<PAGE>
NICHOLAS APPLEGATE-Registered Trademark-
MUTUAL FUNDS, ANNUAL REPORT
PORTFOLIOS A, B AND C
MARCH 31, 1998
WE SEE THE WORLD DIFFERENTLY
[PHOTO]
<PAGE>
DEAR FELLOW SHAREHOLDERS,
It's been an exciting year for investors, with stock markets climbing to
record levels and bond markets enjoying steady growth. Mid and small-sized
companies are beginning to reassert themselves after a long period of
investor preference for large company stocks.
The U.S. market continues to grow with a strong economy and currency as well
as low inflation and interest rates. High consumer confidence has led to
exceptional growth. An example of a company benefiting from this trend is
Ethan Allen Interiors, a retailer of quality home furnishings which we hold
in our Emerging Growth Fund. This nationwide chain continues to establish its
presence in premium locations, introduce innovative products and expand its
sales base among new home buyers, all contributing to profitability.
[PHOTO]
ARTHUR E. NICHOLAS
Managing Partner
Chief Investment Officer
[PHOTO]
<PAGE>
[PHOTO]
Europe is also experiencing one of its most dynamic growth periods ever, with
healthy trends toward deregulation and consolidation of industries, particularly
in the financial sector. Credito Italiano is one of Italy's largest banks, and
is a primary example of a European financial institution benefiting from falling
interest rates and a shift toward investing in stocks.
Asia, of course, presents the biggest challenges, with currencies and stock
markets experiencing drastic declines. Some countries are working fervently to
reform their economies toward recovery while others stubbornly resist change. We
have lowered our exposure significantly, though our style of investing continues
to uncover good opportunities. For example, Sony generates high consumer demand
worldwide, resulting in record earnings and profits, in spite of Japan's
stagnant economy.
[PHOTO]
Nicholas-Applegate's process is focused on investment leadership in a changing
world. Our goal has always been superior performance and client service. We go
after the best opportunities by setting our sights on change wherever it occurs.
We're after companies demonstrating growing earnings and the potential to exceed
<PAGE>
[PHOTO]
the expectations we set for them. A growing company only meets our criteria when
it shows it can sustain this potential a year or more down the road. And the
change must be timely. A company may be doing well financially and demonstrate
sustainability, though it must also keep pace with market and technological
developments to capture our interest. As you'll see throughout this report, our
portfolio managers apply these tenets to invest in exciting opportunities
worldwide.
Perhaps one area that demonstrates positive change most clearly is emerging
markets, where modern technology is opening up business opportunities that were
non-existent only a few years ago. Take, for example, Hungary's telephone
company, Matav, which we held in our Emerging Countries Fund. This is the only
telephone company in Hungary. As modernization proceeds and more private
residences acquire telephones, Matav enjoys dramatic growth. This is the kind of
positive change we're after.
We find it with superior information management. We build our research on
relationships with expert analysts around the world. We've pioneered an exchange
program bringing analysts to work at our offices in the United States and
sending our people overseas to learn first hand how things work in different
markets. In addition, our proprietary database tracks over 20,000 companies
worldwide.
<PAGE>
Once we gather information, we put it to work. Our portfolio managers thrive
on communication, so we've structured our trading floors in open environments.
When news in one area of the market affects Nicholas-Applegate holdings in
another, information flows swiftly to the portfolio management team that can use
it.
We're also acutely aware that when the U.S. market is closed, the rest of the
world is still open for business. We don't miss opportunities just because they
are happening in different time zones.
All of these elements account for Nicholas-Applegate's ability to find
compelling opportunities, not only in strong markets such as Europe and the
United States, but also in challenging markets including Latin America and
Eastern Europe. We believe the future for continued long-term growth is bright,
even in Asia, and encourage investors to share our disciplined, long-term
perspective.
Thank you for your support of the Nicholas-Applegate Mutual Funds. We welcome
your comments and look forward to continuing our work with you in the coming
years.
Sincerely yours,
/s/ ART NICHOLAS
Art Nicholas
[PHOTO]
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TABLE OF CONTENTS
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<TABLE>
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PAGE
<S> <C>
The Portfolios' Review and Outlook, Performance, and the Funds'
Schedules of Investments
Emerging Growth....................................................... 1
Core Growth........................................................... 9
Large Cap Growth...................................................... 13
Income & Growth....................................................... 16
Balanced Growth....................................................... 21
Government Income..................................................... 27
Money Market.......................................................... 30
Emerging Countries.................................................... 32
International Small Cap Growth........................................ 37
International Core Growth............................................. 42
Worldwide Growth...................................................... 47
The Portfolios'
Financial Highlights.................................................. 54
Statements of Assets and Liabilities.................................. 60
Statements of Operations.............................................. 66
Statements of Changes in Net Assets................................... 72
Notes to the Financial Statements..................................... 84
Notes to the Funds' Financial Statements................................ 97
Report of Independent Auditors
Nicholas-Applegate Mutual Funds....................................... 102
Nicholas-Applegate Investment Trust................................... 103
ANNUAL REPORT FOR NICHOLAS-APPLEGATE HIGH YIELD BOND FUND
</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 Series A, B and C Portfolios. Distributor: Nicholas-Applegate
Securities.
<PAGE>
EMERGING GROWTH FUND
PORTFOLIOS A, B & C
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MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Thomas E. Bleakley,
Partner, Portfolio Manager
John C. McCraw,
Portfolio Manager
Aaron M. Harris,
Portfolio Manager
GOAL: The Nicholas-Applegate Emerging Growth Fund seeks to maximize long-term
capital appreciation by investing primarily in U.S. equity securities of
companies with market capitalizations below $500 million.
REVIEW AND OUTLOOK: In the midst of a volatile year for small company stocks,
the Nicholas-Applegate Emerging Growth Fund's C Portfolio returned 45.4%,
outperforming the Russell 2000 Growth Index benchmark, which returned 41.2%. The
Fund's relative outperformance may be attributed largely to our selection of
stocks of small companies demonstrating positive, sustainable and timely growth.
The Fund delivered solid results in May and June of 1997, following a
significant period of relative underperformance by the small-cap asset class.
The Asian economic crisis in October caused a temporary setback in the rally,
largely among technology stocks affected by the region's financial woes.
However, the rally resumed shortly thereafter. The Fund benefited from superior
selection of stocks that benefited from the strong U.S. economy, falling
interest rates and an all-time high level of consumer confidence.
We invested in the stocks of several retailers exhibiting powerful earnings
growth. For example, Linens N Things Inc., a specialty retailer, performed well
on the strength of its sales trends and new store openings. Likewise, home
furnishings store Ethan Allen Interiors did well in light of an extremely strong
housing market and trend of consumers spending a significant portion of
disposable income on their homes.
While the technology sector experienced a great deal of volatility, the Fund
did very well by maintaining a focus on those companies with little or no Asian
exposure. The stocks of software companies CBT Group, Visio Corp. and Veritas
Software, were among the Fund's top performers for the year.
Our outlook for the Emerging Growth Fund remains optimistic as we continue to
find many small companies displaying solid Fundamentals and strong earnings
potential. As investors continue to shift their preference to smaller cap
stocks, we see this asset class offering great opportunities moving forward.
REPRESENTATIVE HOLDINGS
Action Performance
Alaska Airlines
Eastern Environmental
Franchise Mortgage Acceptance
Linens N Things
Lycos
Natures Bounty
Personnel Group of America
Sangstat Medical
Veritas
- --------------------------------------------------------------------------------
1
<PAGE>
EMERGING GROWTH PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING GROWTH RUSSELL 2000
PORTFOLIO A GROWTH INDEX
<S> <C> <C>
1-Oct-93 $9,475.00 $10,000.00
31-Dec-93 $9,453.38 $10,262.59
30-Jun-94 $8,206.62 $9,227.27
31-Dec-94 $9,072.02 $10,013.02
30-Jun-95 $10,656.14 $11,609.85
31-Dec-95 $12,235.64 $13,123.11
30-Jun-96 $14,402.22 $14,687.74
31-Dec-96 $14,470.88 $14,601.18
30-Jun-97 $15,081.98 $15,351.64
31-Dec-97 $16,105.48 $16,476.56
31-Mar-98 $18,767.65 $18,435.00
Annualized Total Returns
As of 3/31/98
1 Year 3 Years Since Inception
38.64% 21.35% 15.02%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING GROWTH RUSSEL 2000
PORTFOLIO B GROWTH INDEX
<S> <C> <C>
1-Oct-93 $10,000.00 $10,000.00
31-Dec-93 $9,961.07 $10,262.59
30-Jun-94 $8,606.38 $9,227.27
31-Dec-94 $9,474.33 $10,013.02
30-Jun-95 $11,093.19 $11,609.85
31-Dec-95 $12,686.10 $13,123.11
30-Jun-96 $14,867.16 $14,687.74
31-Dec-96 $14,883.50 $14,601.18
30-Jun-97 $15,463.48 $15,351.64
31-Dec-97 $16,451.90 $16,476.56
31-Mar-98 $18,541.24 $18,435.00
Annualized Total Returns
As of 3/31/98
1 Year 3 Years Since Inception
40.26% 21.91% 14.71%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING GROWTH RUSSELL 2000
PORTFOLIO C GROWTH INDEX
<S> <C> <C>
1-Oct-93 $10,000.00 $10,000.00
31-Dec-93 $9,960.85 $10,262.59
30-Jun-94 $8,616.25 $9,227.27
31-Dec-94 $9,489.47 $10,013.02
30-Jun-95 $11,127.72 $11,609.85
31-Dec-95 $12,736.96 $13,123.11
30-Jun-96 $14,942.62 $14,687.74
31-Dec-96 $14,975.42 $14,601.18
30-Jun-97 $15,557.08 $15,351.64
31-Dec-97 $16,560.64 $16,476.56
31-Mar-98 $18,592.34 $18,435.00
Annualized Total Returns
As of 3/31/98
1 Year 3 Years Since Inception
45.40% 22.79% 14.78%
</TABLE>
The graphs compare a $10,000 investment in the Emerging Growth Portfolio A
(front load), the Emerging Growth Portfolio B (back-end load) and the Emerging
Growth Portfolio C (level load) with a similar investment in the Russell 2000
Growth Index, on a cumulative and average annual total return basis. Returns
reflect the reinvestment of income dividends and capital gains distributions, if
any, as well as all fees and expenses. Performance figures include the maximum
applicable sales charge of 5.25% for Portfolio A shares. The effect of the
maximum contingent deferred sales charge for Portfolio B shares (maximum 5%
declining to 0% over six years) is included in Portfolio B performance.
Performance is affected by a 12b-1 Plan which commenced at inception of each
Portfolio.
The Portfolios calculate their performance based upon the historical performance
of their corresponding series ("Fund") of Nicholas-Applegate Investment Trust,
adjusted to reflect sales charges and Portfolio operating expenses. The
Portfolios commenced operations on 12/27/93, 5/31/95 and 12/27/93, respectively.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolios, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
The Russell 2000 Growth Index is an unmanaged index comprised of stocks of
smaller U.S. companies with greater-than-average growth orientation and
represents the universe of stocks that generally have higher price-to-book and
price-earnings ratios. Its returns reflect the reinvestment of income dividends
and capital gains distributions, if any, but do not reflect fees, brokerage
commissions, or other expenses of investing.
Past performance is no guarantee of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
2
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
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EMERGING GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
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COMMON STOCKS -- 99.2%
- ---------------------------------------------------------------------------------
ADVERTISING -- 0.4%
Abacus Direct Corp.*....................... 45,700 $ 2,387,825
Getty Images, Inc.*........................ 37,900 952,237
-------------
3,340,062
-------------
AEROSPACE -- 0.4%
AAR Corp................................... 103,200 2,812,200
-------------
AIR FREIGHT/SHIPPING -- 0.9%
Airnet Systems, Inc.*...................... 37,100 1,075,900
Expeditors International Of Washington,
Inc...................................... 125,300 5,372,237
-------------
6,448,137
-------------
AIRLINES -- 2.6%
Alaska Air Group, Inc.*.................... 125,000 6,773,437
Atlantic Coast Airlines, Inc.*............. 47,500 2,280,000
Mesaba Holdings, Inc.*..................... 12,400 389,825
Midwest Express Holdings, Inc.*............ 76,600 3,753,400
Ryanair Holdings PLC Sponsored ADR*........ 26,800 991,600
SkyWest, Inc............................... 29,300 1,069,450
Trans World Airlines, Inc.................. 260,900 3,212,331
Virgin Express Holdings PLC -- ADR*........ 41,400 983,250
-------------
19,453,293
-------------
ALCOHOLIC BEVERAGES -- 0.6%
Beringer Wine Estates Holdings, Inc.*...... 33,800 1,744,925
Canandaigua Wine Co. Class A*.............. 44,400 2,536,350
-------------
4,281,275
-------------
APPAREL -- 1.1%
Ashworth, Inc.*............................ 17,000 291,125
Authentic Fitness Corp..................... 87,300 1,735,087
Big Dog Holdings, Inc...................... 2,500 16,562
Columbia Sportswear Co.*................... 32,700 690,788
Cutter & Buck, Inc.*....................... 26,500 685,687
Genesco, Inc.*............................. 91,300 1,654,812
Nautica Enterprises, Inc.*................. 32,750 1,007,062
Wolverine World Wide, Inc.................. 67,200 1,898,400
-------------
7,979,523
-------------
AUTOMOBILES -- 0.0%
Group 1 Automotive, Inc.................... 11,100 121,406
-------------
AUTOMOTIVE EQUIPMENT -- 0.4%
Aftermarket Technology Corp.*.............. 62,900 1,391,662
O'Reilly Automotive, Inc.*................. 57,100 1,573,819
-------------
2,965,481
-------------
BIOTECHNOLOGY -- 0.6%
Arqule, Inc.*.............................. 47,500 1,056,875
BioReliance Corp.*......................... 13,300 219,589
Coulter Pharmaceutical, Inc.*.............. 69,800 1,910,775
Neurex Corp.*.............................. 10,100 241,137
NeXstar Pharmaceuticals, Inc.*............. 55,600 639,400
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
BIOTECHNOLOGY (CONTINUED)
<TABLE>
<S> <C> <C>
Pharmacopeia, Inc.*........................ 25,200 $ 472,500
-------------
4,540,276
-------------
BROADCASTING -- 1.9%
Chancellor Media Corp.*.................... 208,500 9,564,937
Emmis Broadcasting Corp. Class A*.......... 63,000 3,323,250
Saga Communications, Inc. Class A*......... 55,277 1,153,907
-------------
14,042,094
-------------
BUILDING MATERIALS -- 1.3%
Advanced Lighting Technologies, Inc.*...... 25,800 667,575
AFC Cable Systems, Inc.*................... 35,125 1,365,484
Comfort Systems USA, Inc.*................. 132,600 2,867,475
Hexcel Corp.*.............................. 148,500 4,083,750
Simpson Manufacturing Co., Inc.*........... 5,000 203,750
Triangle Pacific Corp.*.................... 19,500 741,000
-------------
9,929,034
-------------
BUILDING MATERIALS CHAINS -- 0.1%
White Cap Industries, Inc.*................ 35,700 821,100
-------------
CATALOG/OUTLET STORES -- 0.3%
Coldwater Creek............................ 18,000 436,500
Insight Enterprises, Inc.*................. 53,400 2,169,375
-------------
2,605,875
-------------
CHEMICALS -- 0.9%
O.M. Group, Inc............................ 83,250 3,506,906
Scotts Co. (The) Class A*.................. 73,700 2,551,862
Spartech Corp.............................. 26,700 585,731
-------------
6,644,499
-------------
CLOTHING CHAINS -- 3.1%
99 Cents Only Stores*...................... 74,125 2,589,742
American Eagle Outfitters, Inc.*........... 27,100 1,192,400
Buckle, Inc.*.............................. 66,500 3,333,312
Gadzooks, Inc.............................. 17,100 382,612
Men's Wearhouse, Inc.*..................... 93,800 3,470,600
Pacific Sunwear of California*............. 58,050 2,409,075
Stage Stores, Inc.*........................ 108,600 5,606,475
Stein Mart, Inc.*.......................... 49,400 1,759,875
The Wet Seal, Inc. Class A*................ 66,100 2,499,406
-------------
23,243,497
-------------
COMPUTER/OFFICE AUTOMATION -- 2.5%
Advanced Digital Information Corp.*........ 78,500 1,236,375
Apex PC Solutions, Inc.*................... 65,900 1,771,062
Diamond Multimedia Systems, Inc.*.......... 39,100 581,613
Discreet Logic, Inc........................ 6,400 104,400
Geac Computer Corp. LTD*................... 81,000 3,388,931
MICROS Systems, Inc.*...................... 11,700 703,462
Network Appliance, Inc.*................... 277,800 9,861,900
QLogic Corp.*.............................. 4,800 170,400
Safeguard Scientifics, Inc.*............... 12,600 474,075
Visual Networks, Inc.*..................... 11,100 288,600
-------------
18,580,818
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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3
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SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
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<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
CONTRACTING DRILLING -- 0.5%
Atwood Oceanics, Inc.*..................... 26,700 $ 1,443,469
Cliff's Drilling Co.*...................... 26,000 1,074,125
Patterson Energy, Inc.*.................... 79,200 910,800
Unit Corp.*................................ 34,300 278,687
-------------
3,707,081
-------------
DEPARTMENT/DISCOUNT STORES -- 0.4%
Ames Department Stores, Inc.*.............. 124,000 2,619,500
Bon-Ton Stores, Inc.*...................... 26,100 398,025
-------------
3,017,525
-------------
DRUGS/PHARMACEUTICALS -- 4.3%
Boron Lepore & Associates, Inc.*........... 77,500 2,567,187
Curative Health Services, Inc.*............ 68,500 2,281,906
Incyte Pharmaceuticals, Inc.*.............. 56,200 2,627,350
Inhale Therapeutic Systems*................ 35,900 973,787
NBTY, Inc.*................................ 75,800 4,604,850
NCS Healthcare, Inc. Class A*.............. 52,800 1,768,800
Paraxel International Corp.*............... 77,600 2,425,000
PathoGenesis Corp.*........................ 73,000 2,445,500
Sangstat Medical Corp.*.................... 63,800 2,033,625
Sepracor, Inc.*............................ 135,000 5,754,375
Theragenics Corp.*......................... 77,200 4,916,675
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32,399,055
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ELECTRONIC DATA PROCESSING -- 0.2%
Analytical Surveys, Inc.................... 7,300 374,125
Deltek Systems, Inc.*...................... 27,400 486,350
Factset Research Systems, Inc.*............ 14,400 511,200
-------------
1,371,675
-------------
ELECTRONIC INSTRUMENTS/DIVERSIFIED -- 0.8%
Avid Technology, Inc.*..................... 84,800 3,487,400
Triumph Group, Inc.*....................... 38,700 1,717,312
Veeco Instruments, Inc.*................... 31,100 1,156,531
-------------
6,361,243
-------------
ELECTRONICS/MUSIC CHAINS -- 0.3%
Musicland Stores Corp.*.................... 75,400 852,962
Trans World Entertainment Corp.*........... 50,600 1,404,150
-------------
2,257,112
-------------
ENTERTAINMENT -- 0.7%
American Classic Voyages Co.*.............. 50,200 1,154,600
Championship Auto Racing Teams, Inc.*...... 38,000 703,000
Cinar Films, Inc. Class B*................. 24,800 1,057,100
Family Golf Centers, Inc.*................. 62,000 2,511,000
-------------
5,425,700
-------------
ENVIRONMENTAL SERVICES -- 1.1%
American Disposal Services, Inc.*.......... 46,500 1,755,375
Casella Waste Systems, Inc. Class A*....... 69,000 1,824,187
Eastern Environmental Services, Inc.*...... 81,000 2,055,375
Superior Services, Inc.*................... 64,300 2,005,356
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
ENVIRONMENTAL SERVICES (CONTINUED)
<TABLE>
<S> <C> <C>
Tetra Tech, Inc.*.......................... 24,125 $ 585,031
-------------
8,225,324
-------------
FINANCE COMPANIES -- 1.5%
American Capital Strategies LTD............ 33,900 750,037
Medallion Financial Corp................... 31,900 865,287
Cowen Financial Corp.*..................... 141,300 3,921,075
Sirrom Capital Corp........................ 184,000 5,531,500
-------------
11,067,899
-------------
FOOD CHAINS -- 0.2%
Wild Oats Markets, Inc.*................... 38,600 1,375,125
-------------
GROCERY PRODUCTS -- 0.3%
American Italian Pasta Co.*................ 19,000 686,375
Michael Foods, Inc......................... 49,500 1,324,125
-------------
2,010,500
-------------
HOME FURNISHINGS -- 1.7%
Ethan Allen Interiors, Inc................. 182,200 10,886,450
Windmere-Durable Holdings, Inc............. 68,000 1,768,000
-------------
12,654,450
-------------
HOMEBUILDING -- 1.2%
American Homestar Corp.*................... 60,900 1,381,669
Crossmann Communities, Inc.*............... 35,400 1,050,937
M.D.C. Holdings, Inc....................... 82,400 1,462,600
M/I Schottenstein Homes, Inc............... 46,700 1,021,562
Ryland Group, Inc.......................... 77,600 2,143,700
Standard-Pacific Corp...................... 127,400 1,934,887
-------------
8,995,355
-------------
INDUSTRIAL ENGINEERING/CONSTRUCTION -- 0.4%
Dycom Industries, Inc.*.................... 75,600 2,121,525
Modtech, Inc.*............................. 52,700 1,083,644
-------------
3,205,169
-------------
INVESTMENT COMPANIES -- 0.9%
Affiliated Managers Group, Inc.*........... 91,100 3,177,112
AmeriTrade Holding Corp. Class A*.......... 81,000 2,247,750
Everen Capital Corp........................ 28,600 1,261,975
-------------
6,686,837
-------------
LIFE INSURERS -- 0.1%
Protective Life Corp....................... 11,600 846,800
-------------
LODGING -- 0.7%
Capstar Hotel Co.*......................... 125,250 4,344,609
Silverleaf Resorts, Inc.*.................. 35,900 863,844
Trendwest Resorts, Inc.*................... 19,000 358,625
-------------
5,567,078
-------------
MACHINERY/EQUIPMENT -- 2.0%
DT Industries, Inc......................... 51,000 1,957,125
Gardner Denver, Inc.*...................... 18,150 537,694
Kuhlman Corp............................... 82,100 3,997,244
Motivepower Industries, Inc.*.............. 98,377 2,717,665
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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4
<PAGE>
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<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
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MACHINERY/EQUIPMENT (CONTINUED)
<TABLE>
<S> <C> <C>
OmniQuip International, Inc................ 50,500 $ 1,249,875
Terex Corp.*............................... 72,500 1,962,031
Varlen Corp................................ 53,750 2,069,375
Wabash National Corp....................... 21,200 614,800
-------------
15,105,809
-------------
MANAGED HEALTH CARE/HMO'S/PPO'S -- 0.2%
Healthcare Recoveries, Inc.*............... 39,300 913,725
Specialty Care Network, Inc.*.............. 29,200 355,875
-------------
1,269,600
-------------
MEDICAL SPECIALTIES -- 0.6%
Hanger Orthopedic Group, Inc.*............. 31,600 531,275
Impath, Inc.*.............................. 36,200 1,384,650
Osteotech, Inc.*........................... 27,600 714,150
VISX, Inc.*................................ 86,600 2,165,000
-------------
4,795,075
-------------
MEDICAL SUPPLIES -- 3.0%
Biosite Diagnostics, Inc.*................. 58,100 947,756
Milestone Scientific, Inc.*................ 18,500 367,687
Minimed, Inc.*............................. 61,100 2,703,675
Molecular Devices Corp.*................... 41,300 795,025
Ocular Sciences, Inc.*..................... 46,100 1,469,437
OEC Medical Systems, Inc.*................. 32,100 758,362
PharMerica, Inc.*.......................... 55,400 824,075
Sabratek Corp.*............................ 76,600 2,681,000
Safeskin Corp.*............................ 104,900 7,749,487
Serologicals Corp.*........................ 29,450 831,962
Ventana Medical Systems, Inc.*............. 29,500 785,437
Vision Twenty-One, Inc.*................... 9,500 111,625
Vista Medical Technologies, Inc.*.......... 28,500 317,062
Wesley Jessen VisionCare, Inc.*............ 41,800 1,374,175
Young Innovations, Inc.*................... 38,700 599,850
-------------
22,316,615
-------------
MEDICAL/NURSING/HEALTH SERVICES -- 1.9%
ABR Information Services, Inc.*............ 77,400 2,176,875
Assisted Living Concepts, Inc.*............ 43,800 947,175
Atria Communities, Inc.*................... 124,000 2,387,000
CareMatrix Corp.*.......................... 13,600 418,200
Centennial Healthcare Corp.*............... 5,300 133,162
Coast Dental Services, Inc.*............... 40,700 1,144,687
Concentra Managed Care, Inc.*.............. 96,304 2,961,348
Dental Care Alliance, Inc.*................ 25,100 320,025
Diagnostic Health Services, Inc.*.......... 33,100 422,025
Hooper Holmes, Inc......................... 32,500 694,687
Rehabcare Group, Inc.*..................... 24,700 657,637
Sunrise Assisted Living, Inc.*............. 49,200 2,201,700
-------------
14,464,521
-------------
METALS -- 0.6%
Mueller Industries, Inc.*.................. 77,300 4,894,056
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
MILITARY/DEFENSE TECHNOLOGY -- 0.3%
Aeroflex, Inc.*............................ 20,300 $ 268,975
Tracor, Inc.*.............................. 67,800 2,173,837
-------------
2,442,812
-------------
MULTI-LINE INSURERS -- 0.2%
Delphi Financial Group, Inc. Class A*...... 26,452 1,408,569
-------------
OIL REFINING/MARKETING -- 0.1%
Tesoro Petroleum Corp.*.................... 27,900 498,712
-------------
OIL/GAS PRODUCTION -- 0.7%
Harken Energy Corp.*....................... 271,800 1,749,712
Petsec Energy LTD*......................... 63,600 1,192,500
St. Mary Land & Exploration Co............. 34,600 1,322,369
Vintage Petroleum, Inc..................... 51,400 1,079,400
-------------
5,343,981
-------------
OILFIELD SERVICES/EQUIPMENT -- 3.1%
Cal Dive International, Inc.*.............. 47,500 1,567,500
Dril-Quip, Inc.*........................... 21,200 689,000
Global Industries LTD*..................... 94,400 1,923,400
Oceaneering International, Inc.*........... 88,000 1,738,000
Pool Energy Services Co.*.................. 54,900 1,283,287
Pride International, Inc.*................. 106,100 2,533,137
Seitel, Inc.*.............................. 15,500 234,437
Stolt Comex Seaway S. A.*.................. 88,400 2,226,575
Superior Energy Services, Inc.*............ 47,900 467,025
Transcoastal Marine Services, Inc.*........ 45,400 485,213
Tuboscope, Inc.*........................... 198,400 3,769,600
Veritas DGC, Inc.*......................... 119,400 6,037,163
Willbros Group, Inc.*...................... 18,300 300,806
-------------
23,255,143
-------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 12.0%
Administaff, Inc.*......................... 63,800 2,747,388
Affiliated Computer Services, Inc. Class
A*....................................... 89,400 2,966,963
Billing Information Concepts*.............. 189,800 4,922,938
CCC Information Services Group*............ 79,600 2,189,000
Complete Business Solutions, Inc.*......... 94,600 3,393,775
Computer Task Group, Inc................... 179,800 7,405,513
Cornell Corrections, Inc.*................. 42,900 1,051,050
Cotelligent Group, Inc.*................... 15,000 444,375
Data Processing Resources Corp.*........... 71,100 2,208,544
ECsoft Group PLC -- ADR*................... 8,500 212,500
First Consulting Group*.................... 8,000 165,000
Forrester Research, Inc.*.................. 57,100 2,027,050
G & K Services, Inc. Class A............... 22,950 1,006,931
Host Marriott Services Corp.*.............. 46,800 661,050
Information Management Resources, Inc.*.... 94,200 5,546,025
Innovative Valve Technologies, Inc.*....... 25,000 478,125
International Telecommunications Data
Systems, Inc.*........................... 107,400 2,805,825
Kellstrom Industries, Inc.*................ 42,000 1,057,875
Labor Ready, Inc.*......................... 114,750 3,693,516
Lason Holdings, Inc.*...................... 54,300 2,049,825
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
5
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES (CONTINUED)
<TABLE>
<S> <C> <C>
Metro Information Services, Inc.*.......... 47,300 $ 1,614,113
Metzler Group, Inc.*....................... 77,500 3,855,625
NCO Group, Inc.*........................... 52,350 1,308,750
Nova Corp.*................................ 22,200 667,388
Novacare Employee Services, Inc.*.......... 80,000 565,000
On Assignment, Inc.*....................... 63,200 1,872,300
Outsource International, Inc.*............. 16,200 388,800
Palex, Inc.*............................... 4,400 58,300
Personnel Group of America, Inc.*.......... 151,000 3,435,250
PMT Services, Inc.*........................ 104,350 1,871,778
Preview Travel, Inc*....................... 30,500 991,250
Pro Business Services, Inc.*............... 8,400 246,225
RemedyTemp, Inc.*.......................... 24,300 786,713
Romac International, Inc.*................. 171,800 4,724,500
RWD Technologies, Inc.*.................... 23,600 649,000
SOS Staffing Services, Inc.*............... 40,100 1,062,650
SPR, Inc.*................................. 40,400 1,333,200
Staff Leasing, Inc.*....................... 42,200 1,171,050
StaffMark, Inc.*........................... 33,400 1,369,400
Steiner Leisure LTD*....................... 41,900 2,129,044
Steven Myers & Associates, Inc.*........... 10,500 186,375
Technology Solutions Co.*.................. 87,300 2,313,450
Vincam Group, Inc.*........................ 54,600 1,583,400
Whittman-Hart, Inc.*....................... 196,900 8,909,725
Youth Services International, Inc.*........ 27,700 512,450
-------------
90,639,004
-------------
OTHER CONSUMER DURABLES -- 0.8%
Action Performance Cos., Inc.*............. 146,600 5,158,488
Movado Group, Inc.......................... 24,612 710,672
-------------
5,869,160
-------------
OTHER CONSUMER NON-DURABLES -- 0.2%
Helen of Troy LTD*......................... 75,200 1,395,900
-------------
OTHER CONSUMER SERVICES -- 1.2%
Bally Total Fitness Holding Corp.*......... 113,100 3,562,650
Career Education Corp.*.................... 4,000 88,000
Coinmach Laundry Corp.*.................... 48,300 1,020,338
Equity Corp. International*................ 22,800 545,775
MemberWorks, Inc........................... 49,400 1,475,825
Strayer Education, Inc..................... 77,250 2,568,563
-------------
9,261,151
-------------
OTHER FINANCIAL SERVICES -- 0.7%
Franchise Mortgage Acceptance Co.*......... 98,600 2,477,325
Healthcare Financial Partners, Inc.*....... 61,500 2,913,563
-------------
5,390,888
-------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 0.4%
Advance Paradigm, Inc.*.................... 40,700 1,612,738
MedQuist, Inc.*............................ 33,300 1,225,856
-------------
2,838,594
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
OTHER PRODUCERS/MANUFACTURING -- 1.3%
BE Aerospace, Inc.*........................ 76,500 $ 2,151,563
Chicago Miniature Lamp, Inc.*.............. 95,250 3,702,844
Compx International , Inc.*................ 21,000 490,875
Griffon Corp.*............................. 70,000 1,111,250
Interface, Inc. Class A.................... 50,300 2,090,594
Special Metals Corp.*...................... 17,900 290,875
-------------
9,838,001
-------------
OTHER RETAIL TRADE -- 0.4%
Fred's, Inc................................ 34,500 858,188
ONSALE, Inc.*.............................. 27,900 864,900
RDO Equipment Co. Class A.................. 3,800 57,000
Renters Choice, Inc.*...................... 37,100 908,950
-------------
2,689,038
-------------
OTHER TECHNOLOGY -- 0.6%
CHS Electronics, Inc.*..................... 65,700 1,231,875
Henry(Jack) & Associates................... 88,650 3,191,400
Pegasus Systems, Inc.*..................... 6,000 154,500
