisa Grigolite,
Portfolio Manager
Aaron Harris,
Portfolio Manager
Pedro V. Marcal,
Senior Portfolio Manager
Eswar Menon,
Portfolio Manager
Loretta J. Morris,
Senior Portfolio Manager
Alex Muromcew,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior Portfolio Manager
GOAL: The Nicholas-Applegate Global Growth & Income Fund seeks to deliver
total return consisting of long-term capital appreciation and current income
from a diversified portfolio consisting of U.S. and international stocks and
fixed income securities.
REVIEW AND OUTLOOK: The Global Growth & Income Fund was introduced on July 1,
1997. Its diverse holdings reflect the integration and depth of various
components of Nicholas-Applegate's global investment team.
On September 30, the Fund's holdings included stocks from more than 20
countries and exposure to emerging countries.
The application of our bottom-up stock selection process around the world
identified a number of issues which delivered solid gains during the period.
Holdings in Mexico, Italy, and the United States were among the best performers.
For the three-month period ending September 30, the Fund gained 27.3% versus a
2.9% gain for the MSCI World Index.
On September 30, the fixed income securities in the Fund had a yield of 9.8%
while the equities in the Fund had a yield of 2.5%. Among the Fund's
best-performing holdings in the period were Cifra and YPF.
On August 31, Cifra, a leading retailer in Mexico, and Wal-Mart merged their
operations in Mexico. Synergy from the newly merged entity and improving
same-store sales leverage are expected to lead to stronger operating
profitability. The new company has also announced a more aggressive expansion
plan. Cifra remains poised to benefit from improving economic fundamentals and
consumer demand rebounding from 1995 lows in Mexico.
YPF, an international integrated oil and gas company based in Argentina,
continued to generate increased production, revenue, and income.
Limited exposure to companies in South East Asia also contributed to the
Fund's relative outperformance. The currency crisis shook investor confidence
and contributed to double-digit declines in the stock markets of a number of
countries in that region.
We look forward to building on the Fund's solid start and extending our strong
performance results.
REPRESENTATIVE HOLDINGS
Ahmanson
Cifra
Elf Aquitaine
Ford
Houston Industries
National Australia Bank
Philips Electronics
Royal Dutch Petroleum
Usinor
YPF Sociedad Anonima
- --------------------------------------------------------------------------------
62
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
GLOBAL GROWTH & INCOME
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS -- 64.7%
- ----------------------------------------------------------------------------
ARGENTINA -- 1.5%
YPF Sociedad Anonima - ADR................. 2,100 $ 77,438
------------
AUSTRALIA -- 1.2%
Westpac Banking Corp. Ltd*................. 9,600 60,627
------------
CANADA -- 2.7%
Suncor Energy, Inc......................... 1,500 54,482
Northern Telecom, Ltd...................... 800 83,150
------------
137,632
------------
CHILE -- 0.9%
CIA de Telecomunicaciones de Chile S.A. -
ADR...................................... 1,400 45,325
------------
CHINA -- 2.2%
Hutchison Whampoa Ltd...................... 5,200 51,241
Peak International Ltd..................... 1,760 42,020
Zhejiang Southeast Electric Co............. 51,000 18,360
------------
111,621
------------
BRAZIL -- 2.0%
Petroleo Brasiliero - ADR.................. 3,600 101,210
------------
FRANCE -- 3.4%
Cap Gemini Sogeti SA....................... 1,000 64,886
Elf Aquitaine SA........................... 400 53,392
Usinor SA.................................. 2,500 50,518
------------
168,796
------------
GERMANY -- 3.1%
Deutsche Bank AG - ADR..................... 900 63,391
Deutsche Lufthansa AG...................... 2,500 49,160
RWE AG..................................... 900 43,645
------------
156,196
------------
ITALY -- 1.1%
Huhtamaki Group............................ 8,330 55,516
------------
JAPAN -- 5.1%
Advantest Corp............................. 400 39,425
Fujitsu, Ltd............................... 3,000 37,520
Sony Corp.................................. 600 56,653
The Sumitomo Bank, Ltd..................... 2,000 30,149
Takeda Chemical Industries................. 1,000 29,983
TDK Corp................................... 700 62,616
------------
256,346
------------
MALAYSIA -- 0.3%
Beraya Sports Toto Berhad.................. 5,000 14,334
------------
MEXICO -- 4.8%
Cifra S.A. de C.V. - A..................... 20,600 45,071
Cifra S.A. de C.V. - C..................... 5,400 11,676
Cifra S.A. - ADR........................... 3,021 7,089
Corporacion Interamericana de
Entretenimiento S.A.*.................... 5,000 30,245
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
MEXICO (CONTINUED)
<TABLE>
<S> <C> <C>
Desc Sociedad de Fomento Industrial S.A. de
C.V...................................... 4,000 $ 42,214
Industrias Bachoco S.A. - ADR*............. 3,000 55,125
TV Azteca S.A. ADR*........................ 2,200 49,500
------------
240,920
------------
NETHERLANDS -- 4.5%
Akzo Nobel N.V. - ADR...................... 700 59,937
KLM Royal Dutch Airlines N.V. - ADR*....... 1,500 51,469
Philips Electronics N.V.................... 700 59,233
Royal Dutch Petroleum Co................... 1,000 55,977
------------
226,616
------------
PORTUGAL -- 1.3%
Portugal Telecommunications S.A. - ADR..... 1,500 65,156
------------
SINGAPORE -- 1.5%
Dairy Farm International Holdings, Ltd..... 82,000 77,900
------------
SPAIN -- 0.7%
Banco Central Hispanoamericano S.A......... 800 33,414
------------
SWEDEN -- 2.1%
ABB AB - A................................. 3,500 49,556
Telefonaktiebolaget LM Ericsson - ADR...... 1,200 57,525
------------
107,081
------------
SWITZERLAND -- 1.0%
Swiss Reinsurance Co....................... 35 52,496
------------
UNITED KINGDOM -- 3.0%
Barclays, PLC.............................. 2,500 67,537
Dixons Group, PLC.......................... 3,100 32,258
Johnson Matthey, PLC....................... 4,800 52,387
------------
152,182
------------
UNITED STATES OF AMERICA -- 22.3%
American Capital Strategies, Ltd.*......... 5,000 100,000
BankAmerica Corp........................... 800 58,650
Box Hill Systems Corp.*.................... 4,000 70,000
CCA Prison Realty Trust.................... 3,000 113,250
Crescent Real Estate Equities Co........... 2,140 85,867
Equity Residential Properties Trust........ 1,000 54,562
Excel Realty Trust, Inc.................... 2,200 69,025
Ford Motor Co.............................. 1,850 83,712
MCN Energy Group, Inc.*.................... 1,580 50,560
North Fork Bancorporation, Inc............. 2,250 65,250
Oppenheimer Capital, LP.................... 1,550 83,894
Price Real Estate Investment Trust, Inc.... 1,600 64,300
Sundstrand Corp............................ 850 48,981
Syntel, Inc.*.............................. 5,500 87,312
Wal-Mart Stores, Inc....................... 2,250 82,406
------------
1,117,769
------------
TOTAL COMMON STOCKS
(Cost $2,956,116)........................................ 3,258,575
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
63
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------
GLOBAL GROWTH & INCOME
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS -- 8.3%
- ----------------------------------------------------------------------------
ARGENTINA -- 1.0%
Nortel Inversora S.A., Series 10.0%........ 950 $ 51,300
------------
AUSTRALIA -- 1.2%
National Australia Bank, Ltd., Series Unit
7.875%................................... 2,100 61,688
------------
UNITED STATES OF AMERICA -- 6.1%
AES Trust I, Series A, 5.375%.............. 800 54,600
Ahmanson (H.F.), Series D, 6.0%............ 500 58,500
Airtouch Communications, Series C,
4.250%................................... 1,250 70,547
Houston Industries, Inc., Series 7.0%...... 1,050 54,600
Ralston Purina Co., Series 7.0%............ 1,000 67,375
------------
305,622
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $395,216).......................................... 418,610
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- -------------------------------------------------------------------------------
CORPORATE BONDS -- 8.7%
- -------------------------------------------------------------------------------
CANADA -- 1.1%
Magna International, Inc.
5.00%, 10/15/02.......................... $ 40,000 53,350
------------
INDIA -- 0.8%
Mahindra & Mahindra, Ltd.
5.00%, 07/09/01.......................... 40,000 42,752
------------
MEXICO -- 1.6%
Alfa Euro S.A.
8.00%, 09/15/00.......................... 40,000 79,350
------------
UNITED STATES OF AMERICA -- 5.2%
Foodmaker, Inc.
9.25%, 03/01/99.......................... 71,000 72,953
Signature Resorts, Inc.
9.75%, 10/01/07.......................... 100,000 101,000
Xerox Credit Corp.
2.875%, 07/01/02......................... 90,000 90,225
------------
264,178
------------
TOTAL CORPORATE BONDS
(Cost $427,557)............................................ 439,630
------------
- -------------------------------------------------------------------------------
GOVERNMENT BONDS -- 32.9%
- -------------------------------------------------------------------------------
ARGENTINA -- 5.0%
Republic of Argentina
8.75%, 05/09/02.......................... 135,000 137,025
Republic of Argentina
11.75%, 02/12/07......................... 100,000 112,875
------------
249,900
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
BRAZIL -- 1.9%
Republic of Brazil
8.00%, 04/15/14.......................... $ 112,065 $ 95,255
------------
BULGARIA -- 2.0%
Bulgaria National Government
6.6875%, 07/28/24........................ 120,000 99,525
------------
MEXICO -- 2.9%
Mexican Global Bond
9.75%, 02/06/01.......................... 135,000 144,113
------------
PANAMA -- 4.0%
Republic of Panama
7.031%, 05/14/02......................... 203,845 201,807
------------
PERU -- 1.9%
Peru National Government
4.00%, 03/07/17.......................... 145,000 96,969
------------
POLAND -- 1.9%
Poland National Government
4.00%, 10/27/14.......................... 110,000 96,044
------------
RUSSIA -- 7.4%
Ministry Finance of Russia
9.25%, 11/27/01.......................... 360,000 374,625
------------
SOUTH AFRICA -- 5.9%
Republic of South Africa
12.50%, 12/21/06......................... 1,500,000 295,829
------------
TOTAL GOVERNMENT BONDS
(Cost $1,649,392).......................................... 1,654,067
------------
- -------------------------------------------------------------------------------
ZERO COUPON BONDS -- 1.7%
- -------------------------------------------------------------------------------
UNITED STATES OF AMERICA -- 1.7%
Costco Companies, Inc.
0.00%, 08/19/17
(Cost $80,263)........................... 160,000 86,200
------------
- -------------------------------------------------------------------------------
COMMERCIAL PAPER -- 9.7%
- -------------------------------------------------------------------------------
Associates Corp. of North America
6.370%, 10/01/97......................... 244,000 244,000
J.P. Morgan & Co., Inc.
6.250%, 10/01/97......................... 243,000 243,000
------------
TOTAL COMMERCIAL PAPER
(Cost $487,000)............................................ 487,000
------------
TOTAL INVESTMENTS -- 126.0%
(Cost $5,995,544).......................................... 6,344,082
LIABILITIES IN EXCESS OF OTHER ASSETS -- (26.0%)............. (1,308,841)
------------
NET ASSETS -- 100.0%......................................... $ 5,035,241
------------
</TABLE>
- ------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
64
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
GLOBAL GROWTH & INCOME
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Aerospace................................... 1.0%
Airlines.................................... 2.0
Automotive.................................. 1.7
Automotive Equipment........................ 1.9
Broadcasting................................ 1.0
Chemicals................................... 1.2
Computers/Office Automation................. 3.9
Consumer Electrical......................... 1.1
Department/Discount Stores.................. 4.6
Diversified................................. 1.1
Drugs/Pharmaceuticals....................... 0.6
Electric Utilities.......................... 1.4
Electronic Instruments...................... 0.8
Electronics/Music Chains.................... 0.6
Finance Companies........................... 3.1
Gas Utilities............................... 1.0
Grocery Products............................ 2.6
Integrated Oil Companies.................... 4.6
Investment Companies........................ 1.7
Leisure/Gaming.............................. 0.3
Metals...................................... 1.0
Money Center Banks.......................... 6.9
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Oil/Gas Production.......................... 2.2%
Other Commercial/Industrial Services........ 1.7
Other Consumer Non-Durables................. 1.3
Other Energy................................ 0.9
Other Production/Manufacturing.............. 6.1
Publishing.................................. 1.1
Regional/Commercial Banks................... 1.9
REITS....................................... 8.7
Resorts/Theme Parks......................... 2.0
Retail/Restaurants.......................... 1.4
Savings & Loans/Thrifts..................... 0.9
Semiconductors/Electric Companies........... 3.3
Software.................................... 1.3
Telecommunication Equipment................. 2.8
Telecommunication Services.................. 2.4
Telephone................................... 1.3
Foreign Government Bonds.................... 32.9
Short Term Obligations...................... 9.7
Liabilities in Excess of Other Assets....... (26.0)
-----
NET ASSETS.................................. 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
65
<PAGE>
FULLY DISCRETIONARY FIXED INCOME FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Fred S. Robertson,
Partner, Chief Investment Officer,
Fixed Income Management
James E. Kellerman,
Partner, Portfolio Manager
Malcom S. Day, CFA,
Portfolio Manager
Ashvin Syal, CFA,
Portfolio Manager
GOAL: The Nicholas-Applegate Fully Discretionary Fixed Income Fund seeks to
maximize long-term total return from a portfolio of investment grade
fixed-income securities with an average portfolio duration between two and eight
years.
REVIEW AND OUTLOOK: For much of the six-month period ending September 30, the
U.S. bond market remained balanced between opposite poles. On one hand, reports
of benign inflation buttressed investor confidence and boosted bond prices. On
the other hand, tight capacity in the labor market and concerns that smoldering
wage inflation could ignite broader price hikes pulled bond prices lower.
Economic activity, as measured by monthly reports of Gross Domestic Product
(GDP), showed little evidence of a discernible trend. Rather than provide
insight into the direction and magnitude of the U.S. economy, fluctuations in
GDP growth contributed to heightened market volatility.
The Fund climbed 7.2% in the period vs. a 7.3% gain for the Lehman
Government/Corporate Index.
Our interest-rate exposure did not change in the six-month period. We retained
a relatively neutral stance on rates.
Although the Federal Reserve Board made no changes in monetary policy during
the period, we believe the Fed may increase short-term interest rates early in
1998 when the economy strengthens as we expect.
The Fed has clearly stated its intent to keep inflation in check. Because of
the time lag between changes in monetary policy and their impact, the Fed has
expressed its willingness to take action -- even before a measurable
acceleration in inflation occurs.
Returns for the Fund were enhanced through sector and security selection. A
relatively large allocation to mortgage securities, as well as exposure to
international bonds and select high yield securities were positive contributors
to the Fund's performance.
Because of their yield premium over Treasuries and limited interest-rate
volatility, mortgage securities comprised a significant portion of the Fund for
much of the period.
However, in late August, we reduced our exposure to this sector as some of
mortgages' fundamental strengths eroded. At September-end, mortgage and
asset-backed securities comprised 25% of the Fund vs. 41% on March 31.
Corporate securities accounted for 25% of the Fund while 16% of the Fund was
invested in international bonds as of September 30.
International bonds, particularly European issues, are still attractive. Steep
yield curves and sluggish economic activity in Europe created a positive
environment. We continue to maintain hedged allocations in the international
sector.
Our long-term outlook for the U.S. fixed income market remains positive based
upon solid fundamentals including our long-term positive expectations for
inflation, the strength of the U.S. dollar; and the improved federal budget
deficit.
We continue to seek to add value through sector and issue selection.
- --------------------------------------------------------------------------------
66
<PAGE>
FULLY DISCRETIONARY FIXED INCOME INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
FULLY DISCRETIONARY FIXED INCOME INSTITUTIONAL PORTFOLIO WITH THE LEHMAN
BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
<TABLE>
<S> <C> <C>
1 YEAR ANNUALIZED TOTAL RETURNS Since Inception
9.91% As of 09/30/97 8.59%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FULLY LEHMAN BROTHERS
DISCRETIONARY GOVERNMENT/
FIXED INCOME CORPORATE
FUND BOND INDEX
<S> <C> <C>
8/31/1995 $250,000.00 $250,000.00
9/30/1995 257,850.00 252,550.00
12/31/1995 272,032.00 264,319.00
3/31/1996 263,762.00 258,134.00
6/30/1996 264,975.00 259,321.00
9/30/1996 270,010.00 263,885.00
12/31/1996 278,245.00 271,960.00
3/31/1997 276,858.00 269,621.00
6/30/1997 287,277.00 279,390.88
9/30/1997 296,747.92 289,185.35
</TABLE>
This graph compares a $250,000 investment in the Fully Discretionary Fixed
Income Institutional Portfolio with the Lehman Brothers Government/Corporate
Bond Index, on a cumulative and average annual total return basis. All return
calculations reflect the reinvestment of income and capital gains distributions,
if any, as well as all fees and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Lehman Brothers Government/Corporate Bond Index is an unmanaged
market-weighted index consisting of all public obligations of the U.S.
Government, its agencies and instrumentalities and all corporation issuers of
fixed rate, non-convertible, investment grade U.S. dollar denominated bonds
having maturities of greater than one year. It is generally regarded as
representative of the market for domestic bonds.
Index returns reflect the reinvestment of income and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
67
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
FULLY DISCRETIONARY FIXED INCOME FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------
PREFERRED STOCK -- 0.6%
- ----------------------------------------------------------------------------------
IXC Communications, Inc., 12.50%*
(Cost $75,000)........................... 750 $ 87,000
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ----------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 34.4%
- ----------------------------------------------------------------------------------
U.S. TREASURY BONDS -- 16.3%
9.250%, 02/15/16........................... $ 650,000 844,292
6.500%, 11/15/26........................... 1,515,000 1,524,226
-------------
2,368,518
-------------
U.S. TREASURY NOTES -- 18.1%
6.375%, 03/31/01........................... 75,000 75,950
6.250%, 01/31/02........................... 115,000 116,060
6.625%, 03/31/02........................... 2,350,000 2,405,813
3.625%, 07/15/02........................... 20,000 19,945
-------------
2,617,768
-------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $4,942,852)..............
4,986,286
-------------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
AGENCY OBLIGATIONS -- 15.5%
- -------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 6.9%
Pool 380032
10.000%, 10/01/03........................ 95,691 101,582
Pool 200112
9.500%, 11/01/05......................... 274,684 289,792
Pool E60820
7.000%, 07/01/10......................... 174,999 177,259
Pool E20197
7.000%, 10/01/10......................... 19,991 20,250
Pool E20207
7.000%, 12/01/10......................... 246,907 250,095
Pool E62135
7.000%, 12/01/10......................... 7,542 7,640
Pool G43 PF
6.500%, 02/17/21......................... 150,000 149,202
------------
995,820
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 5.9%
Pool 303481
10.000%, 10/01/05........................ 123,893 132,004
Pool 303758
9.500%, 07/01/06......................... 119,010 125,872
Pool 303262
9.500%, 05/01/07......................... 144,956 152,884
Pool 273114
6.500%, 02/01/09......................... 325,850 325,205
Pool 1993-87 HA
6.000%, 10/25/21......................... 125,000 121,289
------------
857,254
------------
<CAPTION>
PAR
VALUE VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 2.7%
Pool 780236
7.000%, 07/15/08......................... $ 223,347 $ 227,535
Pool 780287
7.000%, 12/15/08......................... 33,540 34,169
Pool 50700
11.500%, 02/15/12........................ 9,023 10,348
Pool 64054
11.500%, 02/15/13........................ 3,978 4,557
Pool 068958
11.500%, 07/15/13........................ 8,938 10,280
Pool 141741
11.000%, 11/15/15........................ 8,916 10,161
Pool 299705
8.500%, 02/15/21......................... 13,467 14,254
Pool 357254
7.500%, 09/15/23......................... 47,169 48,142
Pool 368781
6.500%, 10/15/23......................... 36,098 35,455
------------
394,901
------------
TOTAL AGENCY OBLIGATIONS
(Cost $2,194,022).......................................... 2,247,975
------------
- -------------------------------------------------------------------------------
CORPORATE BONDS -- 24.4%
- -------------------------------------------------------------------------------
AUTO -- 2.0%
Chrysler Corp., Series B
7.450%, 03/01/27......................... 175,000 177,352
Interlake Corp.
12.125%, 03/01/02........................ 100,000 105,000
------------
282,352
------------
BEVERAGES/SOFT DRINKS -- 1.5%
Dr. Pepper Bottling Holdings Co.
0.000%, 02/15/03......................... 215,000 217,956
------------
FINANCE -- 6.6%
Aetna Services, Inc.
7.625%, 08/15/26......................... 150,000 156,372
American Resource Corp.
7.450%, 12/15/26......................... 175,000 180,460
Countrywide Capital III
8.050%, 06/15/27......................... 100,000 105,518
General Motors Acceptance Corp.
6.150%, 09/20/99......................... 200,000 200,138
Indah Kiat International Finance, Series A
11.375%, 06/15/99........................ 200,000 209,750
Safeco Capital Trust I
8.072%, 07/15/37......................... 105,000 106,009
------------
958,247
------------
INDUSTRIAL -- 1.4%
The Gap, Inc.