-------------
4,577,775
-------------
OTHER TRANSPORTATION -- 0.3%
Coach USA, Inc.*........................... 47,400 2,061,900
-------------
PAPER -- 0.0%
Fibermark, Inc.*........................... 9,100 212,144
-------------
PRINTING/FORMS -- 1.7%
Applied Graphics Technologies, Inc.*....... 78,800 3,792,250
Consolidated Graphics, Inc.*............... 92,200 5,336,075
Mail-Well, Inc.*........................... 98,900 3,745,838
-------------
12,874,163
-------------
PUBLISHING -- 0.1%
NewsEdge Corp.*............................ 37,900 535,337
-------------
REITS -- 2.1%
American General Hospitality Corp.......... 54,000 1,495,125
Annaly Mortgage Managment, Inc............. 18,000 201,375
FelCor Suite Hotels, Inc................... 27,800 1,030,338
Golf Trust Of America, Inc................. 48,600 1,524,825
Health Care REIT, Inc...................... 43,500 1,196,250
Imperial Credit Commercial Mortgage
Investment Corp.......................... 86,400 1,296,000
Innkeepers USA Trust....................... 118,400 1,938,800
Kilroy Realty Corp......................... 107,825 3,079,752
Patriot American Hospitality, Inc.......... 60,093 1,622,511
Storage USA, Inc........................... 34,700 1,331,613
Walden Residential Properties, Inc......... 43,600 1,100,900
-------------
15,817,489
-------------
REAL ESTATE BROKERS/SERVICES -- 0.2%
Lasalle Partners, Inc.*.................... 57,600 1,872,000
-------------
RECREATION PRODUCTS -- 0.2%
Monaco Coach Corp.*........................ 2,600 102,050
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
6
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
RECREATION PRODUCTS (CONTINUED)
<TABLE>
<S> <C> <C>
National RV Holdings, Inc.*................ 30,100 $ 1,087,363
-------------
1,189,413
-------------
REGIONAL BANKS -- 1.0%
Peoples Heritage Financial Group, Inc...... 68,200 3,290,650
Provident Bankshares Corp.................. 105,170 3,720,389
Sterling Bancorp Co........................ 7,100 192,588
-------------
7,203,627
-------------
RENTAL/LEASING COMPANIES -- 0.4%
Avis Rent A Car, Inc.*..................... 18,000 583,875
Dollar Thrifty Automotive Goup, Inc.*...... 50,000 1,125,000
LINC Capital, Inc.*........................ 15,000 255,000
Rent-Way, Inc.*............................ 16,000 380,000
T & W Financial Corp.*..................... 31,900 917,125
-------------
3,261,000
-------------
RESTAURANTS -- 2.4%
CKE Restaurants, Inc....................... 241,615 8,879,351
Dave & Buster's, Inc.*..................... 57,700 1,565,113
Foodmaker, Inc.*........................... 158,400 3,069,000
Sonic Corp.*............................... 130,100 4,358,350
Star Buffet, Inc.*......................... 14,700 244,388
-------------
18,116,202
-------------
RETAIL/FOOD DISTRIBUTION -- 0.4%
Suiza Foods Corp.*......................... 55,600 3,419,400
-------------
SAVINGS & LOAN ASSOCIATIONS -- 0.3%
First Savings Bank of Washington Bancorp,
Inc...................................... 30,500 802,531
MAF Bancorp, Inc........................... 30,550 1,162,809
SIS Bancorp, Inc........................... 5,100 205,275
-------------
2,170,615
-------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 3.6%
3Dfx Interactive, Inc...................... 30,000 847,500
Aavid Thermal Technologies, Inc.*.......... 36,100 1,114,588
Alpha Industries, Inc.*.................... 15,100 233,106
Anaren Microwave, Inc.*.................... 28,300 622,600
Applied Micro Circuits Corp.*.............. 49,000 1,102,500
C&D Technologies, Inc...................... 18,800 978,775
DII Group, Inc............................. 68,900 1,481,350
Docucorp International, Inc.*.............. 2,520 24,885
Dupont Photomasks, Inc.*................... 53,000 2,292,250
EFTC Corp.*................................ 43,300 568,313
Integrated Silicon Solution, Inc.*......... 69,500 629,844
Kulicke & Soffa Industries, Inc.*.......... 84,600 1,840,050
Microsemi Corp.*........................... 9,600 158,400
Moog, Inc. Class A*........................ 24,100 1,015,213
MRV Communications, Inc.*.................. 23,500 549,313
PMC-Sierra, Inc.*.......................... 44,500 1,691,000
Power-One, Inc.*........................... 39,900 678,300
PRI Automation, Inc........................ 23,800 623,263
Sipex Corp.*............................... 168,700 5,567,100
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
SEMICONDUCTORS/ELECTRONIC COMPONENTS (CONTINUED)
<TABLE>
<S> <C> <C>
STB Systems, Inc.*......................... 73,425 $ 1,468,500
Uniphase Corp.*............................ 89,800 3,777,213
-------------
27,264,063
-------------
SOFTWARE -- 10.9%
Advantage Learning Systems, Inc.*.......... 35,100 1,206,563
Aspen Technology, Inc.*.................... 53,800 2,219,250
AXENT Technologies, Inc.*.................. 70,600 2,153,300
Business Objects S.A. ADR*................. 90,700 1,371,838
CBT Group PLC Sponsored ADR*............... 164,600 8,518,050
Credit Management Solutions, Inc.*......... 5,300 45,050
Datastream Systems, Inc.*.................. 33,100 732,337
DataWorks Corp.*........................... 98,900 2,608,488
Documentum, Inc.*.......................... 47,600 2,576,350
DSET Corp.*................................ 4,000 74,750
Engineering Animation, Inc.*............... 35,750 1,483,625
Excite, Inc.*.............................. 69,100 3,519,781
Geotel Communications Corp.*............... 40,900 1,129,863
Hyperion Software Corp.*................... 58,200 2,575,350
Industri-Matematik International Corp.*.... 41,000 1,286,375
Infinium Software, Inc.*................... 69,700 1,389,644
ITEQ, Inc.*................................ 58,200 829,350
Lycos, Inc.*............................... 64,700 2,862,975
Manugistics Group, Inc.*................... 38,800 2,175,225
Memco Software LTD*........................ 42,300 1,321,875
Mercury Interactive Corp.*................. 104,700 3,821,550
National Instruments Corp.*................ 185,500 6,330,188
Open Text Corp.*........................... 87,100 1,578,688
Oshap Technologies LTD*.................... 36,500 365,000
Peregrine Systems, Inc.*................... 17,600 336,600
Pervasive Software, Inc.*.................. 27,000 391,500
QuadraMed Corp.*........................... 73,500 2,453,063
QuickResponse Services, Inc.*.............. 21,200 1,134,200
Software AG Systems, Inc.*................. 61,600 1,632,400
Summit Design, Inc.*....................... 88,200 1,311,975
Syntel, Inc.*.............................. 52,100 2,136,100
Veritas Software Co.*...................... 125,400 7,414,275
Visio Corp.*............................... 182,200 7,834,600
Wind River Systems, Inc.*.................. 129,800 5,159,550
-------------
81,979,728
-------------
SPECIALTY CHAINS -- 5.0%
Budget Group, Inc.*........................ 29,000 1,087,500
Cort Business Services Corp.*.............. 104,600 4,968,500
Finish Line, Inc. Class A*................. 57,800 1,372,750
Finlay Enterprises, Inc.*.................. 14,700 373,931
Garden Ridge Corp.*........................ 62,800 1,358,050
Guitar Center, Inc.*....................... 63,100 1,490,738
Hollywood Entertainment Corp.*............. 200,100 2,801,400
Linens 'N Things, Inc.*.................... 151,700 8,334,019
Marks Bros. Jewelers, Inc.*................ 30,900 612,206
Micro Warehouse, Inc.*..................... 155,700 2,539,856
Party City Corp.*.......................... 61,350 2,078,231
Pier 1 Imports, Inc........................ 272,300 7,386,138
Rental Service Corp.*...................... 71,200 1,655,400
Sonic Automotive, Inc.*.................... 24,000 414,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
7
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
SPECIALTY CHAINS (CONTINUED)
<TABLE>
<S> <C> <C>
Sunglass Hut International, Inc.*.......... 97,800 $ 1,026,900
-------------
37,499,619
-------------
SPECIALTY INSURERS -- 0.1%
Century Business Services, Inc.*........... 66,600 1,177,988
-------------
TELECOMMUNICATIONS EQUIPMENT -- 3.9%
Advanced Radio Telecom Corp.*.............. 18,500 293,688
Applied Signal Technology, Inc.*........... 9,800 176,400
Applied Voice Technology, Inc.*............ 48,200 1,879,800
Comverse Technology, Inc.*................. 48,500 2,370,438
Davox Corp................................. 75,250 2,342,156
GST Telecommunications, Inc.*.............. 99,100 1,492,694
IFR Systems, Inc........................... 32,850 730,913
Metromedia Fiber Network, Inc. Class A*.... 18,000 605,250
Natural Microsystems Corp.................. 81,700 3,237,363
Nice Systems LTD*.......................... 49,900 2,295,400
Premisys Communications, Inc.*............. 93,700 2,688,019
Quanta Services, Inc.*..................... 13,700 226,906
Remec, Inc.*............................... 60,750 1,742,766
Stanford Telecommunications, Inc.*......... 47,300 798,188
Superior TeleCom, Inc...................... 47,875 1,998,781
Tekelec*................................... 82,600 3,747,975
World Access, Inc.*........................ 81,100 2,635,750
-------------
29,262,487
-------------
TELECOMMUNICATIONS SERVICES -- 1.8%
Advanced Communications Group, Inc.*....... 30,000 478,125
IDT Corp.*................................. 122,100 4,578,750
Pacific Gateway Exchange, Inc.*............ 45,900 2,627,775
Star Telecommunications, Inc.*............. 86,600 4,817,125
SmarTalk Teleservices, Inc................. 3,700 118,169
Telegroup, Inc.*........................... 65,200 1,320,300
-------------
13,940,244
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
TELEPHONE -- 0.2%
Primus Telecommunications Group, Inc.*..... 62,900 $ 1,824,100
-------------
TEXTILES -- 0.6%
Novel Demim Holdings LTD*.................. 45,200 1,237,350
Pillowtex Corp............................. 69,400 3,361,563
-------------
4,598,913
-------------
TRUCKING -- 0.7%
Jevic Transportation, Inc.*................ 32,200 483,000
Johnstown America, Inc.*................... 74,400 1,218,300
Knight Transportation, Inc.*............... 10,900 348,800
M.S. Carriers, Inc.*....................... 25,000 846,875
Swift Transportation Co., Inc.*............ 70,200 1,684,800
U S Xpress Enterprises, Inc. Class A*...... 47,200 979,400
-------------
5,561,175
-------------
WHOLESALE DISTRIBUTION -- 0.6%
Anicom, Inc.*.............................. 85,800 1,222,650
Aviall, Inc.*.............................. 83,800 1,257,000
Inacom Corp.*.............................. 26,700 737,588
U.S.A. Floral Products, Inc.*.............. 47,800 1,084,463
-------------
4,301,701
-------------
TOTAL COMMON STOCK
(Cost $489,840,872)......................................... 747,420,210
-------------
TOTAL INVESTMENTS -- 99.2%
(Cost $489,840,872)......................................... 747,420,210
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.8%................. 5,675,716
-------------
NET ASSETS -- 100.0%.......................................... $ 753,095,926
-------------
</TABLE>
- ---------------
* Non-income producing security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
8
<PAGE>
CORE GROWTH FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Arthur E. Nicholas,
Managing Partner
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Andrew B. Gallagher,
Partner, Portfolio Manager
Thomas J. Sullivan,
Portfolio Manager
GOAL: The Nicholas-Applegate Core Growth Fund seeks to maximize long-term
capital appreciation by investing primarily in U.S. companies with a mid-sized
market capitalization.
REVIEW AND OUTLOOK: Investors turned their attention back to mid-cap stocks in
May of 1997, following an extended period of large-cap outperformance. While the
Asian economic crisis temporarily interrupted this mid-cap rebound, the
beginning of 1998 witnessed a shift of investor preference back to mid-sized
company stocks. Mid-caps are currently exhibiting compelling earnings growth
rates and valuations relative to large caps. While the Fund experienced some
volatility throughout the year, we believe it is well positioned going forward.
The Fund's C Portfolio returned 41.0% for the period, while its index, the
Russell Mid Cap Growth, returned 42.4%.
We maintained our bottom-up philosophy of selecting stocks of mid-sized
companies with strong fundamentals and poised to capitalize on positive change.
Technology stocks experienced a volatile period amid uncertainties regarding
the continuing effects of the Southeast Asian economic crisis. In the midst of
this difficult environment, software holdings such as Compuware performed very
well. Compuware is a computer consulting firm that has benefited from its
ability to work with companies affected by the year 2000 computer problem. The
Fund was negatively affected during the year by semiconductor companies
including DII Group, Inc. and Level One Communications which did not fare as
well. Especially during the period following the onset of Southeast Asia's
economic troubles, the Fund focused on investment in companies with little to no
exposure to the region.
Retail stocks did very well during the period, enjoying a strong domestic
economy, falling interest rates and a high level of consumer confidence. TJ Max,
Costco, and Dollar Tree stores all delivered strong returns for the Fund.
Toward the end of the year, we reduced our energy weighting because of the
negative effects of falling oil prices. We increased our weightings in the
financial services and consumer non-durables sectors.
Looking ahead, we remain optimistic. We continue to find mid-cap companies
with strong earnings growth and attractive relative valuations.
REPRESENTATIVE HOLDINGS
Allied Waste
Carnival
Centex
Chancellor Media
Costco
Peoplesoft
Robert Half International
Saville
TJX
Veritas DGC
- --------------------------------------------------------------------------------
9
<PAGE>
CORE GROWTH PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE GROWTH RUSSELL MID CAP
PORTFOLIO A GROWTH INDEX
<S> <C> <C>
9/30/85 $9,475.00 $10,000.00
12/31/85 $11,802.00 $10,000.00
12/31/86 $15,588.00 $11,755.04
12/31/87 $16,051.00 $12,079.37
12/31/88 $17,977.00 $13,640.50
12/31/89 $23,935.00 $17,935.18
12/31/90 $23,965.00 $17,014.58
12/31/91 $37,056.00 $25,016.75
12/31/92 $41,829.00 $27,196.19
12/31/93 $49,805.00 $30,240.33
12/31/94 $44,328.00 $29,585.30
12/31/95 $61,012.00 $39,641.61
12/31/96 $70,680.00 $46,571.16
12/31/97 $81,899.03 $57,088.43
3/31/98 $91,914.40 $63,902.70
Annualized Total Returns As of 03/31/98
1 Year 5 Years 10 Years
34.36% 14.40% 18.15%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE GROWTH RUSSELL MID CAP
PORTFOLIO B GROWTH INDEX
<S> <C> <C>
9/30/85 $9,475.00 $10,000.00
12/31/85 $11,802.00 $10,000.00
12/31/86 $15,588.00 $11,755.04
12/31/87 $16,051.00 $12,079.37
12/31/88 $17,977.00 $13,640.50
12/31/89 $23,935.00 $17,935.18
12/31/90 $23,965.00 $17,014.58
12/31/91 $37,056.00 $25,016.75
12/31/92 $41,829.00 $27,196.19
12/31/93 $49,805.00 $30,240.33
12/31/94 $44,328.00 $29,585.30
12/31/95 $61,012.00 $39,641.61
12/31/96 $70,680.00 $46,571.16
9/30/97 $84,337.82 $58,703.55
12/31/97 $80,032.30 $57,088.43
3/31/98 $89,594.60 $63,902.70
Annualized Total Returns As of 03/31/98
1 Year 5 Years 10 Years
35.84% 14.68% 18.04%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORE GROWTH RUSSELL MID CAP
PORTFOLIO C GROWTH INDEX
<S> <C> <C>
9/30/85 $9,475.00 $10,000.00
12/31/85 $11,802.00 $10,000.00
12/31/86 $15,588.00 $11,755.04
12/31/87 $16,051.00 $12,079.37
12/31/88 $17,977.00 $13,640.50
12/31/89 $23,935.00 $17,935.18
12/31/90 $23,965.00 $17,014.58
12/31/91 $37,056.00 $25,016.75
12/31/92 $41,829.00 $27,196.19
12/31/93 $49,805.00 $30,240.33
12/31/94 $44,328.00 $29,585.30
12/31/95 $61,012.00 $39,641.61
12/31/96 $70,680.00 $46,571.16
9/30/97 $84,337.82 $58,703.55
12/31/97 $80,014.24 $57,088.43
3/31/98 $89,689.17 $63,902.70
Annualized Total Returns As of 03/31/98
1 Year 5 Years 10 Years
40.95% 14.94% 18.05%
</TABLE>
The graphs compare a $10,000 investment in the Core Growth Portfolio A (front
load), the Core Growth Portfolio B (back-end load) and the Core Growth Portfolio
C (level load) with a similar investment in the Russell Mid Cap Growth Index and
the Standard & Poor's 400 Index ("S&P 400"), on a cumulative and average annual
total return basis. Returns reflect the reinvestment of income dividends and
capital gains distributions, if any, as well as all fees and expenses.
Performance figures include the maximum applicable sales charge of 5.25% for
Portfolio A shares. The effect of the maximum contingent deferred sales charge
for Portfolio B shares (maximum 5% declining to 0% over six years) is included
in Portfolio B performance. Performance is affected by a 12b-1 Plan which
commenced at inception of each Portfolio.
The Portfolios calculate their performance based upon the historical performance
of their corresponding series ("Fund") of Nicholas-Applegate Investment Trust,
adjusted to reflect sales charges and Portfolio operating expenses. The
Portfolios commenced operations on 4/19/93, 5/31/95 and 4/19/93, respectively.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolios, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
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.
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 returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
10
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
CORE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMON STOCKS -- 99.9%
- ---------------------------------------------------------------------------------
ADVERTISING -- 0.8%
Outdoor Systems, Inc.*..................... 114,400 $ 4,011,150
-------------
AIRLINES -- 2.1%
Comair Holdings, Inc....................... 127,100 3,368,150
Southwest Airlines Co...................... 142,800 4,221,525
Trans World Airlines, Inc.................. 217,100 2,673,044
-------------
10,262,719
-------------
ALCOHOLIC BEVERAGES -- 0.9%
Canandaigua Brands, Inc. -- Class A........ 77,400 4,421,475
-------------
BIOTECHNOLOGY -- 2.4%
Centocor, Inc.............................. 59,600 2,659,650
Medimmune, Inc.*........................... 114,300 6,300,787
Millennium Pharmaceuticals, Inc.*.......... 150,000 2,793,750
-------------
11,754,187
-------------
BROADCASTING -- 7.1%
Chancellor Media Corp.*.................... 238,800 10,954,950
Clear Channel Communications, Inc.*........ 76,300 7,477,400
Cox Communications, Inc.*.................. 113,100 4,750,200
Jacor Communications, Inc.*................ 98,900 5,835,100
USA Networks, Inc.*........................ 207,800 5,662,550
-------------
34,680,200
-------------
CLOTHING CHAINS -- 2.3%
Stage Stores, Inc.*........................ 52,700 2,720,637
TJX Companies, Inc......................... 184,300 8,339,575
-------------
11,060,212
-------------
COMPUTER/OFFICE AUTOMATION -- 3.0%
Computer Horizons Corp.*................... 85,700 4,306,425
Computer Sciences Corp.*................... 43,800 2,409,000
Network Appliance, Inc.*................... 130,500 4,632,750
Sterling Commerce, Inc.*................... 68,500 3,176,687
-------------
14,524,862
-------------
CONTRACT DRILLING -- 0.6%
R & B Falcon Corp.*........................ 96,800 2,867,700
-------------
DEPARTMENT/DISCOUNT STORES -- 7.0%
Costco Companies, Inc.*.................... 206,200 11,031,700
Dollar Tree Stores, Inc.*.................. 116,400 6,183,750
Family Dollar Stores, Inc.................. 104,900 3,986,200
Fred Meyer, Inc.*.......................... 126,000 5,819,625
Kohls Corp.*............................... 85,100 6,956,925
-------------
33,978,200
-------------
DRUGS/PHARMACEUTICALS -- 6.3%
ALZA Corp.*................................ 88,300 3,956,944
Elan Corp. PLC -- Sponsored ADR*........... 175,800 11,361,075
NBTY, Inc.*................................ 83,500 5,072,625
Sepracor, Inc.*............................ 51,000 2,173,875
Watson Pharmaceuticals, Inc.*.............. 226,000 8,136,000
-------------
30,700,519
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 1.6%
AES Corp.*................................. 146,600 $ 7,687,337
-------------
ELECTRONIC DATA PROCESSING -- 0.4%
Concord EFS, Inc.*......................... 58,800 2,032,275
-------------
ENVIRONMENTAL SERVICES -- 2.1%
Allied Waste Industries, Inc.*............. 310,600 7,755,294
American Disposal Services, Inc.*.......... 60,600 2,287,650
-------------
10,042,944
-------------
FINANCE COMPANIES -- 3.3%
Finova Group, Inc.......................... 122,700 7,223,962
MBNA Corp.................................. 169,100 6,055,894
Newcourt Credit Group, Inc................. 57,700 2,885,000
-------------
16,164,856
-------------
FOOD CHAINS -- 2.5%
Safeway, Inc.*............................. 124,000 4,580,250
Whole Foods Market, Inc.*.................. 105,100 7,330,725
-------------
11,910,975
-------------
GROCERY PRODUCTS -- 0.8%
International Home Foods, Inc.*............ 49,300 1,639,225
Keebler Foods Co.*......................... 67,100 2,013,000
-------------
3,652,225
-------------
HOMEBUILDING -- 2.7%
Centex Corp................................ 123,100 4,693,187
Champion Enterprises, Inc.*................ 114,400 3,053,050
Kaufman & Broad Home Corp.................. 73,600 2,396,600
Oakwood Homes Corp......................... 81,300 2,977,612
-------------
13,120,449
-------------
HOSPITALS -- 1.7%
Health Management Associates Inc., Class
A........................................ 291,700 8,349,912
-------------
INVESTMENT COMPANIES -- 0.8%
Merrill Lynch & Co., Inc.*................. 47,300 3,925,900
-------------
LEISURE/GAMING -- 2.0%
Carnival Corp. -- Class A.................. 142,400 9,932,400
-------------
MANAGED HEALTH CARE/HMO'S/PPO'S -- 0.3%
Coventry Corp.*............................ 73,900 1,187,019
-------------
MEDICAL SUPPLIES -- 4.0%
Biomet, Inc.*.............................. 89,900 2,697,000
Omnicare, Inc.............................. 160,300 6,351,887
PharMerica, Inc.*.......................... 167,800 2,496,025
Safeskin Corp.*............................ 46,200 3,413,025
Sybron International Corp.*................ 165,400 4,321,075
-------------
19,279,012
-------------
MEDICAL/HEALTH SERVICES -- 0.3%
Sunrise Assisted Living, Inc.*............. 36,500 1,633,375
-------------
OIL/GAS PRODUCTION -- 0.8%
Valero Energy Corp......................... 117,800 3,931,575
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
11
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
CORE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OILFIELD SERVICES/EQUIPMENT -- 4.4%
BJ Services Co.*........................... 105,900 $ 3,858,731
Global Industries, LTD*.................... 311,400 6,344,775
Tuboscope, Inc.*........................... 149,400 2,838,600
Veritas DGC, Inc.*......................... 107,100 5,415,244
Western Atlas, Inc.*....................... 39,300 3,040,838
-------------
21,498,188
-------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 5.3%
Billing Information Concepts Corp.*........ 155,000 4,020,312
Cendant Corp.*............................. 102,300 4,053,637
Paychex, Inc............................... 60,200 3,472,787
Renaissance Worldwide, Inc.*............... 169,600 4,653,400
Robert Half International, Inc.*........... 202,700 9,729,600
-------------
25,929,736
-------------
OTHER FINANCIAL SERVICES -- 0.6%
The CIT Group, Inc.*....................... 95,000 3,099,375
-------------
OTHER HEALTH SERVICES -- 0.4%
McKesson Corp.............................. 33,900 1,957,725
-------------
OTHER PRODUCERS/MANUFACTURING -- 1.3%
Knoll, Inc.*............................... 160,000 6,170,000
-------------
OTHER TECHNOLOGY -- 0.6%
CHS Electronics, Inc.*..................... 151,600 2,842,500
-------------
PAPER -- 1.0%
Bowater, Inc............................... 56,600 3,194,363
Fort James Corp............................ 32,000 1,466,000
-------------
4,660,363
-------------
PUBLISHING -- 1.4%
Valassis Communications, Inc.*............. 170,000 6,970,000
-------------
RESTAURANTS -- 1.1%
CKE Restaurants, Inc....................... 144,100 5,295,675
-------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 3.2%
Advanced Micro Devices, Inc.*.............. 118,400 3,441,000
ASM Lithography Holding NV*................ 32,200 2,976,488
DII Group, Inc............................. 46,200 993,300
Level One Communications, Inc.*............ 141,900 3,334,650
Uniphase Corp.*............................ 119,100 5,009,644
-------------
15,755,082
-------------
SOFTWARE -- 12.7%
AXENT Technologies, Inc.*.................. 66,700 2,034,350
BMC Software, Inc.*........................ 80,500 6,746,906
Compuware Corp.*........................... 185,700 9,168,938
Hyperion Software Corp.*................... 53,600 2,371,800
Industri-Matematik International Corp.*.... 171,100 5,368,263
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
SOFTWARE (CONTINUED)
<TABLE>
<S> <C> <C>
PeopleSoft, Inc.*.......................... 147,000 $ 7,745,063
Platinum Technology, Inc.*................. 250,300 6,445,225
Saville Systems, PLC -- Sponsored ADR*..... 133,300 6,831,625
Siebl Systems, Inc.*....................... 131,800 3,789,250
Veritas Software Corp.*.................... 112,900 6,675,213
Visio Corp.*............................... 102,200 4,394,600
-------------
61,571,233
-------------
SPECIALTY CHAINS -- 3.8%
Borders Group, Inc.*....................... 190,200 6,478,688
General Nutrition Companies, Inc.*......... 224,400 8,919,900
Office Depot, Inc.*........................ 97,000 3,019,125
-------------
18,417,713
-------------
TELECOMMUNICATION SERVICES -- 3.6%
ICG Communications, Inc.*.................. 146,300 5,449,675
IDT Corp.*................................. 90,100 3,378,750
LCI International, Inc..................... 160,000 6,160,000
Pacific Gateway Exchange, Inc.*............ 41,500 2,375,875
-------------
17,364,300
-------------
TELECOMMUNICATIONS EQUIPMENT -- 3.6%
Advanced Fibre Communications, Inc.*....... 170,600 6,205,575
CIENA Corp.*............................... 107,500 4,582,188
Omnipoint Corp.*........................... 232,400 6,855,800
-------------
17,643,563
-------------
TEXTILES -- 1.1%
Westpoint Stevens, Inc.*................... 186,200 5,329,975
-------------
TOTAL COMMON STOCKS
(Cost $373,354,527)......................................... 485,616,906
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER -- 0.9%
- ---------------------------------------------------------------------------------
Associates First Capital Corp.
6.050%, 04/01/98
(Cost $4,594,000)........................ $ 4,594,000 4,594,000
-------------
TOTAL INVESTMENTS -- 100.8%
(Cost $377,948,527)......................................... 490,210,906
LIABILITIES IN EXCESS OF OTHER ASSETS (0.8%).................. (3,707,968)
-------------
NET ASSETS -- 100.0%.......................................... $ 486,502,938
-------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
12
<PAGE>
LARGE CAP GROWTH FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Arthur E. Nicholas,
Managing Partner
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Andrew Gallagher,
Partner, Portfolio Manager
GOAL: The Nicholas-Applegate Large Cap Growth Fund seeks to maximize long-term
capital appreciation by investing in the equity securities of U.S. growth
companies, emphasizing large-sized firms.
REVIEW AND OUTLOOK: The Large Cap Growth Fund performed exceptionally well
during the period as stocks of large companies attained record highs. The Fund's
C Portfolio returned 61.4% for the year, outperforming its benchmark the S&P 500
which returned 48.0%.
Domestic large-cap stocks as an asset class benefited from investor worries
over the impact of the Southeast Asian economic crisis on the U.S. economy and
consequent flight to the perceived safety of the stocks of large companies.
This, combined with the strength of the domestic economy, falling interest rates
and consumer confidence reaching an all-time high, contributed to extremely
positive performance for the asset class. The Large Cap Growth Fund invested in
the stocks of many companies that performed exceptionally well in this strong
environment.
For example, many technology companies, while suffering a temporary setback
surrounding the Southeast Asian economic crisis in October, performed very well
for the year as a whole. The Fund remained focused on the stocks of companies
that were either minimally impacted or actually benefited from Asia's economic
troubles, such as several software and telecommunications companies. For
example, Compuware, a computer consulting firm, performed very well for the Fund
from its ability to work with companies affected by the year 2000 problem.
Tellabs Inc, was another contributor to the Fund's solid performance. Tellabs
benefited by its continuing to sell computer parts to China, a region not as
affected by the Southeast Asian crisis.
The year's consumer-driven economy boosted the business of many financial and
consumer-services companies. For example, American Express was among the Fund's
top performers for the year based on its benefiting from favorable credit
quality trends. Media company, Time Warner Inc., benefited from high demand for
motion pictures, as well as increasing its services to existing cable
subscribers. The Fund also invested in the stocks of several successful
retailers, such as department store chain Dayton Hudson, which delivered solid
earnings growth as a result of strong in-store sales. Looking forward, we
maintain our positive outlook for the Large Cap Growth Fund as we continue to
find plentiful opportunities for positive, sustainable and timely growth in a
healthy economic environment.
REPRESENTATIVE HOLDINGS
Airtouch
American Express
Compuware
Dayton Hudson
HBO
Time Warner
Tellabs
US West Media
Warner-Lambert
Worldcom
- --------------------------------------------------------------------------------
13
<PAGE>
LARGE CAP GROWTH PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LARGE CAP GROWTH PORTFOLIO A RUSSELL 1000 GROWTH INDEX
<S> <C> <C>
12/27/96 $ 9,475.00 $ 10,000.00
12/31/96 $ 9,373.66 $ 9,847.39
1/31/97 $10,326.23 $ 10,538.08
2/28/97 $10,143.82 $ 10,466.42
3/31/97 $ 9,839.81 $ 9,899.98
4/30/97 $10,214.76 $ 10,557.34
5/31/97 $10,336.36 $ 11,319.26
6/30/97 $11,775.35 $ 11,772.03
7/31/97 $13,234.60 $ 12,812.68
8/31/97 $12,930.59 $ 12,063.14
9/30/97 $13,589.28 $ 12,656.77
10/31/97 $13,569.01 $ 12,188.47
11/30/97 $13,395.21 $ 12,706.11
12/31/97 $13,618.64 $ 12,848.42
1/31/98 $13,821.75 $ 13,232.59
2/28/98 $15,101.35 $ 14,227.94
3/31/98 $15,974.73 $ 14,795.07
Annualized Total Returns As of 03/31/98
1 Year Since Inception
53.82% 45.13%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LARGE CAP GROWTH PORTFOLIO B RUSSELL 1000 GROWTH INDEX
<S> <C> <C>
12/27/96 $10,000.00 $ 10,000.00
12/31/96 $ 9,886.65 $ 9,847.39
1/31/97 $10,882.96 $ 10,538.08
2/28/97 $10,688.94 $ 10,466.42
3/31/97 $10,366.62 $ 9,899.98
4/30/97 $10,754.29 $ 10,557.34
5/31/97 $11,944.51 $ 11,319.26
6/30/97 $11,877.44 $ 11,772.03
7/31/97 $13,897.76 $ 12,812.68
8/31/97 $13,567.63 $ 12,063.14
9/30/97 $14,249.20 $ 12,656.77
10/31/97 $14,217.25 $ 12,188.47
11/30/97 $14,023.22 $ 12,706.11
12/31/97 $14,247.34 $ 12,848.42
1/31/98 $14,450.11 $ 13,232.59
2/28/98 $15,794.80 $ 14,227.94
3/31/98 $16,291.27 $ 14,795.07
Annualized Total Returns As of 03/31/98
1 Year Since Inception
56.08% 47.42%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LARGE CAP GROWTH PORTFOLIO C RUSSELL 1000 GROWTH INDEX
<S> <C> <C>
12/27/96 $ 10,000.00 $ 10,000.00
12/31/96 $ 9,886.65 $ 9,847.39
1/31/97 $ 10,882.96 $ 10,538.08
2/28/97 $ 10,688.94 $ 10,466.42
3/31/97 $ 10,366.62 $ 9,899.98
4/30/97 $ 10,754.29 $ 10,557.34
5/31/97 $ 11,944.51 $ 11,319.26
6/30/97 $ 12,277.44 $ 11,772.03
7/31/97 $ 13,897.76 $ 12,812.68
8/31/97 $ 13,578.27 $ 12,063.14
9/30/97 $ 14,270.50 $ 12,656.77
10/31/97 $ 14,238.55 $ 12,188.47
11/30/97 $ 14,047.51 $ 12,706.11
12/31/97 $ 14,282.88 $ 12,848.42
1/31/98 $ 14,475.46 $ 13,232.59
2/28/98 $ 15,812.80 $ 14,227.94
3/31/98 $ 16,722.20 $ 14,795.07
Annualized Total Returns As of 03/31/98
1 Year Since Inception
61.38% 50.51%
</TABLE>
The graphs compare a $10,000 investment in the Large Cap Growth Portfolio A
(front load), the Large Cap Growth Portfolio B (back-end load) and the Large Cap
Growth Portfolio C (level load) with a similar investment in the Russell 1000
Growth Index, on a cumulative and average annual total return basis. The
Portfolios calculate their performance based upon the historical performance of
their corresponding series ("Fund") of Nicholas-Applegate Investment Trust,
adjusted to reflect sales charges and Portfolio operating expenses. The
effective date of the Portfolios' registration statements was on 7/21/97.
Performance returns within are calculated on a total return basis and reflect
all fees and expenses of the Portfolio with reinvestment of dividends and
capital gains, if any. Performance figures include the maximum applicable sales
charge of 5.25% for Portfolio A shares. The effect of the maximum contingent
deferred sales charge for Portfolio B (maximum 5.00% declining to 0% over six
years) is included in Portfolio B performance. Performance is affected by a
12b-1 Plan which commenced at inception of each Portfolio.
The Portfolios calculate their performance based upon the historical performance
of their corresponding series ("Fund") of Nicholas-Applegate Investment Trust,
adjusted to reflect sales charges and Portfolio operating expenses. The
Portfolios commenced operations on 7/21/97.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolios, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
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.
Index returns reflect the reinvestment of dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
14
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
LARGE CAP GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ------------------------------------------------------------------------
COMMON STOCKS -- 96.7%
- ------------------------------------------------------------------------
AIRLINES -- 2.5%
AMR Corp.*................................. 2,100 $ 300,694
-------------
BIOTECHNOLOGY -- 1.3%
Medimmune, Inc.*........................... 2,800 154,350
-------------
BROADCASTING -- 2.9%
Tele-Communications, Inc. Class A*......... 11,400 354,469
-------------
BUILDINGS MATERIALS' CHAINS -- 0.9%
Home Depot, Inc............................ 1,600 107,900
-------------
COMPUTER/OFFICE AUTOMATION -- 7.4%
Bay Networks, Inc.......................... 7,500 203,437
Computer Sciences Corp..................... 6,400 352,000
Sterling Commerce, Inc.*................... 7,500 347,812
-------------
903,249
-------------
DEPARTMENT/DISCOUNT STORES -- 9.8%
Costco Companies, Inc.*.................... 6,000 321,000
Dayton Hudson Corp......................... 3,700 325,600
K-Mart Corp.*.............................. 21,400 357,112
Wal-Mart Stores, Inc....................... 3,800 193,087
-------------
1,196,799
-------------
DRUGS/PHARMACEUTICALS -- 8.9%
Alza Corp.*................................ 8,500 380,906
Forest Laboratories, Inc. Class A*......... 4,800 180,000
Schering-Plough Corp....................... 3,400 277,737
Warner-Lambert Co.......................... 1,500 255,469
-------------
1,094,112
-------------
ELECTRONICS/MUSIC CHAINS -- 2.9%
Tandy Corp................................. 7,600 357,200
-------------
ENTERTAINMENT -- 2.3%
Time Warner, Inc........................... 4,000 288,000
-------------
FINANCE COMPANIES -- 5.0%
American Express Co........................ 3,100 284,619
Newcourt Credit Group...................... 6,500 325,000
-------------
609,619
-------------
GROCERY PRODUCTS -- 0.5%
Keebler Foods Co........................... 2,200 66,000
-------------
INVESTMENT COMPANIES -- 5.9%
Merrill Lynch & Co.*....................... 1,400 116,200
Tele-Communications TCI Venture Group Class
A........................................ 17,200 302,075
Waddell & Reed Financial, Inc.............. 11,700 304,200
-------------
722,475
-------------
MANAGED HEALTH CARE/HMO'S/PPO'S -- 2.7%
United Heathcare Corp...................... 5,100 330,225
-------------
MILITARY/DEFENSE -- 2.8%
General Motors Corp. Class H*.............. 7,500 339,375
-------------
MONEY-CENTER BANKS -- 1.9%
PNC Bank Corp.............................. 3,900 233,756
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ------------------------------------------------------------------------
OILFIELD SERVICES/EQUIPMENT -- 2.3%
Schlumberger, Ltd.......................... 3,800 $ 287,850
-------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 2.4%
Cendant Corp.*............................. 7,500 297,187
-------------
OTHER CONSUMER SERVICES -- 0.3%
America Online, Inc.*...................... 600 40,987
-------------
OTHER HEALTH TECHNOLOGY/SERVICES -- 1.4%
HBO & Co................................... 2,900 175,087
-------------
OTHER PRODUCERS/MANUFACTURING -- 2.6%
Tyco International, Ltd.................... 5,900 322,288
-------------
RESTAURANTS -- 2.2%
McDonald's Corp............................ 4,400 264,000
-------------
SOFTWARE -- 2.1%
Compuware Corp.*........................... 5,300 261,688
-------------
SPECIALTY CHAINS -- 2.4%
Gap, Inc................................... 6,600 297,000
-------------
SPECIALTY INSURERS -- 1.6%
MGIC Investment Corp....................... 2,900 190,494
-------------
TELECOMMUNICATIONS EQUIPMENT -- 8.4%
Ascend Communications, Inc.*............... 7,400 280,275
Ciena Corp.*............................... 4,100 174,763
Loral Space and Communications, Ltd.*...... 5,600 156,450
Lucent Technologies, Inc................... 700 89,513
Tellabs, Inc.*............................. 4,900 328,913
-------------
1,029,914
-------------
TELECOMMUNICATIONS SERVICES -- 10.4%
Airtouch Communications, Inc.*............. 7,400 362,138
Nextel Communications, Inc. Class A*....... 6,400 216,000
U.S. West, Inc.*........................... 9,000 312,750
WorldCom, Inc.*............................ 8,800 378,950
-------------
1,269,838
-------------
TELEPHONE -- 2.9%
AT&T Corp.................................. 3,000 196,875
Global Telesystems Group, Inc.*............ 3,400 158,950
-------------
355,825
-------------
TOTAL COMMON STOCKS
(Cost $10,195,677).................................... 11,850,381
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ------------------------------------------------------------------------
COMMERCIAL PAPER -- 3.4%
- ------------------------------------------------------------------------
Associates First Capital Corp. 6.050%,
04/01/98 (Cost $424,000)................. $424,000 424,000
-------------
TOTAL INVESTMENTS -- 100.1%
(Cost $10,619,677).................................... 12,274,381
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.1%)......... (15,034)
-------------
NET ASSETS -- 100.0%.................................... $ 12,259,347
-------------
</TABLE>
- ------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
15
<PAGE>
INCOME & GROWTH FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Sandra K. Durn,
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: Bolstered by a strong bond market and solid returns among
U.S. equities, the Income & Growth Fund delivered outstanding results from April
1, 1997 through March 31, 1998. The Fund's C Portfolio returned 30.2% during the
12-month period, outperforming its benchmark, the First Boston Convertible
Index, which was up 25.9%. Issue selection and the advance in small- and mid-cap
stocks during the first six months of the fiscal year contributed to the Fund's
gains.
During the fiscal year, the Fund continued to deliver returns consistent with
our objective of participating in the market's upswings, without as much of the
downswings. We seek to capture approximately 70% to 80% of the upside
performance of the underlying equities with only 50% or less of the downside
exposure. From April 1 through December 31, 1997, the Fund participated in 72.3%
of the gain of the S&P 500 Index, which was up 29.8% 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 1.3% -- a participation rate of 22.5%.
During the fiscal year, we increased the Fund's allocation among select issues
in the consumer services, retail trade, commercial/industrial services, and
healthcare services sectors.
Among the Fund's best-performing holdings was Home Depot, North America's
largest home improvement retailer currently operating 584 warehouse-style home
centers. The company benefits from being a leading innovator in home improvement
with a level of customer service among the best in the industry.
Airtouch Communications, a major wireless telecommunications holding company,
also made a positive contribution to the Fund in the fiscal year. Airtouch has
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 growth in infrastructure and technology
development.
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
Airtouch Communications
Affiliated Computer
America Online
Central Garden & Pet
Ciber
Evergreen Media
Family Golf Centers
Home Depot
K Mart
Loral Space & Communication
- --------------------------------------------------------------------------------
16
<PAGE>
INCOME & GROWTH PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME AND GROWTH PORTFOLIO A FIRST BOSTON CONVERTIBLE INDEX
<S> <C> <C>
12/31/86 $9,475.00 $10,000.00
12/31/87 $9,123.82 $9,977.54
12/31/88 $10,873.11 $11,315.70
12/31/89 $13,878.47 $12,872.89
12/31/90 $14,049.29 $11,986.43
12/31/91 $19,325.06 $15,476.19
12/31/92 $21,099.93 $18,196.62
12/31/93 $26,686.89 $21,571.50
12/31/94 $24,490.90 $20,554.30
12/31/95 $29,798.98 $25,429.45
12/31/96 $35,840.21 $28,949.79
12/31/97 $43,939.71 $33,848.68
3/31/98 $47,588.96 $36,627.28
Annualized Total Returns As of 03/31/98
1 Year 5 Years 10 Years
24.16% 15.50% 16.66%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME AND GROWTH PORTFOLIO B FIRST BOSTON CONVERTIBLE INDEX
<S> <C> <C>
12/31/86 $10,000.00 $10,000.00
12/31/87 $9,566.54 $9,977.54
12/31/88 $11,327.88 $11,315.70
12/31/89 $14,367.11 $12,872.89
12/31/90 $14,449.70 $11,986.43
12/31/91 $19,750.33 $15,476.19
12/31/92 $21,425.49 $18,196.62
12/31/93 $26,891.85 $21,571.50
12/31/94 $24,539.63 $20,554.30
12/31/95 $29,671.92 $25,429.45
12/31/96 $35,491.62 $28,949.79
12/31/97 $43,308.26 $33,848.68
3/31/98 $46,865.07 $36,627.28
Annualized Total Returns As of 03/31/97
1 Year 5 Years 10 Years
25.51% 15.86% 16.57%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME AND GROWTH PORTFOLIO C FIRST BOSTON CONVERTIBLE INDEX
<S> <C> <C>
12/31/86 $10,000.00 $10,000.00
12/31/87 $9,566.54 $9,977.54
12/31/88 $11,327.88 $11,315.70
12/31/89 $14,367.11 $12,872.89
12/31/90 $14,449.70 $11,986.43
12/31/91 $19,750.33 $15,476.19
12/31/92 $21,425.49 $18,196.62
12/31/93 $26,891.83 $21,571.50
12/31/94 $24,539.61 $20,554.30
12/31/95 $29,650.71 $25,429.45
12/31/96 $35,447.96 $28,949.79
12/31/97 $43,161.88 $33,848.68
3/31/98 $46,674.72 $36,627.28
Annualized Total Returns As of 03/31/98
1 Year 5 Years 10 Years
30.22% 15.99% 16.53%
</TABLE>
The graphs compare a $10,000 investment in the Income & Growth Portfolio A
(front load), the Income & Growth Portfolio B (back-end load) and the Income &
Growth Portfolio C (level load) with a similar investment in the First Boston
Convertible Index, on a cumulative and average annual total return basis.
Returns reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses. Performance figures
include the maximum applicable sales charge of 5.25% for Portfolio A shares. The
effect of the maximum contingent deferred sales charge for Portfolio B shares
(maximum 5% declining to 0% over six years) is included in Portfolio B
performance. Performance is affected by a 12b-1 Plan which commenced at
inception of each Portfolio.
Performance results reflect the total returns of a predecessor limited
partnership managed by Nicholas-Applegate Capital Management prior to the
effective date of the Portfolios' registration statements on 4/19/93, 5/31/95
and 4/19/93, respectively. Limited partnership returns are restated to reflect
all fees and expenses applicable to each Portfolio. If the limited partnership
had been registered as an investment company under federal securities laws, its
performance might have been adversely affected because of the additional
restrictions applicable to registered investment companies.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolios, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
The First Boston Convertible Index is an unmanaged market weighted index
representing the universe of convertible securities whether they are convertible
preferred stocks or convertible bonds. Index returns reflect the reinvestment of
income dividends and capital gains distributions, if any, but does not reflect
fees, brokerage commissions, or other expenses of investing.
Past performance is no guarantee of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
17
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
INCOME & GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMON STOCKS -- 6.0%
- ---------------------------------------------------------------------------------
GAS UTILITIES -- 1.9%
MCN Energy Group, Inc...................... 69,530 $ 2,598,684
MCN Energy Group, Inc., (Prides)........... 68,700 2,241,337
-------------
4,840,021
-------------
REGIONAL/COMMERCIAL BANKS -- 0.5%
First Security Corp........................ 51,500 1,226,344
-------------
REITS -- 3.6%
CenterPoint Properties Corp................ 53,800 1,866,187
CRIIMI MAE, Inc............................ 104,500 1,613,219
Mack-Cali Realty Corp...................... 51,089 1,995,664
Reckson Associates Realty Corp............. 74,366 1,961,403
Spieker Properties, Inc.................... 41,621 1,716,866
-------------
9,153,339
-------------
TOTAL COMMON STOCKS
(Cost $12,401,813).......................................... 15,219,704
-------------
- ---------------------------------------------------------------------------------
PREFERRED STOCK -- 35.6%
- ---------------------------------------------------------------------------------
ADVERTISING -- 1.3%
Snyder Strypes Trust, 6.50%................ 77,400 3,279,825
-------------
AIRLINES -- 0.5%
Trans World Airlines, $4.625............... 15,000 1,260,000
-------------
AUTOMATIVE EQUIPMENT -- 0.9%
Federal-Mogul Finance Trust, 7.00%......... 37,500 2,221,875
-------------
BROADCASTING -- 5.4%
Chancellor Media Corp., $3.00.............. 17,300 1,649,987
Chancellor Media Corp., Series A, 12.25%... 11,700 1,664,325
CSC Holdings, Inc., Series I, 8.50%........ 60,000 3,082,500
Evergreen Media Corp., $3.00............... 41,310 3,939,941
Merrill Lynch & Co., Series COX, 6.00%
(Strypes)................................ 94,700 3,338,175
-------------
13,674,928
-------------
DEPT/DISCOUNT STORES -- 0.9%
Kmart Financing I, 7.75%................... 35,400 2,221,350
-------------
DRUGS/PHARMACEUTICALS -- 2.0%
McKesson Financing Trust., 5.00%........... 60,700 4,962,225
-------------
ELECTRIC UTILITIES -- 1.0%
AES Trust II, 5.50%........................ 47,000 2,649,625
-------------
ENTERTAINMENT -- 0.4%
Royal Caribbean Cruises, Series A, 7.25%... 9,600 1,060,800
-------------
FINANCE COMPANIES -- 4.0%
Finova Finance Trust, 5.50%................ 46,920 3,683,220
Salomon Smith Barney Holding, Series CSN,
6.25%.................................... 39,250 2,619,937
H.F. Ahmanson, Series D, 6.00%............. 23,698 3,774,641
-------------
10,077,798
-------------
GROCERY PRODUCTS -- 0.6%
Suiza Capital Trust II, 5.50%.............. 30,300 1,522,575
-------------
LIFE INSURERS -- 2.4%
Conseco Finance Trust IV, Series F, 7.00%
(Prides)................................. 50,300 3,033,719
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
LIFE INSURERS (CONTINUED)
<TABLE>
<S> <C> <C>
Protective Life Capital Trust II, 6.50%
(Prides)................................. 48,100 $ 2,970,175
-------------
6,003,894
-------------
OIL REFINING/MARKETING -- 0.6%
Tosco Financing Trust, 5.75%............... 26,200 1,606,387
-------------
OIL/GAS PRODUCTION -- 0.8%
Devon Financing Trust, $3.25............... 5,700 397,931
Devon Financing Trust, $3.25............... 24,576 1,715,712
-------------
2,113,643
-------------
OTHER COMM/INDUSTRIES SERVICES -- 1.0%
Merrill Lynch & Co., "CBR", 7.875%......... 36,800 2,502,400
-------------
PIPELINES -- 1.8%
Williams Companies, Inc., $3.50............ 30,300 4,444,646
-------------
PUBLISHING -- 1.3%
Houston Industries, Inc., 7.00% (Aces)..... 53,900 3,493,394
-------------
SAVINGS & LOAN/THRIFTS -- 1.0%
Sovereign Bancorp, Series B, 6.25%......... 19,140 2,545,620
-------------
SPECIALTY INSURERS -- 1.4%
Merrill, 6.50%, "MTG" (Strypes)............ 30,900 3,437,625
-------------
TELECOMMUNICATION EQUIPMENT -- 2.3%
LM Ericcson Telephone Co., 4.25%........... 476,370 3,155,951
Loral Space & Communications Ltd*.......... 34,600 2,631,762
-------------
5,787,713
-------------
TELECOMMUNICATION SERVICES -- 4.0%
Airtouch Communications, Series C, 4.25%... 53,618 3,806,878
Intermedia Communication, Series E,
7.00%*................................... 25,000 884,375
SBC Communications, Inc., "TMX" (DECS),
7.75%.................................... 51,000 2,607,375
Worldcom, Inc., 8.00%...................... 18,140 2,707,395
-------------
10,006,023
-------------
TELEPHONE -- 2.0%
Nextlink Communications 6.50%.............. 31,000 1,495,750
US West Inc., Series D, 4.50%.............. 52,900 3,782,350
-------------
5,281,100
-------------
TOTAL PREFERRED STOCK
(Cost $71,225,030).......................................... 90,150,446
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------------------
CORPORATE BONDS -- 57.4%
- ---------------------------------------------------------------------------------
ADVERTISING -- 2.1%
Omnicom Group, CV
4.250%, 01/03/07......................... $ 3,441,000 5,367,960
-------------
BIOTECHNOLOGY -- 1.1%
Aviron, CV
5.750%, 04/01/05......................... 1,164,000 1,117,440
Centocor, Inc., CV
4.750%, 02/15/05......................... 1,530,000 1,679,175
-------------
2,796,615
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
18
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
BROADCASTING -- 1.2%
Clear Channel Communication, CV
2.625%, 04/01/03......................... $ 3,009,000 $ 3,001,478
-------------
BUILDING MATERIALS -- 0.6%
Hexcel Corp., CV
7.000%, 08/01/03......................... 844,000 1,540,300
-------------
BUILDING MATERIALS CHAINS -- 2.5%
Home Depot Inc., CV
3.250%, 10/01/01......................... 4,201,000 6,327,756
-------------
COMPUTERS/OFFICE AUTOMATION -- 3.6%
EMC Corp., CV
3.250%, 03/15/02......................... 1,595,000 2,823,150
EMC Corp., CV
3.250%, 03/15/02......................... 1,185,000 2,097,450
Safeguard Scientifics, CV
6.000%, 02/01/06......................... 1,245,000 1,606,050
Veritas Software Corp., CV
5.250%, 11/01/04......................... 2,268,000 2,704,590
-------------
9,231,240
-------------
CONTRACT DRILLING -- 1.8%
Loews Corp., CV
3.125%, 09/15/07......................... 4,554,000 4,485,690
-------------
DEPARTMENT/DISCOUNT STORES -- 2.9%
Costco Companies Inc., CV*
0.000%, 08/19/17......................... 6,678,000 4,482,607
Federated Department Stores, CV
5.000%, 10/01/03......................... 1,861,000 2,931,075
-------------
7,413,682
-------------
DRUG CHAINS -- 1.9%
Rite Aid Corp., CV
5.250%, 09/15/02......................... 4,083,000 4,715,865
-------------
DRUGS/PHARMACEUTICALS -- 6.4%
Alpharma, Inc., CV
5.750%, 04/01/05......................... 1,550,000 1,534,500
Athena Neurosciences, Inc., CV
4.750%, 11/15/04......................... 1,635,000 1,898,644
Athena Neurosciences, Inc., CV
4.750%, 11/15/04......................... 2,111,000 2,435,566
Ominicare, Inc., CV
5.000%, 12/01/07......................... 1,910,000 2,306,325
Sandoz Capital BVI Ltd., CV
2.000%, 10/06/02......................... 900,000 1,500,570
Sandoz Capital BVI Ltd., Euro, CV
2.000%, 10/06/02......................... 1,470,000 2,450,931
Sepracor, Inc., CV
6.250%, 02/15/05......................... 1,075,000 1,218,781
Sepracor, Inc., CV
7.000%, 12/01/02......................... 685,000 1,508,713
Sepracor, Inc., Euro, CV
7.000%, 12/01/02......................... 649,000 1,429,423
-------------
16,283,453
-------------
ELECTRONIC DATA PROCESSING -- 2.7%
Automatic Data Processing, CV*
0.000%, 02/20/12......................... 5,177,000 4,575,174
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
ELECTRONIC DATA PROCESSING (CONTINUED)
<TABLE>
<S> <C> <C>
Affiliated Computer Services, CV
4.000%, 03/15/05......................... $ 2,288,000 $ 2,290,860
-------------
6,866,034
-------------
ELECTRONIC INSTRUMENTS -- 2.6%
ADT Operations, Inc., CV*
0.000%, 07/06/10......................... 3,358,000 4,974,038
SCI Systems, Inc., CV
5.000%, 05/01/06......................... 878,000 1,433,335
-------------
6,407,373
-------------
ENTERTAINMENT -- 1.6%
Family Golf Centers, Inc., CV
5.750%, 10/15/04......................... 2,106,000 2,643,030
Imax Corp., CV
5.750%, 04/01/03......................... 1,000,000 1,441,250
-------------
4,084,280
-------------
ENVIRONMENTAL SERVICES -- 1.8%
USA Waste Services, Inc., CV
4.500%, 06/01/01......................... 2,015,000 3,123,250
USA Waste Services, Inc., CV
4.000%, 02/01/02......................... 1,297,000 1,533,703
-------------
4,656,953
-------------
FOOD CHAINS -- 1.0%
Whole Foods Market, Inc., CV*
0.000%, 03/02/18......................... 5,727,000 2,462,610
-------------
LODGING -- 2.6%
Carematrix Corp., CV
6.250%, 08/15/04......................... 1,914,000 2,299,193
Hilton Hotels Corp., CV
5.000%, 05/15/06......................... 3,809,000 4,304,170
-------------
6,603,363
-------------
MACHINERY/EQUIPMENT -- 1.5%
Thermo Electron Corp., CV
4.250%, 01/01/03......................... 3,329,000 3,878,285
-------------
MEDICAL/HEALTH SERVICES -- 2.1%
Alternative Living Services, CV
5.250%, 12/15/02......................... 2,000,000 2,595,000
Total Renal Care Holdings Inc., CV
5.625%, 07/15/06......................... 1,856,000 2,635,520
-------------
5,230,520
-------------
MULTI-LINE INSURERS -- 0.7%
Republic of Italy, CV
5.000%, 06/28/01......................... 960,000 1,858,800
-------------
OILFIELD SERVICES/EQUIPMENT -- 0.8%
Baker Hughes, Inc., CV*
0.000%, 05/05/08......................... 2,498,000 2,074,901
-------------
OTHER COMMERCIAL/INDUSTRIAL SERVICES -- 3.5%
Data Processing Resource, CV
5.250%, 04/01/05......................... 2,295,000 2,481,469
CUC International, Inc., CV
3.000%, 02/15/02......................... 4,492,000 6,291,630
-------------
8,773,099
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
19
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
INCOME & GROWTH FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
OTHER CONSUMER SERVICES -- 1.9%
America Online, Inc., CV
4.000%, 11/15/02......................... $ 3,243,000 $ 4,750,995
-------------
OTHER HEALTH SERVICES -- 0.5%
Sunrise Assisted Living, CV
5.500%, 06/15/02......................... 911,000 1,204,798
-------------
PRINTING/FORMS -- 0.9%
Mail-Well, Inc., CV
5.000%, 11/01/02......................... 1,917,000 2,319,570
-------------
PROPERTY-CASUALTY INSURANCE -- 1.3%
Mutual Risk Management, Inc., CV*
0.000%, 10/30/15......................... 4,591,000 3,374,385
-------------
RESTAURANTS -- 1.0%
CKE Restaurants, Inc., CV
4.250%, 03/15/04......................... 2,671,000 2,657,645
-------------
SAVINGS & LOAN/THRIFTS -- 0.7%
BankAtlantic Bancorp, Inc., CV
5.625%, 12/01/07......................... 1,435,000 1,739,938
-------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 0.5%
Xilinx, Inc., CV
5.250%, 11/01/02......................... 1,147,000 1,148,434
-------------
SOFTWARE -- 2.4%
Network Associates, Inc.,*
0.000%, 02/13/18......................... 6,501,000 2,966,081
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
SOFTWARE (CONTINUED)
<TABLE>
<S> <C> <C>
Platinum Technology, Inc., CV
6.250%, 12/15/02......................... $ 3,041,000 $ 3,162,640
-------------
6,128,721
-------------
SPECIALTY CHAINS -- 1.7%
Staples, Inc. Euro, CV
4.500%, 10/01/00......................... 150,000 241,125
Staples, Inc., CV
4.500%, 10/01/00......................... 2,544,000 4,089,480
-------------
4,330,605
-------------
TELECOMMUNICATIONS SERVICES -- 1.1%
Smartalk Teleservices, CV
5.750%, 09/15/04......................... 2,025,000 2,667,938
-------------
WHOLESALE DISTRIBUTION -- 0.4%
Central Garden & Pet Co., CV
6.000%, 11/15/03......................... 708,000 1,061,115
-------------
TOTAL CORPORATE BONDS
(Cost $120,807,286)......................................... 145,444,401
-------------
TOTAL INVESTMENTS -- 99.0%
(Cost $204,434,129)......................................... 250,814,551
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.0%................. 2,513,179
-------------
NET ASSETS -- 100.0%.......................................... $ 253,327,730
-------------
</TABLE>
- ---------------
* Non-Income Producing Security
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
20
<PAGE>
BALANCED GROWTH FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Fred S. Robertson,
Partner, Chief Investment Officer,
Fixed Income
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic
Portfolio Management and Research
James E. Kellerman,
Partner, Portfolio Manager
John J. Kane,
Partner, Senior 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 short-term investments.
REVIEW AND OUTLOOK: Nicholas-Applegate's Balanced Growth Fund C Portfolio
gained 38.4% versus a 32.9% gain for a balanced index comprised of 60% S&P 500
Index and 40% Lehman Government/ Corporate Bond Index.
A powerful domestic economy, low inflation, and stable interest rates
contributed to a positive environment for U.S. stocks throughout the fiscal
year. This environment favored companies with strong pricing power fueled by
high consumer demand. Transportation companies, including Airborne Freight,
recorded positive gains, as did technology companies in spite of initial
setbacks caused by the Asian economic crisis.
For the fiscal year, the positive, long-term fundamentals for the U.S. fixed
income market overcame cyclically strong economic activities. The period was
characterized by the presence of low inflation and declining long-term interest
rates in conflict with tight labor markets, economic strength, and low
unemployment. The Asian economic and monetary crises also affected the fixed
income market as expectations for a significant change in the balance of trade
with Asian nations affected forecasts for U.S. economic activity. While interest
rates remained unchanged during the period, the bond market fluctuated as
expectations of future Fed activity shifted.
Looking ahead, we believe the long-term prospects for fixed income investing
remain promising based upon conservative U.S. fiscal policy and increased global
competition which is contributing to a disinflationary trend. However, in the
short to intermediate term, a relatively strong economy, strong money growth,
and tight labor markets create an environment where interest rates may need to
be raised to ease cyclical pressures on inflation. While maintaining our current
neutral to slightly defensive stance on interest rates, we seek to add
additional value through tactical yield-curve decisions and by identifying
opportunities among diverse sectors. Similarly, we remain confident of our
ability to deliver favorable long-term results through stock selection.
REPRESENTATIVE HOLDINGS
Ameritech
AT&T
Chase Manhattan
Dell Computer
Schering Plough
United Technologies
Australia 7.5% 7/15/05
Foodmaker 9.25% 3/1/99
IMCHE 97-5 A5
KN Energy 7.45% 3/1/2098
- --------------------------------------------------------------------------------
21
<PAGE>
BALANCED GROWTH PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
1 YEAR 3 YEARS SINCE INCEPTION
32.02% 19.19% 13.99%
Balanced Growth Portfolio A Balanced 60/40 Index
<S> <C> <C> <C>
4/19/93 $9,475.00 $10,000.00
6/30/93 $10,464.19 $10,167.89
9/30/93 $11,058.45 $10,460.54
12/31/93 $10,736.61 $10,593.91
3/31/94 $10,360.64 $10,220.09
6/30/94 $9,746.05 $10,196.47
9/30/94 $10,250.26 $10,516.10
12/31/94 $10,060.86 $10,533.05
3/31/95 $10,693.92 $11,358.01
6/30/95 $11,681.59 $12,302.76
9/30/95 $12,604.68 $12,982.35
12/31/95 $12,418.56 $13,694.89
3/31/96 $12,849.93 $14,001.13
6/30/96 $13,596.59 $14,403.65
9/30/96 $14,091.89 $14,779.90
12/31/96 $14,453.91 $15,701.27
3/31/97 $13,715.93 $15,904.46
6/30/97 $15,459.10 $17,775.90
9/30/97 $17,690.71 $18,834.70
12/31/97 $17,415.96 $19,411.09
3/31/98 $19,111.78 $21,139.22
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
1 YEAR 3 YEARS SINCE INCEPTION
33.79% 20.08% 14.39%
Balanced Growth Portfolio B Balanced 60/40 Index
<S> <C> <C> <C>
4/19/93 $10,000.00 $10,000.00
6/30/93 $11,035.45 $10,167.89
9/30/93 $11,660.45 $10,460.54
12/31/93 $11,305.97 $10,593.91
3/31/94 $10,886.19 $10,220.09
6/30/94 $10,223.88 $10,196.47
9/30/94 $10,736.94 $10,516.10
12/31/94 $10,522.39 $10,533.05
3/31/95 $11,156.72 $11,358.01
6/30/95 $12,180.97 $12,302.76
9/30/95 $13,122.78 $12,982.35
12/31/95 $12,902.86 $13,694.89
3/31/96 $13,345.78 $14,001.13
6/30/96 $14,106.25 $14,403.65
9/30/96 $14,606.34 $14,779.90
12/31/96 $14,962.03 $15,701.27
3/31/97 $14,160.40 $15,904.46
6/30/97 $15,957.09 $17,775.90
9/30/97 $18,061.47 $18,834.70
12/31/97 $17,934.01 $19,411.09
3/31/98 $19,453.22 $21,139.22
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
1 YEAR 3 YEARS SINCE INCEPTION
38.35% 20.61% 14.55%
Balanced Growth Portfolio C Balanced 60/40 Index
<S> <C> <C> <C>
4/19/93 $10,000.00 $10,000.00
6/30/93 $11,039.20 $10,167.89
9/30/93 $11,660.86 $10,460.54
12/31/93 $11,305.09 $10,593.91
3/31/94 $10,891.29 $10,220.09
6/30/94 $10,228.48 $10,196.47
9/30/94 $10,738.30 $10,516.10
12/31/94 $10,521.52 $10,533.05
3/31/95 $11,160.73 $11,358.01
6/30/95 $12,183.53 $12,302.76
9/30/95 $13,132.13 $12,982.35
12/31/95 $12,919.55 $13,694.89
3/31/96 $13,345.82 $14,001.13
6/30/96 $14,097.97 $14,403.65
9/30/96 $14,591.32 $14,779.90
12/31/96 $14,940.54 $15,701.27
3/31/97 $14,152.91 $15,904.46
6/30/97 $15,932.24 $17,775.90
9/30/97 $18,194.24 $18,834.70
12/31/97 $17,881.57 $19,411.09
3/31/98 $19,580.47 $21,139.22
</TABLE>
The graphs compare a $10,000 investment in the Balanced Growth Portfolio A
(front load), the Balanced Growth Portfolio B (back-end load) and the Balanced
Growth Portfolio C (level load) with a similar investment in a model index
consisting of 60% Standard & Poor's 500 Index ("S&P 500") and 40% Lehman
Brothers Government/Corporate Bond Index, on a cumulative and average annual
total return basis. Portfolio B 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 Portfolio B's registration
statement was on 5/31/95. Returns reflect the reinvestment of income dividends
and capital gains distributions, if any, as well as all fees and expenses.
Performance figures include the maximum applicable sales charge of 5.25% for
Portfolio A shares. The effect of the maximum contingent deferred sales charge
for Portfolio B shares (maximum 5% declining to 0% over six years) is included
in Portfolio B performance. Performance is affected by a 12b-1 Plan which
commenced at inception of each Portfolio.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolio, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
The S&P 500 Index is an unmanaged index containing 500 industrial, utility and
financial companies regarded as generally representative of the U.S. stock
market.
The Lehman Brothers Government/Corporate Bond Index is an unmanaged
market-weighted index consisting of all public obligations of the U.S.
Government, its agencies and instrumentalities and all corporation issuers of
fixed rate, non-convertible, investment grade U.S. dollar denominated bonds
having maturities of greater than one year. It is generally regarded as
representative of the market for domestic bonds.