6.900%, 09/15/07......................... 200 202,454
------------
PRODUCERS/MANUFACTURING -- 0.7%
Doskocil Manufacturing Co., Inc.
10.125%, 09/15/07........................ 100,000 102,750
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
68
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
VALUE VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MUSIC/CLUBS -- 1.8%
Imax Corp.
10.000%, 03/01/01........................ $ 250,000 $ 263,437
------------
REGIONAL BANKS -- 1.8%
Wells Fargo Capital I
7.960%, 12/15/26......................... 250,000 254,085
------------
RESORTS -- 0.7%
Signature Resorts, Inc.
9.750%, 10/01/07......................... 100,000 100,500
------------
SOAPS/COSMETICS -- 0.5%
Revlon Worldwide, Inc., Series B
0.000%, 03/15/01......................... 100,000 72,750
------------
SPECIALTY RETAILING -- 2.1%
Compusa, Inc.
9.500%, 06/15/00......................... 187,000 194,947
Michaels Stores, Inc.
10.875, 06/15/06......................... 100,000 110,000
------------
304,947
------------
STEEL PRODUCERS -- 1.2%
Russel Metals, Inc.
10.250%, 06/15/00........................ 170 177,650
------------
TELEPHONE -- 4.1%
AT&T Capital Corp. - 3
6.520%, 05/14/99......................... 50,000 50,373
BellSouth Capital Funding
7.120%, 07/15/47......................... 115,000 115,000
BellSouth Telecommunications, Inc.
7.000%, 12/01/45......................... 215,000 214,359
BTI Telecom Corp.
10.500%, 09/15/07........................ 100,000 102,750
Highwaymaster Communications, Inc.
13.750%, 09/15/05........................ 100 105,000
------------
587,482
------------
TOTAL CORPORATE BONDS
(Cost $3,483,804).......................................... 3,524,610
------------
<CAPTION>
PAR
VALUE VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
FOREIGN CORPORATE OBLIGATIONS -- 16.6%
- -------------------------------------------------------------------------------
AUSTRALIA -- 2.8%
Australian Government Bond-803
9.500%, 08/15/03......................... $ 475,000 $ 406,877
------------
CANADA -- 1.6%
Canada Government Bond-VZ48
6.250%, 09/15/98......................... 300,000 221,098
------------
DENMARK -- 3.7%
Kingdom of Denmark
6.000%, 11/15/02......................... 3,500,000 538,782
------------
GERMANY -- 8.5%
Federal National Mortgage Association
Global
5.000%, 02/16/01......................... 2,150,000 1,227,563
------------
TOTAL FOREIGN CORPORATE OBLIGATIONS
(Cost $2,464,248).......................................... 2,394,320
------------
- -------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS -- 0.3%
- -------------------------------------------------------------------------------
FNMA Medium Term Notes
6.340%, 07/17/00
(Cost $49,306)........................... 50,000 49,875
------------
- -------------------------------------------------------------------------------
MUTUAL FUNDS -- 7.0%
- -------------------------------------------------------------------------------
Blackrock 2001 Term Trust, Inc........... 82,000 697,000
Blackrock Strategic Term Trust, Inc...... 38,500 320,031
------------
TOTAL MUTUAL FUNDS
(Cost $1,008,813).......................................... 1,017,031
------------
TOTAL INVESTMENTS -- 98.8%
(Cost $14,218,045)......................................... 14,307,097
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.2%................ 171,077
------------
NET ASSETS -- 100.0%......................................... $ 14,478,174
------------
</TABLE>
- ---------------
*Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
69
<PAGE>
SHORT-INTERMEDIATE FIXED INCOME FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Fred S. Robertson,
Partner, Chief Investment Officer,
Fixed Income Management
James E. Kellerman,
Partner, Portfolio Manager
Malcom S. Day, CFA,
Portfolio Manager
GOAL: The Nicholas-Applegate Short-Intermediate Fixed Income Fund seeks
primarily to preserve principal and liquidity and, secondarily, to realize a
relatively high level of current income from a portfolio of investment grade
fixed-income securities with a maximum dollar-weighted maturity of five years.
REVIEW AND OUTLOOK: For much of the six-month period ending September 30, the
U.S. bond market remained balanced between opposite poles. On one hand, reports
of benign inflation buttressed investor confidence and boosted bond prices. On
the other hand, tight capacity in the labor market and concerns that smoldering
wage inflation could ignite broader price hikes pulled bond prices lower.
Economic activity, as measured by monthly reports of Gross Domestic Product
(GDP), showed little evidence of a discernible trend. Rather than provide
insight into the direction and magnitude of the U.S. economy, fluctuations in
GDP growth contributed to heightened market volatility.
The Fund advanced 4.1% in the period vs. a 4.2% gain for the Merrill Lynch 1-3
Year Government Index in the period.
Our interest-rate exposure did not change in the six-month period. We retained
a relatively neutral stance on rates.
Although the Federal Reserve Board made no changes in monetary policy during
the period, we believe the Fed may increase short-term interest rates early in
1998 when the economy strengthens as we expect.
The Fed has clearly stated its intent to keep inflation in check. Because of
the time lag between changes in monetary policy and their impact, the Fed
expressed its willingness to take action -- even before a measurable
acceleration in inflation occurs.
Returns for the Fund were enhanced through sector and security selection. A
relatively large allocation to mortgage securities, as well as exposure to
select asset-backed securities were positive contributors to the Fund's
performance.
Because of their yield premium over Treasuries and limited interest-rate
volatility, mortgage securities comprised a significant portion of the Fund for
much of the period.
However, in late August, we reduced our exposure to this sector as some of
mortgages' fundamental strengths eroded. At September-end, mortgage securities
comprised 49% of the Fund vs. 56% on March 31.
Our long-term outlook for the U.S. fixed income market remains positive based
upon solid fundamentals including:
- our long-term positive expectations for inflation;
- the strength of the U.S. dollar; and
- the improved federal budget deficit.
In addition to retaining our neutral, near-term stance on interest rates, we
will continue to seek to add value through sector and issue selection.
- --------------------------------------------------------------------------------
70
<PAGE>
SHORT-INTERMEDIATE FIXED INCOME INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
SHORT-INTERMEDIATE FIXED INCOME INSTITUTIONAL PORTFOLIO WITH THE MERRILL LYNCH
1-3 YEAR TREASURY INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
6.89% As of 09/30/97 7.16%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SHORT INTERMEDIATE MERRILL LYNCH 1-3 YEAR
FIXED INCOME FUND TREASURY INDEX
<S> <C> <C>
8/31/1995 $ 250,000 $ 250,000
9/95 255,700 251,200
12/95 262,374 257,505
3/96 263,318 258,381
6/96 265,636 260,990
9/96 270,098 265,297
12/96 275,095 270,364
3/97 277,288 272,148
6/96 283,596.22 278,141.96
9/30/96 288,701.85 283,593.66
</TABLE>
This graph compares a $250,000 investment in the Short-Intermediate Fixed Income
Institutional Portfolio with the Merrill Lynch 1-3 Year Treasury Index, on a
cumulative and average annual total return basis. All return calculations
reflect the reinvestment of income and capital gains distributions, if any, as
well as all fees and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Merrill Lynch 1-3 Year Treasury is an index consisting of all public U.S.
Treasury obligations having maturities from one to 2.99 years. It includes
income and distributions but does not reflect fees, brokerage commissions or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
71
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
SHORT-INTERMEDIATE FIXED INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 22.4%
- ---------------------------------------------------------------------
U.S. TREASURY NOTES -- 22.4%
5.125%, 11/30/98........................... $1,675,000 $1,664,012
7.750%, 11/30/99........................... 1,235,000 1,282,078
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $2,941,280)...................................... 2,946,090
----------
- ---------------------------------------------------------------------
AGENCY OBLIGATIONS -- 49.7%
- ---------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 29.1%
Pool 380032
10.000%, 10/01/03........................ 81,091 86,084
Pool B00455
9.000%, 12/01/03......................... 643,162 668,990
Pool 380062
9.500%, 11/01/04......................... 201,466 213,365
Pool 1472 E
6.250%, 02/15/05......................... 200,000 200,000
Pool 380078
9.000%, 04/01/05......................... 418,638 439,374
Pool 200112
9.500%, 11/01/05......................... 122,973 129,526
Pool 504019
9.000%, 03/01/06......................... 230,436 239,149
Pool B00623
9.000%, 06/01/06......................... 538,021 560,551
WMF Huntoon Paige
5.150%, 01/01/07......................... 231,366 221,100
Pool G10453
9.000%, 06/01/07......................... 397,813 419,755
Pool 1836 D
6.250%, 04/15/16......................... 300,000 299,250
Pool 1552 EA
5.850%, 01/15/17......................... 185,000 183,553
Pool FHG31 D
0.000%, 04/25/24......................... 225,000 164,391
----------
3,825,088
----------
FEDERAL HOME LOAN MORTGAGE DISCOUNT NOTES -- 2.3%
5.920%, 10/01/97........................... 300,000 300,000
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 7.3%
Pool 50155
10.000%, 12/01/03........................ 6,371 6,825
Pool 070722
9.000%, 01/01/06......................... 297,397 313,522
Pool 303758
9.500%, 07/01/06......................... 302,641 320,091
Pool 2454
14.750%, 10/01/12........................ 5,678 6,899
Pool G93-40 D
5.700%, 07/25/16......................... 200,000 197,374
Pool 1993-136 PB
6.000%, 03/25/19......................... 120,000 118,763
----------
963,474
----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 11.0%
Pool 780328
10.000%, 10/15/06........................ $ 418,587 $ 448,151
Pool 780306
9.000%, 11/15/06......................... 351,130 366,711
Pool 780182
9.000%, 01/15/08......................... 525,495 548,486
Pool 064054
11.500%, 02/15/13........................ 3,978 4,557
Pool 059779
11.500%, 03/15/13........................ 2,628 3,015
Pool 780179
12.000%, 10/15/15........................ 57,539 67,094
Pool 141741
11.000%, 11/15/15........................ 6,269 7,144
Pool 200947
9.500%, 12/15/17......................... 4,279 4,662
----------
1,449,820
----------
TOTAL AGENCY OBLIGATIONS
(Cost $6,474,948)...................................... 6,538,382
----------
- ---------------------------------------------------------------------
CMO'S AND ASSET-BACKED OBLIGATIONS -- 11.3%
- ---------------------------------------------------------------------
AUTOMOBILES -- 3.6%
Daimler-Benz Auto Grantor Trust 1993-A A
3.900%, 10/15/98......................... 378 377
Premier Auto Trust 1995-2 A5
7.150%, 02/04/99......................... 124,837 125,188
Premier Auto Trust 1995-3 A4
6.100%, 07/06/99......................... 235,301 235,595
Honda Auto Receivables Grantor Trust Series
1997-A A
5.850%, 02/15/03......................... 116,435 116,363
----------
477,523
----------
BANKING -- 4.8%
Standard Credit Card Master Trust 1995-10 A
5.900%, 02/07/01......................... 200,000 199,812
Signet Credit Card Master Trust 1993-1 A
5.200%, 02/15/02......................... 285,000 282,595
First Deposit Master Trust 1995-2 A
6.050%, 08/15/02......................... 150,000 150,046
----------
632,453
----------
FINANCIAL SERVICES -- 2.9%
Standard Credit Card Master Trust 1993-3 A
5.500%, 02/07/00......................... 80,000 79,450
Discover Card Master Trust I
5.715%, 02/15/05......................... 300,000 300,000
----------
379,450
----------
TOTAL CMO'S AND ASSET-BACKED SECURITIES
(Cost $1,490,724)...................................... 1,489,426
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
72
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
MUTUAL FUNDS -- 9.3%
- ---------------------------------------------------------------------------------------------------
Blackrock 2001 Term Trust, Inc...................................... 72,000 $ 612,000
Blackrock Strategic Term Trust, Inc................................. 73,400 610,138
------------
TOTAL MUTUAL FUNDS
(Cost $1,214,158)................................................................. 1,222,138
------------
- ---------------------------------------------------------------------------------------------------
VARIABLE RATE OBLIGATIONS -- 5.8%
- ---------------------------------------------------------------------------------------------------
BANKING -- 1.8%
Bankamerica Capital Trust III
6.320%, 01/15/27.................................................. 120,000 118,132
Chase Capital II
6.219%, 02/01/27.................................................. 120,000 117,119
------------
235,251
------------
FINANCE COMPANIES -- 2.2%
Nationsbank CMLT 1997-1A
5.829%, 09/20/02.................................................. 300,000 300,187
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
FINANCIAL SERVICES -- 1.8%
Nationsbank Capital Trust II
6.300%, 01/15/27.................................................. 120,000 $ 117,900
Wachovia Capital Trust II
6.250%, 01/15/27.................................................. 120,000 117,900
------------
235,800
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $772,451)................................................................... 771,238
------------
TOTAL INVESTMENTS -- 98.5%
(Cost $12,893,561)................................................................ 12,967,274
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.5%....................................... 196,136
------------
NET ASSETS -- 100.0%................................................................ $ 13,163,410
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
73
<PAGE>
STRATEGIC INCOME FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Fred S. Robertson,
Partner, Chief Investment Officer,
Fixed Income Management
Catherine Somhegyi,
Partner, Chief Investment Officer,
Global Equity Management
Alan Brochstein,
Portfolio Manager
Sandra K. Durn,
Portfolio Manager
Douglas G. Forsyth, CFA,
Portfolio Manager
David Smith,
Portfolio Manager
GOAL: The Nicholas-Applegate Strategic Income Fund seeks to provide a high
level of current income and long-term capital appreciation through investment in
convertible, high yield, and mortgage-backed securities.
REVIEW AND OUTLOOK: Combining a mix of mortgage-backed, convertible, and high
yield securities, the Strategic Income Fund is designed to meet the needs of
investors seeking enhanced return potential when investing in fixed
income-related securities. The diverse asset classes comprising the Fund have
excellent risk/return profiles. The low correlation among these asset classes
provides the potential for compelling relative performance in a variety of
market environments.
For much of the six-month period ending September 30, the U.S. bond market
remained balanced between dichotomous poles. On one hand, reports of benign
inflation buttressed investor confidence and boosted bond prices. On the other
hand, tight capacity in the labor market and concerns that smoldering wage
inflation could ignite broader price hikes pulled bond prices lower.
In the period, the Fund was up 10.1% vs. a 5.6% gain for the Lehman Aggregate
Index. An equal-weighted composite of the Lehman Mortgage-Backed Securities
Index, the First Boston High Yield Index, and the First Boston Convertible
Securities Index advanced 9.0%.
A resurgence among small- and mid-cap stocks in the period bolstered returns
for both the convertible-and high-yield bond portions of the Fund.
The Fund's convertible holdings reflect our emphasis on securities issued by
smaller-cap companies. As small caps attracted increased investor recognition,
the underlying common stock and the corresponding convertible securities
appreciated significantly. Our bottom-up approach to issue selection was
responsible for solid gains.
Among the Fund's high yield holdings, individual security selection was also
the primary factor driving performance. In addition, the environment for high
yield bonds was very attractive due to:
- low inflation;
- a growing economy;
- stable interest rates;
- solid small-cap stock performance; and
- a low default rate.
For much of the six-month period, mortgages delivered strong returns as a
result of their yield premium over Treasuries and limited interest-rate
volatility.
Our long-term outlook for the U.S. fixed income market remains positive based
upon solid fundamentals including: our long-term positive expectations for
inflation; the strength of the U.S. dollar; and the improved federal budget
deficit. We believe the complementary nature of the securities which comprise
the Strategic Income Fund will continue to provide downside protection, current
income, and appreciation potential.
- --------------------------------------------------------------------------------
74
<PAGE>
STRATEGIC INCOME INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
STRATEGIC INCOME INSTITUTIONAL PORTFOLIO WITH A MODEL INDEX CONSISTING OF 1/3
LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX, 1/3 FIRST BOSTON CONVERTIBLE
INDEX AND 1/3 FIRST BOSTON HIGH YIELD BOND INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
18.90% As of 09/30/97 21.67%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STRATEGIC INCOME INSTITUTIONAL
PORTFORLIO MODEL INDEX
31-JUL-96 $ 250,000.00 $ 250,000.00
30-SEP-96 $ 264,175.16 $ 259,283.95
<S> <C> <C>
31-Dec-96 $ 272,990.92 $ 268,164.66
31-Mar-97 $ 277,664.93 $ 270,301.77
30-Jun-97 $ 298,228.33 $ 285,437.65
30-Sep-97 $ 314,100.28 $ 302,455.54
</TABLE>
This graph compares a $250,000 investment in the Strategic Income Institutional
Portfolio with a model index consisting of 1/3 Lehman Brothers Mortgage-Backed
Securities Index, 1/3 First Boston Convertible Index and 1/3 First Boston High
Yield Bond Index, on a cumulative return basis. All return calculations reflect
the reinvestment of income dividends and capital gains distributions, if any, as
well as all fees and expenses applicable to the Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The Lehman Brothers Mortgage-Backed Securities Index is an unmanaged index
consisting of fixed-rate securities backed by mortgage pools of the Government
National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation
(FHLMC) and Federal National Mortgage Association (FNMA).
The First Boston Convertible Index is an unmanaged market weighted index
representing the universe of convertible securities whether they are convertible
preferred stocks or convertible bonds.
The First Boston High Yield Index is an unmanaged index that generally includes
over 180 issues with an average maturity range of seven to ten years with a
minimum capitalization of $100 million. All issues are individually
trader-priced monthly.
Index returns reflect the reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
75
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
PREFERRED STOCKS -- 29.3%
- -------------------------------------------------------------------------------
BROADCASTING -- 1.6%
Chancellor Media*, 12.250%................. 500 $ 68,500
------------
FINANCE COMPANIES -- 3.4%
Finova Finance Trust 5.500%................ 2,250 148,219
------------
GAS UTILITIES -- 1.8%
MCN Energy Group, Inc. 8.750% (Prides)..... 2,600 79,300
------------
INDUSTRIAL -- 2.9%
Ralston Purina Co.*, 7.000%................ 1,850 124,644
------------
INTEGRATED OIL COMPANIES -- 2.1%
Occidental Petroleum - Series 1993,
$3.875................................... 1,500 88,125
------------
INVESTMENT COMPANIES -- 2.2%
Merrill Lynch - Series IGL 6.250%
(Strypes)................................ 2,500 96,562
------------
METALS -- 2.4%
AK Steel Holding Corp. 7.000% (Sails)...... 2,800 102,375
------------
MULTI-LINE INSURERS -- 2.8%
American Bankers Insurance - Series B,
$3.125................................... 1,500 123,000
------------
OTHER ENERGY -- 2.9%
Calenergy Capital Trust 3, 6.500%.......... 2,600 125,450
------------
PUBLISHING -- 2.0%
Houston Industries, Inc.*, 7.000% (Aces)... 1,700 88,400
------------
TELECOMMUNICATION SERVICES -- 2.7%
IXC Communications* Inc., 12.500%.......... 1,000 116,000
------------
TELEPHONE -- 2.5%
Nortel Inversora 10.000%................... 2,000 108,000
------------
TOTAL PREFERRED STOCKS
(Cost $1,149,699).......................................... 1,268,575
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- -------------------------------------------------------------------------------
CORPORATE BONDS -- 33.3%
- -------------------------------------------------------------------------------
BEVERAGES/SOFT DRINKS -- 2.3%
Dr. Pepper Bottling Holdings Co.
0.000%, 02/15/03......................... $ 100,000 100,125
------------
COMMERCIAL/INDUSTRIAL SERVICES -- 1.6%
Musicland Group
9.000% 06/15/03.......................... 75,000 67,313
------------
ELECTRONIC INSTRUMENTS -- 2.3%
Electronic Retailing Systems, Inc.
0.000%, 02/01/04......................... 150,000 100,500
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
ENTERTAINMENT -- 2.7%
All American Communications, Inc Series B
10.875%, 10/15/01........................ $ 50,000 $ 54,750
Loews Corporation
3.125%, 09/15/07......................... 60,000 62,175
------------
116,925
------------
FINANCE COMPANIES -- 2.1%
Ocwen Financial Corp.
11.875%, 10/01/03........................ 80,000 89,500
------------
INDUSTRIAL ENGINEERING /CONSTRUCTION -- 3.8%
Empresas ICA, Sociedad
5.000%, 03/15/04......................... 135,000 111,206
Russel Metals Inc. Senior Notes
10.250%, 06/15/00........................ 50,000 52,250
------------
163,456
------------
INTEGRATED OIL COMPANIES -- 1.2%
Rutherford-Moran Oil Co.
10.750%, 10/01/04........................ 50,000 51,750
------------
LIFE INSURERS -- 3.0%
DecisionOne Corp.
9.750%, 08/01/07......................... 50,000 52,125
Penn Treaty American Corp.
6.250%, 12/01/03......................... 60,000 79,725
------------
131,850
------------
MONEY CENTERS/BANKS -- 2.5%
Banamex
11.000%, 07/15/03........................ 100,000 107,500
------------
OTHER CONSUMER DURABLES -- 1.2%
Associated Materials, Inc.
11.500%, 08/15/03........................ 50,000 53,250
------------
PRODUCERS/MANUFACTURING -- 1.6%
Doskocil Manufacturing Co. Inc.
10.125%, 09/15/07........................ 50,000 51,375
Foodmaker, Inc.
9.250%, 03/01/99......................... 18,000 18,472
------------
69,847
------------
RESORTS -- 1.2%
Signature Resorts, Inc.
9.750%, 10/01/07......................... 50,000 50,375
------------
SOAPS/COSMETICS -- 1.2%
Drypers Corp.
10.250%, 06/15/07........................ 50,000 50,250
------------
SPECIALTY RETAILING -- 1.9%
Michaels Stores, Inc.
10.875%, 06/15/06........................ 75,000 82,500
------------
TELECOMMUNICATIONS -- 1.4%
Telesystem International Wireless
0.000%, 06/30/07......................... 100,000 62,375
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
76
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS -- 33.3% (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELEPHONE -- 3.3%
Nextel Communications, Inc. Sr. Disc. Notes
0.000%, 09/01/03......................... $ 100,000 $ 97,000
BTI Telecom Corp.
10.500%, 09/15/07........................ 45,000 46,238
------------
143,238
------------
TOTAL COPORATE BONDS
(Cost $1,375,361).......................................... 1,440,754
------------
- -------------------------------------------------------------------------------
AGENCY OBLIGATIONS -- 23.2%
- -------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 7.9%
Pool 380003
9.500%, 06/01/02......................... 25,150 26,121
Pool 380062
9.500%, 11/01/04......................... 60,793 64,384
Pool 504019
9.000%, 03/01/06......................... 46,087 47,830
Pool 1734 E
6.000%, 10/15/06......................... 65,000 64,654
Pool 1590 G
6.000%, 10/15/21......................... 60,000 58,331
Pool 1579 PM
6.700%, 09/01/23......................... 60,000 58,725
Pool 1591 PK
6.350%, 10/01/23......................... 22,000 20,790
------------
340,835
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 6.6%
Pool 2468
10.500%, 12/01/00........................ 82,969 86,898
Pool 50319
9.500%, 06/01/05......................... 51,696 55,153
G1993-40 D
5.700%, 07/25/16......................... 65,000 64,147
G1994-9
6.500%, 09/01/21......................... 50,000 49,718
1993-187 L
6.500%, 07/25/23......................... 33,000 31,886
------------
287,802
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 8.7%
Pool 346237
7.500%, 02/01/23......................... $ 30,159 $ 30,781
Pool 334305
7.500%, 06/15/23......................... 33,233 33,919
Pool 348909
7.500%, 08/15/23......................... 43,049 43,937
Pool 357262
7.500%, 09/15/23......................... 123,633 126,183
Pool 354713
7.500%, 12/15/23......................... 137,253 140,083
------------
374,903
------------
TOTAL AGENCY OBLIGATIONS
(Cost $983,264)............................................ 1,003,540
------------
<CAPTION>
NUMBER
OF SHARES
<S> <C> <C>
- -------------------------------------------------------------------------------
MUTUAL FUNDS -- 9.4%
- -------------------------------------------------------------------------------
Blackrock 2001 Term Trust, Inc............. 25,000 212,500
Blackrock Strategic Term Trust, Inc........ 23,500 195,345
------------
TOTAL MUTUAL FUNDS
(Cost $405,371)............................................ 407,845
------------
- -------------------------------------------------------------------------------
WARRANTS -- 0.2%
- -------------------------------------------------------------------------------
ELECTRONIC INSTRUMENTS -- 0.2%
Electronic Retailing Systems, Inc.*........ 150 9,000
------------
TELECOMMUNICATIONS EQUIPMENT -- 0.0%
Optel, Inc.*............................... 75 1
------------
TOTAL WARRANTS
(Cost $6,110).............................................. 9,001
------------
TOTAL INVESTMENTS -- 95.4%
(Cost $3,919,805).......................................... 4,129,715
OTHER ASSETS IN EXCESS OF LIABILITIES -- 4.6%................ 197,905
------------
NET ASSETS -- 100.0%......................................... $ 4,327,620
------------
</TABLE>
- ---------------
*Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
77
<PAGE>
HIGH YIELD BOND FUND
INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Fred S. Robertson,
Partner, Chief Investment Officer,
Fixed Income Management
Douglas G. Forsyth, CFA,
Portfolio Manager
Jan Friedli,
Portfolio Manager
Susan Malone,
Portfolio Manager
GOAL: The Nicholas-Applegate High Yield Fund seeks to deliver total return via
high current income and long-term capital appreciation from a diversified
portfolio consisting primarily of U.S. corporate fixed income securities.
REVIEW AND OUTLOOK: The following factors contributed to the positive
environment for high yield bonds in the six-month period ending September 30:
- low inflation;
- a growing economy;
- stable interest rates;
- solid small-cap stock performance; and
- a low default rate.
Strong inflows to high-yield bond funds coupled with a record pace of new
issues providing new investment opportunities continued to drive the high-yield
market. Inflows in the first half of the year totaled $9.3 billion versus $6.4
billion in the first half of 1996. New issuance in the first half of 1997 was
$57.6 billion versus $41.6 billion in the first six months of 1996.
The net return for the Nicholas-Applegate High Yield Fund between April 1 and
September 30 was 16.4% versus 9.2% for the First Boston High Yield Index. The
Lehman Government/Corporate Index gained 7.3% during the period.
At Nicholas-Applegate, our approach to the high-yield market is an extension
of our bottom-up equity philosophy in which we invest in growing companies. We
seek holdings demonstrating the following criteria:
- positive fundamental change leading to earnings growth, cash flow growth,
debt reduction, and potential credit-quality upgrade;
- sustainability of improvement; and
- timeliness of investment.
Individual security selection was the primary factor driving the Fund's
outperformance. Among the high-yield holdings contributing to the Fund's advance
in the period were bonds issued by Foodmaker, owner of the Jack in the Box
restaurant chain, and Revlon, a manufacturer and distributor of beauty products.
Because of our bottom-up approach to high yield investing and focus on company
fundamentals, we believe we will continue to find attractive high yield
investment opportunities regardless of the macroeconomic environment. We look
forward to building upon the Fund's recent outperformance.
REPRESENTATIVE HOLDINGS
Chancellor Media 12.25% 2/15/08
Foodmaker 9.25% 3/1/99
Michaels Stores 10.88% 6/15/06
Nextel Communications 0/11.5% 9/1/03
Signature Resorts 9.75% 10/1/07
- --------------------------------------------------------------------------------
78
<PAGE>
HIGH YIELD BOND INSTITUTIONAL PORTFOLIO
- ------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN NICHOLAS-APPLEGATE
HIGH YIELD BOND INSTITUTIONAL PORTFOLIO WITH THE FIRST BOSTON HIGH YIELD INDEX.
<TABLE>
<S> <C> <C>
SINCE
1 YEAR ANNUALIZED TOTAL RETURNS INCEPTION
24.74% As of 09/30/97 27.41%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HIGH YIELD BOND INSTITUTIONAL
PORTFOLIO FIRST BOSTON HIGH YIELD BOND INDEX
31-JUL-96 $ 250,000.00 $ 250,000.00
30-SEP-96 $ 265,701.85 $ 257,071.87
<S> <C> <C>
31-Dec-96 $ 278,313.49 $ 268,409.15
31-Mar-97 $ 284,739.53 $ 272,366.41
30-Jun-97 $ 305,704.81 $ 284,126.03
30-Sep-97 $ 331,437.96 $ 297,492.29
</TABLE>
This graph compares a $250,000 investment in the High Yield Bond Institutional
Portfolio with the First Boston High Yield Index, on a cumulative return basis.
All return calculations reflect the reinvestment of income dividends and capital
gains distributions, if any, as well as all fees and expenses applicable to the
Portfolio.
The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.
The First Boston High Yield Index includes over 180 U.S. domestic issues with an
average maturity range of seven to ten years and with a minimum issues size of
$100 million.
The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
79
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- ------------------------------------------------------------------------
HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCK -- 1.5%
- -------------------------------------------------------------------------------
TELEPHONE -- 1.5%
Nextlink Communications, Inc. *, Class A
(Cost $51,000)........................... 3,000 $ 72,000
------------
- -------------------------------------------------------------------------------
PREFERRED STOCKS -- 11.1%
- -------------------------------------------------------------------------------
BROADCASTING -- 5.7%
Chancellor Media, Inc. *, $12.250.......... 2,000 274,000
------------
TELECOMMUNICATION SERVICES -- 5.4%
IXC Communications, Inc. *, 12.500%........ 2,250 261,000
------------
TOTAL PREFERRED STOCKS
(Cost $474,842)............................................ 535,000
------------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS -- 85.5%
- ---------------------------------------------------------------------------------------------------
AUTOMOTIVE EQUIPMENT -- 3.3%
Interlake Corp.
12.125%, 03/01/02................................................. $ 150,000 156,375
------------
BEVERAGES/SOFT DRINKS -- 4.7%
Dr. Pepper Bottling Holdings Co.
02/15/03.......................................................... 225,000 225,281
------------
COMMERCIAL/INDUSTRIAL SERVICES -- 6.5%
Musicland Group,
9.000%, 06/15/03.................................................. 175,000 157,062
Rutherford-Moran Oil,
10.750%, 10/01/04................................................. 150,000 155,250
------------
312,312
------------
COMPUTER/OFFICE AUTOMATION -- 4.3%
DecisionOne Corp.
9.750%, 08/01/07.................................................. 200,000 208,500
------------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 4.2%
Electronic Retailing Systems Inc.
02/01/04.......................................................... 300,000 201,000
------------
ENTERTAINMENT -- 4.6%
All American Communications, Inc.
10.875%, 10/15/01................................................. 200,000 219,000
------------
FINANCE -- 8.4%
Ocwen Financial Corp.
11.875%, 10/01/03................................................. 175,000 195,781
Resource America, Inc.
12.000%, 08/01/04................................................. 200,000 208,500
------------
404,281
------------
OTHER CONSUMER DURABLES -- 2.2%
Associated Materials, Inc.
11.500%, 08/15/03................................................. 100,000 106,500
------------
PRODUCERS/MANUFACTURING -- 4.3%
Doskocil Manufacturing Co., Inc.
10.130%, 09/15/07................................................. 200,000 205,500
------------
RAILROAD EQUIPMENT -- 5.6%
Hermes Europe Railtel, BV
11.500%, 08/15/07................................................. 250,000 270,000
------------
<CAPTION>
PAR
VALUE VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
RESORTS -- 4.2%
Signature Resorts, Inc.
9.750%, 10/01/07.................................................. $ 200,000 $ 201,500
------------
RESTAURANTS -- 0.4%
Foodmaker, Inc.
9.250%, 03/01/99.................................................. 18,000 18,472
------------
SOAPS/COSMETICS -- 8.0%
Drypers Corp.
10.250%, 06/15/07................................................. 200,000 201,000
Revlon Worldwide Series B
03/15/01.......................................................... 250,000 181,250
------------
382,250
------------
SPECIALTY RETAILING -- 4.6%
Michaels Stores, Inc.
10.875%, 06/15/06................................................. 200,000 220,000
------------
TELECOMMUNICATIONS -- 15.8%
Highwaymaster Communications, Inc. 13.750%, 09/15/05................ 250,000 262,500
Nextel Communications, Inc.
11.500%, 09/01/03................................................. 200,000 194,000
Nextlink Communications,
9.625%, 10/01/07.................................................. 200,000 208,500
Telesystem International Wireless,
13.250%, 06/30/07................................................. 150,000 93,563
------------
758,563
------------
TELEPHONE -- 4.4%
BTI Telecom Corp.
10.500%, 09/15/07................................................. 205,000 210,638
------------
TOTAL CORPORATE BONDS
(Cost $3,978,483)................................................................. 4,100,172
------------
<CAPTION>
NUMBER
OF SHARES
<S> <C> <C>
- -------------------------------------------------------------------------------
WARRANTS -- 0.4%
- -------------------------------------------------------------------------------
ELECTRONIC INSTRUMENTS -- 0.4%
Electronic Retailing Systems *............. 300 18,000
------------
TELECOMMUNICATIONS EQUIPMENT -- 0.0%
Optel, Inc. *.............................. 200 2
------------
TOTAL WARRANTS
(Cost $12,219)............................................. 18,002
------------
- -------------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.4%
- -------------------------------------------------------------------------------
J.P. Morgan & Co., Inc.
6.250%, 10/01/97......................... 114 114,000
------------
TOTAL INVESTMENTS -- 100.9%
(Cost $4,630,544).......................................... 4,839,174
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.9%).............. (41,657)
------------
NET ASSETS -- 100.0%......................................... $ 4,797,517
------------
</TABLE>
- ---------------
*Non-Income Producing Security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
80
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
81
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED AND DISTRIBUTIONS
VALUES AT INVESTMENT UNREALIZED GAINS FROM NET DISTRIBUTIONS
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM
OF PERIOD (DEFICIT) INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
MINI-CAP GROWTH+
Institutional (For the
period ended 09/30/97)#... $ 15.94 $ 0.04 $ 9.32 -- --
Institutional (For the year
ended 03/31/97)........... 15.85 (0.17) 0.84 -- $ (0.58)
Institutional (For the
period ended 03/31/96).... 12.50 (0.05) 3.40 -- --
EMERGING GROWTH++
Institutional (For the
period ended 09/30/97)#... 11.06 (0.01) 5.13 -- --
Institutional (For the year
ended 03/31/97)........... 15.10 (0.08) (0.31) -- (3.65)
Institutional (For the year
ended 03/31/96)........... 11.58 (0.11) 4.45 -- (0.82)
Institutional (For the year
ended 03/31/95)........... 11.38 (0.05) 0.95 -- (0.70)
Institutional (For the
period ended 03/31/94).... 12.50 (0.04) (0.69) -- (0.39)
CORE GROWTH+++
Institutional (For the
period ended 09/30/97)#... 15.39 (0.05) 4.75 -- --
Institutional (For the year
ended 03/31/97)........... 16.26 (0.08) 0.49 -- (1.28)
Institutional (For the year
ended 03/31/96)........... 12.62 (0.03) 4.47 -- (0.80)
Institutional (For the year
ended 03/31/95)........... 12.68 (0.01) 0.38 -- (0.43)
Institutional (For the
period ended 03/31/94).... 12.50 (0.01) 0.92 -- (0.73)
LARGE CAP GROWTH++++
Institutional (For the
period ended 09/30/97)#... 13.00 (0.02) 5.00 -- --
Institutional (For the
period ended 03/31/97).... 12.50 -- 0.50 -- --
VALUE+++++
Institutional (For the
period ended 09/30/97)#... 15.06 0.05 5.26 -- --
Institutional (For the
period ended 03/31/97).... 12.50 1.50 3.11 $ (1.44) (0.61)
INCOME & GROWTH+++
Institutional (For the
period ended 09/30/97)#... 14.97 0.35 2.86 (0.21) --
Institutional (For the year
ended 03/31/97)........... 14.45 0.51 1.51 (0.52) (0.98)
Institutional (For the year
ended 03/31/96)........... 11.86 0.53 2.59 (0.53) --
Institutional (For the year
ended 03/31/95)........... 13.39 0.54 (0.85) (0.54) (0.68)
Institutional (For the
period ended 03/31/94).... 12.50 0.42 2.12 (0.42) (1.23)
BALANCED GROWTH++
Institutional (For the
period ended 09/30/97)#... 13.94 0.33 3.79 (0.18) --
Institutional (For the year
ended 03/31/97)........... 14.20 0.36 0.75 (0.33) (1.04)
Institutional (For the year
ended 03/31/96)........... 12.01 0.37 2.19 (0.37) --
Institutional (For the year
ended 03/31/95)........... 11.71 0.22 0.30 (0.22) --
Institutional (For the
period ended 03/31/94).... 12.50 0.08 (0.79) (0.08) --
EMERGING COUNTRIES++++++
Institutional (For the
period ended 09/30/97)#... 17.45 0.06 3.31 -- --
Institutional (For the year
ended 03/31/97)........... 14.02 (0.06) 3.62 (0.05) (0.13)
Institutional (For the year
ended 03/31/96)........... 10.91 -- 3.16 (0.05) --
Institutional (For the
period ended 03/31/95).... 12.50 0.08 (1.66) (0.01) --
INTERNATIONAL SMALL CAP+++++++
Institutional (For the
period ended 09/30/97)#... 17.02 (0.10) 3.68 -- --
Institutional (For the year
ended 03/31/97)........... 15.05 -- 2.28 (0.08) (0.23)
Institutional (For the year
ended 03/31/96)........... 13.09 0.06 2.02 (0.12) --
Institutional (For the year
ended 03/31/95)........... 13.47 0.02 (0.22) (0.06) (0.12)
Institutional (For the
period ended 03/31/94).... 12.50 0.01 0.96 -- --
INTERNATIONAL CORE GROWTH++++
Institutional (For the
period ended 09/30/97)#... 14.13 -- 3.80 -- --
Institutional (For the
period ended 03/31/97).... 12.50 -- 1.63 -- --
WORLDWIDE GROWTH++
Institutional (For the
period ended 09/30/97)#... 14.21 0.27 3.48 -- --
Institutional (For the year
ended 03/31/97)........... 15.42 (0.12) 2.08 -- (3.17)
Institutional (For the year
ended 03/31/96)........... 13.06 0.06 2.58 (0.28) --
Institutional (For the year
ended 03/31/95)........... 13.15 (0.01) (0.04) (0.04) --
Institutional (For the
period ended 03/31/94).... 12.50 -- 0.65 -- --
GLOBAL GROWTH & INCOME++++++++
Institutional (For the
period ended 09/30/97)#... 12.50 0.08 3.33 -- --
FULLY DISCRETIONARY FIXED
INCOME+++++++++
Institutional (For the
period ended 09/30/97)#... 12.54 0.80 0.09 (0.42) --
Institutional (For the year
ended 03/31/97)........... 12.72 0.79 (0.17) (0.80) --
Institutional (For the
period ended 03/31/96).... 12.50 0.45 0.47 (0.44) (0.26)
SHORT-INTERMEDIATE FIXED
INCOME+++++++++
Institutional (For the
period ended 09/30/97)#... 12.66 0.79 (0.28) (0.42) --
Institutional (For the year
ended 03/31/97)........... 12.79 0.79 (0.13) (0.79) --
Institutional (For the
period ended 03/31/96).... 12.50 0.37 0.29 (0.37) --
STRATEGIC INCOME++++++++++
Institutional (For the
period ended 09/30/97)#... 13.06 0.87 0.82 (0.43) --
Institutional (For the
period ended 03/31/97).... 12.50 0.61 0.76 (0.61) (0.20)
HIGH YIELD BOND++++++++++
Institutional (For the
period ended 09/30/97)#... 13.20 1.09 1.03 (0.54) --
Institutional (For the
period ended 03/31/97).... 12.50 0.74 0.95 (0.73) (0.26)
</TABLE>
- ------------------------
+ Mini-Cap Institutional Portfolio commenced operations on July 12,
1995.
++ Emerging Growth, Balanced Growth and Worldwide Growth Institutional
Portfolios commenced operations on October 1, 1993.
+++ Core Growth and Income & Growth Institutional Portfolios commenced
operations on April 19, 1993.
++++ Large Cap and International Core Institutional Portfolios commenced
operations on December 27, 1996.
+++++ Value Institutional Portfolio commenced operations on April 30, 1996.
++++++ Emerging Countries Institutional Portfolio commenced operations on
November 28, 1994.
+++++++ International Small Cap Growth Institutional Portfolio commenced
operations on January 3, 1994.
++++++++ Global Growth & Income Institutional Portfolios commenced operations
on June 30, 1997.
+++++++++ Fully Discretionary and Short-Intermediate Fixed Income Institutional
Portfolios commenced operations on August 31, 1995.
++++++++++ Strategic Income and High Yield Bond Institutional Portfolios
commenced operations on July 31, 1996.
* Annualized.
** Includes expenses allocated from the Master Trust Funds. See Notes
to Funds' Financial Statements for amounts.