Index returns reflect the reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
22
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
BALANCED GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS -- 58.3%
- ----------------------------------------------------------------------------
AEROSPACE -- 1.8%
United Technologies Corp................... 6,400 $ 590,800
------------
AIR FREIGHT/SHIPPING -- 0.7%
Airborne Freight Corp...................... 5,600 210,700
------------
AIRLINES -- 0.3%
AMR Corp.*................................. 700 100,231
------------
ALCOHOLIC BEVERAGES -- 0.8%
Canandaigua Brands, Inc. Class A*.......... 4,800 274,200
------------
APPAREL -- 0.9%
Jones Apparel Group, Inc.*................. 2,700 148,669
Stride Rite Corp........................... 11,100 150,544
------------
299,213
------------
AUTOMOBILES -- 1.1%
General Motors Corp........................ 5,600 377,650
------------
AUTOMOTIVE EQUIPMENT -- 1.3%
Federal-Mogul Corp......................... 2,400 127,650
SPX Corp.*................................. 4,000 305,250
------------
432,900
------------
BEVERAGES/SOFT DRINKS -- 1.8%
Pepsico, Inc............................... 14,100 601,894
------------
BUILDING MATERIALS CHAINS -- 0.7%
Centex Construction Products, Inc.......... 6,600 240,487
------------
CHEMICALS -- 2.3%
Dow Chemical Co.*.......................... 5,100 495,975
Lyondell Petrochemical Co.................. 7,500 255,469
------------
751,444
------------
CLOTHING CHAINS -- 2.8%
Ross Stores, Inc........................... 11,400 503,025
TJX Companies, Inc......................... 9,200 416,300
------------
919,325
------------
COMPUTERS/OFFICE AUTOMATION -- 2.4%
Compaq Computer Corp....................... 4,900 126,787
Dell Computer Corp.*....................... 9,800 663,950
------------
790,737
------------
DRUGS/PHARMACEUTICALS -- 3.4%
Abbott Labs, Inc........................... 2,000 150,625
Johnson & Johnson, Inc..................... 3,500 256,594
Schering Plough Corp....................... 8,700 710,681
------------
1,117,900
------------
ELECTRIC UTILITIES -- 1.0%
FPL Group, Inc............................. 5,100 327,675
------------
ENTERTAINMENT -- 0.6%
Walt Disney Co.*........................... 1,700 181,475
------------
FINANCE COMPANIES -- 2.4%
Federal National Mortgage Association...... 8,000 506,000
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
FINANCE COMPANIES (CONTINUED)
<TABLE>
<S> <C> <C>
SLM Holding Corp........................... 6,300 $ 274,837
------------
780,837
------------
FOOD CHAINS -- 1.0%
Albertsons, Inc.*.......................... 6,400 336,800
------------
GROCERY PRODUCTS -- 1.4%
Dean Foods Co.............................. 4,000 201,250
Interstate Bakeries Corp................... 7,600 245,575
------------
446,825
------------
INTEGRATED OIL COMPANIES -- 4.0%
Exxon Corp................................. 6,700 453,087
Mobil Corp................................. 7,300 559,362
Phillips Petroleum Co...................... 6,000 299,625
------------
1,312,074
------------
INVESTMENT COMPANIES -- 0.7%
Bear Stearns Co., Inc...................... 2,020 103,778
Morgan Stanley Dean Witter Discover &
Co.*..................................... 1,800 131,175
------------
234,953
------------
MACHINERY/EQUIPMENT -- 0.3%
Caterpillar, Inc........................... 1,900 104,619
------------
METALS -- 0.6%
Bethlehem Steel Corp.*..................... 15,500 210,219
------------
MONEY-CENTER BANKS -- 2.1%
Chase Manhattan Corp....................... 4,200 566,475
Suntrust Banks, Inc........................ 1,500 113,062
------------
679,537
------------
MULTI-LINE INSURERS -- 1.2%
Torchmark Corp............................. 5,000 229,062
Travelers Group, Inc....................... 2,700 162,000
------------
391,062
------------
OTHER CONSUMER NON-DURABLES -- 1.9%
Procter & Gamble Co........................ 7,600 641,250
------------
OTHER FINANCIAL SERVICES -- 1.3%
SunAmerica, Inc............................ 8,700 416,513
------------
OTHER PRODUCERS/MANUFACTURING -- 1.1%
Crane Co................................... 4,300 227,900
Tyco International Ltd..................... 2,200 120,175
------------
348,075
------------
PAPER -- 1.0%
Fort James Corp............................ 7,300 334,431
------------
PROPERTY-CASUALTY INSURERS -- 2.4%
Allstate Corp.*............................ 5,500 505,656
Orion Capital Corp......................... 5,400 295,313
------------
800,969
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
23
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
PUBLISHING -- 0.8%
Valassis Communication, Inc................ 6,200 $ 254,200
------------
RECREATIONAL PRODUCTS -- 0.3%
Mattel, Inc.*.............................. 2,200 87,175
------------
RESTAURANTS -- 0.5%
Foodmaker, Inc.*........................... 8,100 156,938
------------
SAVINGS & LOAN ASSOCIATIONS -- 0.8%
GreenPoint Financial Corp.................. 7,000 251,563
------------
SEMICONDUCTORS/ELECTRONIC COMPONENTS -- 0.9%
Intel Corp................................. 3,900 304,444
------------
SOAPS/COSMETICS -- 0.9%
Colgate-Palmolive Co....................... 1,600 138,600
Gillette Co................................ 1,400 166,162
------------
304,762
------------
SOFTWARE -- 2.2%
BMC Software, Inc.*........................ 5,400 452,588
Microsoft Corp.*........................... 3,200 286,400
------------
738,988
------------
TELECOMMUNICATIONS EQUIPMENT -- 0.9%
Tekelec, Inc.*............................. 6,600 299,475
------------
TELECOMMUNICATIONS SERVICES -- 2.6%
AirTouch Communications, Inc.*............. 5,300 259,369
Ameritech Corp............................. 12,300 608,081
------------
867,450
------------
TELEPHONE -- 3.7%
AT&T Corp.*................................ 7,700 505,312
Bellsouth Corp............................. 10,700 722,919
------------
1,228,231
------------
TEXTILES -- 0.7%
Carlisle Cos., Inc......................... 4,500 221,062
------------
TOBACCO PRODUCTS -- 0.7%
Philip Morris Co., Inc..................... 5,800 241,788
------------
TOTAL COMMON STOCK
(Cost $14,193,969)....................................... 19,210,871
------------
- ----------------------------------------------------------------------------
PREFERRED STOCK -- 0.8%
- ----------------------------------------------------------------------------
BROADCASTING -- 0.4%
Chancellor Media Corp. Series A, 12.25%.... 1,000 142,250
------------
TELECOMMUNICATIONS -- 0.4%
IXC Communications, Inc., 12.50%*.......... 1,060 129,320
------------
TOTAL PREFERRED STOCK
(Cost $241,051).......................................... 271,570
------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
WARRANTS -- 0.0%
- ----------------------------------------------------------------------------
ELECTRONIC INSTRUMENTS -- 0.0%
Electronic Retailing Systems, Inc.*........ 50 $ 1,250
------------
TOTAL WARRANTS
(Cost $2,036)............................................ 1,250
------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ----------------------------------------------------------------------------
CORPORATE BONDS -- 16.5%
- ----------------------------------------------------------------------------
AIRLINES -- 0.6%
Continental Airlines
6.648%, 09/15/17......................... $135,000 134,823
Trans World Airlines
11.375%, 03/01/06........................ 50,000 50,625
------------
185,448
------------
BANKS -- 1.1%
Bank of Scotland
7.000%, 11/29/49......................... 125,000 125,625
First Union Corp.
6.875%, 09/15/05......................... 225,000 231,907
------------
357,532
------------
BEVERAGES (NON-ALCOHOLIC) -- 0.9%
Coca-Cola Enterprises
6.000%, 03/15/01......................... 110,000 109,645
Coca-Cola Enterprises
6.750%, 01/15/38......................... 175,000 173,190
------------
282,835
------------
COMMERCIAL/INDUSTRIAL SERVICES -- 0.4%
Cellulosa Arauco Constitution
6.950%, 09/15/05......................... 125,000 122,812
------------
CONSTRUCTION -- 0.2%
Standard Pacific Corp.
10.500%, 03/01/00........................ 49,000 51,695
------------
ELECTRONIC INSTRUMENTS -- 0.1%
Electronic Retailing Systems, Inc.
0.000%, 02/01/04*........................ 50,000 29,000
------------
ELECTRIC UTILITIES -- 0.8%
Tenaga Nasional Berhad
7.625%, 04/29/07......................... 100,000 89,256
Yorkshire Power
6.154%, 02/25/03......................... 175,000 173,581
------------
262,837
------------
ELECTRONICS -- 0.5%
Rockwell International Corp.
5.200%, 01/15/49......................... 200,000 149,895
------------
ENTERTAINMENT -- 0.3%
Imax Corp.
10.000%, 03/01/01........................ 100,000 104,500
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
24
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FINANCIAL SERVICES -- 3.7%
American Resource Corp.
7.450%, 12/15/26......................... $225,000 $ 243,493
Amresco Inc.
9.875%, 03/15/05......................... 50,000 50,875
AON Capital Trust A
8.205%, 01/01/27......................... 100,000 113,122
Corp. Andina Fom
6.750%, 03/15/05......................... 125,000 124,245
Credit Suisse-London
7.900%, 05/01/07......................... 95,000 100,927
Hutchison Whampoa
7.500%, 08/01/27......................... 100,000 90,321
Lehman Brothers Holdings
6.625%, 12/27/02......................... 200,000 202,356
MCII Holdings
0.000%, 11/15/02*........................ 50,000 47,250
Cowen Financial Corp.
11.875, 10/01/03......................... 75,000 85,500
Resource America, Inc.
12.000%, 08/01/04........................ 150,000 157,500
------------
1,215,589
------------
FOOD -- 0.4%
Tyson Foods
7.000%, 01/15/28......................... 150,000 148,224
------------
INSURANCE -- 0.3%
Jackson National Life Insurance Co.
8.150%, 03/15/27......................... 100,000 111,486
------------
MACHINERY -- 0.3%
Interlake Corp.
12.125%, 03/01/02........................ 100,000 103,000
------------
MULTI-LINE INSURANCE -- 0.3%
Travelers Group
6.875%, 02/15/49......................... 110,000 107,284
------------
NATURAL GAS UTILITIES -- 1.1%
Kn Energy Inc.
7.450%, 03/01/47......................... 180,000 181,407
Kn Energy Inc.
6.450%, 03/01/03......................... 170,000 170,136
------------
351,543
------------
OIL -- 0.5%
Lasmo, Inc.
6.750%, 12/15/07......................... 160,000 158,000
------------
OIL WELL SERVICES -- 0.6%
Petroleum Geo-Services
7.125%, 03/30/28......................... 210,000 210,666
------------
PRODUCERS/MANUFACTURING -- 0.2%
Figgie International, Inc.
9.875%, 10/01/99......................... 50,000 52,000
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
REAL ESTATE/MORTGAGE -- 0.2%
Criimi Mae, Inc.
9.125%, 12/01/02......................... $ 75,000 $ 75,468
------------
RENTAL/LEASING COMPANIES -- 0.5%
Hertz Corp.
7.000%, 01/15/28......................... 125,000 121,808
Railcar Leasing LLC
7.125%, 01/15/13......................... 55,000 57,681
------------
179,489
------------
RESTAURANTS -- 0.2%
Foodmaker, Inc.
9.250%, 03/01/99......................... 71,000 71,887
------------
SPECIALITY RETAILING -- 1.2%
Musicland Group
9.000%, 06/15/03......................... 150,000 148,500
Tandy Corp.
6.090%, 01/09/02......................... 245,000 242,459
------------
390,959
------------
TELECOMMUNICATIONS -- 1.2%
Cable & Wireless Communications
6.375%, 03/06/03......................... 165,000 165,094
Panamsat Corp.
6.125%, 01/15/05......................... 250,000 245,698
------------
410,792
------------
TELEPHONE -- 0.6%
US West Capital Funding
7.950%, 02/01/47......................... 170,000 193,800
------------
WASTE MANAGEMENT -- 0.3%
WMX Technologies, Inc.
7.100%, 08/01/26......................... 90,000 93,264
------------
TOTAL CORPORATE BONDS
(Cost $5,359,788)........................................ 5,420,005
------------
- ----------------------------------------------------------------------------
FOREIGN GOVERNMENT BONDS -- 5.3%
- ----------------------------------------------------------------------------
AUSTRALIA -- 3.6%
Australian Government
7.500%, 07/15/05......................... 800,000 590,478
Queensland Treasury Global
8.000%, 05/14/03......................... 780,000 572,250
------------
1,162,728
------------
GERMANY -- 1.7%
German Government Unity Fund
8.000%, 01/21/02......................... 945,000 573,947
------------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $1,775,479)........................................ 1,736,675
------------
- ----------------------------------------------------------------------------
FOREIGN CORPORATE BONDS -- 0.2%
- ----------------------------------------------------------------------------
INDONESIA -- 0.2%
PT Polysindo Eka Perkasa Interest
Promissory Note*......................... 5,000 2,950
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
25
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
BALANCED GROWTH FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
FOREIGN CORPORATE BONDS (Continued)
- ---------------------------------------------------------
INDONESIA (CONTINUED)
<TABLE>
<S> <C> <C>
PT Polysindo Eka Perkasa Interest
Promissory Note*......................... $ 5,000 $ 2,950
PT Polysindo Eka Perkasa Principal
Promissory Note*......................... 100,000 59,000
------------
TOTAL FOREIGN CORPORATE BONDS
(Cost $90,726)........................................... 64,900
------------
- ----------------------------------------------------------------------------
AGENCY OBLIGATIONS -- 3.2%
- ----------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.4%
Series #2020E
7.000%, 01/15/28......................... 130,000 133,697
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 2.3%
Pool #1994-27 PJ
6.500%, 06/25/23......................... 350,000 350,763
Pool #1996-59 K
6.500%, 07/25/23......................... 400,000 396,000
------------
746,763
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.5%
Pool #348872
7.000%, 07/15/08......................... 159,002 162,336
------------
TOTAL AGENCY OBLIGATIONS
(Cost $981,642).......................................... 1,042,796
------------
- ----------------------------------------------------------------------------
CMO'S AND ASSET BACKED SECURITIES -- 7.3%
- ----------------------------------------------------------------------------
AUTO -- 0.8%
AESOP Funding II 1998-a A
6.140%, 05/20/06......................... 265,000 262,598
------------
BANKS -- 0.4%
BankBoston Marine Asset Backed Trust 1997-2
A5
6.570%, 11/15/09......................... 120,000 121,219
------------
MORTGAGE COMMERCIAL -- 3.0%
Aames Mortgage Trust 1997-D A2A
5.875%, 12/15/27......................... 250,337 250,415
DLJ Mortgage Acceptance Corp. 1998-CF1, A1B
6.410%, 02/15/08......................... 225,000 225,000
Morgan Stanley Capital I 1998 Hf1 A2
6.600%, 01/15/08......................... 260,000 262,031
Nomura Asset Security Corp. 1998-D6, A1B
6.590%, 03/15/30......................... 260,000 263,819
------------
1,001,265
------------
MORTGAGE HOME EQUITY -- 3.1%
EQCC Home Equity Loan Trust 1996-4 A4
6.470%, 08/15/10......................... 255,000 256,355
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
MORTGAGE HOME EQUITY (CONTINUED)
<TABLE>
<S> <C> <C>
IMC Home Equity Loan Trust 1997-5 A5
6.610%, 06/20/13......................... $235,000 $ 235,698
The Money Store Residential Trust 98-1 A2
6.200%, 03/15/08......................... 130,000 129,959
The Money Store Residential Trust 98-1 A3
6.215%, 02/15/11......................... 260,000 259,594
SL Commercial Mortgage Trust 1997-C1
6.875%, 07/25/04......................... 143,357 146,112
------------
1,027,718
------------
TOTAL CMO'S AND ASSET BACKED SECURITIES
(Cost $2,416,734)........................................ 2,412,800
------------
- ----------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 1.5%
- ----------------------------------------------------------------------------
U.S. TREASURY BILLS -- 0.9%
9.250%, 02/15/16........................... 220,000 298,006
------------
U.S. TREASURY BONDS -- 0.6%
8.500%, 02/15/20........................... 155,000 201,379
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $496,707).......................................... 499,385
------------
<CAPTION>
NUMBER
OF SHARES
<S> <C> <C>
- ----------------------------------------------------------------------------
MUTUAL FUND -- 3.3%
- ----------------------------------------------------------------------------
BLACKROCK 2001 TERM -- 1.6%
60,000 517,500
------------
BLACKROCK STRATEGIC TERM TRUST, INC. -- 1.7%
65,800 567,525
------------
TOTAL MUTUAL FUND
(Cost $1,054,536)........................................ 1,085,025
------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.5%
- ----------------------------------------------------------------------------
Associates First Capital Corp.
6.050%, 04/01/98
(Cost $835,000).......................... $835,000 835,000
------------
TOTAL INVESTMENTS -- 98.9%
(Cost $27,447,668))...................................... 32,580,277
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.1%.............. 363,328
------------
NET ASSETS -- 100.0%....................................... $ 32,943,605
------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
26
<PAGE>
GOVERNMENT INCOME FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Fred S. Robertson,
Partner, Chief Investment Officer,
Fixed Income
Susan Malone,
Portfolio Manager
James E. Kellerman,
Partner, Senior Portfolio Manager
Malcom Day, CFA,
Portfolio Manager
GOAL: The Nicholas-Applegate Government Income Fund seeks to maximize current
income by investing primarily in intermediate term debt securities of the U.S.
Government and its agencies and instrumentalities.*
REVIEW AND OUTLOOK: The Government Income Fund's C Portfolios returned 12.4%
for the fiscal year and 7.9% for the three year period versus its benchmark, the
Lehman Government Bond Index, which returned 12.1% and 8.9% respectively.
In keeping with our long-term bullish outlook for the bond market, the Fund
had a higher level of interest rate sensitivity than did the Intermediate
Government Index. Declining interest rates enhanced the Fund's return throughout
the year.
We invested in US government or government agency backed mortgage issues which
significantly outperformed treasury securities. As interest rates declined, the
mortgage investments were concentrated in those securities which were less
exposed to prepayment risk.
Solid fundamentals and the opportunity for higher returns also made investment
in select international bond markets attractive. Our overseas bond holdings,
while small, significantly enhanced the Fund's returns.
The long-term trend toward disinflation in the US remains intact, fueled by
conservative fiscal policies, a vigilant Federal Reserve Board, and excess
global capacity, which inhibits price increases. As a result, the outlook for
the bond market remains favorable.
- ------------
* The government guarantee of the Fund's portfolio securities does not
guarantee the value of the Fund's shares. The Fund's share price
will generally fluctuate with changing interest rates or other
market conditions.
- --------------------------------------------------------------------------------
27
<PAGE>
GOVERNMENT INCOME PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
1 YEAR 3 YEARS SINCE INCEPTION
7.78% 6.70% 5.82%
Government Income Lehman Brothers Government
<S> <C> <C>
Portfolio A Bond Index
19-Apr-93 $9,525.00 $10,000.00
30-Jun-93 $9,855.71 $10,249.56
30-Sep-93 $10,253.46 $10,582.10
31-Dec-93 $10,219.54 $10,546.44
31-Mar-94 $9,998.45 $10,228.83
30-Jun-94 $9,912.93 $10,111.52
30-Sep-94 $9,915.35 $10,154.40
31-Dec-94 $9,979.18 $10,190.82
31-Mar-95 $10,374.36 $10,670.35
30-Jun-95 $11,010.32 $11,332.37
30-Sep-95 $11,208.25 $11,532.20
31-Dec-95 $11,742.17 $12,058.96
31-Mar-96 $11,381.35 $11,785.18
30-Jun-96 $11,267.89 $11,840.65
30-Sep-96 $11,392.78 $12,040.75
31-Dec-96 $11,799.57 $12,392.06
31-Mar-97 $11,691.86 $12,291.38
30-Jun-97 $12,141.09 $12,716.45
30-Sep-97 $12,607.07 $13,142.35
31-Dec-97 $13,013.32 $13,579.00
31-Mar-98 $13,229.63 $13,783.95
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
1 YEAR 3 YEARS SINCE INCEPTION
7.51% 7.09% 5.92%
Government Income Lehman Brothers Government
<S> <C> <C>
Portfolio B Bond Index
4/19/93 $10,000.00 $10,000.00
6/30/93 $10,333.94 $10,249.56
9/30/93 $10,740.07 $10,582.10
12/31/93 $10,694.95 $10,546.44
3/31/94 $10,433.21 $10,228.83
6/30/94 $10,315.88 $10,111.52
9/30/94 $10,306.86 $10,154.40
12/31/94 $10,361.01 $10,190.82
3/31/95 $10,749.10 $10,670.35
6/30/95 $11,382.67 $11,332.37
9/30/95 $11,574.95 $11,532.20
12/31/95 $12,147.61 $12,058.96
3/31/96 $11,759.74 $11,785.18
6/30/96 $11,625.64 $11,840.65
9/30/96 $11,743.46 $12,040.75
12/31/96 $12,135.01 $12,392.06
3/31/97 $12,020.16 $12,291.38
6/30/97 $12,463.08 $12,716.45
9/30/97 $12,708.43 $13,142.35
12/31/97 $13,305.05 $13,579.00
3/31/98 $13,323.44 $13,783.95
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
1 YEAR 3 YEARS SINCE INCEPTION
<S> <C> <C>
12.43% 7.89% 6.24%
Government Income Lehman Brothers Government
Portfolio C Bond Index
4/19/93 $10,000.00 $10,000.00
6/30/93 $10,331.20 $10,249.56
9/30/93 $10,742.04 $10,582.10
12/31/93 $10,689.58 $10,546.44
3/31/94 $10,428.33 $10,228.83
6/30/94 $10,312.92 $10,111.52
9/30/94 $10,307.07 $10,154.40
12/31/94 $10,359.79 $10,190.82
3/31/95 $10,745.59 $10,670.35
6/30/95 $11,386.13 $11,332.37
9/30/95 $11,568.34 $11,532.20
12/31/95 $12,115.81 $12,058.96
3/31/96 $11,734.27 $11,785.18
6/30/96 $11,598.62 $11,840.65
9/30/96 $11,715.76 $12,040.75
12/31/96 $12,110.42 $12,392.06
3/31/97 $12,003.03 $12,291.38
6/30/97 $12,439.54 $12,716.45
9/30/97 $12,885.40 $13,142.35
12/31/97 $13,272.84 $13,579.00
3/31/98 $13,494.87 $13,783.95
</TABLE>
The graphs compare a $10,000 investment in the Government Income Portfolio A
(front load), the Government Income Portfolio B (back- end load) and the
Government Income Portfolio C (level load) with a similar investment in the
Lehman Brothers Government Bond Index, on a cumulative and average annual total
return basis. Portfolio B 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 Portfolio B's registration statement was on
5/31/95. Returns reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses. Performance figures
include the maximum applicable sales charge of 5.25% for Portfolio A shares. The
effect of the maximum contingent deferred sales charge for Portfolio B shares
(maximum 5% declining to 0% over six years) is included in Portfolio B
performance. Performance is affected by a 12b-1 Plan which commenced at
inception of each Portfolio.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolio, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
The Lehman Brothers Government Bond Index is an unmanaged index composed of all
publicly issued, non-convertible, domestic debt of the U.S. government or any
agency thereof, quasi-federal corporations or corporate debt guaranteed by the
U.S. government. Index returns reflect the reinvestment of income dividends and
capital gains distributions, if any, but do not reflect fees, brokerage
commissions, or other expenses of investing.
Past performance is no guarantee of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
28
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------
AGENCY OBLIGATIONS -- 26.9%
- ---------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 8.5%
Pool # B00623
9.000%, 6/01/06.......................... $ 90,403 $ 94,047
Pool # 43 PG
6.500%, 12/17/22......................... 145,000 145,544
Pool # 2020E
7.000%, 1/15/28.......................... 550,000 565,641
----------
805,232
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 4.9%
Pool # 363503
9.500%, 6/01/05.......................... 122,881 129,178
Pool # 1994-27 PJ
6.500%, 6/25/23.......................... 255,000 255,556
Pool # 1996-59 K
6.500%, 7/25/23.......................... 80,000 79,200
----------
463,934
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES -- 9.6%
5.900%, 4/01/98............................ 917,000 917,000
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 1.2%
Pool # 357290
7.000%, 7/15/08.......................... 109,574 111,872
----------
TENNESSEE VALLEY AUTHORITY -- 2.7%
Tennessee Valley Authority - Global, Series
A
6.375%, 6/15/05.......................... 250,000 255,467
----------
TOTAL AGENCY OBLIGATIONS
(Cost $2,518,592)...................................... 2,553,505
----------
- ---------------------------------------------------------------------
FOREIGN GOVERNMENT BONDS -- 13.7%
- ---------------------------------------------------------------------
AUSTRALIA -- 8.7%
Australian Government, Series 705
7.500%, 7/15/05.......................... 400,000 295,239
Queensland Treasury - Global
8.000%, 5/14/03.......................... 725,000 531,899
----------
827,138
----------
GERMANY -- 5.0%
German Government Unity Fund
8.000%, 1/21/02.......................... 790,000 479,808
----------
TOTAL FOREIGN BONDS
(Cost $1,318,359)...................................... 1,306,946
----------
<CAPTION>
NUMBER OF
SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------
MUTUAL FUNDS -- 10.6%
- ---------------------------------------------------------------------
Blackrock 2001 Term Trust, Inc............. 59,700 $ 514,913
Blackrock Strategic Term Trust, Inc........ 57,400 495,075
----------
TOTAL MUTUAL FUNDS
(Cost $995,232)........................................ 1,009,988
----------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 48.0%
- ---------------------------------------------------------------------
U.S. TREASURY BONDS -- 23.3%
8.500%, 2/15/20............................ $1,710,000 2,221,666
----------
U.S. TREASURY NOTES -- 24.7%
6.250%, 1/31/02............................ 2,305,000 2,350,017
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $4,573,433)...................................... 4,571,683
----------
TOTAL INVESTMENTS -- 99.2%
(Cost $9,405,616)...................................... 9,442,122
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.8%............ 74,725
----------
NET ASSETS -- 100.0%..................................... $9,516,847
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
29
<PAGE>
MONEY MARKET FUND
MONEY MARKET PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Claudia L. Bengston,
Portfolio Manager
GOAL: The Money Market Fund seeks to obtain a high level of current income
consistent with preservation of capital and maintenance of liquidity. It invests
in high-quality, short-term, U.S. dollar-denominated money market instruments.*
REVIEW AND OUTLOOK: The Money Market Portfolio of the Fund returned a 5.3%
cumulative return for the period ending March 31, 1998, versus a 5.1% cumulative
return for the Lipper Money Market. The current SEC 7-day yield as of March 31,
1998 was 5.2%.**
- ------------
* The Money Market Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able
to maintain a stable net asset value of $1 per share.
** Current annualized yield is the seven-day annualized net investment
income per share as of March 31, 1998. Gains or losses are not
included.
- --------------------------------------------------------------------------------
30
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------
AGENCY OBLIGATIONS -- 5.2%
- ------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK DISCOUNT NOTES -- 3.6%
5.380%, 06/16/98........................... $ 1,000,000 $ 988,642
5.420%, 08/07/98........................... 1,525,000 1,495,612
5.500%, 11/12/98........................... 415,000 400,734
5.480%, 11/16/98........................... 200,000 193,028
5.420%, 11/20/98........................... 1,000,000 964,920
5.420%, 12/18/98........................... 520,000 499,567
------------
4,542,503
------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- 0.6%
5.390%, 06/05/98........................... 182,000 180,229
5.420%, 08/20/98........................... 639,000 625,435
------------
805,664
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES -- 1.0%
5.430%, 08/10/98........................... 100,000 98,024
5.410%, 08/21/98........................... 150,000 146,799
5.260%, 02/12/99........................... 1,000,000 953,683
------------
1,198,506
------------
TOTAL AGENCY OBLIGATIONS
(Cost $6,546,673)....................................... 6,546,673
------------
- ------------------------------------------------------------------------
COMMERCIAL PAPER -- 21.2%
- ------------------------------------------------------------------------
AETNA SERVICES, INC.
5.540%, 04/13/98........................... 1,500,000 1,497,230
AMERICAN EXPRESS CREDIT CORP.
5.530%, 04/09/98........................... 1,500,000 1,498,157
ASSOCIATES FIRST CAPITAL CORP.
5.520%, 04/15/98........................... 1,500,000 1,496,780
AVNET, INC.
5.470%, 04/08/98........................... 1,500,000 1,498,405
BELL ATLANTIC NETWORK FUNDING CORP.
5.520%, 04/10/98........................... 1,500,000 1,497,930
CATERPILLAR FINANCIAL SERVICES CORP.
5.350%, 07/15/98........................... 1,000,000 984,396
CHEVRON USA, INC.
5.590%, 04/03/98........................... 1,500,000 1,499,534
DUPONT (E.I.) DE NEMOURS & CO., INC.
5.520%, 04/03/98........................... 1,500,000 1,499,540
FLUOR CORP.
5.530%, 04/23/98........................... 1,500,000 1,494,931
HOUSEHOLD FINANCE CORP.
5.530%, 04/06/98........................... 1,500,000 1,498,848
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------
INTERSTATE POWER CORP.
5.550%, 04/06/98........................... $ 1,000,000 $ 999,229
MADISON GAS & ELECTRIC CO.
5.530%, 04/13/98........................... 1,500,000 1,497,235
MINNESOTA MINING & MANUFACTURING CO.
5.550%, 04/20/98........................... 1,590,000 1,585,343
MORGAN, J.P. & CO., INC.
5.340%, 07/17/98........................... 1,500,000 1,476,192
NORWEST CORP.
5.540%, 04/02/98........................... 1,500,000 1,499,769
PHH CORP.
5.530%, 04/14/98........................... 1,000,000 998,003
PRINCIPAL MUTUAL LIFE INSURANCE CO.
5.540%, 04/07/98........................... 1,500,000 1,498,615
WINN-DIXIE STORES, INC.
5.470%, 04/21/98........................... 1,000,000 996,961
WISCONSIN ELECTRIC POWER CO.
5.530%, 04/07/98........................... 900,000 899,170
WISCONSIN ELECTRIC POWER CO.
5.530%, 04/10/98........................... 600,000 599,171
------------
TOTAL COMMERCIAL PAPER
(Cost $26,515,439)...................................... 26,515,439
------------
- ---------------------------------------------------------
<CAPTION>
REPURCHASE AGREEMENTS -- 73.6%
<S> <C> <C>
- ----------------------------------------------
Morgan, J.P. & Co., Inc. $91,943,000 at
5.92% (Agreement dated 03/31/98, to be
repurchased at $91,958,120 on 04/02/98;
collateralized by $18,565,000 FNMA Notes
6.57%, due 09/03/02 (Value $18,845,517);
collateralized by $30,500,000 FHLB Notes,
5.765%, due 03/18/03 (Value $30,410,995);
collateralized by $44,970,000 FHLB Notes,
5.60%, due 03/26/01)
(Cost $91,943,000)....................... 91,943,000 91,943,000
------------
TOTAL INVESTMENTS -- 100.0%
(Cost $125,005,112)..................................... 125,005,112
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.0%)........... (4,998)
------------
NET ASSETS -- 100.0%...................................... $125,000,114
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
31
<PAGE>
EMERGING COUNTRIES FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic
Portfolio Management and Research
Pedro V. Marcal,
Partner, Portfolio Manager
Eswar Menon,
Portfolio Manager
Jon Borchardt,
Portfolio Manager
Jessica Hilinski,
Portfolio Manager
Aaron M. Harris,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior 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 returns
during the fiscal year, based on the strength of our superior stock selection
and avoidance of stocks affected by the Asian economic crisis. The Fund's C
Portfolio returned 7.5% in the period, outperforming its benchmark, the MSCI
Emerging Markets Free Index, which dropped 13.4%.
Using our bottom-up stock selection process of investing company-by-company,
we were able to avoid much of the negative impact of the economic crisis in
Southeast Asia. We eliminated most of our holdings in this region on the basis
of their deteriorating fundamentals, prior to the beginning of the crisis.
The Fund was invested in several solid companies in Hong Kong and China,
including 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.
The Fund drew its strength throughout the year from the stocks of companies in
more economically prosperous areas, such as Latin America, South Africa, Israel
and Eastern Europe.
In Mexico, entertainment firm Corporacion Interamericana de Entretenimiento
(CIE), was a strong performer, benefiting from a consumer-led economic recovery.
Toward the end of the year, we reduced our weighting in Mexico and invested more
heavily in Brazil, where many companies benefited from trends towards
restructuring and infrastructure rebuilding.
In South Africa, where companies have been freed from restrictions on
international investment, companies such as computer consultant Dimension Data,
performed very well for the Fund.
In Israel, we have invested in the stocks of start-up technology companies,
leveraging off a tax-exempt status.
Eastern European stocks also performed well in a environment of falling
interest rates and the benefits of the impending EMU. Gedeon Richter, a
Hungarian pharmaceutical company, and Banco Portugues de Investimento (BPI), a
Portuguese bank, were both strong performers during the year.
We continue to have a positive outlook for the Fund based on our bottom-up
method of stock selection and plentiful investment opportunities.