# Unaudited.
- --------------------------------------------------------------------------------
82
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF
EXPENSES TO EXPENSES TO
AVERAGE NET AVERAGE NET
ASSETS, AFTER ASSETS, BEFORE
NET ASSET EXPENSE EXPENSE
VALUES AT TOTAL NET ASSETS AT REIMBURSEMENT REIMBURSEMENT
END OF PERIOD RETURN END OF PERIOD AND FEE WAIVER** AND FEE WAIVER**
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
MINI-CAP GROWTH+
Institutional (For the
period ended 09/30/97)#... $ 25.30 58.72% $102,223,011 1.57%* 1.88%*
Institutional (For the year
ended 03/31/97)........... 15.94 3.90% 28,711,622 1.56% 1.99%
Institutional (For the
period ended 03/31/96).... 15.85 26.80% 25,237,077 1.55%* 2.46%*
EMERGING GROWTH++
Institutional (For the
period ended 09/30/97)#... 16.18 46.29% 276,161,896 1.17%* 1.43%*
Institutional (For the year
ended 03/31/97)........... 11.06 (5.66%) 167,230,059 1.17% 1.26%
Institutional (For the year
ended 03/31/96)........... 15.10 38.27% 224,077,027 1.16% 1.20%
Institutional (For the year
ended 03/31/95)........... 11.58 8.69% 206,695,605 1.18% 1.24%
Institutional (For the
period ended 03/31/94).... 11.38 (6.06%) 165,939,862 1.17%* 1.18%*
CORE GROWTH+++
Institutional (For the
period ended 09/30/97)#... 20.09 30.54% 160,853,593 0.99%* 1.21%*
Institutional (For the year
ended 03/31/97)........... 15.39 1.74% 156,443,417 1.00% 1.02%
Institutional (For the year
ended 03/31/96)........... 16.26 35.81% 149,969,371 0.98% 1.06%
Institutional (For the year
ended 03/31/95)........... 12.62 3.30% 72,825,771 0.99% 1.07%
Institutional (For the
period ended 03/31/94).... 12.68 6.84% 77,947,252 0.97%* 1.14%*
LARGE CAP GROWTH++++
Institutional (For the
period ended 09/30/97)#... 17.98 38.31% 1,783,055 1.01%* 4.13%*
Institutional (For the
period ended 03/31/97).... 13.00 4.00% 1,292,965 1.00%* 4.99%*
VALUE+++++
Institutional (For the
period ended 09/30/97)#... 20.37 35.26% 8,698,524 1.01%* 2.76%*
Institutional (For the
period ended 03/31/97).... 15.06 26.77% 3,062,377 1.00%* 3.34%*
INCOME & GROWTH+++
Institutional (For the
period ended 09/30/97)#... 17.98 21.56% 64,380,071 0.99%* 1.32%*
Institutional (For the year
ended 03/31/97)........... 14.97 14.37% 18,343,841 1.00% 1.37%
Institutional (For the year
ended 03/31/96)........... 14.45 26.69% 17,239,363 1.00% 1.53%
Institutional (For the year
ended 03/31/95)........... 11.86 (2.02%) 12,506,203 1.00% 1.48%
Institutional (For the
period ended 03/31/94).... 13.39 20.18% 18,331,546 0.99%* 1.50%*
BALANCED GROWTH++
Institutional (For the
period ended 09/30/97)#... 17.88 29.66% 883,895 1.01%* 4.49%*
Institutional (For the year
ended 03/31/97)........... 13.94 7.46% 709,692 1.00% 7.37%
Institutional (For the year
ended 03/31/96)........... 14.20 21.45% 625,350 1.00% 9.90%
Institutional (For the year
ended 03/31/95)........... 12.01 4.56% 283,586 1.00% 20.66%
Institutional (For the
period ended 03/31/94).... 11.71 (5.66%) 142,745 0.99%* 43.16%*
EMERGING COUNTRIES++++++
Institutional (For the
period ended 09/30/97)#... 20.82 19.31% 84,755,535 1.66%* 1.93%*
Institutional (For the year
ended 03/31/97)........... 17.45 25.48% 56,917,892 1.65% 1.87%
Institutional (For the year
ended 03/31/96)........... 14.02 29.06% 6,877,500 1.65% 3.59%
Institutional (For the
period ended 03/31/95).... 10.91 (12.64%) 2,020,615 1.65%* 2.14%*
INTERNATIONAL SMALL CAP+++++++
Institutional (For the
period ended 09/30/97)#... 20.60 20.96% 40,708,832 1.41%* 1.76%*
Institutional (For the year
ended 03/31/97)........... 17.02 15.25% 48,504,553 1.40% 1.68%
Institutional (For the year
ended 03/31/96)........... 15.05 15.99% 20,245,194 1.40% 2.44%
Institutional (For the year
ended 03/31/95)........... 13.09 (1.54%) 16,923,561 1.40% 1.92%
Institutional (For the
period ended 03/31/94).... 13.47 7.60% 3,668,113 1.40%* 2.35%*
INTERNATIONAL CORE GROWTH++++
Institutional (For the
period ended 09/30/97)#... 17.93 26.89% 34,813,386 1.29%* 1.85%*
Institutional (For the
period ended 03/31/97).... 14.13 13.04% 4,593,482 1.40%* 3.14%*
WORLDWIDE GROWTH++
Institutional (For the
period ended 09/30/97)#... 17.96 26.39% 10,231,907 1.36%* 2.02%*
Institutional (For the year
ended 03/31/97)........... 14.21 13.18% 2,655,712 1.35% 3.05%
Institutional (For the year
ended 03/31/96)........... 15.42 20.37% 3,613,140 1.35% 2.60%
Institutional (For the year
ended 03/31/95)........... 13.06 (0.34%) 4,086,668 1.35% 2.50%
Institutional (For the
period ended 03/31/94).... 13.15 5.20% 2,981,559 1.34%* 3.58%*
GLOBAL GROWTH & INCOME++++++++
Institutional (For the
period ended 09/30/97)#... 15.91 27.28% 5,003,128 1.36%* 2.45%*
FULLY DISCRETIONARY FIXED
INCOME+++++++++
Institutional (For the
period ended 09/30/97)#... 13.01 7.18% 14,220,052 0.46%* 1.61%*
Institutional (For the year
ended 03/31/97)........... 12.54 4.98% 15,865,442 0.45% 3.74%
Institutional (For the
period ended 03/31/96).... 12.72 5.49% 4,413,386 0.45%* 6.45%*
SHORT-INTERMEDIATE FIXED
INCOME+++++++++
Institutional (For the
period ended 09/30/97)#... 12.76 4.12% 12,920,964 0.36%* 1.51%*
Institutional (For the year
ended 03/31/97)........... 12.66 5.30% 5,363,962 0.35% 2.86%
Institutional (For the
period ended 03/31/96).... 12.79 5.33% 4,725,591 0.35%* 3.17%*
STRATEGIC INCOME++++++++++
Institutional (For the
period ended 09/30/97)#... 14.32 13.12% 4,284,787 0.76%* 2.94%*
Institutional (For the
period ended 03/31/97).... 13.06 11.07% 4,205,509 0.77%* 2.33%*
HIGH YIELD BOND++++++++++
Institutional (For the
period ended 09/30/97)#... 14.78 16.40% 4,748,888 0.76%* 2.83%*
Institutional (For the
period ended 03/31/97).... 13.20 13.90% 4,607,559 0.75%* 1.95%*
<CAPTION>
RATIO OF NET RATIO OF NET
INCOME (DEFICIT) TO INCOME (DEFICIT) TO
AVERAGE NET AVERAGE NET
ASSETS, AFTER ASSETS, BEFORE
EXPENSE EXPENSE
REIMBURSEMENT REIMBURSEMENT
AND FEE WAIVER** AND FEE WAIVER**
<S> <C> <C>
- ------------------------------
MINI-CAP GROWTH+
Institutional (For the
period ended 09/30/97)#... (1.17%)* (1.48%)*
Institutional (For the year
ended 03/31/97)........... (1.08%) (1.30%)
Institutional (For the
period ended 03/31/96).... (0.98%)* (1.36%)*
EMERGING GROWTH++
Institutional (For the
period ended 09/30/97)#... (0.65%)* (0.90%)*
Institutional (For the year
ended 03/31/97)........... (0.72%) (0.81%)
Institutional (For the year
ended 03/31/96)........... (0.62%) (0.66%)
Institutional (For the year
ended 03/31/95)........... (0.58%) (0.64%)
Institutional (For the
period ended 03/31/94).... (0.83%)* (0.84%)*
CORE GROWTH+++
Institutional (For the
period ended 09/30/97)#... (0.22%)* (0.44%)*
Institutional (For the year
ended 03/31/97)........... (0.45%) (0.47%)
Institutional (For the year
ended 03/31/96)........... (0.32%) (0.40%)
Institutional (For the year
ended 03/31/95)........... (0.06%) (0.14%)
Institutional (For the
period ended 03/31/94).... (0.07%)* (0.24%)*
LARGE CAP GROWTH++++
Institutional (For the
period ended 09/30/97)#... (0.24%)* (3.36%)*
Institutional (For the
period ended 03/31/97).... (0.06%)* (1.68%)*
VALUE+++++
Institutional (For the
period ended 09/30/97)#... 1.34%* (0.41%)*
Institutional (For the
period ended 03/31/97).... 1.64%* 0.59%*
INCOME & GROWTH+++
Institutional (For the
period ended 09/30/97)#... 3.27%* 2.94%*
Institutional (For the year
ended 03/31/97)........... 3.43% 3.03%
Institutional (For the year
ended 03/31/96)........... 3.88% 3.34%
Institutional (For the year
ended 03/31/95)........... 4.28% 3.80%
Institutional (For the
period ended 03/31/94).... 3.36%* 2.85%*
BALANCED GROWTH++
Institutional (For the
period ended 09/30/97)#... 1.88%* (1.61%)*
Institutional (For the year
ended 03/31/97)........... 2.49% (3.63%)
Institutional (For the year
ended 03/31/96)........... 2.74% (5.74%)
Institutional (For the year
ended 03/31/95)........... 2.06% (17.60%)
Institutional (For the
period ended 03/31/94).... 1.59%* (40.58%)*
EMERGING COUNTRIES++++++
Institutional (For the
period ended 09/30/97)#... 0.61%* 0.34%*
Institutional (For the year
ended 03/31/97)........... (0.52%) (0.76%)
Institutional (For the year
ended 03/31/96)........... 0.29% (1.41%)
Institutional (For the
period ended 03/31/95).... 1.73%* 1.24%*
INTERNATIONAL SMALL CAP+++++++
Institutional (For the
period ended 09/30/97)#... (0.20%)* (0.56%)*
Institutional (For the year
ended 03/31/97)........... (0.38%) (0.63%)
Institutional (For the year
ended 03/31/96)........... 0.34% (0.07%)
Institutional (For the year
ended 03/31/95)........... 0.19% (0.33%)
Institutional (For the
period ended 03/31/94).... 0.36%* (0.59%)*
INTERNATIONAL CORE GROWTH++++
Institutional (For the
period ended 09/30/97)#... 0.26%* (0.30%)*
Institutional (For the
period ended 03/31/97).... 0.43%* (0.41%)*
WORLDWIDE GROWTH++
Institutional (For the
period ended 09/30/97)#... (0.01%)* (0.68%)*
Institutional (For the year
ended 03/31/97)........... (0.43%) (2.06%)
Institutional (For the year
ended 03/31/96)........... 0.20% (0.99%)
Institutional (For the year
ended 03/31/95)........... 0.05% (1.10%)
Institutional (For the
period ended 03/31/94).... 0.05%* (2.19%)*
GLOBAL GROWTH & INCOME++++++++
Institutional (For the
period ended 09/30/97)#... 2.73%* 1.63%*
FULLY DISCRETIONARY FIXED
INCOME+++++++++
Institutional (For the
period ended 09/30/97)#... 6.35%* 5.20%*
Institutional (For the year
ended 03/31/97)........... 6.12% 4.71%
Institutional (For the
period ended 03/31/96).... 6.39%* 2.63%*
SHORT-INTERMEDIATE FIXED
INCOME+++++++++
Institutional (For the
period ended 09/30/97)#... 6.68%* 5.53%*
Institutional (For the year
ended 03/31/97)........... 6.18% 4.95%
Institutional (For the
period ended 03/31/96).... 5.81%* (4.01%)*
STRATEGIC INCOME++++++++++
Institutional (For the
period ended 09/30/97)#... 6.32%* 4.13%*
Institutional (For the
period ended 03/31/97).... 6.97%* 6.36%*
HIGH YIELD BOND++++++++++
Institutional (For the
period ended 09/30/97)#... 7.67%* 5.60%*
Institutional (For the
period ended 03/31/97).... 8.47%* 7.97%*
</TABLE>
- --------------------------------------------------------------------------------
83
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------
INSTITUTIONAL PORTFOLIOS
<TABLE>
<CAPTION>
MINI CAP EMERGING LARGE CAP INCOME &
GROWTH GROWTH CORE GROWTH GROWTH VALUE GROWTH
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 102,223,980 $ 276,167,888 $ 160,896,157 $ 1,783,191 $ 8,699,055 $ 64,716,092
Receivable for shares of
beneficial interest
sold...................... 671,764 -- -- -- -- --
Receivable for investments
sold in Master Trust
Fund...................... 100,000 -- -- -- -- --
Fundshare gain.............. -- -- -- -- -- --
Due from advisor............ 26,039 75,288 51,585 2,295 3,998 18,178
Deferred organization
costs..................... 1,470 2,313 7,383 -- 2,315 4,142
Prepaid expenses and other
assets.................... 680 2,845 2,054 17 33 298
---------------------------------------------------------------------------------------------
Total assets.............. 103,023,933 276,248,334 160,957,179 1,785,503 8,705,401 64,738,710
---------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 100,000 -- -- -- -- --
Payable for shares of
beneficial interest
repurchased............... 29,158 -- -- -- -- --
Due to advisor.............. -- -- 37,882 -- -- 1,090
Dividend payable............ 671,764 -- -- -- -- 329,345
Accrued expenses............ -- 86,438 65,704 2,448 3,642 28,204
Fundshare gain.............. -- -- -- -- -- --
Organizational Costs
Payable................... -- -- -- -- 3,235 --
---------------------------------------------------------------------------------------------
Total liabilities......... 800,922 86,438 103,586 2,448 6,877 358,639
---------------------------------------------------------------------------------------------
NET ASSETS.................... $ 102,223,011 $ 276,161,896 $ 160,853,593 $ 1,783,055 $ 8,698,524 $ 64,380,071
---------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS.....
Paid-in capital............. $ 71,116,313 $ 184,494,913 $ 108,562,148 $ 1,231,080 $ 6,923,297 $ 56,724,730
Accumulated undistributed
net investment income
(deficit)................. (741,575) (4,940,991) (1,396,116) (2,187) 44,910 750
Accumulated undistributed
net realized gains
(losses).................. 4,225,762 2,891,097 23,012,778 425,538 445,442 1,407,212
Accumulated undistributed
foreign exchange gain
(loss).................... -- -- -- -- 1,284,875 --
Net unrealized foreign
exchange gain (loss)...... -- -- -- -- -- 6,247,379
Net unrealized appreciation
(depreciation) on
investments............... 27,622,511 93,716,877 30,674,783 128,624 -- --
---------------------------------------------------------------------------------------------
Net assets................ $ 102,223,011 $ 276,161,896 $ 160,853,593 $ 1,783,055 $ 8,698,524 $ 64,380,071
---------------------------------------------------------------------------------------------
Shares of beneficial
interest, no par value,
issued
and outstanding (unlimited
shares authorized)........ 4,040,022 17,068,062 8,007,647 99,163 427,102 3,579,835
---------------------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest
(Net assets/Outstanding
shares of beneficial
interest)................. $ 25.30 $ 16.18 $ 20.09 $ 17.98 $ 20.37 $ 17.98
---------------------------------------------------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 70,120,529 $ 119,944,502 $ 83,251,452 $ 1,230,564 $ 6,790,027 $ 51,230,541
---------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
84
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED EMERGING SMALL CAP INTERNATIONAL WORLDWIDE GLOBAL GROWTH
GROWTH COUNTRIES GROWTH CORE GROWTH GROWTH & INCOME
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
ASSETS
Investments in Master Trust
Fund, at value*........... $ 898,417 $ 84,719,638 $ 40,684,486 $ 34,812,756 $ 10,239,209 $ 5,003,379
Receivable for shares of
beneficial interest
sold...................... -- -- -- -- 18,861 --
Receivable for investments
sold in Master Trust
Fund...................... -- -- -- -- 18,861 --
Fundshare gain.............. -- -- -- -- -- 3,446
Due from advisor............ 2,089 28,478 19,567 12,841 2,964 4,324
Deferred organization
costs..................... -- 4,637 4,496 -- -- --
Prepaid expenses and other
assets.................... 14 2,782 655 191 42 --
---------------------------------------------------------------------------------------------
Total assets.............. 900,520 84,755,535 40,709,204 34,825,788 10,279,937 5,011,149
---------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... -- -- -- -- 18,861 --
Payable for shares of
beneficial interest
repurchased............... -- -- -- -- 18,861 --
Due to advisor.............. -- -- -- -- -- --
Dividend payable............ 3,411 -- -- -- -- --
Accrued expenses............ 13,214 -- 372 12,402 10,308 4,575
Fundshare gain.............. -- -- -- -- -- 3,446
Organizational Costs
Payable................... -- -- -- -- -- --
---------------------------------------------------------------------------------------------
Total liabilities......... 16,625 -- 372 12,402 48,030 8,021
---------------------------------------------------------------------------------------------
NET ASSETS.................... $ 883,895 $ 84,755,535 $ 40,708,832 $ 34,813,386 $ 10,231,907 $ 5,003,128
---------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS.....
Paid-in capital............. $ 642,996 $ 66,307,233 $ 25,196,109 $ 31,205,014 $ 8,398,634 $ 4,098,449
Accumulated undistributed
net investment income
(deficit)................. (17) 62,671 (541,806) 21,672 (74,292) 25,776
Accumulated undistributed
net realized gains
(losses).................. 45,666 7,709,447 8,136,866 549,544 695,860 546,118
Accumulated undistributed
foreign exchange gain
(loss).................... 3,399 (245,419) (369,705) (64,883) (17,518) (13,320)
Net unrealized foreign
exchange gain (loss)...... (2,378) (5,192) (2,095) (1,534) (587) (65)
Net unrealized appreciation
(depreciation) on
investments............... 194,229 10,926,795 8,289,463 3,103,573 1,229,810 346,170
---------------------------------------------------------------------------------------------
Net assets................ $ 883,895 $ 84,755,535 $ 40,708,832 $ 34,813,386 $ 10,231,907 $ 5,003,128
---------------------------------------------------------------------------------------------
Shares of beneficial
interest, no par value,
issued
and outstanding (unlimited
shares authorized)........ 49,435 4,070,195 1,975,976 1,941,702 569,788 314,392
---------------------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest
(Net assets/Outstanding
shares of beneficial
interest)................. $ 17.88 $ 20.82 $ 20.60 $ 17.93 $ 17.96 $ 15.91
---------------------------------------------------------------------------------------------
* Cost of investments in the
Master Trust Fund........... $ 573,414 $ 66,022,130 $ 23,983,243 $ 31,199,853 $ 7,880,570 $ 4,097,218
---------------------------------------------------------------------------------------------
<CAPTION>
FULLY SHORT
DISCRETIONARY INTERMEDIATE STRATEGIC HIGH YIELD
FIXED INCOME FIXED INCOME INCOME BOND
<S> <C> <C> <C> <C>
ASSETS
Investments in Master Trust
Fund, at value*........... $ 14,424,280 $ 13,110,510 $ 4,297,864 $ 4,766,611
Receivable for shares of
beneficial interest
sold...................... 3,210 -- -- --
Receivable for investments
sold in Master Trust
Fund...................... 121 -- -- --
Fundshare gain.............. -- -- -- --
Due from advisor............ 7,010 6,021 3,133 3,272
Deferred organization
costs..................... 1,220 1,220 --
Prepaid expenses and other
assets.................... 171 267 48 57
Total assets.............. 14,436,012 13,118,018 4,301,045 4,769,940
LIABILITIES
Payable for investments
purchased in Master Trust
Fund...................... 3,210 -- -- --
Payable for shares of
beneficial interest
repurchased............... 121 -- -- --
Due to advisor.............. -- -- -- --
Dividend payable............ 197,835 191,400 23,040 25,711
Accrued expenses............ 14,794 5,654 (6,782) (4,659)
Fundshare gain.............. -- -- -- --
Organizational Costs
Payable................... -- -- -- --
Total liabilities......... 215,960 197,054 16,258 21,052
NET ASSETS.................... $ 14,220,052 $ 12,920,964 $ 4,284,787 $ 4,748,888
COMPOSITION OF NET ASSETS.....
Paid-in capital............. $ 13,923,514 $ 12,919,088 $ 3,743,851 $ 4,009,557
Accumulated undistributed
net investment income
(deficit)................. 705 48 2,330 (140)
Accumulated undistributed
net realized gains
(losses).................. 103,486 (71,563) 330,129 532,164
Accumulated undistributed
foreign exchange gain
(loss).................... 206,838 -- -- --
Net unrealized foreign
exchange gain (loss)...... (103,279) -- -- --
Net unrealized appreciation
(depreciation) on
investments............... 88,788 73,391 208,477 207,307
Net assets................ $ 14,220,052 $ 12,920,964 $ 4,284,787 $ 4,748,888
Shares of beneficial
interest, no par value,
issued
and outstanding (unlimited
shares authorized)........ 1,092,997 1,012,699 299,222 321,987
COMPUTATION OF
Net asset value per share of
beneficial interest
(Net assets/Outstanding
shares of beneficial
interest)................. $ 13.01 $ 12.76 $ 14.32 $ 14.78
* Cost of investments in the
Master Trust Fund........... $ 13,384,259 $ 12,290,065 $ 3,386,344 $ 3,511,470
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
85
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
MINI CAP EMERGING LARGE CAP INCOME &
GROWTH GROWTH CORE GROWTH GROWTH VALUE GROWTH
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ (324,931) $ (645,705) $ (82,778) $ (1,523) $ 34,470 $ 528,136
---------------------------------------------------------------------------------------------
EXPENSES
Accounting fees............. 18,818 70,752 49,763 537 1,588 10,128
Administration fees......... 2,507 2,507 5,731 2,356 2,507 3,545
Audit & tax fees............ 9,626 13,340 11,198 3,216 3,262 8,479
Co-Administration fees...... 29,172 108,443 75,516 822 2,473 15,817
Distribution fees........... -- -- -- 139 -- --
Insurance................... 544 2,494 1,771 16 38 246
Legal fees.................. 3,169 11,967 8,449 91 267 1,697
Miscellaneous............... 634 2,392 1,690 18 53 689
Organization costs.......... 288 1,166 6,760 -- 326 3,772
Registration fees........... 3,566 11,341 9,384 80 526 1,566
Shareholder reporting
fees...................... 11,092 41,884 29,571 319 934 5,941
Shareholder servicing fee... -- -- -- -- -- --
Transfer agent fees......... 20,082 59,489 40,650 605 1,942 13,745
Trustees' fee............... 637 637 637 637 637 637
---------------------------------------------------------------------------------------------
Total expenses............ 100,135 326,412 241,120 8,836 14,553 66,262
Less: Reimbursement to
(from) advisor............ (56,378) (163,747) (89,964) (7,604) (10,843) (41,446)
Less: Co-Administration fees
waived.................... (29,172) (108,443) (75,516) (822) (2,473) (15,817)
Add: Line of credit
commitment fee............ 2,151 8,122 5,734 62 181 1,152
---------------------------------------------------------------------------------------------
Net expenses.............. 16,736 62,344 81,374 472 1,418 10,151
---------------------------------------------------------------------------------------------
Net investment income
(deficit)............. (341,667) (708,049) (164,152) (1,995) 33,052 517,985
---------------------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS)
ON INVESTMENTS
Net realized gain (loss) on
security transactions..... 2,280,198 12,463,480 14,519,452 354,175 271,625 1,009,178
Net realized foreign
exchange gain (loss)...... -- -- -- -- -- --
Net unrealized foreign
exchange gain (loss)...... -- -- -- -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 26,182,494 71,872,503 24,665,369 163,739 1,047,774 4,749,342
---------------------------------------------------------------------------------------------
Net gain (loss) on
investments........... 28,462,692 84,335,983 39,184,821 517,914 1,319,399 5,758,520
---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS... $ 28,121,025 $ 83,627,934 $ 39,020,669 $ 515,919 $ 1,352,451 $ 6,276,505
---------------------------------------------------------------------------------------------
</TABLE>
- ---------------
+ Commenced operations on June 30, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
86
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED EMERGING SMALL CAP INTERNATIONAL WORLDWIDE GLOBAL GROWTH
GROWTH COUNTRIES GROWTH CORE GROWTH GROWTH & INCOME+
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ 7,656 $ 222,437 $ (34,829) $ 23,364 $ 3,937 $ 27,258
---------------------------------------------------------------------------------------------
EXPENSES
Accounting fees............. 260 21,850 15,894 4,639 1,754 --
Administration fees......... 500 6,155 12,496 13,950 779 1,679
Audit & tax fees............ 7,212 9,529 8,225 4,087 7,426 2,923
Co-Administration fees...... 395 33,392 23,996 7,356 2,738 946
Distribution fees........... -- -- -- -- -- --
Insurance................... 8 678 520 136 43 --
Legal fees.................. 44 3,700 2,705 772 294 95
Miscellaneous............... 9 740 541 154 58 19
Organization costs.......... -- 930 201 -- -- 53
Registration fees........... 50 8,093 5,177 1,165 257 83
Shareholder reporting
fees...................... 154 12,949 9,466 2,703 1,030 331
Shareholder servicing fee... -- -- -- -- -- 2,364
Transfer agent fees......... 4,133 17,513 15,435 4,854 5,892 822
Trustees' fee............... 637 637 637 637 637 320
---------------------------------------------------------------------------------------------
Total expenses............ 13,402 116,166 95,293 40,453 20,908 9,635
Less: Reimbursement to
(from) advisor............ (12,810) (66,077) (59,299) (29,420) (14,065) (7,271)
Less: Co-Administration fees
waived.................... (395) (33,392) (23,996) (7,356) (2,738) (946)
Add: Line of credit
commitment fee............ 30 2,511 1,836 524 200 64
---------------------------------------------------------------------------------------------
Net expenses.............. 227 19,208 13,834 4,201 4,305 1,482
---------------------------------------------------------------------------------------------
Net investment income
(deficit)............. 7,429 203,229 (48,663) 19,163 (368) 25,776
---------------------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS)
ON INVESTMENTS
Net realized gain (loss) on
security transactions..... 31,823 3,184,869 6,098,254 410,048 376,905 546,118
Net realized foreign
exchange gain (loss)...... 3,399 (189,992) (240,576) (51,172) (7,305) (13,320)
Net unrealized foreign
exchange gain (loss)...... (2,378) 744 3,047 (233) 39 (65)
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 163,075 8,552,156 3,014,077 3,045,873 856,174 346,170
---------------------------------------------------------------------------------------------
Net gain (loss) on
investments........... 195,919 11,547,777 8,874,802 3,404,516 1,225,813 878,903
---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS... $ 203,348 $ 11,751,006 $ 8,826,139 $ 3,423,679 $ 1,225,445 $ 904,679
---------------------------------------------------------------------------------------------
<CAPTION>
FULLY SHORT
DISCRETIONARY INTERMEDIATE STRATEGIC HIGH YIELD
FIXED INCOME FIXED INCOME INCOME BOND
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Net investment income
(deficit) from Master
Trust Fund................ $ 414,434 $ 386,153 $ 131,479 $ 177,431
EXPENSES
Accounting fees............. 4,283 3,777 1,359 1,516
Administration fees......... 2,507 2,507 2,507 2,507
Audit & tax fees............ 7,218 7,173 3,284 3,296
Co-Administration fees...... 6,464 5,729 2,061 2,296
Distribution fees........... -- -- -- --
Insurance................... 133 127 44 51
Legal fees.................. 728 642 231 258
Miscellaneous............... 151 129 46 50
Organization costs.......... 246 245 -- --
Registration fees........... 2,066 788 651 714
Shareholder reporting
fees...................... 2,548 2,246 808 902
Shareholder servicing fee... -- -- -- --
Transfer agent fees......... 6,488 6,240 1,903 1,987
Trustees' fee............... 637 637 637 637
Total expenses............ 33,469 30,240 13,531 14,214
Less: Reimbursement to
(from) advisor............ (23,769) (21,648) (10,440) (10,771)
Less: Co-Administration fees
waived.................... (6,464) (5,729) (2,061) (2,296)
Add: Line of credit
commitment fee............ 494 435 157 175
Net expenses.............. 3,730 3,298 1,187 1,322
Net investment income
(deficit)............. 410,704 382,855 130,292 176,109
NET REALIZED & UNREALIZED GAIN
(LOSS)
ON INVESTMENTS
Net realized gain (loss) on
security transactions..... 265,705 (26,748) 167,503 290,827
Net realized foreign
exchange gain (loss)...... 130,590 -- -- --
Net unrealized foreign
exchange gain (loss)...... (104,217) -- -- --
Change in net unrealized
appreciation
(depreciation) of
investments and foreign
currency.................. 207,580 110,290 202,802 231,080
Net gain (loss) on
investments........... 499,658 83,542 370,305 521,907
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS... $ 910,362 $ 466,397 $ 500,597 $ 698,016
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
87
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
MINI CAP GROWTH EMERGING GROWTH
---------------------------- -----------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C>
-----------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)..... $ (341,667) $ (322,817) $ (708,049) $ (1,318,817)
Net realized gain (loss) from
security transactions............. 2,280,198 2,962,417 12,463,480 40,968,639
Net realized foreign exchange gain
(loss)............................ -- -- -- --
Net unrealized foreign exchange gain
(loss)............................ -- -- -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 26,182,494 (1,715,457) 71,872,503 (41,243,766)
-----------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations.................... 28,121,025 924,143 83,627,934 (1,593,944)
-----------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net income*......................... -- -- -- --
Capital gain*....................... -- (960,218) -- (37,468,037)
-----------------------------------------------------------
Total distributions............. -- (960,218) -- (37,468,037)
-----------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from sales................. 48,978,213 13,080,834 90,209,582 70,456,223
Proceeds from shares issued for
distribution reinvestment......... -- 754,309 148 33,951,298
Cost of shares repurchased.......... (3,587,849) (10,324,523) (64,905,827) (122,192,508)
-----------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares
of beneficial interest.......... 45,390,364 3,510,620 25,303,903 (17,784,987)
-----------------------------------------------------------
Total increase (decrease) in net
assets in net assets.......... 73,511,389 3,474,545 108,931,837 (56,846,968)
NET ASSETS:
BEGINNING OF PERIOD................... 28,711,622 25,237,077 167,230,059 224,077,027
-----------------------------------------------------------
END OF PERIOD......................... $102,223,011 $ 28,711,622 $276,161,896 $ 167,230,059
-----------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 1,801,049 1,592,133 15,120,583 14,834,897
Shares sold........................... 2,409,740 724,572 6,791,780 5,471,066
Shares issued for distributions
reinvested.......................... -- 43,501 14 2,681,778
Shares repurchased.................... (170,767) (559,157) (4,844,315) (7,867,158)
-----------------------------------------------------------
Ending balance.................... 4,040,022 1,801,049 17,068,062 15,120,583
-----------------------------------------------------------
</TABLE>
- ---------------
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
88
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH INCOME & GROWTH BALANCED GROWTH
---------------------------- --------------------------- --------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)..... $ (164,152) $ (807,350) $ 517,985 $ 600,726 $ 7,429 $ 15,860
Net realized gain (loss) from
security transactions............. 14,519,452 24,083,173 1,009,178 2,239,626 31,823 37,219
Net realized foreign exchange gain
(loss)............................ -- -- -- -- 3,399 --
Net unrealized foreign exchange gain
(loss)............................ -- -- -- -- (2,378) --
Change in net unrealized
appreciation (depreciation) of
investments....................... 24,665,369 (21,156,642) 4,749,342 (495,106) 163,075 (15,084)
-------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations.................... 39,020,669 2,119,181 6,276,505 2,345,246 203,348 37,995
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net income*......................... -- -- (514,161) (606,762) (8,757) (14,573)
Capital gain*....................... -- (13,534,098) -- (1,113,316) -- (42,381)
-------------------------------------------------------------------------------------
Total distributions............. -- (13,534,098) (514,161) (1,720,078) (8,757) (56,954)
-------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from sales................. 10,930,613 57,722,183 42,639,840 2,424,480 36,624 333,652
Proceeds from shares issued for
distribution reinvestment......... -- 13,248,640 170,367 1,702,546 5,306 56,905
Cost of shares repurchased.......... (45,541,106) (53,081,860) (2,536,321) (3,647,716) (62,318) (287,256)
-------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares
of beneficial interest.......... (34,610,493) 17,888,964 40,273,886 479,310 (20,388) 103,301
-------------------------------------------------------------------------------------
Total increase (decrease) in net
assets in net assets.......... 4,410,176 6,474,047 46,036,230 1,104,478 174,203 84,342
NET ASSETS:
BEGINNING OF PERIOD................... 156,443,417 149,969,371 18,343,841 17,239,363 709,692 625,350
-------------------------------------------------------------------------------------
END OF PERIOD......................... $ 160,853,593 $156,443,418 $64,380,071 $18,343,841 $883,895 $ 709,692
-------------------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 10,163,057 9,221,300 1,225,160 1,193,034 50,910 44,039
Shares sold........................... 632,779 3,328,373 2,497,039 162,499 2,408 22,505
Shares issued for distributions
reinvested.......................... -- 774,774 10,363 114,716 339 3,853
Shares repurchased.................... (2,788,189) (3,161,390) (152,727) (245,089) (4,222) (19,487)
-------------------------------------------------------------------------------------
Ending balance.................... 8,007,647 10,163,057 3,579,835 1,225,160 49,435 50,910
-------------------------------------------------------------------------------------
<CAPTION>
VALUE
--------------------------
FOR THE
PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED
1997 MARCH 31,
(UNAUDITED) 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)..... $ 33,052 $ 38,054
Net realized gain (loss) from
security transactions............. 271,625 278,762
Net realized foreign exchange gain
(loss)............................ -- --
Net unrealized foreign exchange gain
(loss)............................ -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 1,047,774 237,101
Net increase (decrease) in net
assets resulting from
operations.................... 1,352,451 553,917
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net income*......................... -- (26,196 )
Capital gain*....................... -- (104,945 )
Total distributions............. -- (131,141 )
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from sales................. 4,434,205 2,647,153
Proceeds from shares issued for
distribution reinvestment......... -- 131,141
Cost of shares repurchased.......... (150,509) (139,693 )
Increase (decrease) in net assets
derived from transactions in
shares
of beneficial interest.......... 4,283,696 2,638,601
Total increase (decrease) in net
assets in net assets.......... 5,636,147 3,061,377
NET ASSETS:
BEGINNING OF PERIOD................... 3,062,377 1,000
END OF PERIOD......................... $8,698,524 $3,062,377
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 203,339 80
Shares sold........................... 232,430 204,389
Shares issued for distributions
reinvested.......................... (8,667) (10,167 )
Shares repurchased.................... -- 9,037
Ending balance.................... 427,102 203,339
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
89
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
- --------------------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
LARGE CAP GROWTH EMERGING COUNTRIES
-------------------------- ----------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C>
--------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)..... $ (1,995) $ (192 ) $ 203,229 $ (150,126)
Net realized gain (loss) from
security transactions............. 354,175 71,363 3,184,869 4,904,364
Net realized foreign exchange gain
(loss)............................ -- -- (189,992) (45,337)
Net unrealized foreign exchange gain
(loss)............................ -- -- 744 (5,843)
Change in net unrealized
appreciation (depreciation) of
investments....................... 163,739 (35,115 ) 8,552,156 1,820,754
--------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations.................... 515,919 36,056 11,751,006 6,523,812
--------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net income*......................... -- -- -- --
Capital gain*....................... -- -- -- (194,973)
--------------------------------------------------------
Total distributions............. -- -- -- (194,973)
--------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from sales................. 614,299 1,321,861 18,692,137 55,734,073
Proceeds from shares issued for
distribution reinvestment......... -- -- -- 169,281
Cost of shares repurchased.......... (640,128) (65,952 ) (2,605,500) (12,191,801)
--------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares
of beneficial interest.......... (25,829) 1,255,909 16,086,637 43,711,553
--------------------------------------------------------
Total increase (decrease) in net
assets in net assets.......... 490,090 1,291,965 27,837,643 50,040,392
NET ASSETS:
BEGINNING OF PERIOD................... 1,292,965 1,000 56,917,892 6,877,500
--------------------------------------------------------
END OF PERIOD......................... $1,783,055 $1,292,965 $84,755,535 $ 56,917,892
--------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 99,421 80 3,262,451 490,586
Shares sold........................... 39,877 104,530 939,073 3,450,932
Shares issued for distributions
reinvested.......................... -- -- -- 10,803
Shares repurchased.................... (40,135) (5,189 ) (131,329) (689,870)
--------------------------------------------------------
Ending balance.................... 99,163 99,421 4,070,195 3,262,451
--------------------------------------------------------
</TABLE>
- ---------------
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
90
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP
GROWTH INTERNATIONAL CORE GROWTH WORLDWIDE GROWTH
--------------------------- -------------------------- ---------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)..... $ (48,663) $ (148,043) $ 19,163 $ 2,509 $ (368) $ (10,931)
Net realized gain (loss) from
security transactions............. 6,098,254 2,759,222 410,048 139,496 376,905 563,530
Net realized foreign exchange gain
(loss)............................ (240,576) (140,129) (51,172) (13,711 ) (7,305) (8,783)
Net unrealized foreign exchange gain
(loss)............................ 3,047 (3,275) (233) (1,301 ) 39 (522)
Change in net unrealized
appreciation (depreciation) of
investments....................... 3,014,077 3,025,858 3,045,873 57,700 856,174 (201,276)
------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations.................... 8,826,139 5,493,633 3,423,679 184,693 1,225,445 342,018
------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net income*......................... -- (223,045) -- -- -- --
Capital gain*....................... -- (568,944) -- -- -- 429,300
------------------------------------------------------------------------------------
Total distributions............. -- (791,989) -- -- -- 429,300
------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from sales................. 7,870,459 25,838,052 28,139,117 4,415,151 20,904,574 5,125,124
Proceeds from shares issued for
distribution reinvestment......... -- 773,378 -- -- -- 421,075
Cost of shares repurchased.......... (24,492,319) (3,053,715) (1,342,892) (7,362 ) (14,553,824) (6,416,345)
------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares
of beneficial interest.......... (16,621,860) 23,557,715 26,796,225 4,407,789 6,350,750 (870,146)
------------------------------------------------------------------------------------
Total increase (decrease) in net
assets in net assets.......... (7,795,721) 28,259,359 30,219,904 4,592,482 7,576,195 (957,428)
NET ASSETS:
BEGINNING OF PERIOD................... 48,504,553 20,245,194 4,593,482 1,000 2,655,712 3,613,140
------------------------------------------------------------------------------------
END OF PERIOD......................... $ 40,708,832 $48,504,553 $34,813,386 $4,593,482 $ 10,231,907 $ 2,655,712
------------------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 2,849,347 1,345,544 325,024 80 186,939 234,347
Shares sold........................... 406,838 1,639,856 1,701,797 325,489 1,269,431 353,391
Shares issued for distributions
reinvested.......................... -- 47,675 -- -- -- 30,293
Shares repurchased.................... (1,280,209) (183,728) (85,119) (545 ) (886,582) (431,092)
------------------------------------------------------------------------------------
Ending balance.................... 1,975,976 2,849,347 1,941,702 325,024 569,788 186,939
------------------------------------------------------------------------------------
<CAPTION>
GROWTH & INCOME+
-----------------
FOR THE
PERIOD ENDED
SEPTEMBER 30,
1997
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)..... $ 25,776
Net realized gain (loss) from
security transactions............. 546,118
Net realized foreign exchange gain
(loss)............................ (13,320)
Net unrealized foreign exchange gain
(loss)............................ (65)
Change in net unrealized
appreciation (depreciation) of
investments....................... 346,170
Net increase (decrease) in net
assets resulting from
operations.................... 904,679
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net income*......................... --
Capital gain*....................... --
Total distributions............. --
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from sales................. 4,314,571
Proceeds from shares issued for
distribution reinvestment......... --
Cost of shares repurchased.......... (216,122)
Increase (decrease) in net assets
derived from transactions in
shares
of beneficial interest.......... 4,098,449
Total increase (decrease) in net
assets in net assets.......... 5,003,128
NET ASSETS:
BEGINNING OF PERIOD................... --
END OF PERIOD......................... $5,003,128
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... --
Shares sold........................... 329,361
Shares issued for distributions
reinvested.......................... (14,969)
Shares repurchased.................... --
Ending balance.................... 314,392
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
91
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
- --------------------------------------------------------------------------------
INSTITUTIONAL SERIES PORTFOLIOS
<TABLE>
<CAPTION>
FULLY DISCRETIONARY
FIXED INCOME
---------------------------
FOR THE
PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED
1997 MARCH 31,
(UNAUDITED) 1997
<S> <C> <C>
---------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)..... $ 410,704 $ 272,061
Net realized gain (loss) from
security transactions.............. 265,705 (139,003)
Net realized foreign exchange gain
(loss)............................. 130,590 75,392
Net unrealized foreign exchange gain
(loss)............................. (104,217) --
Change in net unrealized
appreciation (depreciation) of
investments........................ 207,580 10,904
---------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 910,362 219,354
---------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net income*......................... (407,794) (276,382)
Capital gain*....................... -- --
---------------------------
Total distributions............. (407,794) (276,382)
---------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from sales................. 3,882,298 11,803,710
Proceeds from shares issued for
distribution reinvestment.......... 209,958 276,378
Cost of shares repurchased.......... (6,240,214) (571,004)
---------------------------
Increase (decrease) in net assets
derived from transactions in
shares
of beneficial interest.......... (2,147,958) 11,509,084
---------------------------
Total increase (decrease) in net
assets in net assets............ (1,645,390) 11,452,056
NET ASSETS:
BEGINNING OF PERIOD................... 15,865,442 4,413,386
---------------------------
END OF PERIOD......................... $14,220,052 $15,865,442
---------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 1,265,138 346,945
Shares sold........................... 301,784 940,990
Shares issued for distributions
reinvested.......................... 16,442 21,906
Shares repurchased.................... (490,367) (44,703)
---------------------------
Ending balance.................... 1,092,997 1,265,138
---------------------------
</TABLE>
- ---------------
* See Financial Highlights for per share distribution amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
92
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT INTERMEDIATE
FIXED INCOME STRATEGIC INCOME HIGH YIELD BOND
--------------------------- -------------------------- --------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997*** (UNAUDITED) 1997***
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)..... $ 382,855 $ 316,594 $ 130,292 $ 182,428 $ 176,109 $ 248,226
Net realized gain (loss) from
security transactions.............. (26,748) (50,351) 167,503 220,210 290,827 329,760
Net realized foreign exchange gain
(loss)............................. -- -- -- -- -- --
Net unrealized foreign exchange gain
(loss)............................. -- -- -- -- -- --
Change in net unrealized
appreciation (depreciation) of
investments........................ 110,290 (6,461) 202,802 5,675 231,080 (23,773 )
-----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 466,397 259,782 500,597 408,313 698,016 554,213
-----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net income*......................... (383,110) (316,105) (128,123) (182,267 ) (177,916) (246,559 )
Capital gain*....................... -- -- -- (57,584 ) -- (88,423 )
-----------------------------------------------------------------------------------
Total distributions............. (383,110) (316,105) (128,123) (239,851 ) (177,916) (334,982 )
-----------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from sales................. 8,341,525 1,516,862 133,471 4,223,875 44,294 4,551,209
Proceeds from shares issued for
distribution reinvestment.......... 191,690 316,102 5,961 16,398 14,066 37,643
Cost of shares repurchased.......... (1,059,500) (1,138,270) (432,628) (204,226 ) (437,131) (201,524 )
-----------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares
of beneficial interest.......... 7,473,715 694,694 (293,196) 4,036,047 (378,771) 4,387,328
-----------------------------------------------------------------------------------
Total increase (decrease) in net
assets in net assets............ 7,557,002 638,371 79,278 4,204,509 141,329 4,606,559
NET ASSETS:
BEGINNING OF PERIOD................... 5,363,962 4,725,591 4,205,509 1,000 4,607,559 1,000
-----------------------------------------------------------------------------------
END OF PERIOD......................... $12,920,964 $ 5,363,962 $4,284,787 $4,205,509 $4,748,888 $4,607,559
-----------------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 423,739 369,411 321,942 80 349,046 80
Shares sold........................... 656,430 118,278 9,964 336,500 3,181 361,395
Shares issued for distributions
reinvested.......................... 15,070 24,862 435 1,254 1,027 2,861
Shares repurchased.................... (82,540) (88,812) (33,119) (15,892 ) (31,867) (15,290 )
-----------------------------------------------------------------------------------
Ending balance.................... 1,012,699 423,739 299,222 321,942 321,387 349,046
-----------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
93
<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 commenced operations on April 19,
1993. The Trust offers 57 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 Advisory (formerly
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 eighteen investment vehicles (the
"Funds"). For a description of the investment objectives of each Fund, see Note
A to the accompanying Funds' financial statements.