REPRESENTATIVE HOLDINGS
BPI BCO Port Invest, Portugal
Corp Inter Entertainment, Mexico
Gedeon Richter, Hungary
Grupo Televisa, Mexico
Magyar Tavkozlesi, Hungary
Mol Magyar Olaj ES Gazip, Hungary
Portugal Telecom, Portugal
Telebras, Brasil
Telec Do Rio Janeiro, Brazil
- --------------------------------------------------------------------------------
32
<PAGE>
EMERGING COUNTRIES PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING COUNTRIES PORTFOLIO A MSCI EMF INDEX
<S> <C> <C>
11/28/94 $ 9,475.00 $ 10,000.00
12/31/94 $ 9,052.00 $ 8,721.60
3/31/95 $ 8,331.78 $ 7,639.95
6/30/95 $ 9,582.68 $ 8,432.90
9/30/95 $ 10,166.44 $ 8,378.76
12/31/95 $ 9,625.48 $ 8,265.82
3/31/96 $ 10,700.91 $ 8,780.71
6/30/96 $ 11,783.97 $ 9,147.21
9/30/96 $ 12,020.41 $ 8,816.67
12/31/96 $ 12,274.33 $ 8,764.70
3/31/97 $ 13,353.47 $ 9,506.39
6/30/97 $15,340.97 $10,319.96
9/30/97 $15,876.66 $9,394.68
12/31/97 $13,434.30 $8,328.68
3/31/98 $14,430.05 $8,844.52
Annualized Total Returns As of 03/31/98
1 Year 3 Years Since Inception
2.39% 17.95% 11.62%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING COUNTRIES PORTFOLIO B MSCI EMF INDEX
<S> <C> <C>
11/28/94 $10,000.00 $10,000.00
12/31/94 $8,677.62 $8,721.60
3/31/95 $9,092.33 $7,639.95
6/30/95 $10,524.26 $8,432.90
9/30/95 $9,937.40 $8,378.76
12/31/95 $10,782.47 $8,265.82
3/31/96 $11,666.67 $8,780.71
6/30/96 $11,588.42 $9,147.21
9/30/96 $11,948.36 $8,816.67
12/31/96 $12,525.64 $8,764.70
3/31/97 $13,603.53 $9,506.39
6/30/97 $15,601.97 $10,319.96
9/30/97 $15,836.99 $9,394.68
12/31/97 $13,625.50 $8,328.68
3/31/98 $14,320.06 $8,844.52
Annualized Total Returns As of 03/31/98
1 Year 3 Years Since Inception
2.47% 18.54% 11.36%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
EMERGING COUNTRIES PORTFOLIO C MSCI EMF INDEX
<S> <C> <C>
11/28/94 $10,000.00 $10,000.00
12/31/94 $9,467.90 $8,721.60
3/31/95 $8,619.55 $7,639.95
6/30/95 $9,876.07 $8,432.90
9/30/95 $10,460.31 $8,378.76
12/31/95 $9,900.08 $8,265.82
3/31/96 $10,972.52 $8,780.71
6/30/96 $12,068.97 $9,147.21
9/30/96 $12,293.06 $8,816.67
12/31/96 $12,531.94 $8,764.70
3/31/97 $13,599.87 $9,506.39
6/30/97 $15,606.27 $10,319.96
9/30/97 $16,140.24 $9,394.68
12/31/97 $13,634.30 $8,328.68
3/31/98 $14,615.62 $8,844.52
Annualized Total Returns As of 03/31/98
1 Year 3 Years Since Inception
7.47% 19.25% 12.04%
</TABLE>
The graphs compare a $10,000 investment in the Emerging Countries Portfolio A
(front load), the Emerging Countries Portfolio B (back-end load) and the
Emerging Countries Portfolio C (level load) with a similar investment in the
MSCI Emerging Markets Free Index ("EMF"), on a cumulative and average annual
total return basis. Portfolio B 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 Portfolio B's registration
statement was on 5/31/95. Performance returns within are calculated on a total
return basis and reflect all fees and expenses of the Portfolio with
reinvestment of dividends and capital gains, if any. Performance figures include
the maximum applicable sales charge of 5.25% for Portfolio A shares. The effect
of the maximum contingent deferred sales charge for Portfolio B (maximum 5.00%
declining to 0% over six years) is included in Portfolio B performance.
Performance is affected by a 12b-1 Plan which commenced at inception of each
Portfolio.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolio, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
The MSCI EMF Index 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 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 returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
Investments in overseas markets pose special risks, including currency
fluctuation and political risks, and the Fund's Share price is expected to be
more volatile than that of a U.S. only fund. These risks are generally
intensified for investments in emerging markets.
- --------------------------------------------------------------------------------
33
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
EMERGING COUNTRIES FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
COMMON STOCKS -- 95.0%
- --------------------------------------------------------------------------
ARGENTINA -- 2.1%
Banco de Galicia Y Buenos Aires S.A. de
C.V. -- ADR.............................. 96,200 $ 2,356,900
Disco S.A. -- ADR*......................... 21,900 881,475
Telefonica de Argentina S.A. -- ADR........ 71,200 2,710,050
-------------
5,948,425
-------------
BERMUDA -- 0.2%
First South Africa Corp., Ltd.*............ 62,500 472,656
-------------
BRAZIL -- 18.5%
Banco do Estado de Sao Paulo S.A. --
Preferred................................ 55,315,000 3,682,640
Banco Itau S.A. -- Preferred............... 6,450,000 4,129,690
Companhia Energetica de Minas Gerais PN.... 84,666,900 4,117,743
Companhia Paranaense de Energia-Copel...... 267,176,000 3,846,507
Companhia Paulista de Forca de Luz......... 16,414,700 2,223,177
Companhia Vale do Rio Doce................. 47,000 1,120,179
Makro Atacadista S.A. -- GDR*.............. 31,800 405,450
Petroleo Brasileiro S.A.................... 11,040,000 2,621,521
Telecomunicacoes Brasileiras S.A. -- ADR... 85,500 11,098,969
Telecomunicacoes de Sao Paulo S.A. --
Preferred................................ 33,911,088 10,885,667
Telecomunicacoes do Rio de Janeiro S.A. --
Preferred................................ 37,370,000 5,274,953
Uniao de Bancos Brasileiros S.A. -- GDR.... 70,800 2,566,500
-------------
51,972,996
-------------
CANADA -- 0.1%
Sedna Geotech, Inc. -- Secondary*.......... 118,890 100,328
-------------
CHILE -- 2.4%
Compania Cervecerias Unidos S.A. -- ADR.... 94,900 2,870,725
Linea Aerea Nacional Chile S.A. -- ADR*.... 179,000 2,461,250
Vina Concha y Toro S.A. -- ADR............. 44,500 1,457,375
-------------
6,789,350
-------------
CROATIA -- 1.1%
Pliva d.d. -- GDR.......................... 156,500 2,934,375
-------------
CZECH REPUBLIC -- 1.0%
SPT Telecom AS*............................ 22,200 2,873,808
-------------
EGYPT -- 0.9%
Arabian International Construction Co.*.... 29,500 1,238,502
Egypt Gas.................................. 13,500 1,352,881
-------------
2,591,383
-------------
GREECE -- 1.6%
Hellenic Bottling Co. S.A.................. 158,140 4,549,787
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
HONG KONG -- 6.8%
Cheung Kong Holdings, Ltd.................. 181,000 $ 1,284,838
China Merchants Holdings International Co.,
Ltd...................................... 1,361,000 1,264,729
China Resources Beijing Land............... 978,000 523,834
China Telecom, Ltd.*....................... 1,462,000 2,962,471
Chongqing Changan Automobile Co., Ltd...... 263,900 92,303
HSBC Holdings PLC.......................... 110,000 3,364,713
Hutchison Whampoa, Ltd..................... 212,000 1,491,212
Peak International, Ltd.*.................. 115,800 2,938,425
Shanghai Industrial Holdings, Ltd.......... 352,000 1,440,154
Shenzhen Fangda Co., Ltd................... 1,137,000 1,238,540
Sun Hung Kai Properties, Ltd............... 166,000 1,130,154
Yanzhou Coal Mining Co., Ltd.*............. 4,904,000 1,544,356
-------------
19,275,729
-------------
HUNGARY -- 8.6%
Gedeon Richter -- GDR*..................... 7,000 736,596
Magyar Tavkozlesi Rt....................... 143,900 887,153
Magyar Tavkozlesi Rt. -- ADR............... 187,500 5,835,938
Mol Magyar Olaj-Es Gazipari Rt............. 197,200 6,046,396
OTP Bank Rt................................ 62,840 3,196,523
Pick Szeged Rt. -- GDR*.................... 90,800 1,128,644
Richter Gedeon Rt.......................... 61,191 6,439,010
-------------
24,270,260
-------------
INDIA -- 5.3%
Bharat Heavy Electricals Ltd............... 45,000 410,320
BSES Ltd. -- GDR........................... 26,000 461,500
BSES Ltd. -- GDR........................... 30,000 532,500
Hindalco Industries, Ltd. -- ADR........... 13,400 234,500
Hindalco Industries, Ltd. -- GDR........... 26,600 465,500
Housing Development Finance Corp., Ltd..... 9,300 748,827
Infosys Technologies, Ltd.................. 57,000 2,638,757
ITLC, Ltd.................................. 33,000 596,788
ITC Limited................................ 24,400 601,460
Mahanagar Telephone Nigam, Ltd. -- GDR*.... 55,000 944,625
Mahindra & Mahindra, Ltd. -- ADR........... 12,500 104,688
Mahindra & Mahindra, Ltd. -- GDR........... 64,000 536,000
NIIT, Ltd.................................. 128,000 2,645,501
Oriental Bank of Commerce, Ltd............. 418,000 693,996
Punjab Tractors, Ltd....................... 25,000 430,425
State Bank of India, Ltd................... 125,000 892,826
State Bank of India -- ADR................. 63,600 1,136,532
State Bank of India -- GDR................. 50,000 893,500
-------------
14,968,245
-------------
ISRAEL -- 6.3%
Agan Chemical Manufacturers, Ltd........... 22,245 786,108
Bank Hapolin, Ltd.......................... 540,600 1,479,702
Bank Leumi Le-Israel....................... 2,114,500 3,997,386
Elbit Systems, Ltd......................... 15,200 191,899
Formula Systems (1985), Ltd.*.............. 111,406 4,558,557
Koor Industries, Ltd....................... 10,900 1,355,582
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
34
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
ISRAEL (CONTINUED)
<TABLE>
<S> <C> <C>
Makhteshim Chemical Works, Ltd.*........... 81,100 $ 695,666
New Dimension Software, Ltd.*.............. 86,600 1,932,263
NICE-Systems, Ltd. -- ADR*................. 61,500 2,829,000
-------------
17,826,163
-------------
KOREA -- 1.2%
Daewoo Heavy Industries.................... 507,800 2,603,240
LG Information & Communication, Ltd........ 25,000 868,257
-------------
3,471,497
-------------
LUXEMBOURG -- 0.1%
First NIS Regional Fund.................... 15,000 285,000
-------------
MEXICO -- 10.5%
Cifra S.A. de C.V. -- C.................... 2,189,699 3,917,799
Consorcio Hogar S.A. de C.V. -- B*......... 908,200 1,908,566
Corporacion Geo S.A. de C.V. -- B*......... 331,697 2,161,260
Corporacion Interamericana de
Entretenimiento S.A.*.................... 1,041,500 8,094,496
Grupo Televisa, S.A. -- GDR*............... 156,300 5,724,487
Grupo Tribasa, S.A. de C.V. -- ADR*........ 243,700 1,507,894
Kimberly-Clark de Mexico, S.A. de C.V...... 731,000 3,776,092
Panamerican Berverages, Inc................ 64,400 2,584,050
-------------
29,674,644
-------------
PAKISTAN -- 0.5%
Hub Power Co............................... 635,000 675,973
Pakistan State Oil Co., Ltd................ 65,964 383,970
SUI Northern Gas Pipelines................. 535,612 283,873
-------------
1,343,816
-------------
PERU -- 1.4%
Cementos Lima S.A.......................... 54,400 1,065,364
Cerveceria Backus & Johnston S.A........... 2,207,104 1,626,783
Enrique Ferreyros S.A...................... 1,201,198 1,304,520
-------------
3,996,667
-------------
PHILIPPINES -- 1.1%
Jollibee Foods Corporation................. 1,570,100 735,358
Music Corporation.......................... 6,005,200 2,337,184
-------------
3,072,542
-------------
POLAND -- 1.6%
Bank Handlowy W. Warszawie*................ 80,600 1,295,505
Bank Przemyslowo-Handlowy S.A.............. 16,200 1,290,205
Exbud S.A. -- GDR*......................... 165,600 1,929,240
-------------
4,514,950
-------------
PORTUGAL -- 7.0%
BPI-SGPS, S.A.............................. 204,100 7,850,853
Jeronimo Martins, SGPS, S.A................ 74,200 3,052,008
Ibersol SGPS S.A.*......................... 16,400 1,385,505
Portugal Telecom S.A....................... 92,475 4,810,043
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
</TABLE>
PORTUGAL (CONTINUED)
<TABLE>
<S> <C> <C>
Telecel-Comunicacaoes Pessoais S.A.*....... 17,600 $ 2,732,149
-------------
19,830,558
-------------
RUSSIA -- 3.1%
Gazprom -- ADR............................. 136,200 2,887,440
Kubanelectrosvyaz*......................... 43,700 655,500
Kuzbassenergo*............................. 932,000 400,760
Lukoil Holding -- ADR...................... 40,900 2,875,025
Unified Energy Systems -- ADR*............. 54,500 1,784,875
-------------
8,603,600
-------------
SINGAPORE -- 1.2%
Datacraft Asia, Ltd........................ 473,100 1,532,844
Elec & Eltek International Co., Ltd........ 196,700 1,170,365
Venture Manufacturing, Ltd.*............... 168,000 624,168
-------------
3,327,377
-------------
SOUTH AFRICA -- 6.1%
ABSA Group, Ltd............................ 471,300 4,279,129
Barlow, Ltd................................ 294,700 2,397,899
Dimesion Data Holdings, Ltd................ 476,778 3,051,496
First SA Food Holdings, Ltd.*.............. 505,200 511,329
Investec Group, Ltd........................ 54,500 2,768,875
Pick' n Pay Stores, Ltd.................... 789,533 1,324,018
South African Breweries, Ltd............... 93,364 2,768,196
-------------
17,100,942
-------------
SRI LANKA -- 0.5%
Ceylon Brewery Ltd......................... 125,700 140,946
John Keells Holdings ltd................... 297,500 1,346,247
-------------
1,487,193
-------------
TAIWAN -- 0.1%
Compal Electronics Inc..................... 98,800 395,307
-------------
TURKEY -- 3.0%
Adana Cimento Sanayii T.A.S................ 1,352,000 89,003
Akbank T.A.S............................... 31,471,043 2,298,359
Alcatel Teletas Telekomunikasyon Endustri
ve Ticaret A.S........................... 9,896,000 1,078,981
Enka Holding Yatirim A.S................... 2,334,000 1,248,397
Migros Turk T.A.S.......................... 1,624,000 1,436,590
Tofas Turk Otomobil Fabrikasi A.S.......... 19,430,000 939,332
Turkiye Garanti Bankasi A.S................ 31,350,000 1,238,275
-------------
8,328,937
-------------
UNITED STATES OF AMERICA -- 1.7%
Central Asia Investment Co.*............... 48,567 437,103
Forsoft Ltd.*.............................. 104,700 2,015,475
Global Telesystems Group, Inc.*............ 25,500 1,192,125
Harken Energy Corp.*....................... 192,200 1,237,287
-------------
4,881,990
-------------
VENEZUELA -- 1.0%
F.V.I. Fondo de Valores Inmobiliarios
S.A.C.A. -- ADR*......................... 85,180 883,742
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
35
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
EMERGING COUNTRIES FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
VENEZUELA (CONTINUED)
<TABLE>
<S> <C> <C>
Corporacion Venezolana de Cementos S.A.C.A.
I........................................ 80,000 $ 121,955
Corporacion Venezolana de Cementos S.A.C.A.
II....................................... 1,107,633 1,688,515
-------------
2,694,212
-------------
TOTAL COMMON STOCKS
(Cost $231,823,680)..................................... 267,582,737
-------------
- --------------------------------------------------------------------------
EQUITY SWAPS -- (0.1)%
- --------------------------------------------------------------------------
COLOMBIA -- (0.1)%
Bavaria S.A. -- Equity Swap
(Cost $0)................................ 2,306,226 (381,025)
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- --------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.4%
- --------------------------------------------------------------------------
Associates First Capital Corp.
6.050%, 04/01/98......................... $ 6,346,000 6,346,000
Merrill Lynch & Co.
6.050%, 04/01/98......................... 562,000 562,000
-------------
TOTAL COMMERCIAL PAPER
(Cost $6,908,000)....................................... 6,908,000
-------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- --------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.0%
- --------------------------------------------------------------------------
J.P. Morgan & Co., Inc. $2,798,000 at 5.92%
(Agreement dated 03/31/98; to be
repurchased at $2,798,460 on on 04/01/98
collateralized by $2,870,000 FNMA Notes,
5.97% due 04/05/01 (Value $2,938,242)
(Cost $2,798,000)........................ $ 2,798,000 $ 2,798,000
-------------
- --------------------------------------------------------------------------
RIGHTS/WARRANTS -- 0.0%
- --------------------------------------------------------------------------
BRAZIL -- 0.0%
Companhia Paulista de Forca de Luz --
Rights
(Cost $0)................................ 44,171 2,195
-------------
TOTAL INVESTMENTS -- 98.3%
(Cost $241,529,680)..................................... 276,909,907
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.7%............. 4,802,947
-------------
NET ASSETS -- 100.0%...................................... $ 281,712,854
-------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
36
<PAGE>
INTERNATIONAL SMALL CAP GROWTH FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic
Portfolio Management and Research
Loretta J. Morris,
Partner, Portfolio Manager
Alex Muromcew,
Portfolio Manager
Melisa Grigolite,
Portfolio Manager
Pedro Marcal,
Partner, Portfolio Manager
Eswar Menon,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior Portfolio Manager
John Tribolet,
Portfolio Manager
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 Nicholas-Applegate International Small Cap Growth Fund
outperformed its benchmark for the year with its strength largely attributable
to outstanding selection of European stocks. The Fund's C Portfolio returned
35.6% for the period while its benchmark, the Salomon EPAC/ EMI, returned 7.8%.
Throughout the year, the Fund benefited from our avoidance of stocks affected
by the economic crisis in Southeast Asia in October.
In Europe, positive evidence of the coming EMU (European Monetary Union) may
be seen in falling interest rates, a shift toward equity investing and corporate
restructuring, especially in the banking and finance sectors. As beneficiaries
of these trends, Italian banks Banco Di Roma and Credito Italiano, performed
very well for the Fund throughout the year. Trends toward consolidation and
deregulation in European telecommunications companies led us to invest in Colt
Telecom, a telecommunications company in the United Kingdom that has expanded
across Europe into Spain and Switzerland. Irish telephone companies ESAT and
Global Telesystems are other holdings in the Fund that are benefiting from these
trends.
Ireland's, low inflation and falling interest rate environment, combined with
expectations of inclusion in the first round of EMU, contributed to many
excellent stock opportunities there.
In Japan, while the government has done little in the way of economic reform
to lead us to increase our relative underweight position there, our bottom-up
method has led us to invest in several Japanese technology companies that were
relatively unaffected by the Asian economic crisis. For example, Ibiden, a
producer of next generation plastic packaging for Intel microprocessors,
continued to be strong competitor in an environment of increasing globalization.
In Singapore, the Fund did well with the stocks of several technology Funds.
Natsteel Electronics, benefited from trends towards outsourcing. The company
makes printed circuit boards and provides outsourced contract manufacturing.
Our outlook for the Fund remains positive as we continue to find lucrative
stock opportunities in developed countries around the world.
REPRESENTATIVE HOLDINGS
Aixtron
Banco Di Roma
Benckiser NVB SHS NLG
Cap Gemini NV
Colt Telecom Group PLC
Global Telesystems Group
Misys Ord GBP.05
Ortivus AB B Shares Comm
Porsche AG
Telepizza
- --------------------------------------------------------------------------------
37
<PAGE>
INTERNATIONAL SMALL CAP GROWTH PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL SMALL SALOMON
CAP GROWTH PORTFOLIO A EPAC EMI
<S> <C> <C> <C>
06-07-90 $9,475.00 $10,000.00
06-30-90 $9,603.62 $10,135.00
09-30-90 $7,481.77 $7,880.19
12-31-90 $7,793.29 $8,303.82
03-31-91 $8,461.75 $9,051.40
06-30-91 $8,017.65 $8,511.83
09-30-91 $8,653.45 $9,033.08
12-31-91 $8,664.16 $8,857.15
03-31-92 $7,867.33 $7,967.30
06-30-92 $8,194.00 $8,329.44
09-30-92 $7,872.99 $7,906.76
12-31-92 $7,551.02 $7,941.40
03-31-93 $8,323.98 $8,594.15
06-30-93 $9,397.92 $9,479.41
09-30-93 $9,813.75 $10,092.36
12-31-93 $9,465.10 $9,764.47
03-31-94 $10,170.77 $10,693.45
06-30-94 $10,557.20 $11,128.80
09-30-94 $10,666.80 $11,018.18
12-31-94 $10,299.72 $10,685.83
03-31-95 $10,046.59 $10,605.69
06-30-95 $10,194.98 $10,573.78
09-30-95 $10,884.53 $10,994.72
12-31-95 $10,867.27 $11,197.92
03-31-96 $11,599.40 $11,834.25
06-30-96 $12,322.71 $12,376.53
09-30-96 $12,172.75 $12,059.30
12-31-96 $12,784.04 $11,922.57
03-31-97 $13,301.04 $11,686.63
06-30-97 $15,048.37 $12,529.00
09-30-97 $16,046.84 $11,886.80
12-31-97 $14,504.13 $10,697.60
03-31-98 $18,130.16 $12,592.69
Annualized Total Returns
As of 03/31/98
1 Year 5 Years Since Inception
29.15% 15.59% 7.91%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL SMALL SALOMON
CAP GROWTH PORTFOLIO B EPAC EMI
<S> <C> <C> <C>
6/7/90 $10,000.00 $10,000.00
6/30/90 $10,130.33 $10,135.00
9/30/90 $7,878.13 $7,880.19
12/31/90 $8,192.95 $8,303.82
3/31/91 $8,881.61 $9,051.40
6/30/91 $8,401.54 $8,511.83
9/30/91 $9,053.42 $9,033.08
12/31/91 $9,049.90 $8,857.15
3/31/92 $8,203.81 $7,967.30
6/30/92 $8,530.75 $8,329.44
9/30/92 $8,183.05 $7,906.76
12/31/92 $7,835.48 $7,491.40
3/31/93 $8,623.96 $8,594.15
6/30/93 $9,721.39 $9,479.41
9/30/93 $10,135.28 $10,092.36
12/31/93 $9,759.10 $9,764.47
3/31/94 $10,470.04 $10,693.45
6/30/94 $10,850.41 $11,128.80
9/30/94 $10,949.57 $11,018.18
12/31/94 $10,473.85 $10,685.83
3/31/95 $10,200.62 $10,605.69
6/30/95 $10,325.90 $10,573.78
9/30/95 $11,012.62 $10,994.72
12/31/95 $10,970.75 $11,197.92
3/31/96 $11,690.96 $11,834.25
6/30/96 $12,394.43 $12,376.53
9/30/96 $12,226.94 $12,059.30
12/31/96 $12,824.04 $11,922.57
3/31/97 $13,323.17 $11,686.63
6/30/97 $15,067.18 $12,529.00
9/30/97 $16,048.18 $11,886.80
12/31/97 $14,477.93 $10,697.60
3/31/98 $18,083.95 $12,592.89
Annualized Total Returns
As of 03/31/98
1 Year 5 Years Since Inception
30.73% 15.74% 7.88%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL SMALL SALOMON
CAP GROWTH PORTFOLIO C EPAC EMI
<S> <C> <C>
6/7/90 $10,000.00 $10,000.00
6/30/90 $10,130.33 $10,135.00
9/30/90 $7,878.13 $7,880.19
12/31/90 $8,192.95 $8,303.82
3/31/91 $8,881.61 $9,051.40
6/30/91 $8,401.54 $8,511.83
9/30/91 $9,053.42 $9,033.08
12/31/91 $9,049.90 $8,857.15
3/31/92 $8,203.81 $7,967.30
6/30/92 $8,530.75 $8,329.44
9/30/92 $8,183.05 $7,906.76
12/31/92 $7,835.48 $7,941.40
3/31/93 $8,623.96 $8,594.15
6/30/93 $9,721.39 $9,479.41
9/30/93 $10,135.28 $10,092.36
12/31/93 $9,759.10 $9,764.47
3/31/94 $10,470.04 $10,693.45
6/30/94 $10,850.41 $11,128.80
9/30/94 $11,032.00 $11,018.18
12/31/94 $10,615.09 $10,685.83
3/31/95 $10,157.46 $10,605.69
6/30/95 $10,336.92 $10,573.78
9/30/95 $11,027.85 $10,994.72
12/31/95 $10,993.78 $11,197.92
3/31/96 $11,711.74 $11,834.25
6/30/96 $12,420.73 $12,376.53
9/30/96 $12,259.19 $12,059.30
12/31/96 $12,853.30 $11,922.57
3/31/97 $13,349.57 $11,686.63
6/30/97 $15,082.18 $12,529.00
9/30/97 $16,060.73 $11,886.80
12/31/97 $14,490.35 $10,697.60
3/31/98 $18,105.61 $12,592.89
Annualized Total Returns
As of 03/31/98
1 Year 5 Years Since Inception
35.63% 15.99% 7.89%
</TABLE>
The graphs compare a $10,000 investment in the International Small Cap Growth
Portfolio A (front load), the International Small Cap Growth Portfolio B
(back-end load) and the International Small Cap Growth Portfolio C (level load)
with a similar investment in the Salomon EPAC EMI Index, on a cumulative and
average annual total return basis. Returns reflect the reinvestment of income
dividends and capital gains distributions, if any, as well as all fees and
expenses. Performance figures include the maximum applicable sales charge of
5.25% for Portfolio A shares. The effect of the maximum contingent deferred
sales charge for Portfolio B shares (maximum 5.00% declining to 0% over six
years) is included in Portfolio B performance. Performance is affected by a
12b-1 Plan which commenced at inception of each Portfolio.
Performance results reflect the total returns of a predecessor limited
partnership managed by Nicholas-Applegate Capital Management prior to the
effective date of the Portfolio's registration statement on 8/31/94, 5/31/95 and
8/31/94, respectively. Limited partnership returns are restated to reflect all
fees and expenses applicable to each Portfolio. If the limited partnership had
been registered as an investment company under federal securities laws, its
performance might have been adversely affected because of the additional
restrictions applicable to registered investment companies.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolio, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
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. 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 returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
Investments in overseas markets pose special risks, including currency
fluctuation and political risks, and the Fund's Share price is expected to be
more volatile than that of a U.S. only fund.
- --------------------------------------------------------------------------------
38
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
INTERNATIONAL SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMON STOCKS -- 98.0%
- ---------------------------------------------------------------------------------
ARGENTINA -- 0.3%
Disco S.A. -- ADR*......................... 6,900 $ 277,725
-------------
BELGIUM -- 0.8%
Barco N.V.................................. 2,465 637,107
-------------
BRAZIL -- 0.9%
Petroleo Brasileiro S.A. -- Preferred...... 1,500,000 356,185
Telecomunicacoes de Sao Paulo S.A. --
Preferred................................ 1,151,000 369,478
-------------
725,663
-------------
CANADA -- 4.0%
ATI Technologies, Inc.*.................... 19,900 811,599
JDS Fitel Inc.*............................ 14,000 765,401
Newcourt Credit Group, Inc................. 15,300 763,854
Yogen Fruz World Wide Inc.*................ 136,290 967,935
-------------
3,308,789
-------------
FINLAND -- 1.7%
Huhtamaki.................................. 6,700 364,098
Raisio Group PLC........................... 7,300 1,048,339
-------------
1,412,437
-------------
FRANCE -- 6.7%
Altran Technologies S.A.................... 6,000 760,206
Bouygues S.A............................... 4,000 697,259
Cap Gemini Sogeti S.A...................... 5,200 611,005
Coflexip S.A. -- ADR....................... 15,000 926,250
Dassault Systemes S.A...................... 14,600 587,941
Genset S.A. -- ADR*........................ 32,900 954,100
Synthelabo S.A............................. 4,800 666,270
TRANSGENE S.A. -- ADR*..................... 24,900 378,169
-------------
5,581,200
-------------
GERMANY -- 8.4%
Adidas AG.................................. 6,000 1,067,408
Aixtron AG*................................ 4,900 1,258,557
Kiekert AG................................. 16,000 668,347
Pfeiffer Vacuum Technology AG -- ADR....... 14,000 874,125
Porsche AG................................. 950 2,121,568
Wella Aktiengesellschaft AG -- Preferred... 1,100 942,769
-------------
6,932,774
-------------
HONG KONG -- 1.9%
Peak International Ltd.*................... 21,900 555,712
Novel Denim Holdings Ltd.*................. 14,200 388,725
Smartone Telecommunications................ 224,000 634,585
-------------
1,579,022
-------------
HUNGARY -- 1.4%
Gedeon Richter -- GDR*..................... 3,800 399,866
Gedeon Richter Rt.*........................ 1,800 189,410
OTP Bank Rt................................ 11,600 590,065
-------------
1,179,341
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
INDIA -- 0.4%
Infosys Technologies Ltd................... 8,000 $ 370,352
-------------
IRELAND -- 2.1%
Bank of Ireland............................ 1 9
Esat Telecom Group PLC -- ADR*............. 36,200 1,013,600
Ryanair Holdings PLC -- ADR*............... 20,700 765,900
-------------
1,779,509
-------------
ISRAEL -- 1.0%
Formula Systems Ltd.*...................... 7,600 310,980
NICE-Systems Ltd. -- ADR*.................. 11,300 519,800
-------------
830,780
-------------
ITALY -- 5.1%
Banca di Roma SpA*......................... 790,000 1,332,651
Credito Italiano SpA....................... 200,000 988,002
Italgas SpA................................ 195,000 980,953
La Rinascente SpA.......................... 87,000 930,675
-------------
4,232,281
-------------
JAPAN -- 7.2%
Argotechnos 21Corp......................... 7,000 110,235
Circle K Japan Co., Ltd.................... 900 37,120
Cresco Ltd................................. 15,400 209,027
Fuji Soft ABC, Inc......................... 15,200 496,974
Ibiden Co., Ltd............................ 40,000 518,931
Keyence Corp............................... 2,800 386,349
Kinden Corp................................ 24,000 311,359
Matsumotokiyoshi Co........................ 15,000 528,680
Meitec Corp................................ 22,000 687,958
Mimasu Semiconductor Industry Co........... 21,100 294,306
Nichiei Co., Ltd........................... 5,390 476,952
Orix Corp.................................. 6,200 421,234
Rohm Co., Ltd.............................. 3,000 274,463
Sony Chemicals Corp........................ 26,000 438,692
Tokyo Seimitsu Co., Ltd.................... 18,000 456,239
Tsudakoma Corp............................. 121,000 282,195
-------------
5,930,714
-------------
MEXICO -- 1.4%
Cifra S.A. de C.V. -- C.................... 281,800 504,195
Corporacion Interamericana de
Entretenimiento S.A.*.................... 88,900 690,927
-------------
1,195,122
-------------
NETHERLANDS -- 9.3%
Baan Co., N.V.............................. 15,000 717,376
Benckiser N.V. -- B*....................... 21,500 1,187,065
Benckiser N.V. -- B*....................... 2,800 154,000
Cap Gemini N.V............................. 24,000 1,473,607
CMG PLC.................................... 2,600 116,613
Fugro N.V.................................. 25,000 983,364
Internatio-Muller N.V...................... 32,250 1,147,874
Nutreco Holding NV......................... 32,400 1,072,395
Smit International N.V..................... 28,000 870,349
-------------
7,722,643
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
39
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
NORWAY -- 4.3%
ContextVision AB*.......................... 20,000 $ 354,143
Merkantildata ASA.......................... 25,000 1,242,781
Petroleum Geo-Services ASA*................ 4,100 239,309
Petroleum Geo-Services ASA -- ADR*......... 11,300 670,937
Tomra Systems ASA.......................... 38,900 1,030,662
-------------
3,537,832
-------------
PAKISTAN -- 0.3%
Hub Power Co............................... 254,000 270,389
-------------
PORTUGAL -- 3.7%
BPI -- SGPS, S.A........................... 19,400 746,235
Ibersol SGPS S.A.*......................... 8,800 743,442
Jeronimo Martins, SGPS, S.A................ 20,100 826,757
Telecel-Comunicacaoes Pessoais S.A.*....... 5,000 776,179
-------------
3,092,613
-------------
SINGAPORE -- 2.2%
Creative Technology Ltd.*.................. 17,000 382,500
Datacraft Asia Ltd......................... 161,000 521,640
Natsteel Electronics Ltd.*................. 192,000 373,312
Singapore Technologies Engineering Ltd.*... 656,372 581,202
-------------
1,858,654
-------------
SOUTH AFRICA -- 0.7%
Dimension Data Holdings Ltd................ 88,125 564,022
-------------
SPAIN -- 5.1%
Fomento de Construcciones y Contratas
S.A...................................... 18,800 993,820
Grupo Acciona S.A.......................... 4,500 905,673
Tele Pizza, S.A.*.......................... 15,600 2,300,103
-------------
4,199,596
-------------
SWEDEN -- 2.2%
Ortivus AB*................................ 36,000 1,247,393
Spectra Physics AB-A....................... 27,300 546,391
-------------
1,793,784
-------------
SWITZERLAND -- 4.4%
Disetronic Holding AG...................... 300 871,773
Kuoni Reisen Holdings AG................... 200 1,003,621
Logitech International S.A.*............... 5,000 783,874
Mettler-Toledo International Inc.*......... 46,000 1,020,625
-------------
3,679,893
-------------
TURKEY -- 0.3%
Tofas Turk Otomobil Fabrikasi A.S.......... 4,380,000 211,748
-------------
UNITED KINGDOM -- 17.0%
Admiral PLC................................ 52,300 821,072
Amvescap PLC............................... 76,900 831,893
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
UNITED KINGDOM (CONTINUED)
<TABLE>
<S> <C> <C>
Arriva PLC................................. 106,100 $ 869,714
British Aerospace PLC...................... 155 5,108
British Energy PLC......................... 87,900 772,413
British Land Corp. PLC..................... 51,100 641,787
Capita Group PLC........................... 139,400 1,049,303
CMG PLC.................................... 11,800 520,680
COLT Telecom Group PLC*.................... 62,300 1,485,616
ECsoft Group PLC -- ADR*................... 30,600 765,000
FKI PLC.................................... 109,800 372,337
Guardian Royal Exchange PLC................ 66,200 473,917
Hays PLC................................... 45,200 812,169
Misys PLC.................................. 32,600 1,614,821
National Express Group PLC................. 50,100 714,383
Orange PLC*................................ 183,700 1,170,502
Virgin Express Holdings PLC -- ADR*........ 50,400 1,197,000
-------------
14,117,715
-------------
UNITED STATES OF AMERICA -- 5.2%
Getty Images, Inc.......................... 37,700 947,212
Global TeleSystems Group, Inc.*............ 27,000 1,262,250
Optimal Robotics Corp.*.................... 41,700 573,375
Shire Pharmaceuticals Group PLC -- ADR*.... 47,400 1,016,138
Syntel, Inc.*.............................. 11,600 475,600
-------------
4,274,575
-------------
VENEZUELA -- 0.0%
C.A. La Electricidad de Caracas............ 2 2
-------------
TOTAL COMMON STOCKS
(Cost $60,514,954).......................................... 81,296,282
-------------
- ---------------------------------------------------------------------------------
RIGHTS/WARRANTS -- 0.0%
- ---------------------------------------------------------------------------------
FRANCE -- 0.0%
Cap Gemini S.A. Rights* (Cost $0).......... 5,200 16,073
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER -- 3.6%
- ---------------------------------------------------------------------------------
Associates First Capital Corp.