INVESTMENT INCOME AND REALIZED AND UNREALIZED GAINS AND LOSSES
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 securities transactions and foreign currency of
the Fund are allocated pro rata among the investors in the Fund at the time of
such determination.
PORTFOLIO SHARE VALUATION
The net asset value per portfolio share is determined each business day at the
close of regular trading on the New York Stock Exchange by dividing a
portfolio's net assets by the number of its shares outstanding.
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.
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. The prospectus
for the Nicholas-Applegate Mutual Funds describe each Portfolio's policies with
respect to declaration and payment of dividends and distribution of capital
gains.
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 are amortized over a period of 60
months from the date the Portfolios commenced operations.
In the event that any of the initial shares are redeemed by the holder during
the period of amortization of the Portfolio's organization costs, the redemption
proceeds will be reduced by any such unamortized organization costs in the same
proportion as the number of initial shares being redeemed bears to the number of
those shares outstanding at the time of redemption.
- --------------------------------------------------------------------------------
94
<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 amounts reported in the financial statements and accompanying notes.
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.
ADMINISTRATIVE SERVICES AGREEMENT
Effective November 15, 1996, the Trust agreed to compensate the Adviser for
administrative services at an annual rate of 0.10% of average daily net assets
of each of the Portfolios. These fees are in addition to the administrative fees
charged by Investment Company Administration Corporation.
EXPENSE LIMITATIONS
Nicholas-Applegate and the Trust have undertaken to limit the Portfolios'
expenses to the following annual levels through March 31, 1998. 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 and expenses paid by the Investment Adviser under
this agreement, as each Portfolio will reimburse the Investment Adviser in
subsequent years when operating expenses (before reimbursement) are less than
the applicable percentage limitation.
<TABLE>
<S> <C>
Mini-Cap Growth Institutional
Portfolio............................. 1.56%
Emerging Growth Institutional
Portfolio............................. 1.17%
Core Growth Institutional Portfolio.... 1.00%
Value Institutional Portfolio.......... 1.00%
Large Cap Growth Institutional
Portfolio............................. 1.00%
Income & Growth Institutional
Portfolio............................. 1.00%
Balanced Growth Institutional
Portfolio............................. 1.00%
Emerging Countries Institutional
Portfolio............................. 1.65%
International Small Cap Growth
Institutional Portfolio............... 1.40%
International Core Growth Institutional
Portfolio............................. 1.40%
Worldwide Growth Institutional
Portfolio............................. 1.35%
Global Growth & Income................. 1.35%
Fully Discretionary Institutional Fixed
Income Portfolio...................... 0.45%
Short-Intermediate Institutional Fixed
Income Portfolio...................... 0.35%
Strategic Income Institutional
Portfolio............................. 0.75%
High Yield Bond Institutional
Portfolio............................. 0.75%
</TABLE>
These percentages are based on the average net assets of the Portfolios,
exclusive of interest, taxes, brokerage commissions and other costs incurred in
connection with portfolio securities transactions, capital expenditures, and
extraordinary expenses.
The cumulative unreimbursed amounts paid by Nicholas-Applegate, involving
co-administration fees,
- --------------------------------------------------------------------------------
95
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
on behalf of the Portfolios, during the periods from inception (respectively) to
September 30, 1997, are as follows:
<TABLE>
<S> <C>
Mini-Cap Growth Institutional
Portfolio.......................... $ 115,896
Emerging Growth Institutional
Portfolio.......................... 464,461
Core Growth Institutional
Portfolio.......................... 416,893
Large Cap Institutional Portfolio... 8,426
Value Institutional Portfolio....... 13,316
Income & Growth Institutional
Portfolio.......................... 273,572
Balanced Growth Institutional
Portfolio.......................... 120,519
Emerging Countries Institutional
Portfolio.......................... 174,942
International Small Cap Growth
Institutional Portfolio............ 234,313
International Core Growth
Institutional Portfolio............ 36,776
Worldwide Growth Institutional
Portfolio.......................... 140,578
Global Growth and Income
Institutional Portfolio............ 8,217
Fully Discretionary Institutional
Fixed Income Portfolio............. 76,544
Short-Intermediate Institutional
Fixed Income Portfolio............. 61,780
Strategic Income Institutional
Portfolio.......................... 12,501
High Yield Bond Institutional
Portfolio.......................... 13,067
</TABLE>
RELATED PARTIES
Certain officers of the Trust and the Master Trust are also officers of the
Investment Adviser.
3. INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the respective Master Trust
Funds for the six month period ended September 30, 1997 were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
--------- -----------
<S> <C> <C>
Mini-Cap Growth Institutional
Portfolio........................ $ 49,018 $ 3,664
Emerging Growth Institutional
Portfolio........................ 90,367 65,100
Core Growth Institutional
Portfolio........................ 11,023 45,726
Large Cap Growth Institutional
Portfolio........................ 622 648
Value Institutional Portfolio..... 4,448 167
Income & Growth Institutional
Portfolio........................ 42,673 2,587
Balanced Growth Institutional
Portfolio........................ 53 76
Emerging Countries Institutional
Portfolio........................ 18,738 2,706
International Small Cap Growth
Institutional Portfolio.......... 137 10
International Core Growth
Institutional Portfolio.......... 28,154 1,363
Worldwide Growth Institutional
Portfolio........................ 20,922 14,573
Global Growth and Income
Institutional Portfolio.......... 4,316 220
Fully Discretionary Institutional
Fixed Income Portfolio........... 3,882 6,240
Short-Intermediate Institutional
Fixed Income Portfolio........... 8,363 1,094
Strategic Income Institutional
Portfolio........................ 144 555
High Yield Bond Institutional
Portfolio........................ 53 595
</TABLE>
- --------------------------------------------------------------------------------
96
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
4. CREDIT FACILITY
The Portfolios participate in a $75 million redemption credit facility
("Facility") to be utilized for temporary or emergency purposes, including the
financing of redemptions. In connection therewith, the Portfolios have agreed to
pay commitment fees on its pro rata portion of the Facility. Interest is charged
to the Portfolios at rates based on prevailing market rates in effect at the
time of borrowings. At September 30, 1997, there was no outstanding borrowing
under the Facility. The maximum amount borrowed under this line of credit at any
time during the period ended September 30, 1997 was $0.
- --------------------------------------------------------------------------------
97
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES FOR THE NICHOLAS-APPLEGATE INVESTMENT TRUST
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MINI-CAP EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH GROWTH VALUE GROWTH
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
ASSETS
Investments, at value*................ $102,166,080 $808,666,422 $496,078,012 $3,367,285 $8,675,047 $206,451,735
Foreign currencies, at value**........ -- -- -- -- -- --
Cash.................................. 2,147 8,155 2,952 90,038 60,709 2,290
Receivable for investment securities
sold................................ 23,324 1,681,667 4,869,013 -- -- 452,850
Receivable for interests sold......... 671,764 862,828 301,047 93,856 -- 567,490
Dividends receivable.................. 1,420 136,874 21,207 1,555 13,707 125,657
Interest receivable................... -- 1,527 3,899 -- -- 904,603
Due from advisor...................... -- -- -- 5,390 1,750 --
Deferred organization costs........... -- 10,178 8,549 -- -- 4,239
Prepaid expenses...................... 1,049 11,604 8,874 39 90 3,019
Other assets.......................... -- 55,052 23,696 -- -- 187
------------------------------------------------------------------------------
Total assets........................ 102,865,784 811,434,307 501,317,249 3,558,163 8,751,303 208,512,070
------------------------------------------------------------------------------
LIABILITIES
Payable for investment securities
purchased........................... -- 12,707,153 5,625,325 62,551 -- 3,092,605
Payable for interests repurchased..... 100,000 722,136 418,684 10,509 -- 162,345
Due to advisor........................ -- -- -- -- -- --
Accrued expenses...................... 134,262 776,486 449,345 12,699 14,620 170,673
Dividend payable...................... -- -- -- -- -- --
Forward currency contracts............ -- -- -- -- -- --
Other payables........................ -- -- 62,554 -- -- --
------------------------------------------------------------------------------
Total liabilities................... 234,262 14,205,775 6,555,908 85,759 14,620 3,425,623
------------------------------------------------------------------------------
NET ASSETS.............................. $102,631,522 $797,228,532 $494,761,341 $3,472,404 $8,736,683 $205,086,447
------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 70,346,720 $396,047,330 $261,646,858 $2,856,982 $6,811,164 $129,572,089
Accumulated net investment income
(deficit)........................... (709,091) (11,781,536) (2,510,594) (1,507) 74,440 18,378,314
Accumulated net realized gain (loss).. 5,217,260 151,840,829 141,435,842 440,546 556,295 24,927,632
Accumulated net realized foreign
exchange gain (loss)................ -- -- -- -- -- --
Net unrealized foreign exchange gain
(loss).............................. -- -- -- -- -- --
Net unrealized appreciation
(depreciation) on investments....... 27,776,633 261,121,909 94,189,235 176,383 1,294,784 32,208,412
------------------------------------------------------------------------------
Net assets.......................... $102,631,522 $797,228,532 $494,761,341 $3,472,404 $8,736,683 $205,086,447
------------------------------------------------------------------------------
* Investments, at cost................ $ 74,389,447 $547,544,513 $401,888,777 $3,190,902 $7,380,263 $174,243,323
------------------------------------------------------------------------------
** Foreign currencies, at cost........ -- -- -- -- -- --
------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
98
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL GLOBAL
BALANCED EMERGING SMALL CAP CORE WORLDWIDE GROWTH
GROWTH COUNTRIES GROWTH GROWTH GROWTH AND INCOME
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------
ASSETS
Investments, at value*................ $30,815,243 $263,786,353 $ 64,910,430 $ 45,940,345 $141,585,758 $6,344,082
Foreign currencies, at value**........ 39 189,401 46,153 -- 43,405 --
Cash.................................. 315 2,678 1,212 360 1,698 3,323
Receivable for investment securities
sold................................ 351,013 3,336,889 959,042 109,243 806 232,209
Receivable for interests sold......... 2,112 956,139 75,422 158,212 232,152 --
Dividends receivable.................. 4,807 548,502 90,701 52,678 239,485 10,234
Interest receivable................... 132,915 598 117 -- 138 49,901
Due from advisor...................... -- -- -- -- 54,750 1,396
Deferred organization costs........... 3,021 -- 405 -- 3,474 --
Prepaid expenses...................... 588 -- -- -- -- --
Other assets.......................... -- 6,901 1,442 306 2,390 --
-------------------------------------------------------------------------------------
Total assets........................ 31,310,053 268,827,461 66,084,924 46,261,144 142,164,056 6,641,145
-------------------------------------------------------------------------------------
LIABILITIES
Payable for investment securities
purchased........................... 522,750 6,022,148 -- 1,028,359 1,687,699 1,596,627
Payable for interests repurchased..... 10,632 57,563 -- 2,324 364,941 --
Due to advisor........................ -- -- -- -- -- --
Accrued expenses...................... 26,025 263,469 22,915 31,170 197,468 5,831
Dividend payable...................... -- -- -- -- -- --
Forward currency contracts............ 82,747 -- -- -- -- --
Other payables........................ -- -- -- -- -- 3,446
-------------------------------------------------------------------------------------
Total liabilities................... 642,154 6,343,180 22,915 1,061,853 2,250,108 1,605,904
-------------------------------------------------------------------------------------
NET ASSETS.............................. $30,667,899 $262,484,281 $ 66,062,009 $ 45,199,291 $139,913,948 $5,035,241
-------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $16,841,897 $210,726,060 $ 44,051,647 $ 40,711,623 $ 74,771,180 $4,122,227
Accumulated net investment income
(deficit)........................... 2,337,379 347,259 (107,792) 30,082 439,155 27,456
Accumulated net realized gain (loss).. 4,031,799 20,252,633 10,798,689 598,345 34,985,209 550,521
Accumulated net realized foreign
exchange gain (loss)................ 119,339 (728,440) (338,747) (81,245) 351,205 (13,436)
Net unrealized foreign exchange gain
(loss).............................. (82,597) (15,898) (3,284) (1,884) (8,742) (65)
Net unrealized appreciation
(depreciation) on investments....... 7,420,082 31,902,667 11,661,496 3,942,370 29,375,941 348,538
-------------------------------------------------------------------------------------
Net assets.......................... $30,667,899 $262,484,281 $ 66,062,009 $ 45,199,291 $139,913,948 $5,035,241
-------------------------------------------------------------------------------------
* Investments, at cost................ $23,395,161 $231,883,686 $ 53,248,934 $ 41,997,975 $112,209,817 $5,995,544
-------------------------------------------------------------------------------------
** Foreign currencies, at cost........ $ 39 $ 192,338 $ 48,789 -- $ 45,090 --
-------------------------------------------------------------------------------------
<CAPTION>
FULLY SHORT-
DISCRETIONARY INTERMEDIATE STRATEGIC
FIXED INCOME FIXED INCOME INCOME HIGH YIELD
FUND FUND FUND BOND FUND
<S> <C> <C> <C> <C>
ASSETS
Investments, at value*................ $ 14,307,097 $ 12,967,274 $4,129,715 $4,839,174
Foreign currencies, at value**........ 37 -- -- --
Cash.................................. 129,641 51,359 53,080 317
Receivable for investment securities
sold................................ 456,830 -- 309,125 361,938
Receivable for interests sold......... 3,210 -- -- --
Dividends receivable.................. -- -- 9,808 --
Interest receivable................... 188,109 124,014 30,173 55,793
Due from advisor...................... 5,562 8,065 5,897 9,116
Deferred organization costs........... 1,220 1,220 -- --
Prepaid expenses...................... 179 178 87 95
Other assets.......................... -- 24,570 2,504 --
Total assets........................ 15,091,885 13,176,680 4,540,389 5,266,433
LIABILITIES
Payable for investment securities
purchased........................... 492,380 -- 199,396 450,396
Payable for interests repurchased..... 121 -- -- --
Due to advisor........................ 17,979 -- -- --
Accrued expenses...................... -- 13,270 13,373 18,520
Dividend payable...................... -- -- -- --
Forward currency contracts............ 103,231 -- -- --
Other payables........................ -- -- -- --
Total liabilities................... 613,711 13,270 212,769 468,916
NET ASSETS.............................. $ 14,478,174 $ 13,163,410 $4,327,620 $4,797,517
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 13,430,639 $ 12,337,058 $3,409,817 $3,534,578
Accumulated net investment income
(deficit)........................... 749,368 824,037 317,460 429,857
Accumulated net realized gain (loss).. 104,435 (71,398) 390,433 624,452
Accumulated net realized foreign
exchange gain (loss)................ 208,361 -- -- --
Net unrealized foreign exchange gain
(loss).............................. (103,681) -- -- --
Net unrealized appreciation
(depreciation) on investments....... 89,052 73,713 209,910 208,630
Net assets.......................... $ 14,478,174 $ 13,163,410 $4,327,620 $4,797,517
* Investments, at cost................ $ 14,218,045 $ 12,893,561 $3,919,805 $4,630,544
** Foreign currencies, at cost........ $ 37 -- -- --
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
99
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE NICHOLAS-APPLEGATE INVESTMENT TRUST
FOR THE PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MINI CAP EMERGING CORE LARGE CAP
GROWTH GROWTH GROWTH GROWTH
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
------------------------------------------------------------
INVESTMENT INCOME
Dividends............................. $ 23,414 $ 793,458 $ 748,472 $ 5,455
Interest.............................. 92,809 875,447 986,263 2,790
------------------------------------------------------------
Total income........................ 116,223 1,668,905 1,734,735 8,245
------------------------------------------------------------
EXPENSES
Advisory fee.......................... 366,663 3,137,539 1,688,653 7,691
Accounting fee........................ 31,169 170,338 131,621 11,645
Administration fee.................... 7,150 17,500 55,784 249
Audit & tax fees...................... 5,686 42,940 31,089 198
Custodian fee......................... 31,067 100,905 56,507 8,070
Insurance............................. 686 7,848 5,518 23
Legal fee............................. 280 3,434 2,487 9
Miscellaneous......................... 1,782 17,176 12,436 61
Organization costs.................... -- 4,270 7,791 --
Trustees' fee......................... 3,260 3,260 3,260 3,260
------------------------------------------------------------
Total expense....................... 447,743 3,505,210 1,995,146 31,206
Less: Reimbursement to (from)
advisor............................. (4,814) -- -- (21,466)
------------------------------------------------------------
Net expenses........................ 442,929 3,505,210 1,995,146 9,740
------------------------------------------------------------
Net investment income (deficit)... (326,706) (1,836,305) (260,411) (1,495)
------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 2,299,184 30,875,910 45,970,394 367,545
Net realized foreign exchange gain
(loss).............................. -- -- -- --
Net unrealized foreign exchange gain
(loss).............................. -- -- -- --
Change in net unrealized appreciation
(depreciation) of investments and
foreign currencies.................. 26,316,126 214,822,089 73,261,858 212,123
------------------------------------------------------------
Net gain (loss) on investments.... 28,615,310 245,697,999 119,232,252 579,668
------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 28,288,604 $ 243,861,694 $ 118,971,841 $ 578,173
------------------------------------------------------------
</TABLE>
- -------------
+ Commenced operations on June 30, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
100
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
INCOME & BALANCED EMERGING SMALL CAP CORE WORLDWIDE
VALUE GROWTH GROWTH COUNTRIES GROWTH GROWTH GROWTH
FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends............................. $ 53,666 $ 1,402,224 $ 42,848 $ 2,056,127 $ 367,531 $ 113,240 $ 833,314
Interest.............................. 4,660 1,858,162 356,709 239,137 33,088 43,834 69,657
------------------------------------------------------------------------------------------
Total income........................ 58,326 3,260,386 399,557 2,295,264 400,619 157,074 902,971
------------------------------------------------------------------------------------------
EXPENSES
Advisory fee.......................... 18,650 585,852 104,516 1,292,090 337,541 96,189 606,536
Accounting fee........................ 23,894 50,921 23,781 73,386 30,207 13,523 41,224
Administration fee.................... 604 19,242 3,449 25,441 8,380 2,294 15,002
Audit & tax fees...................... 479 10,681 1,921 14,110 4,677 1,793 8,350
Custodian fee......................... 6,585 17,765 11,848 210,883 71,519 6,100 74,541
Insurance............................. 52 1,827 363 2,386 830 199 1,473
Legal fee............................. 23 854 154 1,129 374 91 668
Miscellaneous......................... 148 4,272 768 5,644 1,871 548 3,340
Organization costs.................... -- 3,864 2,757 -- 150 -- 3,157
Trustees' fee......................... 3,260 3,260 3,260 3,259 3,259 3,259 3,259
------------------------------------------------------------------------------------------
Total expense....................... 53,695 698,538 152,817 1,628,328 458,808 123,996 757,550
Less: Reimbursement to (from)
advisor............................. (30,072) 20,851 (20,429) 25,547 (3,127) 5,860 (29,707)
------------------------------------------------------------------------------------------
Net expenses........................ 23,623 719,389 132,388 1,653,875 455,681 129,856 727,843
------------------------------------------------------------------------------------------
Net investment income (deficit)... 34,703 2,540,997 267,169 641,389 (55,062) 27,218 175,128
------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 274,172 6,285,663 1,352,996 8,659,375 7,847,694 456,089 11,702,311
Net realized foreign exchange gain
(loss).............................. -- -- 119,339 (590,371) (332,467) (67,357 ) (222,691)
Net unrealized foreign exchange gain
(loss).............................. -- -- (82,597) (3,311) 3,382 (562 ) 15,538
Change in net unrealized appreciation
(depreciation) of investments and
foreign currencies.................. 1,054,808 21,764,575 5,444,310 26,625,733 5,204,454 3,883,825 16,676,992
------------------------------------------------------------------------------------------
Net gain (loss) on investments.... 1,328,980 28,050,238 6,834,048 34,691,426 12,723,063 4,271,995 28,172,150
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 1,363,683 $30,591,235 $ 7,101,217 $35,332,815 $12,668,001 $4,299,213 $ 28,347,278
------------------------------------------------------------------------------------------
<CAPTION>
GLOBAL
GROWTH
AND INCOME
FUND+
<S> <C>
INVESTMENT INCOME
Dividends............................. $ 19,536
Interest.............................. 19,351
Total income........................ 38,887
EXPENSES
Advisory fee.......................... 8,097
Accounting fee........................ 325
Administration fee.................... 222
Audit & tax fees...................... 1,284
Custodian fee......................... 1,580
Insurance............................. --
Legal fee............................. 68
Miscellaneous......................... 375
Organization costs.................... --
Trustees' fee......................... 1,638
Total expense....................... 13,589
Less: Reimbursement to (from)
advisor............................. (2,158 )
Net expenses........................ 11,431
Net investment income (deficit)... 27,456
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 550,521
Net realized foreign exchange gain
(loss).............................. (13,436 )
Net unrealized foreign exchange gain
(loss).............................. (65 )
Change in net unrealized appreciation
(depreciation) of investments and
foreign currencies.................. 348,538
Net gain (loss) on investments.... 885,558
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 913,014
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
101
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE NICHOLAS-APPLEGATE INVESTMENT TRUST
FOR THE PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
FULLY SHORT-
DISCRETIONARY INTERMEDIATE STRATEGIC
FIXED INCOME FIXED INCOME INCOME HIGH YIELD
FUND FUND FUND BOND FUND
<S> <C> <C> <C> <C>
---------------------------------------------------------
INVESTMENT INCOME
Dividends............................. -- -- $ 29,821 --
Interest.............................. $ 442,068 $ 405,129 117,061 $ 194,690
---------------------------------------------------------
Total income........................ 442,068 405,129 146,882 194,690
---------------------------------------------------------
EXPENSES
Advisory fee.......................... 29,213 17,264 12,433 13,851
Accounting fee........................ 25,270 25,020 21,948 22,026
Administration fee.................... 1,616 1,428 515 574
Audit & tax fees...................... 1,305 1,151 415 463
Custodian fee......................... 9,035 7,305 8,475 10,456
Insurance............................. 121 116 45 49
Legal fee............................. 63 55 20 22
Miscellaneous......................... 419 369 132 147
Organization costs.................... 244 244 -- --
Trustees' fee......................... 3,260 3,260 3,260 3,260
---------------------------------------------------------
Total expense....................... 70,546 56,212 47,243 50,848
Less: Reimbursement to (from)
advisor............................. (44,580) (38,948) (32,738) (34,689)
---------------------------------------------------------
Net expenses........................ 25,966 17,264 14,505 16,159
---------------------------------------------------------
Net investment income (deficit)... 416,102 387,865 132,377 178,531
---------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 265,809 (27,026) 168,719 292,640
Net realized foreign exchange gain
(loss).............................. 131,217 -- -- --
Net unrealized foreign exchange gain
(loss).............................. (104,629) -- -- --
Change in net unrealized appreciation
(depreciation) of investments and
foreign currencies.................. 209,209 110,939 204,146 232,528
---------------------------------------------------------
Net gain (loss) on investments.... 501,606 83,913 372,865 525,168
---------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 917,708 $ 471,778 $ 505,242 $ 703,699
---------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
102
<PAGE>
(This page intentionally left blank)
- --------------------------------------------------------------------------------
103
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
MINI CAP GROWTH FUND EMERGING GROWTH FUND
------------------------- ---------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C>
------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)....... $ (326,706) $ (309,093) $(1,836,305) $ (3,743,018)
Net realized gain (loss) from security
transactions and foreign exchange... 2,299,184 2,973,970 30,875,910 96,622,117
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... 26,316,126 (1,699,744) 214,822,089 (114,330,357)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations........................ 28,288,604 965,133 243,861,694 (21,451,258)
------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners............. 49,018,140 13,388,281 856,592,631 626,817,132
Withdrawals by partners............... (3,663,637 ) (10,628,968) (804,788,326 ) (687,889,723)
------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests......................... 45,354,503 2,759,313 51,804,305 (61,072,591)
------------------------------------------------------
Total increase (decrease) in net
assets.......................... 73,643,107 3,724,446 295,665,999 (82,523,849)
NET ASSETS
BEGINNING OF PERIOD................... 28,988,415 25,263,969 501,562,533 584,086,382
------------------------------------------------------
END OF PERIOD......................... $102,631,522 $28,988,415 $797,228,532 $501,562,533
------------------------------------------------------
</TABLE>
- ---------------
+ Commenced operations on December 27, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
104
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
CORE GROWTH FUND LARGE CAP GROWTH FUND VALUE FUND
--------------------------- -------------------------- --------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997+ (UNAUDITED) 1997
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)....... $ (260,411) $ (1,567,011) $ (1,495) $ (12) $ 34,703 $ 39,737
Net realized gain (loss) from security
transactions and foreign exchange... 45,970,394 76,538,109 367,545 73,001 274,172 282,123
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... 73,261,858 (67,826,297) 212,123 (35,740) 1,054,808 239,976
-----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations........................ 118,971,841 7,144,801 578,173 37,249 1,363,683 561,836
-----------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners............. 99,500,567 158,154,505 2,234,347 1,347,861 4,448,357 2,673,153
Withdrawals by partners............... (156,484,998 ) (153,067,978) (659,274 ) (65,952 ) (166,790 ) (143,556)
-----------------------------------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests......................... (56,984,431 ) 5,086,527 1,575,073 1,281,909 4,281,567 2,529,597
-----------------------------------------------------------------------------------
Total increase (decrease) in net
assets.......................... 61,987,410 12,231,328 2,153,246 1,319,158 5,645,250 3,091,433
NET ASSETS
BEGINNING OF PERIOD................... 432,773,931 420,542,603 1,319,158 -- 3,091,433 --
-----------------------------------------------------------------------------------
END OF PERIOD......................... $494,761,341 $432,773,931 $ 3,472,404 $1,319,158 $ 8,736,683 $3,091,433
-----------------------------------------------------------------------------------
<CAPTION>
-------------------------- -------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)....... $ 2,540,997 $ 4,199,481 $ 267,169 $ 661,170
Net realized gain (loss) from security
transactions and foreign exchange... 6,285,663 15,692,945 1,472,335 1,969,019
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... 21,764,575 (3,821,355) 5,361,713 (768,824)
Net increase (decrease) in net
assets resulting from
operations........................ 30,591,235 16,071,071 7,101,217 1,861,365
TRANSACTIONS IN INTERESTS
Contributions by partners............. 57,798,093 34,105,984 3,007,351 8,738,263
Withdrawals by partners............... (13,954,283 ) (31,283,589) (4,452,639 ) (9,432,209)
Net increase (decrease) in net
assets from transactions in
interests......................... 43,843,810 2,822,395 (1,445,288 ) (693,946)
Total increase (decrease) in net
assets.......................... 74,435,045 18,893,466 5,655,929 1,167,419
NET ASSETS
BEGINNING OF PERIOD................... 130,651,402 111,757,936 25,011,970 23,844,551
END OF PERIOD......................... $205,086,447 $130,651,402 $ 30,667,899 $25,011,970
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
105
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
INTERNATIONAL
EMERGING COUNTRIES FUND SMALL CAP GROWTH FUND
-------------------------- -------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C>
-----------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)....... $ 641,389 $ (342,535) $ (55,062) $ (163,117)
Net realized gain (loss) from security
transactions and foreign exchange... 8,069,004 11,736,516 7,515,227 2,969,008
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... 26,622,422 3,885,820 5,207,836 3,916,968
-----------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations........................ 35,332,815 15,279,801 12,668,001 6,722,859
-----------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners............. 91,518,985 143,835,272 30,758,007 37,692,390
Withdrawals by partners............... (22,704,403 ) (20,677,175) (40,250,543 ) (5,334,333)
-----------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests......................... 68,814,582 123,158,097 (9,492,536 ) 32,358,057
-----------------------------------------------------
Total increase (decrease) in net
assets.......................... 104,147,397 138,437,898 3,175,465 39,080,916
NET ASSETS
BEGINNING OF PERIOD................... 158,336,884 19,898,986 62,886,544 23,805,628
-----------------------------------------------------
END OF PERIOD......................... $262,484,281 $158,336,884 $ 66,062,009 $62,886,544
-----------------------------------------------------
</TABLE>
- ---------------
+ Commenced operations on December 27, 1996.
++ Commenced operations on June 30, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
106
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
FULLY
DISCRETIONARY
INTERNATIONAL GLOBAL GROWTH FIXED INCOME
CORE GROWTH FUND WORLDWIDE GROWTH FUND AND INCOME FUND FUND
-------------------------- -------------------------- ----------------- -------------
FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
1997 MARCH 31, 1997 MARCH 31, 1997+ 1997
(UNAUDITED) 1997++ (UNAUDITED) 1997 (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)....... $ 27,218 $ 2,864 $ 175,128 $ (281,315) $ 27,456 $ 416,102
Net realized gain (loss) from security
transactions and foreign exchange... 388,732 128,368 11,479,620 15,454,490 537,085 397,026
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... 3,883,263 57,223 16,692,530 (2,455,733) 348,473 104,580
----------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations........................ 4,299,213 188,455 28,347,278 12,717,442 913,014 917,708
----------------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners............. 37,822,378 4,487,783 62,930,452 34,174,758 4,342,537 3,882,296
Withdrawals by partners............... (1,591,176 ) (7,362 ) (55,179,158 ) (43,419,850) (220,310 ) (6,240,215)
----------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests......................... 36,231,202 4,480,421 7,751,294 (9,245,092) 4,122,227 (2,357,919)
----------------------------------------------------------------------------------------
Total increase (decrease) in net
assets.......................... 40,530,415 4,668,876 36,098,572 3,472,350 5,035,241 (1,440,211)
NET ASSETS
BEGINNING OF PERIOD................... 4,668,876 -- 103,815,376 100,343,026 -- 15,918,385
----------------------------------------------------------------------------------------
END OF PERIOD......................... $ 45,199,291 $4,668,876 $139,913,948 $103,815,376 $ 5,035,241 $ 14,478,174
----------------------------------------------------------------------------------------
<CAPTION>
SHORT-INTERMEDIATE
FIXED INCOME FUND
--------------------------
FOR THE
FOR THE PERIOD ENDED FOR THE
YEAR ENDED SEPTEMBER 30, YEAR ENDED
MARCH 31, 1997 MARCH 31,
1997 (UNAUDITED) 1997
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)....... $ 277,107 $ 387,865 $ 322,048
Net realized gain (loss) from security
transactions and foreign exchange... (63,263) (27,026) (50,498)
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... 10,374 110,939 (6,618)
Net increase (decrease) in net
assets resulting from
operations........................ 224,218 471,778 264,932
TRANSACTIONS IN INTERESTS
Contributions by partners............. 11,828,709 8,363,058 1,638,177
Withdrawals by partners............... (574,627) (1,094,065 ) (1,241,693 )
Net increase (decrease) in net
assets from transactions in
interests......................... 11,254,082 7,268,993 396,484
Total increase (decrease) in net
assets.......................... 11,478,300 7,740,771 661,416
NET ASSETS
BEGINNING OF PERIOD................... 4,440,085 5,422,639 4,761,223
END OF PERIOD......................... $15,918,385 $ 13,163,410 $5,422,639
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
107
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
STRATEGIC INCOME FUND HIGH YIELD BOND FUND
-------------------------- --------------------------
FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED
1997 MARCH 31, 1997 MARCH 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C>
------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (deficit)....... $ 132,377 $ 185,083 $ 178,531 $ 251,326
Net realized gain (loss) from security
transactions and foreign exchange... 168,719 221,714 292,640 331,812
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... 204,146 5,764 232,528 (23,898)
------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations........................ 505,242 412,561 703,699 559,240
------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners............. 144,176 4,249,875 52,864 4,577,209
Withdrawals by partners............... (574,347 ) (409,887 ) (620,100 ) (475,395 )
------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests......................... (430,171 ) 3,839,988 (567,236 ) 4,101,814
------------------------------------------------------
Total increase (decrease) in net
assets.......................... 75,071 4,252,549 136,463 4,661,054
NET ASSETS
BEGINNING OF PERIOD................... 4,252,549 -- 4,661,054 --
------------------------------------------------------
END OF PERIOD......................... $ 4,327,620 $4,252,549 $ 4,797,517 $4,661,054
------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
108
<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 eighteen investment vehicles (each a "Fund" and collectively the
"Funds") as of September 30, 1997. Up to five Portfolios of Nicholas-Applegate
Mutual Funds invest in the respective Funds of the Master Trust to achieve their
investment objective.
The investment objectives of the Funds are as follows:
Mini Cap Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in equity securities of U.S. companies with market
capitalizations less than $100 million.
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.
Large Cap Fund seeks to maximize long-term capital appreciation through
investment primarily in equity securities of U.S. companies with larger market
capitalizations whose earnings and prices are expected to grow faster than the
Standard & Poor's 500 Stock Price Index.
Value Fund seeks to maximize long-term capital appreciation through investment
primarily in equity securities of U.S. companies with market capitalizations
above $5 billion.
Income & Growth Fund seeks to maximize total return through investment
primarily in convertible and equity securities of U.S. companies.
Balanced Growth Fund seeks to provide a balance of long-term capital
appreciation and current income by investing approximately 60% of its total
assets in equity and convertible securities of primarily U.S. companies and 40%
of its total assets in debt securities, money market instruments and other
short-term investments.
Emerging Countries Fund seeks to maximize long-term capital appreciation
through investment primarily in equity securities of companies in developing
countries of the world.
International Small Cap Growth Fund seeks to maximize long-term capital
appreciation through investment primarily in equity securities of international
companies with smaller to middle market capitalizations.
International Core Growth Fund seeks to maximize long-term capital
appreciation through investment primarily in equity securities of international
companies with larger market capitalizations.
Worldwide Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in growth stocks of U.S. and foreign companies.
Global Growth and Income Fund seeks to maximum total return through long-term
capital appreciation and current income by managing a blended portfolio of
equity and fixed income securities.
Fully Discretionary Fixed Income Fund seeks to maximize total return through
investment primarily in investment grade fixed-income securities with an average
portfolio duration between two and eight years.
Short-Intermediate Fixed Income Fund seeks to preserve principal and liquidity
and realize a relatively high level of current income through investment
primarily in investment grade fixed-income securities with an average
dollar-weighted portfolio maturity of two to five years.
- --------------------------------------------------------------------------------
109
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
Strategic Income Fund seeks to provide a high level of current income by
investing primarily in convertible, lower rated and mortgage-backed debt
securities.
High Yield Bond Fund seeks to provide a higher level of income and capital
growth by investing primarily in lower rated debt and convertible securities.
SECURITIES TRANSACTIONS
Equity securities are valued at the closing sale price (for exchange-listed
and NASDAQ national market system securities) or the mean between the closing
bid and asked prices (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 accounted for on the trade date. Realized gains
and losses from securities transactions are reported on an identified cost
basis. Dividend income is recognized on the ex-dividend date, except that
certain dividends from foreign securities are recorded as soon as the
information is available to the Funds. Interest income is recorded on the
accrual basis. Discounts and premiums on securities purchased are amortized over
the life of the respective securities.
FOREIGN CURRENCY TRANSLATIONS
Values of investments denominated in foreign currencies are converted into
U.S. dollars using the spot market rate of exchange at the time of valuation.
Purchases and sales of investments and dividend and interest income are
translated into U.S. dollars using the spot market rate of exchange prevailing
on the respective dates of such translations. The gain or loss resulting from
changes in foreign exchange rates is included with net realized and unrealized
gain or loss from investments, as appropriate.
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 is amortized over a period of 60
months from the date the respective Fund 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 amounts reported in the financial statements and accompanying notes.
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
- --------------------------------------------------------------------------------
110
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
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>
Mini Cap Growth Fund.............. 1.25% 1.25% 1.25%
Emerging Growth Fund.............. 1.00% 1.00% 1.00%
Core Growth Fund.................. 0.75% 0.675% 0.65%
Large Cap Growth Fund............. 0.75% 0.75% 0.75%
Value Fund........................ 0.75% 0.75% 0.75%
Income & Growth Fund.............. 0.75% 0.675% 0.65%
Balanced Growth Fund.............. 0.75% 0.675% 0.65%
Emerging Countries Fund........... 1.25% 1.25% 1.25%
International Small Cap Growth
Fund............................. 1.00% 0.90% 0.85%
International Core Growth Fund.... 1.00% 0.90% 0.85%
Worldwide Growth Fund............. 1.00% 0.90% 0.85%
Global Growth and Income Fund..... See Footnote 1
Fully Discretionary Fixed Income
Fund............................. See Footnote 1
Short-Intermediate Fixed Income
Fund............................. See Footnote 1
Strategic Income Fund............. 0.60% 0.60% 0.60%
High Yield Bond Fund.............. 0.60% 0.60% 0.60%
</TABLE>
- -----------------
(1) The advisory fee for Fully Discretionary Fixed Income Fund is computed as
follows: 0.45% of the first $500 million of the Fund's average net assets, 0.40%
of the next $250 million of average net assets, and 0.35% of average net assets
in excess of $750 million. The advisory fee for Short-Intermediate Fixed Income
Fund is computed as follows: 0.30% of the first $250 million of the Fund's
average net assets and 0.25% of average net assets in excess of $250 million.
The advisory fee for Global Growth and Income Fund is computed as 0.85% of the
Fund's net assets.
EXPENSE LIMITATIONS
Nicholas-Applegate and the Master Trust have undertaken to limit the Funds'
expenses to certain annual levels through March 31, 1998. In subsequent years,
overall operating expenses for each Fund will not fall below the percentage
limitation until the Investment Adviser has been fully reimbursed for fees
foregone or expenses paid by the Investment Adviser under this agreement, as
each Fund will reimburse the Investment Adviser in subsequent years when
operating expenses (before reimbursement) are less than the applicable
percentage limitation.
The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Funds, during the period from inception (respectively) to September 30,
1997, are as follows:
<TABLE>
<CAPTION>
FUND
- ---------------------------------------------
<S> <C>
Mini Cap Growth Fund......................... $ 45,537
Large Cap Growth Fund........................ 21,466
Value Fund................................... 30,072
Balanced Growth Fund......................... 265,300
Emerging Countries Fund...................... 86,226
International Small Cap Growth Fund.......... 198,784
International Core Growth Fund............... 5,860
Worldwide Growth Fund........................ 263,630
Global Growth and Income Fund................ 2,158
Fully Discretionary Fixed Income Fund........ 64,662
Short-Intermediate Fixed Income Fund......... 59,827
Strategic Income Fund........................ 32,738
High Yield Bond Fund......................... 34,689
</TABLE>
C. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investment securities, other than
short-term obligations, for the
- --------------------------------------------------------------------------------
111
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
six month period ended September 30, 1997, were as follows (in 000's):
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- -------------------------------- ----------- -----------
<S> <C> <C>
Mini Cap Growth Fund............ $ 67,251 $ 26,377
Emerging Growth Fund............ 354,023 288,342
Core Growth Fund................ 428,265 500,283
Large Cap Growth Fund........... 6,736 5,253
Value Fund...................... 20,287 1,263
Income & Growth Fund............ 158,609 115,889
Balanced Growth Fund............ 37,169 37,973
Emerging Countries Fund......... 277,080 208,710
International Small Cap Growth
Fund........................... 67,445 76,182
International Core Growth
Fund........................... 52,815 16,126
Worldwide Growth Fund........... 110,994 106,683
Global Growth and Income Fund... 11,506 7,447
Fully Discretionary Fixed Income
Fund........................... 27,695 28,358
Short-Intermediate Fixed Income
Fund........................... 20,774 12,705
Strategic Income Fund........... 8,291 8,578
High Yield Bond Fund............ 18,012 17,939
</TABLE>
At September 30, 1997, the net unrealized appreciation (depreciation) based on
the cost of investments for Federal income tax purposes was as follows (in
000's):
<TABLE>
<CAPTION>
NET
TAX GROSS GROSS UNREALIZED
COST OF UNREALIZED UNREALIZED APPRECIATION
FUND INVESTMENTS APPRECIATION DEPRECIATION (DEPRECIATION)
- ----------------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Mini Cap Growth
Fund............ $ 74,389 $ 27,984 $ 208 $ 27,777
Emerging Growth
Fund............ 547,545 265,560 4,439 261,122
Core Growth
Fund............ 401,887 96,527 2,338 94,189
Large Cap Growth
Fund............ 3,191 213 37 176
Value Fund....... 7,380 1,333 38 1,295
Income & Growth
Fund............ 174,243 32,621 412 32,208
Balanced Growth
Fund............ 23,395 7,472 135 7,337
Emerging
Countries Fund.. 232,076 36,643 4,757 31,886
International
Small Cap Growth
Fund............ 53,298 13,084 1,426 11,658
International
Core Growth
Fund............ 41,998 4,186 246 3,940
Worldwide Growth
Fund............ 112,255 30,058 691 29,367
Global Growth &
Income Fund..... 5,996 376 28 348
Fully
Discretionary
Fixed Income
Fund............ 14,218 60 75 (15)
Short-Intermediate
Fixed Income
Fund............ 12,894 78 4 74
Strategic Income
Fund............ 3,920 220 10 210
High Yield Bond
Fund............ 4,631 214 5 209
</TABLE>
- --------------------------------------------------------------------------------
112
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
D. OFF BALANCE SHEET RISKS AND DERIVATIVE INSTRUMENTS
The Masters Trust's investment in foreign securities may entail risks due to
the potential of political and economic instability in the countries where the
securities are being offered. In addition, foreign exchange fluctuations could
affect the value of positions held. It is the Master Trust's policy to
continuously monitor its exposure to these risks.