6.050%, 4/01/1998
(Cost $2,984,000)........................ $ 2,984,000 2,984,000
-------------
TOTAL INVESTMENTS -- 101.6%
(Cost $63,498,954).......................................... 84,296,355
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.6%)............... (1,356,118)
-------------
NET ASSETS -- 100.0%.......................................... $ 82,940,237
-------------
</TABLE>
- ---------------
* Non-Income Producing Securities.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
40
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
INTERNATIONAL SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Advertising................................. 1.1%
Agriculture................................. 1.3
Airlines.................................... 2.4
Automobiles................................. 0.3
Automotive Equipment........................ 3.4
Biotechnology............................... 1.6
Chemicals................................... 1.6
Computers/Office Automation................. 3.9
Department/Discount Stores.................. 0.6
Drugs/Pharmaceuticals....................... 2.7
Electric Utilities.......................... 1.7
Entertainment............................... 0.8
Finance Companies........................... 5.1
Food Chains................................. 1.0
Gas Utilities............................... 1.2
Grocery Products............................ 1.7
Industrial Engineering/Construction......... 6.4
Investment Companies........................ 1.9
Machinery/Equipment......................... 2.8
Medical Supplies............................ 2.6
Military/Defense Technology................. 0.7
Money Center Banks.......................... 2.8
Oilfield Services/Equipment................. 2.6
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Other Commercial/Industrial Services........ 1.7%
Other Communication......................... 3.2
Other Consumer Services..................... 1.2
Other Production/Manufacturing.............. 2.8
Other Retail Trade.......................... 2.6
Other Transportation........................ 1.9
Property-Casualty Insurance................. 0.6
Real Estate Development/Investment.......... 0.8
Recreational Equipment...................... 1.3
Regional/Commercial Banks................... 0.7
Rental/Leasing Companies.................... 0.5
Restaurants................................. 4.7
Semiconductors/Electric Companies........... 5.8
Soaps/Cosmetics............................. 1.1
Software.................................... 8.7
Specialty Stores............................ 2.2
Telecommunication Equipment................. 2.3
Telecommunication Services.................. 5.4
Telephone................................... 2.0
Textiles.................................... 0.5
Wholesale Distribution...................... 1.4
Liabilities in Excess of Other Assets....... (1.6)
-----
NET ASSETS.................................. 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
41
<PAGE>
INTERNATIONAL CORE GROWTH FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic
Portfolio Management and Research
Loretta J. Morris,
Partner, Portfolio Manager
Alex Muromcew,
Portfolio Manager
Melisa Grigolite,
Portfolio Manager
Pedro Marcal,
Partner, Portfolio Manager
Eswar Menon,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior Portfolio Manager
John Tribolet,
Portfolio Manager
GOAL: The International Core Growth Fund seeks to maximize long-term capital
appreciation through investment in a portfolio of equity securities primarily of
mid- to large-sized non-U.S. companies.
REVIEW AND OUTLOOK: The Nicholas-Applegate International Core Growth Fund
outperformed its benchmark for the year, with the C Portfolio delivering a 35.3%
return, versus 18.6% for the MSCI EAFE.
Outstanding stock selection, particularly in Europe, contributed to
outstanding performance. Our process of selecting companies based on individual
merit played an integral role in the Fund's performance, especially in light of
the Southeast Asian economic crisis. By investing company-by-company, we avoided
stocks negatively affected by the crisis.
While many technology stocks experienced a setback in light of the Asian
economic crisis, we invested in the stocks that maintained solid Fundamentals
and solid earnings growth. For example, stocks such as Nokia, a Finnish supplier
of telecommunications systems and the world's largest maker of mobile phones,
was among the Fund's best performers.
In Japan, we maintained an underweight position relative to the benchmark.
While the stocks of Japanese technology companies were also hard hit by the
Asian economic crisis, we continue to hold companies such as Sony, which has
performed very well in an environment of increasing globalization.
In Europe, positive evidence of the coming EMU (European Monetary Union) was
illustrated with falling interest rates, a shift toward equity investing and
corporate restructuring, especially in the banking and finance sectors.
In Ireland, low inflation, falling interest rates and expectations of
inclusion in the first round of EMU contributed to many excellent stock
opportunities. The Bank of Ireland benefited from this economic environment and
was a strong performer for the Fund.
The July 1, 1997 handover of Hong Kong to China created opportunities in many
"red chips" -- stocks of mainland Chinese companies listed in Hong Kong.
Our outlook for the Fund remains positive as we continue to find lucrative
stock opportunities in developed countries around the world.
REPRESENTATIVE HOLDINGS
AXA UAP, France
Banco di Roma, Italy
Bank of Ireland GDP, Ireland
Bayerische Motoren Werk, Germany
Mannesmann, Germany
Nokia, Finland
Orange, United Kingdom
Raision Tehtaat Oy, Finland
Tabacalera, Spain
Telepizza, Spain
- --------------------------------------------------------------------------------
42
<PAGE>
INTERNATIONAL CORE GROWTH PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL CORE GROWTH PORTFOLIO A MSCI EAFE INDEX
<S> <C> <C>
12/27/96 $9,475.00 $10,000.00
12/31/96 $9,567.40 $9,979.00
1/31/97 $10,407.38 $9,629.74
2/28/97 $10,499.78 $9,787.66
3/31/97 $10,684.57 $9,822.90
4/30/97 $10,827.37 $9,874.96
5/31/97 $11,826.95 $10,517.82
6/30/97 $12,498.94 $11,097.35
7/31/97 $13,296.92 $11,277.13
8/31/97 $12,608.13 $10,434.73
9/30/97 $13,532.11 $11,019.07
10/31/97 $12,406.54 $10,171.71
11/30/97 $12,258.06 $10,067.95
12/31/97 $12,412.03 $10,155.54
1/31/98 $12,865.40 $10,619.65
2/28/98 $13,737.92 $11,301.12
3/31/98 $14,542.01 $11,649.19
Annualized Total Returns
As of 03/31/98
1 Year Since Inception
28.96% 34.69%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL CORE GROWTH PORTFOLIO B MSCI EAFE INDEX
<S> <C> <C>
12/27/96 $10,000.00 $10,000.00
12/31/96 $10,094.67 $ 9,979.00
1/31/97 $10,971.39 $ 9,629.74
2/28/97 $11,061.95 $ 9,787.66
3/31/97 $11,274.34 $ 9,822.90
4/30/97 $11,407.08 $ 9,874.96
5/31/97 $12,469.03 $10,517.82
6/30/97 $13,176.99 $11,097.35
7/31/97 $14,017.70 $11,277.13
8/31/97 $13,256.64 $10,434.73
9/30/97 $13,730.09 $11,019.07
10/31/97 $13,026.55 $10,171.71
11/30/97 $12,862.87 $10,067.95
12/31/97 $13,023.54 $10,155.54
1/31/98 $13,496.64 $10,619.65
2/28/98 $14,407.13 $11,301.12
3/31/98 $14,855.13 $11,649.19
Annualized Total Returns
As of 03/31/98
1 Year Since Inception
30.31% 36.99%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL CORE GROWTH PORTFOLIO C MSCI EAFE INDEX
<S> <C> <C>
12/27/96 $10,000.00 $10,000.00
12/31/96 $10,088.50 $9,979.00
1/31/97 $10,964.60 $9,629.74
2/28/97 $11,061.95 $9,787.66
3/31/97 $11,221.24 $9,822.90
4/30/97 $11,362.83 $9,874.96
5/31/97 $12,415.93 $10,517.82
6/30/97 $13,106.19 $11,097.35
7/31/97 $13,929.20 $11,277.13
8/31/97 $13,185.84 $10,434.73
9/30/97 $14,050.44 $11,019.07
10/31/97 $12,964.60 $10,171.71
11/30/97 $12,805.31 $10,067.95
12/31/97 $12,964.60 $10,155.54
1/31/98 $13,433.63 $10,619.65
2/28/98 $14,336.28 $11,301.12
3/31/98 $15,176.99 $11,649.19
Annualized Total Returns
As of 03/31/98
1 Year Since Inception
35.25% 39.34%
</TABLE>
The graphs compare a $10,000 investment in the International Core Growth
Portfolio A (front load), the B (back-end load) and the C (level load) with a
similar investment in the MSCI EAFE Index, on a cumulative and average annual
total return basis. The Portfolios calculate their performance based upon the
historical performance of their corresponding series ("Fund") of
Nicholas-Applegate Investment Trust, adjusted to reflect sales charges and
Portfolio operating expenses. The effective date of the Portfolios' registration
statements was on 2/28/97. Performance returns within are calculated on a total
return basis and reflect all fees and expenses of the Portfolio with
reinvestment of dividends and capital gains, if any. Performance figures include
the maximum applicable sales charge of 5.25% for Portfolio A shares. The effect
of the maximum contingent deferred sales charge for Portfolio B (maximum 5.00%
declining to 0% over six years) is included in Portfolio B performance.
Performance is affected by a 12b-1 Plan which commenced at inception of each
Portfolio.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolio, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
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 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 returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
Investments in overseas markets pose special risks, including currency
fluctuation and political risks, and the Fund's Share price is expected to be
more volatile than that of a U.S. only fund.
- --------------------------------------------------------------------------------
43
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
INTERNATIONAL CORE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMON STOCKS -- 94.2%
- ---------------------------------------------------------------------------------
AUSTRALIA -- 1.3%
News, Ltd. -- ADR.......................... 4,800 $ 129,300
Telstra Corp., Ltd......................... 153,500 395,983
The News Corp., Ltd........................ 34,200 226,120
-------------
751,403
-------------
BRAZIL -- 1.0%
Telecomunicacoes de Sao Paulo S.A. --
Preferred................................ 864,000 277,349
Telecomunicacoes do Rio de Janeiro S.A..... 2,000,000 282,309
-------------
559,658
-------------
CANADA -- 1.0%
Newcourt Credit Group, Inc................. 11,800 589,116
-------------
DENMARK -- 1.5%
Tele Danmark A/S -- B...................... 9,500 862,458
-------------
FINLAND -- 3.3%
Nokia Oyj Corp. -- ADR..................... 9,500 1,025,406
Raisio Group PLC........................... 6,200 890,370
-------------
1,915,776
-------------
FRANCE -- 11.0%
AXA -- UAP................................. 10,000 1,029,748
Banque Nationale de Paris S.A.............. 7,500 582,865
Bouygues S.A............................... 3,400 592,670
Cap Gemini Sogeti S.A...................... 4,400 517,005
Compagnie Financiere de Paribas S.A. --
A........................................ 4,300 435,157
Dassault Systemes S.A...................... 11,400 459,077
Etablissements Economiques du Casino
Guichard-Perrachon S.A................... 10,000 674,501
Groupe Danone -- ADR....................... 17,500 842,187
Synthelabo S.A............................. 5,400 749,553
Total S.A. -- B............................ 4,500 540,376
-------------
6,423,139
-------------
GERMANY -- 9.6%
Adidas AG.................................. 3,400 604,864
Bayerische Motoren Werke AG................ 800 900,646
Bayerische Motoren Werke AG................ 6,700 478,587
Deutsche Bank AG........................... 5,600 419,847
Deutsche Lufthansa AG...................... 21,100 443,829
Mannesmann AG.............................. 1,400 1,012,902
Porsche AG................................. 320 714,633
SAP AG..................................... 1,200 477,576
Volkswagen AG.............................. 710 555,917
-------------
5,608,801
-------------
HONG KONG -- 2.4%
China Telecom, Ltd.*....................... 186,000 376,894
Dairy Farm International Holdings, Ltd. --
ADR...................................... 263,700 316,440
HSBC Holdings PLC.......................... 8,800 269,177
Hutchison Whampoa, Ltd..................... 35,000 246,191
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
HONG KONG (CONTINUED)
<TABLE>
<S> <C> <C>
Sun Hung Kai Properties, Ltd............... 31,000 $ 211,053
-------------
1,419,755
-------------
HUNGARY -- 1.6%
OTP Bank Rt................................ 5,500 279,772
Magyar Tavkozlesi Rt. -- ADR*.............. 8,400 261,450
Richter Gedeon Rt.......................... 3,900 410,389
-------------
951,611
-------------
IRELAND -- 1.8%
Bank of Ireland............................ 26,910 532,029
Ryanair Holdings PLC -- ADR*............... 13,300 492,100
-------------
1,024,129
-------------
ISRAEL -- 1.2%
Formula Systems, Ltd.*..................... 4,600 188,225
New Dimension Software, Ltd. -- ADR*....... 5,100 113,794
NICE-Systems, Ltd. -- ADR*................. 8,200 377,200
-------------
679,219
-------------
ITALY -- 6.5%
Banca di Roma SpA*......................... 555,000 936,229
Credito Italiano SpA....................... 170,000 839,802
La Rinascente SpA.......................... 35,300 377,618
Luxottica Group SpA -- ADR................. 5,400 505,913
Telecom Italia SpA......................... 72,400 570,543
Telecom Italia Mobile SpA.................. 102,500 550,773
-------------
3,780,878
-------------
JAPAN -- 5.9%
Advantest Corp............................. 4,290 278,277
Bridgestone Corp........................... 13,000 294,411
Credit Saison Co., Ltd..................... 11,000 243,343
Ibiden Co., Ltd............................ 25,000 324,332
Keyene Corp................................ 1,800 248,367
Minebea Co., Ltd........................... 25,000 273,713
Nichiei Co., Ltd........................... 3,520 311,478
Nippon Telegraph & Telephone Corp.......... 370 307,984
Orix Corp.................................. 3,800 258,176
Rohm Co., Ltd.............................. 2,000 182,976
Sankyo Co., Ltd............................ 10,000 277,463
Sony Corp.................................. 5,100 432,167
-------------
3,432,687
-------------
MEXICO -- 0.9%
Cifra S.A. de C.V. -- C.................... 121,199 216,850
Corporation Interamericana de
Entretenimiento S.A.*.................... 42,100 327,200
-------------
544,050
-------------
NETHERLANDS -- 4.6%
Aegon NV................................... 8 973
AKZO Nobel NV.............................. 3,800 771,965
ASM Lithography Holding NV -- ADR*......... 5,600 517,650
Baan Co., NV*.............................. 10,360 495,468
CMG, PLC -- ADR............................ 1,800 80,732
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
44
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
NETHERLANDS (CONTINUED)
<TABLE>
<S> <C> <C>
Hagemeyer NV............................... 8,800 $ 426,348
Internatio -- Muller NV.................... 11,400 405,760
-------------
2,698,896
-------------
NORWAY -- 1.5%
Petroleum Geo-Services ASA -- ADR*......... 14,550 863,906
-------------
PORTUGAL -- 3.4%
BPI-SGPS, S.A.............................. 17,300 665,457
Jeronimo Martins, SGPS, S.A.*.............. 13,900 571,738
Portugal Telecom S.A....................... 9,450 491,537
Telecel-Comunicacaoes Pessoais S.A.*....... 1,600 248,377
-------------
1,977,109
-------------
RUSSIA -- 0.3%
Gazprom -- ADR............................. 7,700 163,240
-------------
SINGAPORE -- 1.7%
Natsteel Electronics, Ltd.*................ 109,000 211,932
Singapore Technologies Engineering,
Ltd.*.................................... 393,659 348,576
Straits Steamship Land, Ltd................ 295,000 407,350
-------------
967,858
-------------
SOUTH AFRICA -- 0.7%
Dimension Data Holdings, Ltd.*............. 60,058 384,386
-------------
SPAIN -- 7.4%
Argentaria S.A............................. 6,020 498,439
Banco Bilbao Vizcaya S.A................... 10,500 492,866
Fomento de Construcciones y Contratas
S.A...................................... 3,200 169,161
Grupo Acciona S.A.......................... 2,000 402,521
Tabacalera S.A. -- A....................... 8,500 953,886
Telefonica de Espana -- ADR................ 4,500 595,125
Tele Pizza S.A.*........................... 8,230 1,213,452
-------------
4,325,450
-------------
SWEDEN -- 2.8%
Nordbanken Holding AB*..................... 50,900 337,454
Ortivus AB*................................ 15,000 519,747
Telefonaktiebolaget LM Ericsson -- ADR..... 16,600 789,538
-------------
1,646,739
-------------
SWITZERLAND -- 5.4%
Credit Suisse Group........................ 2,800 560,191
Kuoni Reisen Holdings AG................... 90 451,630
Nestle S.A................................. 300 573,245
Novartis AG................................ 230 407,050
Swiss Reinsurance Co....................... 300 659,044
Union Bank of Switzerland.................. 300 490,003
-------------
3,141,163
-------------
TURKEY -- 0.2%
Tofas Turk Otomobil Fabrikasi AS*.......... 2,660,000 128,596
-------------
UNITED KINGDOM -- 16.1%
Amvescap PLC............................... 55,000 594,982
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
</TABLE>
UNITED KINGDOM (CONTINUED)
<TABLE>
<S> <C> <C>
Bank of Ireland............................ 40,900 $ 807,506
British Aerospace PLC...................... 16,400 540,477
British Energy PLC......................... 68,000 597,544
British Land Corp. PLC..................... 32,700 410,693
British Petroleum Co. PLC.................. 34,000 490,789
CMG PLC.................................... 8,000 353,004
Glaxo Wellcome PLC......................... 14,500 390,205
Guardian Royal Exchange PLC................ 47,100 337,183
Hays PLC................................... 30,000 539,050
Lloyds TSB Group PLC....................... 34,300 533,603
Misys PLC.................................. 14,371 711,858
National Grid Holdings PLC................. 44,030 260,275
Orange PLC*................................ 148,100 943,666
Rolls-Royce PLC............................ 84,000 392,457
Standard Chartered Bank PLC................ 39,700 575,395
Unilever PLC............................... 34,500 326,419
Viridian Group PLC......................... 40,680 358,323
Zeneca Group PLC........................... 5,500 237,072
-------------
9,400,501
-------------
UNITED STATES OF AMERICA -- 1.1%
Syntel, Inc.*.............................. 15,000 615,000
-------------
TOTAL COMMON STOCK
(Cost $45,887,890).......................................... 54,855,524
-------------
- ---------------------------------------------------------------------------------
WARRANT/RIGHTS -- 0.0%
- ---------------------------------------------------------------------------------
FRANCE
Cap Gemini SA -- Rights* (Cost $0)......... 4,400 13,600
-------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------------------
CORPORATE BONDS -- 0.1%
- ---------------------------------------------------------------------------------
UNITED KINDGOM
Viridian Group PLC Loan Notes
7.650%, 02/14/03
(Cost $35,991)........................... $ 45,200 35,878
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.8%
- ---------------------------------------------------------------------------------
Associates First Capital Corp.
6.050%, 04/01/98
(Cost $1,641,000)........................ 1,641,000 1,641,000
-------------
TOTAL INVESTMENTS -- 97.1%
(Cost $47,564,881).......................................... 56,546,002
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.9%................. 1,679,051
-------------
NET ASSETS -- 100.0%.......................................... $ 58,225,053
-------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
45
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
INTERNATIONAL CORE GROWTH FUND
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Aerospace................................... 1.6%
Airlines.................................... 1.6
Automobiles................................. 4.8
Automotive Equipment........................ 0.5
Chemicals................................... 1.3
Computers/Office Automation................. 0.7
Consumer Electrical......................... 0.7
Department/Discount Stores.................. 0.4
Drugs/Pharmaceuticals....................... 4.2
Electric Utilities.......................... 2.2
Electronic Instruments...................... 0.9
Entertainment............................... 0.6
Finance Companies........................... 4.4
Food Chains................................. 1.0
Grocery Products............................ 6.2
Industrial Engineering/Contruction.......... 2.0
Investment Companies........................ 1.0
Machinery/Equipment......................... 2.2
Medical Supplies............................ 1.8
Military/Defense Technology................. 0.6
Money Center Banks.......................... 10.1
Multi-Line Insurers......................... 2.9
Oil/Gas Production.......................... 2.1
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Oilfield Services/Equipment................. 1.5%
Other Commercial/Industrial Services........ 1.7
Other Consumer Durables..................... 0.7
Other Consumer Services..................... 0.8
Other Production/Manufacturing.............. 0.4
Other Retail Trade.......................... 0.6
Property-Casualty Insurance................. 0.6
Publishing.................................. 0.6
Real Estate Development/Investment.......... 1.8
Recreational Equipment...................... 1.0
Regional/Commercial Banks................... 5.2
Rental/Leasing Companies.................... 0.4
Restaurants................................. 2.1
Semiconductors/Electric Companies........... 2.1
Software.................................... 6.2
Telecommunication Equipment................. 3.8
Telecommunication Services.................. 3.4
Telephone................................... 7.2
Textiles.................................... 0.9
Tobacco Products............................ 1.6
Wholesale Distribution...................... 0.7
Other Assets in Excess of Liabilities....... 2.9
-----
NET ASSETS.................................. 100.0%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
46
<PAGE>
WORLDWIDE GROWTH FUND
PORTFOLIOS A, B, & C
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Catherine Somhegyi,
Partner, Chief Investment Officer,
Equities
Lawrence S. Speidell, CFA,
Partner, Director of Global/Systematic
Portfolio Management and Research
Loretta J. Morris,
Partner, Portfolio Manager
Alex Muromcew,
Portfolio Manager
Melisa Grigolite,
Portfolio Manager
Pedro Marcal,
Partner, Portfolio Manager
Eswar Menon,
Portfolio Manager
Ernesto Ramos, Ph.D.,
Senior Portfolio Manager
John Tribolet,
Portfolio Manager
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 Nicholas-Applegate Worldwide Growth Fund outperformed
its benchmark during the fiscal year on the strength of our superior stock
selection. The Fund's C Portfolio returned 33.7% for the period, while its
benchmark, the MSCI World Index, returned 32.0%.
Domestically, the Fund benefited from the stocks of companies thriving in the
strong economic environment. A combination of low interest rates, a high level
of consumer confidence and an overall market that achieved the returns expected
by analysts for all of 1998 in just the first quarter contributed to the growth
of many domestic companies. The Gap, K-Mart and Costco were among the best
performing domestic holdings, benefiting from increased consumer spending.
Though the technology sector was hit hard by the Asian economic crisis, the
Fund benefited from our avoidance of stocks with little to no exposure to Asia.
Companies such as Nokia, Finnish supplier of telecommunications systems and the
world's largest maker of mobile phones, delivered strong results for the fiscal
year.
Stock selection in Europe was a major factor in the Fund's outstanding
performance during the year. In Europe, anticipation of the European Monetary
Union (EMU) may be seen in positive changes such as falling interest rates, a
shift toward equity investing and corporate restructuring, especially in the
banking and financial sectors. Italian banks, Credito Italiano and Banco di Roma
were both beneficiaries of these trends, performing very well for the Fund.
In Ireland, low inflation, falling interest rates and expectations of
inclusion in the first round of EMU contributed to our finding many excellent
stock opportunities. The Bank of Ireland benefited from this economic
environment and was a strong performer for the Fund.
We maintained the Fund's underweight position in Japan relative to the
benchmark as few companies met our strict criteria in an environment where the
government has done little to stimulate economic reform.
As we continue to find stocks around the world benefiting from positive
change, our outlook for the Fund remains extremely positive.
REPRESENTATIVE HOLDINGS
Banco Di Roma
Bank Of Ireland GBP
British Pound Sterling
Credito Italiano
Costco Companies Inc.
Groupe Danone
Mannesmann Ag
Nokia Corp
Raision Tehtaat Oy
Tabacalera
- --------------------------------------------------------------------------------
47
<PAGE>
WORLDWIDE GROWTH PORTFOLIOS
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
<S> <C> <C>
1 Year 3 Years Since Inception
27.48% 19.77% 15.44%
Worldwide Growth MSCI World
Portfolio A Index
19-Apr-93 $9,475.00 $10,000.00
30-Jun-93 $9,975.28 $10,283.06
30-Sep-93 $10,756.02 $10,765.74
31-Dec-93 $10,809.08 $10,940.63
31-Mar-94 $11,324.52 $11,007.30
30-Jun-94 $11,127.44 $11,338.33
30-Sep-94 $11,680.78 $11,581.61
31-Dec-94 $11,073.73 $11,498.33
31-Mar-95 $11,222.95 $12,017.66
30-Jun-95 $11,866.95 $12,530.40
30-Sep-95 $12,966.47 $13,212.41
31-Dec-95 $12,705.93 $13,839.58
31-Mar-96 $13,444.27 $14,402.82
30-Jun-96 $14,369.22 $14,820.99
30-Sep-96 $14,369.22 $15,018.73
31-Dec-96 $14,983.16 $15,705.98
31-Mar-97 $15,126.54 $15,751.02
30-Jun-97 $17,366.84 $18,121.07
30-Sep-97 $19,060.51 $18,639.41
31-Dec-97 $17,572.90 $18,179.79
31-Mar-98 $20,352.56 $20,783.77
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
<S> <C> <C>
1 Year 3 Years Since Inception
29.03% 20.52% 15.78%
Worldwide Growth MSCI World
Portfolio B Index
19-Apr-93 $10,000.00 $10,000.00
30-Jun-93 $10,514.56 $10,283.06
30-Sep-93 $11,310.68 $10,765.74
31-Dec-93 $11,349.51 $10,940.63
31-Mar-94 $11,883.50 $11,007.30
30-Jun-94 $11,650.49 $11,338.33
30-Sep-94 $12,223.30 $11,581.61
31-Dec-94 $11,563.11 $11,498.33
31-Mar-95 $11,708.74 $12,017.66
30-Jun-95 $12,339.81 $12,530.40
30-Sep-95 $13,475.73 $13,212.41
31-Dec-95 $13,165.05 $13,839.58
31-Mar-96 $13,922.33 $14,402.82
30-Jun-96 $14,854.37 $14,820.99
30-Sep-96 $14,825.24 $15,018.73
31-Dec-96 $15,446.60 $15,705.98
31-Mar-97 $15,553.40 $15,751.02
30-Jun-97 $17,854.37 $18,121.07
30-Sep-97 $19,572.82 $18,639.41
31-Dec-97 $18,004.85 $18,179.79
31-Mar-98 $20,646.63 $20,783.77
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS AS OF 03/31/98
<S> <C> <C>
1 Year 3 Years Since Inception
33.72% 21.16% 15.98%
Worldwide Growth MSCI World
Portfolio C Index
19-Apr-93 $10,000.00 $10,000.00
30-Jun-93 10,520.00 10,283.06
30-Sep-93 11,320.00 10,765.74
31-Dec-93 11,352.00 10,940.63
31-Mar-94 11,888.00 11,007.30
30-Jun-94 11,656.00 11,338.33
30-Sep-94 12,224.00 11,581.61
31-Dec-94 11,564.96 11,498.33
31-Mar-95 11,710.94 12,017.66
30-Jun-95 12,351.64 12,530.40
30-Sep-95 13,478.94 13,212.41
31-Dec-95 13,181.86 13,839.58
31-Mar-96 13,929.89 14,402.82
30-Jun-96 14,869.07 14,820.99
30-Sep-96 14,844.14 15,018.73
31-Dec-96 15,455.91 15,705.98
31-Mar-97 15,575.58 15,751.02
30-Jun-97 17,858.52 18,121.07
30-Sep-97 19,561.53 18,639.41
31-Dec-97 18,017.94 18,179.79
31-Mar-98 20,829.00 20,783.77
</TABLE>
The graphs compare a $10,000 investment in the Worldwide Growth Portfolio A
(front load), the Worldwide Growth Portfolio B (back-end load) and the Worldwide
Growth Portfolio C (level load) with a similar investment in the Morgan Stanley
Capital International ("MSCI") World Index, on a cumulative and average annual
total return basis. Portfolio B 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 Portfolio B's registration
statement was on 5/31/95. Performance returns within are calculated on a total
return basis and reflect all fees and expenses of the Portfolio with
reinvestment of dividends and capital gains, if any. Performance figures include
the maximum applicable sales charge of 5.25% for Portfolio A shares. The effect
of the maximum contingent deferred sales charge for Portfolio B shares (maximum
5.00% declining to 0% over six years) is included in Portfolio B performance.
Performance is affected by a 12b-1 Plan which commenced at inception of each
Portfolio.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the Portfolio, subject to possible later reimbursement during a five
year period. Total return results may have been lower had there been no waiver
or deferral.
The MSCI World Index consists of more than 1,400 securities listed on exchanges
in the U.S., Europe, Canada, Australia, New Zealand, and the Far East. The Index
is a market-value weighted combination of countries and is unmanaged. Index
returns reflect the reinvestment of income dividends and capital gains
distributions, if any, but do not reflect fees, brokerage commissions, or other
expenses of investing.
Past performance is no guarantee of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
Investments in overseas markets pose special risks, including currency
fluctuation and political risks, and the Fund's Share price is expected to be
more volatile than that of a U.S. only fund.
- --------------------------------------------------------------------------------
48
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS -- 91.6%
- ----------------------------------------------------------------------------
AUSTRALIA -- 0.4%
The News Corp. Ltd......................... 79,200 $ 523,647
------------
BRAZIL -- 1.0%
Petroleo Brasileiro S.A. PN................ 1,950,000 463,040
Telecomunicacoes Brasileiras S.A. -- ADR... 3,500 454,344
Telecomunicacoes de Sao Paulo S.A. --
Preferred................................ 1,455,000 467,064
------------
1,384,448
------------
CANADA -- 0.7%
Newcourt Credit Group, Inc................. 19,300 963,555
------------
DENMARK -- 1.1%
Tele Danmark A/S -- B...................... 17,000 1,543,346
------------
FINLAND -- 2.6%
Nokia Oyj Corp. -- ADR..................... 18,000 1,942,875
Raisio Group PLC........................... 13,000 1,866,904
------------
3,809,779
------------
FRANCE -- 7.2%
AXA-UAP.................................... 14,000 1,441,647
Banque Nationale de Paris S.A.............. 13,000 1,010,299
Bouygues S.A............................... 5,000 871,574
Cap Gemini Sogeti S.A...................... 8,200 963,508
Compagnie Financiere de Paribas S.A. -- A.. 10,000 1,011,994
Compagnie Francaise de Petroleum Total S.A.