Some of the Funds may utilize forward foreign currency exchange contracts as
part of their strategy of preserving capital. Upon entering into forward foreign
currency contracts, the Funds are required to deposit with the broker an amount
of cash or cash equivalents equal to the amount of the contract. The daily
changes in the contract are recorded as unrealized gains or losses. The Funds
recognize a realized gain or loss when the contract is sold.
- --------------------------------------------------------------------------------
113
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
E. SELECTED RATIO DATA
<TABLE>
<CAPTION>
RATIO OF EXPENSES
TO AVERAGE NET
ASSETS, AFTER
EXPENSE
REIMBURSEMENTS
(RECOUPMENT)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
MINI CAP GROWTH (1)
For the period ended 09/30/97*#............................................................... 1.51%
For the year ended 03/31/97................................................................... 1.51%
For the period ended 03/31/96*................................................................ 1.50%
EMERGING GROWTH (2)
For the period ended 09/30/97*#............................................................... 1.12%
For the year ended 03/31/97................................................................... 1.10%
For the year ended 03/31/96................................................................... 1.11%
For the year ended 03/31/95................................................................... 1.12%
For the period ended 03/31/94*................................................................ 1.12%
CORE GROWTH (3)
For the period ended 09/30/97*#............................................................... 0.89%
For the year ended 03/31/97................................................................... 0.88%
For the year ended 03/31/96................................................................... 0.89%
For the year ended 03/31/95................................................................... 0.89%
For the period ended 03/31/94*................................................................ 0.92%
LARGE CAP GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... 0.95%
For the period ended 03/31/97*................................................................ 0.91%
VALUE FUND (5)
For the period ended 09/30/97*#............................................................... 0.95%
For the period ended 03/31/97*................................................................ 0.95%
INCOME & GROWTH (3)
For the period ended 09/30/97*#............................................................... 0.92%
For the year ended 03/31/97................................................................... 0.95%
For the year ended 03/31/96................................................................... 0.95%
For the year ended 03/31/95................................................................... 0.93%
For the period ended 03/31/94*................................................................ 0.94%
BALANCED GROWTH (3)
For the period ended 09/30/97*#............................................................... 0.95%
For the year ended 03/31/97................................................................... 0.95%
For the year ended 03/31/96................................................................... 0.95%
For the year ended 03/31/95................................................................... 0.95%
For the period ended 03/31/94*................................................................ 0.94%
EMERGING COUNTRIES FUND (6)
For the period ended 09/30/97*#............................................................... 1.60%
For the year ended 03/31/97................................................................... 1.60%
For the year ended 03/31/96................................................................... 1.60%
For the period ended 03/31/95*................................................................ 1.60%
INTERNATIONAL SMALL CAP GROWTH FUND (7)
For the period ended 09/30/97*#............................................................... 1.35%
For the year ended 03/31/97................................................................... 1.35%
For the year ended 03/31/96................................................................... 1.35%
For the year ended 03/31/95................................................................... 1.35%
For the period ended 03/31/94*................................................................ 1.35%
INTERNATIONAL CORE GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... 1.35%
For the period ended 03/31/97*................................................................ 1.29%
WORLDWIDE GROWTH FUND (3)
For the period ended 09/30/97*#............................................................... 1.20%
For the year ended 03/31/97................................................................... 1.20%
For the year ended 03/31/96................................................................... 1.20%
For the year ended 03/31/95................................................................... 1.20%
For the period ended 03/31/94*................................................................ 1.20%
GLOBAL GROWTH & INCOME (8)
For the period ended 09/30/97*#............................................................... 1.20%
FULLY DISCRETIONARY FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... 0.40%
For the year ended 03/31/97................................................................... 0.40%
For the period ended 03/31/96*................................................................ 0.45%
SHORT-INTERMEDIATE FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... 0.30%
For the year ended 03/31/97................................................................... 0.30%
For the period ended 03/31/96*................................................................ 0.30%
STRATEGIC INCOME FUND (10)
For the period ended 09/30/97*#............................................................... 0.70%
For the period ended 03/31/97*................................................................ 0.70%
HIGH YIELD BOND FUND (10)
For the period ended 09/30/97*#............................................................... 0.70%
For the period ended 03/31/97*................................................................ 0.70%
<CAPTION>
TO AVERAGE NET
ASSETS, BEFORE
EXPENSE
REIMBURSEMENTS
(RECOUPMENT)
<S> <C>
- ------------------------------------------------------------------------------------------------
MINI CAP GROWTH (1)
For the period ended 09/30/97*#............................................................... 1.53%
For the year ended 03/31/97................................................................... 1.71%
For the period ended 03/31/96*................................................................ 2.02%
EMERGING GROWTH (2)
For the period ended 09/30/97*#............................................................... 1.12%
For the year ended 03/31/97................................................................... 1.10%
For the year ended 03/31/96................................................................... 1.11%
For the year ended 03/31/95................................................................... 1.11%
For the period ended 03/31/94*................................................................ 1.16%
CORE GROWTH (3)
For the period ended 09/30/97*#............................................................... 0.89%
For the year ended 03/31/97................................................................... 0.88%
For the year ended 03/31/96................................................................... 0.89%
For the year ended 03/31/95................................................................... 0.89%
For the period ended 03/31/94*................................................................ 0.92%
LARGE CAP GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... 3.04%
For the period ended 03/31/97*................................................................ 3.32%
VALUE FUND (5)
For the period ended 09/30/97*#............................................................... 2.16%
For the period ended 03/31/97*................................................................ 2.24%
INCOME & GROWTH (3)
For the period ended 09/30/97*#............................................................... 0.89%
For the year ended 03/31/97................................................................... 0.92%
For the year ended 03/31/96................................................................... 0.94%
For the year ended 03/31/95................................................................... 0.95%
For the period ended 03/31/94*................................................................ 0.97%
BALANCED GROWTH (3)
For the period ended 09/30/97*#............................................................... 1.10%
For the year ended 03/31/97................................................................... 1.21%
For the year ended 03/31/96................................................................... 1.37%
For the year ended 03/31/95................................................................... 1.33%
For the period ended 03/31/94*................................................................ 1.37%
EMERGING COUNTRIES FUND (6)
For the period ended 09/30/97*#............................................................... 1.58%
For the year ended 03/31/97................................................................... 1.57%
For the year ended 03/31/96................................................................... 2.80%
For the period ended 03/31/95*................................................................ 1.81%
INTERNATIONAL SMALL CAP GROWTH FUND (7)
For the period ended 09/30/97*#............................................................... 1.36%
For the year ended 03/31/97................................................................... 1.38%
For the year ended 03/31/96................................................................... 1.98%
For the year ended 03/31/95................................................................... 1.85%
For the period ended 03/31/94*................................................................ 2.28%
INTERNATIONAL CORE GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... 1.29%
For the period ended 03/31/97*................................................................ 2.25%
WORLDWIDE GROWTH FUND (3)
For the period ended 09/30/97*#............................................................... 1.25%
For the year ended 03/31/97................................................................... 1.26%
For the year ended 03/31/96................................................................... 1.26%
For the year ended 03/31/95................................................................... 1.30%
For the period ended 03/31/94*................................................................ 1.36%
GLOBAL GROWTH & INCOME (8)
For the period ended 09/30/97*#............................................................... 1.43%
FULLY DISCRETIONARY FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... 1.09%
For the year ended 03/31/97................................................................... 2.27%
For the period ended 03/31/96*................................................................ 2.69%
SHORT-INTERMEDIATE FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... 0.98%
For the year ended 03/31/97................................................................... 1.87%
For the period ended 03/31/96*................................................................ 1.36%
STRATEGIC INCOME FUND (10)
For the period ended 09/30/97*#............................................................... 2.28%
For the period ended 03/31/97*................................................................ 1.66%
HIGH YIELD BOND FUND (10)
For the period ended 09/30/97*#............................................................... 2.20%
For the period ended 03/31/97*................................................................ 1.13%
<CAPTION>
RATIO OF NET
INVESTMENT
INCOME (DEFICIT)
TO AVERAGE NET
ASSETS, AFTER
EXPENSE
REIMBURSEMENTS
(RECOUPMENT)
- ------------------------------------------------------------------------------------------------
MINI CAP GROWTH (1)
For the period ended 09/30/97*#............................................................... (1.11%)
For the year ended 03/31/97................................................................... (1.03%)
For the period ended 03/31/96*................................................................ (0.93%)
EMERGING GROWTH (2)
For the period ended 09/30/97*#............................................................... (0.59%)
For the year ended 03/31/97................................................................... (0.64%)
For the year ended 03/31/96................................................................... (0.57%)
For the year ended 03/31/95................................................................... (0.53%)
For the period ended 03/31/94*................................................................ (0.80%)
CORE GROWTH (3)
For the period ended 09/30/97*#............................................................... (0.12%)
For the year ended 03/31/97................................................................... (0.33%)
For the year ended 03/31/96................................................................... (0.22%)
For the year ended 03/31/95................................................................... 0.05%
For the period ended 03/31/94*................................................................ (0.03%)
LARGE CAP GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... (0.15%)
For the period ended 03/31/97*................................................................ (0.00%)
VALUE FUND (5)
For the period ended 09/30/97*#............................................................... 1.40%
For the period ended 03/31/97*................................................................ 1.70%
INCOME & GROWTH (3)
For the period ended 09/30/97*#............................................................... 3.25%
For the year ended 03/31/97................................................................... 3.49%
For the year ended 03/31/96................................................................... 3.94%
For the year ended 03/31/95................................................................... 4.37%
For the period ended 03/31/94*................................................................ 3.51%
BALANCED GROWTH (3)
For the period ended 09/30/97*#............................................................... 1.92%
For the year ended 03/31/97................................................................... 2.53%
For the year ended 03/31/96................................................................... 2.83%
For the year ended 03/31/95................................................................... 2.13%
For the period ended 03/31/94*................................................................ 1.93%
EMERGING COUNTRIES FUND (6)
For the period ended 09/30/97*#............................................................... 0.62%
For the year ended 03/31/97................................................................... (0.47%)
For the year ended 03/31/96................................................................... 0.30%
For the period ended 03/31/95*................................................................ 1.73%
INTERNATIONAL SMALL CAP GROWTH FUND (7)
For the period ended 09/30/97*#............................................................... (0.16%)
For the year ended 03/31/97................................................................... (0.34%)
For the year ended 03/31/96................................................................... 0.39%
For the year ended 03/31/95................................................................... 0.24%
For the period ended 03/31/94*................................................................ 0.41%
INTERNATIONAL CORE GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... 0.28%
For the period ended 03/31/97*................................................................ 0.48%
WORLDWIDE GROWTH FUND (3)
For the period ended 09/30/97*#............................................................... 0.29%
For the year ended 03/31/97................................................................... (0.27%)
For the year ended 03/31/96................................................................... 0.31%
For the year ended 03/31/95................................................................... 0.24%
For the period ended 03/31/94*................................................................ 0.01%
GLOBAL GROWTH & INCOME (8)
For the period ended 09/30/97*#............................................................... 2.88%
FULLY DISCRETIONARY FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... 6.41%
For the year ended 03/31/97................................................................... 6.17%
For the period ended 03/31/96*................................................................ 6.44%
SHORT-INTERMEDIATE FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... 6.74%
For the year ended 03/31/97................................................................... 6.23%
For the period ended 03/31/96*................................................................ 5.85%
STRATEGIC INCOME FUND (10)
For the period ended 09/30/97*#............................................................... 6.39%
For the period ended 03/31/97*................................................................ 7.02%
HIGH YIELD BOND FUND (10)
For the period ended 09/30/97*#............................................................... 7.73%
For the period ended 03/31/97*................................................................ 8.55%
<CAPTION>
RATIO OF NET
INVESTMENT
INCOME (DEFICIT)
TO AVERAGE NET
ASSETS, BEFORE
EXPENSE PORTFOLIO
REIMBURSEMENTS TURNOVER
(RECOUPMENT) RATE
- ------------------------------------------------------------------------------------------------
MINI CAP GROWTH (1)
For the period ended 09/30/97*#............................................................... (1.13%) 46.43%
For the year ended 03/31/97................................................................... (1.22%) 164.01%
For the period ended 03/31/96*................................................................ (1.44%) 106.99%
EMERGING GROWTH (2)
For the period ended 09/30/97*#............................................................... (0.59%) 46.99%
For the year ended 03/31/97................................................................... (0.64%) 112.90%
For the year ended 03/31/96................................................................... (0.57%) 129.59%
For the year ended 03/31/95................................................................... (0.52%) 100.46%
For the period ended 03/31/94*................................................................ (0.84%) 50.51%
CORE GROWTH (3)
For the period ended 09/30/97*#............................................................... (0.12%) 99.41%
For the year ended 03/31/97................................................................... (0.33%) 153.20%
For the year ended 03/31/96................................................................... (0.22%) 114.48%
For the year ended 03/31/95................................................................... 0.05% 98.09%
For the period ended 03/31/94*................................................................ (0.03%) 84.84%
LARGE CAP GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... (2.24%) 269.87%
For the period ended 03/31/97*................................................................ (2.41%) 320.73%
VALUE FUND (5)
For the period ended 09/30/97*#............................................................... 0.19% 24.78%
For the period ended 03/31/97*................................................................ 0.41% 139.27%
INCOME & GROWTH (3)
For the period ended 09/30/97*#............................................................... 3.28% 76.54%
For the year ended 03/31/97................................................................... 3.52% 166.84%
For the year ended 03/31/96................................................................... 3.94% 144.97%
For the year ended 03/31/95................................................................... 4.35% 125.51%
For the period ended 03/31/94*................................................................ 3.48% 177.52%
BALANCED GROWTH (3)
For the period ended 09/30/97*#............................................................... 1.77% 136.75%
For the year ended 03/31/97................................................................... 2.27% 212.95%
For the year ended 03/31/96................................................................... 2.37% 197.19%
For the year ended 03/31/95................................................................... 1.75% 110.40%
For the period ended 03/31/94*................................................................ 1.50% 85.43%
EMERGING COUNTRIES FUND (6)
For the period ended 09/30/97*#............................................................... 0.65% 119.86%
For the year ended 03/31/97................................................................... (0.44%) 176.20%
For the year ended 03/31/96................................................................... (0.90%) 118.21%
For the period ended 03/31/95*................................................................ 1.52% 60.79%
INTERNATIONAL SMALL CAP GROWTH FUND (7)
For the period ended 09/30/97*#............................................................... (0.17%) 103.72%
For the year ended 03/31/97................................................................... (0.37%) 206.07%
For the year ended 03/31/96................................................................... (0.24%) 141.02%
For the year ended 03/31/95................................................................... (0.26%) 74.85%
For the period ended 03/31/94*................................................................ (0.52%) 23.71%
INTERNATIONAL CORE GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... 0.34% 89.81%
For the period ended 03/31/97*................................................................ (0.47%) 75.53%
WORLDWIDE GROWTH FUND (3)
For the period ended 09/30/97*#............................................................... 0.24% 90.09%
For the year ended 03/31/97................................................................... (0.33%) 181.81%
For the year ended 03/31/96................................................................... 0.25% 132.20%
For the year ended 03/31/95................................................................... 0.14% 98.54%
For the period ended 03/31/94*................................................................ (0.15%) 95.09%
GLOBAL GROWTH & INCOME (8)
For the period ended 09/30/97*#............................................................... 2.66% 169.40%
FULLY DISCRETIONARY FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... 5.72% 220.55%
For the year ended 03/31/97................................................................... 4.30% 190.41%
For the period ended 03/31/96*................................................................ 4.12% 60.06%
SHORT-INTERMEDIATE FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... 6.06% 123.64%
For the year ended 03/31/97................................................................... 4.66% 132.30%
For the period ended 03/31/96*................................................................ 4.77% 114.38%
STRATEGIC INCOME FUND (10)
For the period ended 09/30/97*#............................................................... 4.81% 205.35%
For the period ended 03/31/97*................................................................ 6.07% 211.63%
HIGH YIELD BOND FUND (10)
For the period ended 09/30/97*#............................................................... 6.23% 403.81%
For the period ended 03/31/97*................................................................ 7.90% 465.36%
<CAPTION>
BROKER
COMMISSIONS
PER SHARE
- ------------------------------------------------------------------------------------------------
MINI CAP GROWTH (1)
For the period ended 09/30/97*#............................................................... $ 0.0504
For the year ended 03/31/97................................................................... $ 0.0455
For the period ended 03/31/96*................................................................ $ 0.0529
EMERGING GROWTH (2)
For the period ended 09/30/97*#............................................................... $ 0.0531
For the year ended 03/31/97................................................................... $ 0.0520
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 09/30/97*#............................................................... $ 0.0581
For the year ended 03/31/97................................................................... $ 0.0582
For the year ended 03/31/96................................................................... $ 0.0593
For the year ended 03/31/95................................................................... --
For the period ended 03/31/94*................................................................ --
LARGE CAP GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... $ 0.0599
For the period ended 03/31/97*................................................................ $ 0.0594
VALUE FUND (5)
For the period ended 09/30/97*#............................................................... $ 0.0600
For the period ended 03/31/97*................................................................ $ 0.0589
INCOME & GROWTH (3)
For the period ended 09/30/97*#............................................................... $ 0.0599
For the year ended 03/31/97................................................................... $ 0.0154
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 09/30/97*#............................................................... $ 0.0600
For the year ended 03/31/97................................................................... $ 0.0586
For the year ended 03/31/96................................................................... $ 0.0594
For the year ended 03/31/95................................................................... --
For the period ended 03/31/94*................................................................ --
EMERGING COUNTRIES FUND (6)
For the period ended 09/30/97*#............................................................... $ 0.0022
For the year ended 03/31/97................................................................... $ 0.0021
For the year ended 03/31/96................................................................... $ 0.0022
For the period ended 03/31/95*................................................................ --
INTERNATIONAL SMALL CAP GROWTH FUND (7)
For the period ended 09/30/97*#............................................................... $ 0.0091
For the year ended 03/31/97................................................................... $ 0.0098
For the year ended 03/31/96................................................................... $ 0.0128
For the year ended 03/31/95................................................................... --
For the period ended 03/31/94*................................................................ --
INTERNATIONAL CORE GROWTH FUND (4)
For the period ended 09/30/97*#............................................................... $ 0.0111
For the period ended 03/31/97*................................................................ $ 0.0106
WORLDWIDE GROWTH FUND (3)
For the period ended 09/30/97*#............................................................... $ 0.0111
For the year ended 03/31/97................................................................... $ 0.0078
For the year ended 03/31/96................................................................... $ 0.0187
For the year ended 03/31/95................................................................... --
For the period ended 03/31/94*................................................................ --
GLOBAL GROWTH & INCOME (8)
For the period ended 09/30/97*#............................................................... $ 0.1056
FULLY DISCRETIONARY FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... --
For the year ended 03/31/97................................................................... --
For the period ended 03/31/96*................................................................ --
SHORT-INTERMEDIATE FIXED INCOME (9)
For the period ended 09/30/97*#............................................................... --
For the year ended 03/31/97................................................................... --
For the period ended 03/31/96*................................................................ --
STRATEGIC INCOME FUND (10)
For the period ended 09/30/97*#............................................................... $ 0.0267
For the period ended 03/31/97*................................................................ $ 0.0600
HIGH YIELD BOND FUND (10)
For the period ended 09/30/97*#............................................................... $ 0.0500
For the period ended 03/31/97*................................................................ $ 0.0200
</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 December 27, 1996.
(5) Commenced operations on April 30, 1996.
(6) Commenced operations on November 28, 1994.
(7) Commenced operations on December 31, 1993.
(8) Commenced operations on June 30, 1997.
(9) Commenced operations on August 31, 1995.
(10) Commenced operations on July 31, 1996.
* Annualized
# Unaudited
- --------------------------------------------------------------------------------
114
<PAGE>
TRUSTEES OF NICHOLAS-APPLEGATE MUTUAL FUNDS
-------------------------------------------
Fred C. Applegate, CHAIRMAN
Dr. Arthur B. Laffer
Charles E. Young
OFFICERS
--------
John D. Wylie, PRESIDENT
Peter J. Johnson, VICE PRESIDENT
Thomas Pindelski, TREASURER
E. Blake Moore, Jr., SECRETARY
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
INVESTMENT MANAGER
------------------
Nicholas-Applegate Capital Management
DISTRIBUTOR
-----------
Nicholas-Applegate Securities
CUSTODIAN
---------
PNC Bank
TRANSFER AGENT
--------------
State Street Bank & Trust Company
<PAGE>
NICHOLAS-APPLEGATE-Registered Trademark-
MUTUAL FUNDS
600 West Broadway
San Diego, California 92101
800-551-8643
Nicholas-Applegate Securities, Distributor
www.nacm.com