-- B..................................... 8,000 960,668
Dassault Systemes S.A...................... 21,800 877,884
Etablissements Economiques du Casino
Guichard-Perrachon S.A................... 10,000 674,501
Groupe Danone -- ADR....................... 36,000 1,732,500
Synthelabo S.A............................. 7,000 971,643
------------
10,516,218
------------
GERMANY -- 6.2%
Adidas AG.................................. 5,800 1,031,828
Bayerische Motoren Werke AG................ 1,000 1,125,807
Deutsche Bank AG........................... 18,100 1,357,006
Deutsche Lufthansa AG...................... 71,000 1,493,452
Mannesmann AG.............................. 2,800 2,025,804
SAP AG..................................... 2,600 1,034,748
Volkswagen AG.............................. 1,270 994,387
------------
9,063,032
------------
HONG KONG -- 1.7%
China Telecom Ltd.*........................ 305,000 618,026
Dairy Farm International Holdings, Ltd..... 724,000 868,800
HSBC Holdings PLC.......................... 18,300 559,766
Hutchison Whampoa Ltd...................... 65,600 461,432
------------
2,508,024
------------
HUNGARY -- 1.4%
Magyar Tavkozlesi Rt. -- ADR*.............. 23,600 734,550
OTP Bank Rt................................ 12,900 656,193
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
HUNGARY (CONTINUED)
<TABLE>
<S> <C> <C>
Richter Gedeon Rt.......................... 6,600 $ 694,505
------------
2,085,248
------------
INDIA -- 0.3%
Bombay Suburban Electric Supply Co.,
Ltd...................................... 2,500 13,272
HDFC Bank Ltd.............................. 250,000 452,429
------------
465,701
------------
IRELAND -- 0.0%
Bank of Ireland............................ 0 17
------------
ISRAEL -- 0.4%
Formula Systems Ltd.*...................... 15,300 626,052
------------
ITALY -- 6.1%
Banca di Roma SpA*......................... 1,195,000 2,015,845
Credito Italiano SpA....................... 475,000 2,346,505
Italgas SpA................................ 215,000 1,081,563
Luxottica Group SpA -- ADR................. 10,000 936,875
Telecom Italia SpA......................... 130,300 1,026,820
Telecom Italia Mobile SpA.................. 260,300 1,398,694
------------
8,806,302
------------
JAPAN -- 3.4%
Bridgestone Corp........................... 27,000 611,469
Ibiden Co., Ltd............................ 73,000 947,049
Nichiei Co., Ltd........................... 9,240 817,631
Nippon Telegraph & Telephone Corp.......... 70 58,267
Orix Corp.................................. 10,500 713,380
SMC Corp................................... 5,500 408,733
Sony Corp.................................. 16,000 1,355,820
------------
4,912,349
------------
MEXICO -- 0.6%
Cifra S.A. de C.V. -- C.................... 224,599 401,853
Corporation Interamericana de
Entretenimiento S.A...................... 65,000 505,177
------------
907,030
------------
NETHERLANDS -- 2.9%
AKZO Nobel NV.............................. 6,000 1,218,892
ASM Lithography Holding N.V................ 12,000 1,109,250
Baan Co., NV*.............................. 21,000 1,005,375
CMG PLC -- (United Kingdom)................ 3,400 152,493
Hagemeyer NV............................... 15,300 741,265
------------
4,227,275
------------
NORWAY -- 1.6%
Tomra Systems ASA.......................... 44,500 1,179,035
Petroleum Geo-Services ASA -- ADR*......... 20,300 1,205,312
------------
2,384,347
------------
PORTUGAL -- 1.9%
BPI-SGPS, S.A.............................. 26,000 1,000,109
Estabelecimentos Jeronimo Martins & Filho
S.A...................................... 20,200 830,870
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
49
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
COMMON STOCKS (Continued)
- ---------------------------------------------------------
PORTUGAL (CONTINUED)
<TABLE>
<S> <C> <C>
Portugal Telecom S.A....................... 19,000 $ 988,276
------------
2,819,255
------------
RUSSIA -- 0.3%
Gazprom -- ADR............................. 23,700 502,440
------------
SINGAPORE -- 0.5%
Singapore Technologies Engineering Ltd.*... 819,000 725,205
------------
SOUTH AFRICA -- 0.7%
Dimension Data Holdings Ltd................ 146,071 934,890
South African Breweries Ltd................ 175 5,189
------------
940,079
------------
SPAIN -- 4.6%
Argentaria S.A............................. 12,380 1,025,028
Banco Bilbao Vizcaya S.A................... 21,500 1,009,201
Fomento de Construcciones y Contratas
S.A...................................... 20,000 1,057,255
Grupo Acciona S.A.......................... 4,000 805,043
Tabacalera SA -- A......................... 16,300 1,829,217
Telefonica de Espana -- ADR................ 7,800 1,031,550
------------
6,757,294
------------
SWEDEN -- 1.7%
Astra AB................................... 133 2,693
Nordbanken Holding AB...................... 155,325 1,029,766
Telefonaktiebolaget LM Ericsson -- ADR..... 30,200 1,436,387
------------
2,468,846
------------
SWITZERLAND -- 3.8%
Credit Suisse Group........................ 5,000 1,000,341
Nestle S.A................................. 600 1,146,489
Novartis AG................................ 565 999,928
Swiss Reinsurance Co....................... 650 1,427,930
Union Bank of Switzerland.................. 600 980,006
------------
5,554,694
------------
UNITED KINGDOM -- 11.0%
Amvescap PLC............................... 90,000 973,607
Bank of Ireland............................ 83,012 1,638,940
British Aerospace PLC...................... 29,887 984,954
British Energy PLC......................... 110,700 972,766
British Land Corp. PLC..................... 69,700 875,392
British Petroleum Co. PLC.................. 46,000 664,008
CMG PLC.................................... 15,400 679,532
Glaxo Wellcome PLC......................... 28,200 758,881
Guardian Royal Exchange PLC................ 91,700 656,469
Hays PLC................................... 47,200 848,106
Lloyds TSB Group PLC....................... 50,500 785,626
Misys PLC.................................. 21,585 1,069,200
National Grid Holdings PLC................. 81,175 479,850
Orange PLC*................................ 192,200 1,224,663
Rolls-Royce PLC............................ 160,000 747,537
Standard Chartered Bank PLC................ 57,200 829,033
Unilever PLC............................... 48,300 456,987
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
</TABLE>
UNITED KINGDOM (CONTINUED)
<TABLE>
<S> <C> <C>
Viridian Group PLC......................... 92,810 $ 817,502
Zeneca Group PLC........................... 11,800 508,627
------------
15,971,680
------------
UNITED STATES OF AMERICA -- 29.5%
AirTouch Communications, Inc.*............. 26,800 1,311,525
ALZA Corp.................................. 35,000 1,568,437
AmSouth Bancorporation..................... 16,900 998,156
BMC Software, Inc.......................... 8,900 745,931
Cendant Corp............................... 34,000 1,347,250
CIENA Corp.*............................... 29,200 1,244,650
Computer Sciences Corp..................... 23,600 1,298,000
Compuware Corp.*........................... 25,000 1,234,375
Costco Companies, Inc.*.................... 32,600 1,744,100
Dayton Hudson Corp......................... 12,300 1,082,400
Federal National Mortgage Association...... 11,800 746,350
Federal-Mogul Corp......................... 9,200 489,325
Gannett Co., Inc........................... 17,800 1,279,375
Gap, Inc................................... 30,100 1,354,500
General Motors Corp. -- H.................. 29,400 1,330,350
HBO & Co................................... 19,500 1,177,312
Kmart Corp.*............................... 83,600 1,395,075
Loral Space and Communications Ltd.*....... 52,800 1,475,100
MBNA Corp.................................. 12,750 456,609
McDonald's Corp............................ 16,900 1,014,000
Merck & Co., Inc........................... 10,300 1,322,262
Merrill Lynch & Co., Inc................... 5,500 456,500
PNC Bank Corp.............................. 15,000 899,062
Qlogic Corp.*.............................. 16,000 568,000
Schlumberger, Ltd.......................... 19,100 1,446,825
State Street Corp.......................... 18,300 1,245,544
Sterling Commerce, Inc.*................... 20,500 950,687
Tekelec, Inc............................... 11,600 526,350
Tele-Communications TCI Ventures Group --
A........................................ 68,000 1,194,250
Tele-Communications, Inc. -- A*............ 41,600 1,293,500
Tellabs, Inc.*............................. 22,500 1,510,312
The Equitable Cos., Inc.................... 12,200 688,538
Tyco International Ltd..................... 24,500 1,338,313
U.S. West Media Group, Inc.*............... 34,000 1,181,500
United Healthcare Corp..................... 21,200 1,372,700
Warner-Lambert Co.......................... 8,300 1,413,594
Wellpoint Health Networks, Inc.*........... 11,000 742,500
WorldCom, Inc.*............................ 34,300 1,477,044
------------
42,920,301
------------
VENEZUELA -- 0.0%
C.A. La Electricidad de Caracas S.A.C.A.... 2 2
------------
TOTAL COMMON STOCK
(Cost $104,175,961)...................................... 133,386,166
------------
- ----------------------------------------------------------------------------
WARRANT/RIGHTS -- 0.0%
- ----------------------------------------------------------------------------
FRANCE
Cap Gemini Rights*
(Cost $0) 8,200 25,345
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
50
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
FOREIGN BONDS -- 0.1%
- -------------------------------------------------------------------------------
UNITED KINDGOM
Viridian Group PLC Loan Notes
7.650%, 02/14/03
(Cost $112,072) $ 140,900 $ 111,840
------------
- -------------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.9%
- -------------------------------------------------------------------------------
Associates First Capital Corp.
6.050%, 04/01/98
(Cost $2,736,000) 2,736,000 $ 2,736,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -- 93.6%
(Cost $107,024,033) $136,259,351
OTHER ASSETS IN EXCESS OF LIABILITIES -- 6.4% 9,277,014
------------
NET ASSETS -- 100.0% $145,536,365
------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
51
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Aerospace................................... 1.2%
Airlines.................................... 1.0
Apparel..................................... 0.9
Automobiles................................. 1.5
Automotive Equipment........................ 0.8
Cable TV.................................... 1.7
Cellular Telecommunication.................. 0.9
Chemicals................................... 0.8
Computers/Office Automation................. 0.6
Computer Services........................... 2.5
Consumer Electrical......................... 0.9
Data Processing............................. 0.7
Department/Discount Stores.................. 3.2
Diversified Manufacturing................... 0.9
Drug Delivery Systems....................... 1.1
Drugs/Pharmaceuticals....................... 4.6
Electric Utilities.......................... 2.0
Entertainment............................... 0.4
Fiber Optics................................ 0.9
Finance Companies........................... 3.7
Financial Services.......................... 1.9
Gas Utilities............................... 0.7
Grocery Products............................ 4.2
Industrial Engineering/Construction......... 1.9
Investment Companies........................ 1.6
Life/Health Insurance....................... 0.5
Machinery/Equipment......................... 1.7
Managed Health Care/HMO's................... 1.5
Medical Supplies............................ 0.6
Medical Information Systems................. 0.8
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------- -------------
<S> <C>
Military/Defense Technology................. 0.5%
Money Center Banks.......................... 6.9
Multi-Line Insurers......................... 1.0
Multi-Media................................. 0.9
Oil/Gas Production.......................... 1.8
Oilfield Services/Equipment................. 1.8
Other Commercial/Industrial Services........ 1.2
Other Consumer Durables..................... 0.5
Other Production/Manufacturing.............. 0.3
Property Casualty Insurance................. 0.5
Publishing.................................. 0.4
Real Estate Development/Investment.......... 0.6
Recreational Products....................... 0.7
Recycling................................... 0.8
Regional/Commercial Banks................... 6.2
Reinsurance................................. 1.0
Rental/Leasing Companies.................... 0.5
Retail/Food................................. 1.2
Retail/Hypermarkets......................... 0.6
Satellite Telecommunication................. 1.9
Semiconductors/Electric Companies........... 1.4
Software.................................... 4.6
Telecommunication Equipment................. 3.0
Telecommunication Services.................. 1.3
Telephone................................... 6.3
Textiles.................................... 0.6
Tobacco Products............................ 1.4
Other Assets in Excess of Liabilities....... 6.4
------
NET ASSETS.................................. 100.00%
------
------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
52
<PAGE>
(This page intentionally left blank.)
- --------------------------------------------------------------------------------
53
<PAGE>
NICHOLAS-APPLEGATE MUTUTAL FUNDS
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DISTRIBUTIONS
VALUES AT INVESTMENT AND UNREALIZED FROM NET DISTRIBUTIONS
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM
OF PERIOD (DEFICIT) ON INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... $ 15.15 $ (0.08) $ 6.91 -- $ (2.23)
For the year ended
3/31/97................... 17.93 (0.22) (0.66) -- (1.90)
For the year ended
3/31/96................... 13.06 (0.20) 5.09 -- (0.02)
For the year ended
3/31/95................... 12.10 (0.16) 1.12 -- --
For the period ended
3/31/94*.................. 12.50 (0.04) (0.36) -- --
CORE GROWTH (2)
For the year ended
3/31/98................... 16.80 (0.14) 6.50 -- (4.53)
For the year ended
3/31/97................... 18.37 (0.17) 0.57 -- (1.97)
For the year ended
3/31/96................... 13.61 (0.18) 4.94 -- --
For the year ended
3/31/95................... 13.25 (0.10) 0.46 -- --
For the period ended
3/31/94*.................. 12.50 (0.07) 0.86 -- (0.04)
LARGE CAP GROWTH (3)
For the year ended
3/31/98*+................. 12.50 (0.03) 3.29 -- (0.03)
INCOME & GROWTH (2)
For the year ended
3/31/98................... 16.59 0.44 4.49 $ (0.44) (1.96)
For the year ended
3/31/97................... 15.68 0.47 1.64 (0.48) (0.72)
For the year ended
3/31/96................... 12.86 0.48 2.82 (0.48) --
For the year ended
3/31/95................... 14.16 0.49 (0.89) (0.49) (0.41)
For the period ended
3/31/94*.................. 12.50 0.32 2.15 (0.32) (0.49)
BALANCED GROWTH (2)
For the year ended
3/31/98................... 15.54 0.26 5.70 (0.27) (1.70)
For the year ended
3/31/97................... 16.16 0.32 0.84 (0.32) (1.46)
For the year ended
3/31/96................... 13.74 0.34 2.42 (0.34) --
For the year ended
3/31/95................... 13.52 0.21 0.22 (0.21) --
For the period ended
3/31/94*.................. 12.50 0.15 1.02 (0.15) --
GOVERNMENT INCOME (2)
For the year ended
3/31/98................... 12.16 0.68 0.88 (0.67) (0.16)
For the year ended
3/31/97................... 12.74 0.71 (0.37) (0.71) (0.21)
For the year ended
3/31/96................... 12.29 0.75 0.45 (0.75) --
For the year ended
3/31/95................... 12.51 0.63 (0.19) (0.63) (0.03)
For the period ended
3/31/94*.................. 12.50 0.29 0.34 (0.29) (0.33)
MONEY MARKET (2)
For the year ended
3/31/98................... 1.00 0.03 (0.00) (0.03) --
For the year ended
3/31/97................... 1.00 0.05 -- (0.05) --
For the year ended
3/31/96................... 1.00 0.05 -- (0.05) --
For the year ended
3/31/95................... 1.00 0.05 -- (0.05) --
For the period ended
3/31/94*.................. 1.00 0.01 -- (0.01) --
EMERGING COUNTRIES (4)
For the year ended
3/31/98................... 17.20 0.03 1.22 -- (1.06)
For the year ended
3/31/97................... 14.03 (0.06) 3.51 -- (0.28)
For the year ended
3/31/96................... 11.00 (0.04) 3.15 (0.02) (0.06)
For the period ended
3/31/95*.................. 12.50 0.04 (1.54) -- --
INTERNATIONAL SMALL CAP GROWTH
(5)
For the year ended
3/31/98................... 14.92 (0.15) 5.36 -- (0.84)
For the year ended
3/31/97................... 13.15 0.04 1.88 (0.01) (0.14)
For the year ended
3/31/96................... 11.51 (0.02) 1.79 (0.13) --
For the year ended
3/31/95*.................. 12.50 -- (0.98) (0.01) --
INTERNATIONAL CORE GROWTH (6)
For the year ended
3/31/98+.................. 12.73 (0.02) 4.56 -- (0.26)
For the period ended
3/31/97*.................. 12.50 -- 0.23 -- --
WORLDWIDE GROWTH (2)
For the year ended
3/31/98................... 16.88 0.04 5.33 -- (2.92)
For the year ended
3/31/97................... 16.57 (0.16) 2.20 -- (1.73)
For the year ended
3/31/96................... 14.29 (0.07) 2.86 (0.12) (0.39)
For the year ended
3/31/95................... 14.94 (0.05) (0.09) (0.02) (0.49)
For the period ended
3/31/94*.................. 12.50 (0.07) 2.51 -- --
</TABLE>
- --------------------
(1) Commenced operations on December 27, 1993.
(2) Commenced operations on April 19, 1993.
(3) Commenced operations on July 15, 1997.
(4) Commenced operations on November 28, 1994.
(5) Commenced operations on August 31, 1994.
(6) Commenced operations on February 28, 1997.
* Annualized
** Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
+ The total returns of these portfolios were linked to the total returns, after
adjusting for the expenses and sales charge, of the Institutional Portfolios
(the "Linking Portfolios") of their respective series of the Nicholas-Applegate
Mutual Funds. Without linking to the Linking Portfolios, the total returns for
the fiscal year ended March 31, 1998 of Large Cap Growth and International Core
Growth would have been 25.84% and 33.65%, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
54
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
RATIO OF EXPENSES TO
EXPENSES TO AVERAGE NET
AVERAGE NET ASSETS, BEFORE
NET ASSETS ASSETS, AFTER EXPENSE
NET ASSET AT EXPENSE REIMBURSEMENT
VALUES AT TOTAL END OF REIMBURSEMENT AND FEE
END OF PERIOD RETURN PERIOD AND FEE WAIVER** WAIVER**
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... $ 19.75 46.32% 2$01,943,369 1.89% 1.90%
For the year ended
3/31/97................... 15.15 (6.26%) 121,741,647 1.72% 1.72%
For the year ended
3/31/96................... 17.93 37.48% 138,155,390 1.74% 1.74%
For the year ended
3/31/95................... 13.06 7.93% 106,725,077 1.86% 1.84%
For the period ended
3/31/94*.................. 12.10 (3.20%) 104,838,285 1.73% 1.80%
CORE GROWTH (2)
For the year ended
3/31/98................... 18.63 41.81% 90,619,300 1.57% 1.66%
For the year ended
3/31/97................... 16.80 1.09% 76,107,976 1.60% 1.56%
For the year ended
3/31/96................... 18.37 35.07% 77,275,060 1.58% 1.56%
For the year ended
3/31/95................... 13.61 2.72% 65,291,541 1.59% 1.63%
For the period ended
3/31/94*.................. 13.25 6.27% 70,512,167 1.57% 1.71%
LARGE CAP GROWTH (3)
For the year ended
3/31/98*+................. 15.73 62.35% 4,742,423 1.60% 4.70%
INCOME & GROWTH (2)
For the year ended
3/31/98................... 19.12 31.04% 47,289,841 1.57% 1.74%
For the year ended
3/31/97................... 16.59 13.73% 32,081,563 1.60% 1.75%
For the year ended
3/31/96................... 15.68 26.00% 31,712,051 1.60% 1.76%
For the year ended
3/31/95................... 12.86 (2.64%) 31,150,481 1.60% 1.76%
For the period ended
3/31/94*.................. 14.16 19.65% 30,447,446 1.59% 1.83%
BALANCED GROWTH (2)
For the year ended
3/31/98................... 19.53 39.34% 6,674,796 1.61% 2.56%
For the year ended
3/31/97................... 15.54 6.74% 4,897,987 1.60% 3.00%
For the year ended
3/31/96................... 16.16 20.16% 5,902,210 1.60% 3.30%
For the year ended
3/31/95................... 13.74 3.22% 4,979,593 1.60% 2.78%
For the period ended
3/31/94*.................. 13.52 9.35% 6,445,901 1.59% 3.28%
GOVERNMENT INCOME (2)
For the year ended
3/31/98................... 12.89 13.15% 1,462,893 0.91% 5.88%
For the year ended
3/31/97................... 12.16 2.73% 1,113,290 0.90% 7.67%
For the year ended
3/31/96................... 12.74 9.71% 1,297,458 0.93% 9.58%
For the year ended
3/31/95................... 12.29 3.68% 925,074 1.10% 8.40%
For the period ended
3/31/94*.................. 12.51 4.97% 819,919 1.10% 20.28%
MONEY MARKET (2)
For the year ended
3/31/98................... 1.00 5.30% 124,864,285 0.45% 1.10%
For the year ended
3/31/97................... 1.00 5.09% 36,258,680 0.45% 1.73%
For the year ended
3/31/96................... 1.00 5.47% 3,129,223 0.45% 5.78%
For the year ended
3/31/95................... 1.00 4.58% 2,995,847 0.31% 2.49%
For the period ended
3/31/94*.................. 1.00 1.72% 47,975 0.54% 323.24%
EMERGING COUNTRIES (4)
For the year ended
3/31/98................... 17.39 8.06% 71,014,267 2.26% 2.48%
For the year ended
3/31/97................... 17.20 24.79% 38,687,897 2.25% 3.08%
For the year ended
3/31/96................... 14.03 28.43% 4,717,767 2.25% 6.72%
For the period ended
3/31/95*.................. 11.00 (11.98%) 1,197,361 2.25% 6.15%
INTERNATIONAL SMALL CAP GROWTH
(5)
For the year ended
3/31/98................... 19.29 36.31% 11,182,638 1.96% 2.75%
For the year ended
3/31/97................... 14.92 14.67% 5,569,084 1.95% 3.76%
For the year ended
3/31/96................... 13.15 15.46% 1,055,809 1.95% 10.06%
For the year ended
3/31/95*.................. 11.51 (7.85%) 610,176 1.95% 9.77%
INTERNATIONAL CORE GROWTH (6)
For the year ended
3/31/98+.................. 17.01 36.10% 12,664,013 1.96% 3.02%
For the period ended
3/31/97*.................. 12.73 1.76% 1,642 1.95% 4579.78%
WORLDWIDE GROWTH (2)
For the year ended
3/31/98................... 19.33 34.55% 38,647,436 1.86% 2.21%
For the year ended
3/31/97................... 16.88 12.51% 24,022,177 1.85% 2.17%
For the year ended
3/31/96................... 16.57 19.79% 23,480,586 1.85% 2.17%
For the year ended
3/31/95................... 14.29 (0.90%) 22,207,775 1.85% 2.18%
For the period ended
3/31/94*.................. 14.94 19.52% 20,194,105 1.85% 2.23%
<CAPTION>
RATIO OF NET
INVESTMENT INCOME (DEFICIT)
INCOME (DEFICIT) TO TO
AVERAGE NET AVERAGE NET
ASSETS, AFTER ASSETS, BEFORE
EXPENSE EXPENSE
REIMBURSEMENT REIMBURSEMENT
AND FEE WAIVER** AND FEE WAIVER**
<S> <C> <C>
- ------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... (1.85%) (1.86%)
For the year ended
3/31/97................... (1.26%) (1.26%)
For the year ended
3/31/96................... (1.20%) (1.20%)
For the year ended
3/31/95................... (1.27%) (1.25%)
For the period ended
3/31/94*.................. (1.44%) (1.51%)
CORE GROWTH (2)
For the year ended
3/31/98................... (1.33%) (1.41%)
For the year ended
3/31/97................... (1.05%) (1.01%)
For the year ended
3/31/96................... (0.91%) (0.89%)
For the year ended
3/31/95................... (0.66%) (0.70%)
For the period ended
3/31/94*.................. (0.68%) (0.82%)
LARGE CAP GROWTH (3)
For the year ended
3/31/98*+................. (0.87%) (3.96%)
INCOME & GROWTH (2)
For the year ended
3/31/98................... 5.64% 5.48%
For the year ended
3/31/97................... 2.83% 2.66%
For the year ended
3/31/96................... 3.29% 3.12%
For the year ended
3/31/95................... 3.71% 3.55%
For the period ended
3/31/94*.................. 2.83% 2.59%
BALANCED GROWTH (2)
For the year ended
3/31/98................... 3.58% 2.63%
For the year ended
3/31/97................... 1.87% 0.73%
For the year ended
3/31/96................... 2.16% 0.88%
For the year ended
3/31/95................... 1.44% 0.26%
For the period ended
3/31/94*.................. 1.30% (0.39%)
GOVERNMENT INCOME (2)
For the year ended
3/31/98................... 10.81% 5.84%
For the year ended
3/31/97................... 5.52% 0.22%
For the year ended
3/31/96................... 5.78% (0.75%)
For the year ended
3/31/95................... 5.18% (2.12%)
For the period ended
3/31/94*.................. 3.07% (16.11%)
MONEY MARKET (2)
For the year ended
3/31/98................... 10.34% 9.69%
For the year ended
3/31/97................... 4.97% 4.12%
For the year ended
3/31/96................... 5.35% 2.77%
For the year ended
3/31/95................... 4.60% 2.42%
For the period ended
3/31/94*.................. 1.85% (320.85%)
EMERGING COUNTRIES (4)
For the year ended
3/31/98................... 0.55% 0.33%
For the year ended
3/31/97................... (1.14%) (2.00%)
For the year ended
3/31/96................... (0.35%) (3.61%)
For the period ended
3/31/95*.................. 1.09% (4.99%)
INTERNATIONAL SMALL CAP GROWTH
(5)
For the year ended
3/31/98................... (1.56%) (2.35%)
For the year ended
3/31/97................... (1.05%) (2.82%)
For the year ended
3/31/96................... (0.27%) (7.75%)
For the year ended
3/31/95*.................. (0.07%) (7.89%)
INTERNATIONAL CORE GROWTH (6)
For the year ended
3/31/98+.................. (0.45%) (1.51%)
For the period ended
3/31/97*.................. 0.00% (4576.87%)
WORLDWIDE GROWTH (2)
For the year ended
3/31/98................... (0.69%) (1.04%)
For the year ended
3/31/97................... (0.93%) (1.18%)
For the year ended
3/31/96................... (0.35%) (0.61%)
For the year ended
3/31/95................... (0.42%) (0.75%)
For the period ended
3/31/94*.................. (0.69%) (1.07%)
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
55
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DISTRIBUTIONS
VALUES AT INVESTMENT AND UNREALIZED FROM NET DISTRIBUTIONS
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM
OF PERIOD (DEFICIT) ON INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... $ 15.51 $ (0.27) $ 7.29 -- --
For the year ended
3/31/97................... 16.69 (0.21) (0.97) -- --
For the period ended
3/31/96*.................. 12.50 (0.14) 4.33 -- --
CORE GROWTH (1)
For the year ended
3/31/98................... 16.33 (0.25) 6.74 -- $ (1.27)
For the year ended
3/31/97................... 16.25 (0.17) 0.25 -- --
For the period ended
3/31/96*.................. 12.50 (0.09) 3.84 -- --
LARGE CAP GROWTH (2)
For the period ended
3/31/98*++................ 12.50 (0.07) 3.24 -- (0.03)
INCOME & GROWTH (1)
For the year ended
3/31/98................... 16.60 0.32 4.65 $ (0.32) (0.69)
For the year ended
3/31/97................... 14.96 0.31 1.64 (0.31) --
For the period ended
3/31/96*.................. 12.50 0.24 2.46 (0.24) --
BALANCED GROWTH (1)
For the year ended
3/31/98+.................. 14.88 0.15 5.58 (0.15) (0.39)
For the year ended
3/31/97................... 14.18 0.17 0.70 (0.17) --
For the period ended
3/31/96*.................. 12.50 0.12 1.68 (0.12) --
GOVERNMENT INCOME (1)
For the year ended
3/31/98+.................. 12.13 0.60 0.88 (0.60) (0.15)
For the year ended
3/31/97................... 12.53 0.56 (0.28) (0.56) (0.12)
For the period ended
3/31/96*.................. 12.50 0.48 0.04 (0.48) (0.01)
EMERGING COUNTRIES (1)
For the year ended
3/31/98+.................. 17.29 (0.07) 1.26 -- (0.84)
For the year ended
3/31/97................... 14.02 (0.11) 3.47 -- (0.09)
For the period ended
3/31/96*.................. 12.50 (0.04) 1.56 -- --
INTERNATIONAL SMALL CAP GROWTH
(1)
For the year ended
3/31/98................... 15.89 (0.15) 5.56 -- (1.14)
For the year ended
3/31/97................... 13.96 (0.15) 2.09 (0.01) --
For the period ended
3/31/96*.................. 12.50 (0.02) 1.48 -- --
INTERNATIONAL CORE GROWTH (3)
For the year ended
3/31/98++................. 12.68 (0.11) 4.66 -- (0.13)
For the period ended
3/31/97*.................. 12.50 -- 0.18 -- --
WORLDWIDE GROWTH (1)
For the year ended
3/31/98+.................. 16.02 (0.17) 5.44 -- (1.19)
For the year ended
3/31/97................... 14.34 (0.14) 1.82 -- --
For the period ended
3/31/96*.................. 12.50 (0.05) 1.89 -- --
</TABLE>
- --------------------
(1) Commenced operations on May 31, 1995.
(2) Commenced operations on July 15, 1997.
(3) Commenced operations on February 28, 1997.
* Annualized
** Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
+ The total returns of these portfolios were linked to the total returns, after
adjusting for the expenses and sales charge, of Portfolios A (the "Linking
Portfolios") of their respective series of the Nicholas-Applegate Mutual Funds.
Without linking to the Linking Portfolios, the total returns for the fiscal year
ended March 31, 1998 of Balanced Growth, Government Income, Emerging Countries
and Worldwide Growth would have been 38.79%, 12.51%, 2.02% and 25.47%,
respectively.
++ The total returns of these portfolios were linked to the total returns,
after adjusting for the expenses and sales charge, of the Institutional
Portfolios (the "Linking Portfolios") of their respective series of the
Nicholas-Applegate Mutual Funds. Without linking to the Linking Portfolios, the
total returns for the fiscal year ended March 31, 1998 of Large Cap Growth and
International Core Growth would have been 25.12% and 34.78%, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
56
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF NET
INVESTMENT
RATIO OF RATIO OF INCOME (DEFICIT)
EXPENSES TO EXPENSES TO TO
AVERAGE NET AVERAGE NET AVERAGE NET
NET ASSETS ASSETS, AFTER ASSETS, BEFORE ASSETS, AFTER
NET ASSET AT EXPENSE EXPENSE EXPENSE
VALUES AT TOTAL END OF REIMBURSEMENT REIMBURSEMENT REIMBURSEMENT
END OF PERIOD RETURN PERIOD AND FEE WAIVER** AND FEE WAIVER** AND FEE WAIVER**
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... $ 22.53 45.26% $55,215,261 2.62% 2.63% (2.59%)
For the year ended
3/31/97................... 15.51 (7.07%) 28,029,591 2.61% 2.73% (2.13%)
For the period ended
3/31/96*.................. 16.69 33.52% 13,625,738 2.58% 3.26% (2.09%)
CORE GROWTH (1)
For the year ended
3/31/98................... 21.55 40.84% 46,805,761 2.22% 2.21% (1.99%)
For the year ended
3/31/97................... 16.33 (0.49%) 29,002,393 2.25% 2.66% (1.69%)
For the period ended
3/31/96*.................. 16.25 30.00% 11,185,978 2.22% 3.39% (1.61%)
LARGE CAP GROWTH (2)
For the period ended
3/31/98*++................ 15.64 61.08% 3,186,975 2.25% 4.78% (1.36%)
INCOME & GROWTH (1)
For the year ended
3/31/98................... 20.56 30.51% 36,725,044 2.22% 2.33% 5.04%
For the year ended
3/31/97................... 16.60 13.01% 12,739,703 2.25% 3.19% 2.29%
For the period ended
3/31/96*.................. 14.96 21.72% 2,125,077 2.25% 7.08% 2.59%
BALANCED GROWTH (1)
For the year ended
3/31/98+.................. 20.07 38.79% 4,254,473 2.26% 2.71% 2.99%
For the year ended
3/31/97................... 14.88 6.10% 2,132,890 2.25% 6.44% 1.25%
For the period ended
3/31/96*.................. 14.18 14.45% 672,934 2.25% 13.05% 1.38%
GOVERNMENT INCOME (1)
For the year ended
3/31/98+.................. 12.86 12.51% 3,077,623 1.31% 4.77% 10.15%
For the year ended
3/31/97................... 12.13 2.30% 1,344,705 1.29% 8.33% 5.20%
For the period ended
3/31/96*.................. 12.53 4.16% 127,528 1.33% 86.12% 5.14%
EMERGING COUNTRIES (1)
For the year ended
3/31/98+.................. 17.64 7.47% 38,796,047 2.91% 3.06% (0.20%)
For the year ended
3/31/97................... 17.29 24.00% 24,557,521 2.90% 3.66% (1.77%)
For the period ended
3/31/96*.................. 14.02 12.16% 3,557,080 2.90% 7.58% (1.05%)
INTERNATIONAL SMALL CAP GROWTH
(1)
For the year ended
3/31/98................... 20.16 35.73% 12,032,863 2.61% 2.98% (2.20%)
For the year ended
3/31/97................... 15.89 13.96% 5,079,996 2.60% 4.89% (1.66%)
For the period ended
3/31/96*.................. 13.96 11.68% 1,486,794 2.60% 16.15% (0.64%)
INTERNATIONAL CORE GROWTH (3)
For the year ended
3/31/98++................. 17.10 35.31% 7,942,045 2.61% 3.04% (1.32%)
For the period ended
3/31/97*.................. 12.68 1.44% 1,027 2.59% 16000.25% 0.00%
WORLDWIDE GROWTH (1)
For the year ended
3/31/98+.................. 20.10 34.03% 10,082,616 2.51% 2.70% (1.37%)
For the year ended
3/31/97................... 16.02 11.72% 5,941,869 2.50% 4.81% (1.62%)
For the period ended
3/31/96*.................. 14.34 14.72% 1,972,242 2.50% 9.50% (1.28%)
<CAPTION>
RATIO OF NET
INVESTMENT
INCOME (DEFICIT)
TO
AVERAGE NET
ASSETS, BEFORE
EXPENSE
REIMBURSEMENT
AND FEE WAIVER**
<S> <C>
- ------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... (2.60%)
For the year ended
3/31/97................... (2.25%)
For the period ended
3/31/96*.................. (2.76%)
CORE GROWTH (1)
For the year ended
3/31/98................... (1.98%)
For the year ended
3/31/97................... (2.10%)
For the period ended
3/31/96*.................. (2.77%)
LARGE CAP GROWTH (2)
For the period ended
3/31/98*++................ (3.88%)
INCOME & GROWTH (1)
For the year ended
3/31/98................... 4.93%
For the year ended
3/31/97................... 1.32%
For the period ended
3/31/96*.................. (2.22%)
BALANCED GROWTH (1)
For the year ended
3/31/98+.................. 2.54%
For the year ended
3/31/97................... (2.67%)
For the period ended
3/31/96*.................. (8.86%)
GOVERNMENT INCOME (1)
For the year ended
3/31/98+.................. 6.68%
For the year ended
3/31/97................... (0.36%)
For the period ended
3/31/96*.................. (67.73%)
EMERGING COUNTRIES (1)
For the year ended
3/31/98+.................. (0.35%)
For the year ended
3/31/97................... (2.55%)
For the period ended
3/31/96*.................. (5.44%)
INTERNATIONAL SMALL CAP GROWTH
(1)
For the year ended
3/31/98................... (2.57%)
For the year ended
3/31/97................... (3.91%)
For the period ended
3/31/96*.................. (13.26%)
INTERNATIONAL CORE GROWTH (3)
For the year ended
3/31/98++................. (1.76%)
For the period ended
3/31/97*.................. (15998.21%)
WORLDWIDE GROWTH (1)
For the year ended
3/31/98+.................. (1.57%)
For the year ended
3/31/97................... (3.87%)
For the period ended
3/31/96*.................. (8.12%)
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
57
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DISTRIBUTIONS
VALUES AT INVESTMENT AND UNREALIZED FROM NET DISTRIBUTIONS
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM
OF PERIOD (DEFICIT) ON INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... $ 14.69 $ (0.38) $ 6.84 -- $ (2.53)
For the year ended
3/31/97................... 17.62 (0.31) (0.63) -- (1.99)
For the year ended
3/31/96................... 12.96 (0.29) 5.03 -- (0.08)
For the year ended
3/31/95................... 12.07 (0.22) 1.11 -- --
For the period ended
3/31/94*.................. 12.50 (0.06) (0.37) -- --
CORE GROWTH (2)
For the year ended
3/31/98................... 16.48 (0.28) 6.26 -- (5.31)
For the year ended
3/31/97................... 18.06 (0.32) 0.62 -- (1.88)
For the year ended
3/31/96................... 13.45 (0.27) 4.88 -- --
For the year ended
3/31/95................... 13.18 (0.17) 0.44 -- --
For the period ended
3/31/94*.................. 12.50 (0.11) 0.80 -- (0.01)
LARGE CAP GROWTH (3)
For the year ended
3/31/98*+................. 12.50 (0.05) 3.24 -- (0.06)
INCOME & GROWTH (2)
For the year ended
3/31/98................... 17.05 0.34 4.60 $ (0.34) (2.10)
For the year ended
3/31/97................... 15.89 0.37 1.66 (0.37) (0.50)
For the year ended
3/31/96................... 13.03 0.40 2.86 (0.40) --
For the year ended
3/31/95................... 14.28 0.41 (0.89) (0.41) (0.36)
For the period ended
3/31/94*.................. 12.50 0.24 2.11 (0.24) (0.33)
BALANCED GROWTH (2)
For the year ended
3/31/98................... 15.59 0.15 5.71 (0.15) (1.40)
For the year ended
3/31/97................... 16.20 0.21 0.85 (0.21) (1.46)
For the year ended
3/31/96................... 13.76 0.24 2.44 (0.24) --
For the year ended
3/31/95................... 13.54 0.11 0.22 (0.11) --
For the period ended
3/31/94*.................. 12.50 0.08 1.04 (0.08) --
GOVERNMENT INCOME (2)
For the year ended
3/31/98................... 12.29 0.62 0.88 (0.62) --
For the year ended
3/31/97................... 12.63 0.62 (0.34) (0.62) --
For the year ended
3/31/96................... 12.27 0.77 0.36 (0.77) --
For the year ended
3/31/95................... 12.56 0.63 (0.28) (0.63) (0.01)
For the period ended
3/31/94*.................. 12.50 0.25 0.29 (0.25) (0.23)
EMERGING COUNTRIES (4)
For the year ended
3/31/98................... 16.81 (0.12) 1.26 -- (0.97)
For the year ended
3/31/97................... 13.71 (0.10) 3.37 -- (0.17)
For the year ended
3/31/96................... 10.79 (0.05) 2.97 -- --
For the period ended
3/31/95*.................. 12.50 -- (1.70) (0.01) --
INTERNATIONAL SMALL CAP GROWTH
(5)
For the year ended
3/31/98................... 14.87 (0.11) 5.09 -- (1.32)
For the year ended
3/31/97................... 13.05 (0.16) 1.98 -- --
For the year ended
3/31/96................... 11.32 0.01 1.72 -- --
For the year ended
3/31/95*.................. 12.50 (0.04) (1.12) (0.02) --
INTERNATIONAL CORE GROWTH (6)
For the year ended
3/31/98+.................. 12.68 (0.07) 4.55 -- --
For the period ended
3/31/97*.................. 12.50 -- 0.18 -- --
WORLDWIDE GROWTH (2)
For the year ended
3/31/98................... 16.92 (0.19) 5.41 -- (3.09)
For the year ended
3/31/97................... 16.76 (0.28) 2.23 -- (1.79)
For the year ended
3/31/96................... 14.44 (0.21) 2.92 (0.01) (0.38)
For the year ended
3/31/95................... 14.86 (0.15) (0.08) -- (0.19)
For the period ended
3/31/94*.................. 12.50 (0.09) 2.45 -- --
</TABLE>
- --------------------
(1) Commenced operations on December 27, 1993.
(2) Commenced operations on April 19, 1993.
(3) Commenced operations on July 15, 1997.
(4) Commenced operations on November 28, 1994.
(5) Commenced operations on August 31, 1994.
(6) Commenced operations on February 28, 1997.
* Annualized
** Includes expenses allocated from the Master Trust Funds. See Notes fo Funds'
Financial Statements for amounts.
+ The total returns of these portfolios were linked to the total returns, after
adjusting for the expenses and sales charge, of the Institutional Portfolios
(the "Linking Portfolios") of their respective series of the Nicholas-Applegate
Mutual Funds. Without linking to the Linking Portfolios, the total returns for
the fiscal year ended March 31, 1998 of Large Cap Growth and International Core
Growth would have been 25.04% and 35.33%, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
58
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF
EXPENSES TO EXPENSES TO
AVERAGE NET AVERAGE NET
NET ASSETS ASSETS, AFTER ASSETS, BEFORE
NET ASSET AT EXPENSE EXPENSE
VALUES AT TOTAL END OF REIMBURSEMENT REIMBURSEMENT
END OF PERIOD RETURN PERIOD AND FEE WAIVER** AND FEE WAIVER**
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... $ 18.62 45.40% 2$25,024,687 2.57% 2.59%
For the year ended
3/31/97................... 14.69 (6.81%) 182,906,982 2.35% 2.35%
For the year ended
3/31/96................... 17.62 37.18% 207,332,005 2.35% 2.35%
For the year ended
3/31/95................... 12.96 7.37% 157,292,246 2.44% 2.44%
For the period ended
3/31/94*.................. 12.07 (3.44%) 142,874,310 2.34% 2.34%
CORE GROWTH (2)
For the year ended
3/31/98................... 17.15 40.95% 166,849,424 2.27% 2.33%
For the year ended
3/31/97................... 16.48 0.56% 157,501,096 2.14% 2.17%
For the year ended
3/31/96................... 18.06 34.28% 177,461,331 2.14% 2.14%
For the year ended
3/31/95................... 13.45 2.05% 143,389,656 2.24% 2.24%
For the period ended
3/31/94*.................. 13.18 5.54% 141,488,561 2.17% 2.17%
LARGE CAP GROWTH (3)
For the year ended
3/31/98*+................. 15.63 61.38% 959,564 2.25% 7.79%
INCOME & GROWTH (2)
For the year ended
3/31/98................... 19.55 30.22% 81,560,539 2.22% 2.31%
For the year ended
3/31/97................... 17.05 12.91% 62,143,307 2.25% 2.29%
For the year ended
3/31/96................... 15.89 25.24% 58,997,309 2.25% 2.28%
For the year ended
3/31/95................... 13.03 (3.26%) 61,791,573 2.25% 2.29%
For the period ended
3/31/94*.................. 14.28 18.76% 69,264,807 2.22% 2.23%
BALANCED GROWTH (2)
For the year ended
3/31/98................... 19.90 38.35% 20,784,083 2.26% 2.68%
For the year ended
3/31/97................... 15.59 6.05% 16,990,094 2.25% 2.83%
For the year ended
3/31/96................... 16.20 19.58% 16,586,339 2.25% 3.01%
For the year ended
3/31/95................... 13.76 2.47% 16,469,510 2.25% 2.60%
For the period ended
3/31/94*.................. 13.54 8.91% 16,248,130 2.24% 2.73%
GOVERNMENT INCOME (2)
For the year ended
3/31/98................... 13.17 12.43% 4,665,473 1.31% 3.77%
For the year ended
3/31/97................... 12.29 2.29% 3,694,341 1.30% 4.98%
For the year ended
3/31/96................... 12.63 9.20% 2,968,287 1.33% 5.77%
For the year ended
3/31/95................... 12.27 2.96% 4,278,140 1.50% 2.67%
For the period ended
3/31/94*.................. 12.56 4.28% 7,345,300 1.50% 3.86%
EMERGING COUNTRIES (4)
For the year ended
3/31/98................... 16.98 7.47% 36,986,452 2.91% 3.09%
For the year ended
3/31/97................... 16.81 23.94% 29,375,971 2.90% 3.12%
For the year ended
3/31/96................... 13.71 27.30% 4,344,744 2.90% 6.23%
For the period ended
3/31/95*.................. 10.79 (13.64%) 59,366 2.90% 242.59%
INTERNATIONAL SMALL CAP GROWTH
(5)
For the year ended
3/31/98................... 18.53 35.63% 8,013,950 2.61% 3.38%
For the year ended
3/31/97................... 14.87 13.98% 3,592,314 2.60% 3.95%
For the year ended
3/31/96................... 13.05 15.30% 933,422 2.60% 16.15%
For the year ended
3/31/95*.................. 11.32 (9.25%) 24,066 2.61% 75.37%
INTERNATIONAL CORE GROWTH (6)
For the year ended
3/31/98+.................. 17.16 35.25% 3,517,041 2.61% 5.10%
For the period ended
3/31/97*.................. 12.68 1.44% 43,075 2.41% 25.55%
WORLDWIDE GROWTH (2)
For the year ended
3/31/98................... 19.05 33.72% 84,292,423 2.51% 2.77%
For the year ended
3/31/97................... 16.92 11.81% 70,344,561 2.50% 2.61%
For the year ended
3/31/96................... 16.76 18.95% 71,155,027 2.50% 2.57%
For the year ended
3/31/95................... 14.44 (1.49%) 71,200,715 2.50% 2.57%
For the period ended
3/31/94*.................. 14.86 18.88% 66,576,743 2.44% 2.44%
<CAPTION>
RATIO OF NET
INCOME (DEFICIT) TO TO
AVERAGE NET AVERAGE NET
ASSETS, AFTER ASSETS, BEFORE
EXPENSE EXPENSE
REIMBURSEMENT REIMBURSEMENT
AND FEE WAIVER** AND FEE WAIVER**
<S> <C> <C>
- ------------------------------
EMERGING GROWTH (1)
For the year ended
3/31/98................... (2.53%) (2.55%)
For the year ended
3/31/97................... (1.89%) (1.89%)
For the year ended
3/31/96................... (1.81%) (1.81%)
For the year ended
3/31/95................... (1.85%) (1.85%)
For the period ended
3/31/94*.................. (2.04%) (2.04%)
CORE GROWTH (2)
For the year ended
3/31/98................... (2.01%) (2.07%)
For the year ended
3/31/97................... (1.59%) (1.62%)
For the year ended
3/31/96................... (1.47%) (1.47%)
For the year ended
3/31/95................... (1.30%) (1.30%)
For the period ended
3/31/94*.................. (1.30%) (1.30%)
LARGE CAP GROWTH (3)
For the year ended
3/31/98*+................. (1.49%) (7.03%)
INCOME & GROWTH (2)
For the year ended
3/31/98................... 4.99% 4.91%
For the year ended
3/31/97................... 2.18% 2.11%
For the year ended
3/31/96................... 2.64% 2.61%
For the year ended
3/31/95................... 3.05% 3.01%
For the period ended
3/31/94*.................. 2.28% 2.27%
BALANCED GROWTH (2)
For the year ended
3/31/98................... 2.93% 2.51%
For the year ended
3/31/97................... 1.23% 0.91%
For the year ended
3/31/96................... 1.53% 1.19%
For the year ended
3/31/95................... 0.83% 0.48%
For the period ended
3/31/94*.................. 0.61% 0.12%
GOVERNMENT INCOME (2)
For the year ended
3/31/98................... 10.25% 7.79%
For the year ended
3/31/97................... 5.10% 2.89%
For the year ended
3/31/96................... 5.46% 3.13%
For the year ended
3/31/95................... 4.58% 3.41%
For the period ended
3/31/94*.................. 2.70% 0.34%
EMERGING COUNTRIES (4)
For the year ended
3/31/98................... (0.26%) (0.45%)
For the year ended
3/31/97................... (1.75%) (1.99%)
For the year ended
3/31/96................... (1.06%) (4.15%)
For the period ended
3/31/95*.................. (0.04%) (239.73%)
INTERNATIONAL SMALL CAP GROWTH
(5)
For the year ended
3/31/98................... (2.18%) (2.95%)
For the year ended
3/31/97................... (1.67%) (2.99%)
For the year ended
3/31/96................... (1.02%) (13.95%)
For the year ended
3/31/95*.................. (0.76%) (73.52%)
INTERNATIONAL CORE GROWTH (6)
For the year ended
3/31/98+.................. (1.27%) (3.76%)
For the period ended
3/31/97*.................. (0.07%) (291.20%)
WORLDWIDE GROWTH (2)
For the year ended
3/31/98................... (1.34%) (1.60%)
For the year ended
3/31/97................... (1.57%) (1.62%)
For the year ended
3/31/96................... (0.99%) (1.00%)
For the year ended
3/31/95................... (1.06%) (1.13%)
For the period ended
3/31/94*.................. (1.24%) (1.24%)
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
59
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1998
- -------------------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH GROWTH
<S> <C> <C> <C> <C>
--------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at
value*.............................. $ 202,155,491 $ 90,729,761 $4,749,153 $ 47,304,212
Receivable for shares of beneficial
interests sold...................... 55,333,500 1,521,063 91,049 355,048
Receivable for investments sold in
Master Trust Fund................... 981,062 183,728 -- 24,538
Due from advisor...................... -- -- 15,963 26,124
--------------------------------------------------------
Total assets........................ 258,470,053 92,434,552 4,856,165 47,709,922
--------------------------------------------------------
LIABILITIES
Payable for investments purchased in
Master Trust Fund................... 55,333,500 1,521,063 91,049 355,048
Payable for shares of beneficial
interest repurchased................ 981,062 183,728 -- 24,538
Due to advisor........................ 14,964 18,455 -- --
Dividend payable...................... -- -- -- 107
Accrued expenses...................... 197,158 92,006 22,693 40,388
--------------------------------------------------------
Total liabilities................... 56,526,684 1,815,252 113,742 420,081
--------------------------------------------------------
NET ASSETS.............................. $ 201,943,369 $ 90,619,300 $4,742,423 $ 47,289,841
--------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 130,839,621 $ 67,153,367 $4,157,848 $ 36,694,577
Accumulated undistributed net
investment (deficit)................ (7,204,017) (3,165,089) (8,304) (1,849)
Accumulated undistributed net realized
gain (loss)......................... 4,030,207 4,906,831 (5,798) 694,817
Accumulated undistributed foreign
exchange gain (loss)................ -- -- -- --
Net unrealized foreign exchange gain
(loss).............................. -- -- -- --
Net unrealized appreciation on
investments......................... 74,277,558 21,724,191 598,677 9,902,296
--------------------------------------------------------
Net assets.......................... $ 201,943,369 $ 90,619,300 $4,742,423 $ 47,289,841
--------------------------------------------------------
Shares of beneficial interest, no par
value, issued and outstanding
(unlimited shares authorized)....... 10,225,995 4,864,889 301,584 2,473,879
--------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net assets/
Outstanding shares of beneficial
interest)........................... $ 19.75 $ 18.63 $ 15.73 $ 19.12
--------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE OF
$19.75/94.75%, $18.63/94.75%,
$15.73/94.75%, $19.12/94.75%,
$19.53/94.75%, $12.89/95.25%, $1.00,
$17.39/94.75%, $19.29/94.75%,
$17.01/94.75, $19.33/94.75%,
respectively)....................... $ 20.84 $ 19.66 $ 16.60 $ 20.18
--------------------------------------------------------
* Cost of investments in the Master
Trust Fund............................ $ 89,506,414 $ 36,371,897 $4,156,963 $ 24,041,740
--------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
60
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED GOVERNMENT MONEY EMERGING SMALL CAP
GROWTH INCOME MARKET COUNTRIES GROWTH
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at
value*.............................. $ 6,674,163 $ 1,459,326 $124,916,932 $ 71,012,604 $ 11,185,238
Receivable for shares of beneficial
interests sold...................... 78,757 53,648 -- 1,149,591 137,960
Receivable for investments sold in
Master Trust Fund................... 597 -- -- 157,964 --
Due from advisor...................... 14,604 14,925 51,609 51,640 20,684
-------------------------------------------------------------------------
Total assets........................ 6,768,121 1,527,899 124,968,541 72,371,799 11,343,882
-------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased in
Master Trust Fund................... 78,757 53,648 -- 1,149,591 137,960
Payable for shares of beneficial
interest repurchased................ 597 -- -- 157,964 --
Due to advisor........................ -- -- -- -- --
Dividend payable...................... -- -- 3,690 -- --
Accrued expenses...................... 13,971 11,358 100,566 49,977 23,284
-------------------------------------------------------------------------
Total liabilities................... 93,325 65,006 104,256 1,357,532 161,244
-------------------------------------------------------------------------
NET ASSETS.............................. $ 6,674,796 $ 1,462,893 $124,864,285 $ 71,014,267 $ 11,182,638
-------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 4,683,968 $ 1,452,894 $124,863,943 $ 67,017,923 $ 7,273,648
Accumulated undistributed net
investment (deficit)................ (194) (391) -- (217,357) (151,713)
Accumulated undistributed net realized
gain (loss)......................... 903,270 (400) 342 (4,296,063) 293,780
Accumulated undistributed foreign
exchange gain (loss)................ 19,730 8,046 -- (255,364) (75,668)
Net unrealized foreign exchange gain
(loss).............................. (4,003) (1,706) -- (112) 2,596
Net unrealized appreciation on
investments......................... 1,072,025 4,450 -- 8,765,240 3,839,995
-------------------------------------------------------------------------
Net assets.......................... $ 6,674,796 $ 1,462,893 $124,864,285 $ 71,014,267 $ 11,182,638
-------------------------------------------------------------------------
Shares of beneficial interest, no par
value, issued and outstanding
(unlimited shares authorized)....... 341,730 113,451 124,863,943 4,084,631 579,657
-------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net assets/
Outstanding shares of beneficial
interest)........................... $ 19.53 $ 12.89 $ 1.00 $ 17.39 $ 19.29
-------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE OF
$19.75/94.75%, $18.63/94.75%,
$15.73/94.75%, $19.12/94.75%,
$19.53/94.75%, $12.89/95.25%, $1.00,
$17.39/94.75%, $19.29/94.75%,
$17.01/94.75, $19.33/94.75%,
respectively)....................... $ 20.61 $ 13.53 $ 1.00 $ 18.35 $ 20.36
-------------------------------------------------------------------------
* Cost of investments in the Master
Trust Fund............................ $ 3,024,527 $ 1,115,098 $124,924,651 $ 62,920,782 $ 6,530,714
-------------------------------------------------------------------------
<CAPTION>
INTERNATIONAL WORLDWIDE
CORE GROWTH GROWTH
<S> <C> <C>
---------------------------
ASSETS
Investments in Master Trust Fund, at
value*.............................. $12,666,831 $ 38,654,763
Receivable for shares of beneficial
interests sold...................... 2,294,124 5,594,639
Receivable for investments sold in
Master Trust Fund................... -- 53,413
Due from advisor...................... 7,326 36,109
---------------------------
Total assets........................ 14,968,281 44,338,924
---------------------------
LIABILITIES
Payable for investments purchased in
Master Trust Fund................... 2,294,123 5,594,639
Payable for shares of beneficial
interest repurchased................ -- 53,413
Due to advisor........................ -- --
Dividend payable...................... -- --
Accrued expenses...................... 10,145 43,436
---------------------------
Total liabilities................... 2,304,268 5,691,488
---------------------------
NET ASSETS.............................. $12,664,013 $ 38,647,436
---------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $11,337,018 $ 28,582,957
Accumulated undistributed net
investment (deficit)................ (14,085) (873,652)
Accumulated undistributed net realized
gain (loss)......................... (256,789) 3,582,592
Accumulated undistributed foreign
exchange gain (loss)................ (11,583) (133,005)
Net unrealized foreign exchange gain
(loss).............................. 3,053 1,687
Net unrealized appreciation on
investments......................... 1,606,399 7,486,857
---------------------------
Net assets.......................... $12,664,013 $ 38,647,436
---------------------------
Shares of beneficial interest, no par
value, issued and outstanding
(unlimited shares authorized)....... 744,465 1,999,475
---------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net assets/
Outstanding shares of beneficial
interest)........................... $ 17.01 $ 19.33
---------------------------
MAXIMUM OFFERING PRICE PER SHARE OF
$19.75/94.75%, $18.63/94.75%,
$15.73/94.75%, $19.12/94.75%,
$19.53/94.75%, $12.89/95.25%, $1.00,
$17.39/94.75%, $19.29/94.75%,
$17.01/94.75, $19.33/94.75%,
respectively)....................... $ 17.95 $ 20.40
---------------------------
* Cost of investments in the Master
Trust Fund............................ $11,267,499 $ 19,624,027
---------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
61
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1998
- -------------------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH GROWTH
<S> <C> <C> <C> <C>
--------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at
value*.............................. $ 55,289,975 $ 46,888,527 $3,200,965 $ 37,102,882
Receivable for shares of beneficial
interest sold....................... 219,462 106,949 22,444 540,432
Receivable for investments sold in
Master Trust Fund................... 36,992 74,023 -- 6,664
Due from advisor...................... 19,450 -- 9,578 --
--------------------------------------------------------
Total assets........................ 55,565,879 47,069,499 3,232,987 37,649,978
--------------------------------------------------------
LIABILITIES
Payable for investments purchased in
Master Trust Fund................... 219,462 106,949 22,444 540,432
Payable for shares of beneficial
interest repurchased................ 36,992 74,023 -- 6,664
Due to advisor........................ -- 29,196 -- 34,146
Dividend payable...................... -- -- -- 459
Accrued expenses...................... 94,164 53,570 23,568 343,233
--------------------------------------------------------
Total liabilities................... 350,618 263,738 46,012 924,934
--------------------------------------------------------
NET ASSETS.............................. $ 55,215,261 $ 46,805,761 $3,186,975 $ 36,725,044
--------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 42,732,124 $ 36,977,437 $2,784,528 $ 31,611,870
Accumulated undistributed net
investment (deficit)................ (1,495,951) (1,080,501) (13,889) (1,394)
Accumulated undistributed net realized
gain (loss)......................... (135,573) 1,298,619 (2,283) 22,674
Accumulated undistributed foreign
exchange gain (loss)................ -- -- -- --
Net unrealized foreign exchange gain
(loss).............................. -- -- -- --
Net unrealized appreciation on
investments......................... 14,114,661 9,610,206 418,619 5,091,894
--------------------------------------------------------
Net assets.......................... $ 55,215,261 $ 46,805,761 $3,186,975 $ 36,725,044
--------------------------------------------------------
Shares of beneficial interest, no par
value, issued and outstanding
(unlimited shares authorized)....... 2,450,788 2,172,318 203,753 1,786,124
--------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net assets/
Outstanding shares of beneficial
interest)........................... $ 22.53 $ 21.55 $ 15.64 $ 20.56
--------------------------------------------------------
* Cost of investments in the Master
Trust Fund............................ $ 41,731,151 $ 33,677,832 $2,781,126 $ 30,244,427
--------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
62
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED GOVERNMENT EMERGING SMALL CAP INTERNATIONAL WORLDWIDE
GROWTH INCOME COUNTRIES GROWTH CORE GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at
value*.............................. $ 4,295,857 $ 3,099,916 $ 38,878,774 $ 12,074,257 $7,991,836 $ 10,146,690
Receivable for shares of beneficial
interest sold....................... 26,506 327 69,416 89,870 215,130 57,493
Receivable for investments sold in
Master Trust Fund................... 200 7,040 54,316 3,618 -- 1,416
Due from advisor...................... -- 25,265 -- -- -- --
----------------------------------------------------------------------------------------
Total assets........................ 4,322,563 3,132,548 39,002,506 12,167,745 8,206,966 10,205,599
----------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased in
Master Trust Fund................... 26,506 327 69,416 89,870 215,130 57,493
Payable for shares of beneficial
interest repurchased................ 200 7,040 54,316 3,618 -- 1,416
Due to advisor........................ 22,960 -- 24,923 19,415 38,250 38,121
Dividend payable...................... -- -- -- -- -- --
Accrued expenses...................... 18,424 47,558 57,804 21,979 11,541 25,953
----------------------------------------------------------------------------------------
Total liabilities................... 68,090 54,925 206,459 134,882 264,921 122,983
----------------------------------------------------------------------------------------
NET ASSETS.............................. $ 4,254,473 $ 3,077,623 $ 38,796,047 $ 12,032,863 $7,942,045 $ 10,082,616
----------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 3,376,122 $ 3,007,282 $ 36,975,253 $ 9,588,245 $6,997,523 $ 7,984,098
Accumulated undistributed net
investment (deficit)................ (68) (922) (488,301) (196,907) (50,638) (178,521)
Accumulated undistributed net realized
gain (loss)......................... 357,622 51,771 (2,543,829) 123,955 (215,830) 610,225
Accumulated undistributed foreign
exchange gain (loss)................ 9,722 12,807 (159,664) (61,230) (14,612) (39,704)
Net unrealized foreign exchange gain
(loss).............................. (1,926) (3,554) (105) 4,070 2,412 610
Net unrealized appreciation on
investments......................... 513,001 10,239 5,012,693 2,574,730 1,223,190 1,705,908
----------------------------------------------------------------------------------------
Net assets.......................... $ 4,254,473 $ 3,077,623 $ 38,796,047 $ 12,032,863 $7,942,045 $ 10,082,616
----------------------------------------------------------------------------------------
Shares of beneficial interest, no par
value, issued and outstanding
(unlimited shares authorized)....... 211,963 239,319 2,199,764 596,828 464,480 501,687
----------------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net assets/
Outstanding shares of beneficial
interest)........................... $ 20.07 $ 12.86 $ 17.64 $ 20.16 $ 17.10 $ 20.10
----------------------------------------------------------------------------------------
* Cost of investments in the Master
Trust Fund............................ $ 3,228,848 $ 2,834,417 $ 34,663,592 $ 8,924,805 $6,956,200 $ 7,336,009
----------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
63
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1998
- -------------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH GROWTH
<S> <C> <C> <C> <C>
-------------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at
value*.............................. $ 225,380,879 $ 167,160,004 $ 962,541 $ 81,682,723
Receivable for shares of beneficial
interests sold...................... 238,830 186,880 12,464 759,050
Receivable for investments sold in
Master Trust Fund................... 484,684 773,136 -- 169,939
Due from advisor...................... 9,299 -- 8,557 --
-------------------------------------------------------------
Total assets........................ 226,113,692 168,120,020 983,562 82,611,712
-------------------------------------------------------------
LIABILITIES
Payable for investments purchased in
Master Trust Fund................... 238,830 186,880 12,464 759,050
Payable for shares of beneficial
interest repurchased................ 484,684 773,136 -- 169,939
Due to advisor........................ -- 21,216 -- 4,322
Dividend payable...................... -- -- -- 1,039
Accrued expenses...................... 365,491 289,364 11,534 116,823
-------------------------------------------------------------
Total liabilities................... 1,089,005 1,270,596 23,998 1,051,173
-------------------------------------------------------------
NET ASSETS.............................. $ 225,024,687 $ 166,849,424 $ 959,564 $ 81,560,539
-------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 157,040,221 $ 126,937,812 $ 837,152 $ 61,920,779
Accumulated undistributed net
investment (deficit)................ (15,093,475) (11,087,022) (3,260) (2,498)
Accumulated undistributed net realized
gain (loss)......................... 3,742,484 10,556,135 3,290 1,362,414
Accumulated undistributed foreign
exchange gain (loss)................ -- -- -- --
Net unrealized foreign exchange gain
(loss).............................. -- -- -- --
Net unrealized appreciation on
investments......................... 79,335,457 40,442,499 122,382 18,279,844
-------------------------------------------------------------
Net assets.......................... $ 225,024,687 $ 166,849,424 $ 959,564 $ 81,560,539
-------------------------------------------------------------
Shares of beneficial interest, no par
value, issued and outstanding
(unlimited shares authorized)....... 12,085,381 9,726,149 61,404 4,171,144
-------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net assets/
Outstanding shares of beneficial
interest)........................... $ 18.62 $ 17.15 $ 15.63 $ 19.55
-------------------------------------------------------------
* Cost of investments in the Master
Trust Fund............................ $ 93,040,743 $ 56,335,209 $ 836,391 $ 38,633,981
-------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
64
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED GOVERNMENT EMERGING SMALL CAP INTERNATIONAL WORLDWIDE
GROWTH INCOME COUNTRIES GROWTH CORE GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
ASSETS
Investments in Master Trust Fund, at
value*.............................. $20,811,648 $ 4,674,546 $37,053,581 $8,015,690 $3,532,562 $ 84,394,983
Receivable for shares of beneficial
interests sold...................... 224,983 1,694 174,496 140,560 241,715 41,689
Receivable for investments sold in
Master Trust Fund................... 190,675 45,984 215,230 50,314 -- 161,095
Due from advisor...................... -- 9,291 19,359 13,095 12,944 56,656
-----------------------------------------------------------------------------
Total assets........................ 21,227,306 4,731,515 37,462,666 8,219,659 3,787,221 84,654,423
-----------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased in
Master Trust Fund................... 224,983 1,694 174,496 140,560 241,715 41,689
Payable for shares of beneficial
interest repurchased................ 190,675 45,984 215,230 50,314 -- 161,095
Due to advisor........................ 1,771 -- -- -- -- --
Dividend payable...................... -- -- -- -- -- --
Accrued expenses...................... 25,794 18,364 86,488 14,835 28,465 159,216
-----------------------------------------------------------------------------
Total liabilities................... 443,223 66,042 476,214 205,709 270,180 362,000
-----------------------------------------------------------------------------
NET ASSETS.............................. $20,784,083 $ 4,665,473 $36,986,452 $8,013,950 $3,517,041 $ 84,292,423
-----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $14,334,478 $ 4,622,636 $35,514,648 $6,390,720 $3,183,799 $ 60,901,504
Accumulated undistributed net
investment (deficit)................ (327) (1,957) (586,713) (136,403 ) (15,363 ) (4,102,024)
Accumulated undistributed net realized
gain (loss)......................... 3,011,472 11,149 (2,652,351) 108,242 (110,644 ) 9,204,744
Accumulated undistributed foreign
exchange gain (loss)................ 63,721 25,686 (179,756) (39,883 ) (3,723 ) 146,128
Net unrealized foreign exchange gain
(loss).............................. (12,846) (12,945) (133) 2,303 1,064 4,216
Net unrealized appreciation on
investments......................... 3,387,585 20,904 4,890,757 1,688,971 461,908 18,137,855
-----------------------------------------------------------------------------
Net assets.......................... $20,784,083 $ 4,665,473 $36,986,452 $8,013,950 $3,517,041 $ 84,292,423
-----------------------------------------------------------------------------
Shares of beneficial interest, no par
value, issued and outstanding
(unlimited shares authorized)....... 1,044,468 354,273 2,178,043 432,494 204,944 4,424,490
-----------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net assets/
Outstanding shares of beneficial
interest)........................... $ 19.90 $ 13.17 $ 16.98 $ 18.53 $ 17.16 $ 19.05
-----------------------------------------------------------------------------
* Cost of investments in the Master
Trust Fund............................ $ 9,602,389 $ 3,490,107 $32,490,039 $5,894,456 $3,183,799 $ 34,636,454
-----------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
65
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1998
- -------------------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH+ GROWTH
<S> <C> <C> <C> <C>
--------------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from
Master Trust Fund................... $ (900,961) $ (277,345) $ (1,571) $ 1,203,544
--------------------------------------------------------
EXPENSES
Accounting fees....................... 106,989 54,935 646 24,618
Administration fees................... 5,000 6,542 2,847 7,460
Audit & tax fees...................... 92,476 33,297 313 16,868
Co-Administration fees................ 166,646 85,279 1,026 41,321
Distribution fees..................... 416,615 213,197 2,564 95,482
Insurance............................. 9,056 5,146 20 2,287
Legal fees............................ 3,520 3,823 209 702
Miscellaneous......................... 12,932 6,504 91 3,434
Organization costs.................... 3,863 9,117 -- 7,517
Registration fees -- federal.......... 1,965 1,769 -- 5
Registration fees -- state............ 11,193 8,222 485 7,349
Shareholder reporting fees............ 122,421 50,184 1,008 17,774
Shareholder servicing fees............ 166,191 85,279 1,026 38,193
Transfer agent fees................... 147,746 78,636 14,604 53,106
Trustees' fees........................ 1,270 1,270 877 1,270
--------------------------------------------------------
Total expenses...................... 1,267,883 643,200 25,716 317,386
Less: Reimbursement to (from)
advisor............................. -- (19,235) (18,023) (41,436)
Less: Co-Administration fees waived... (14,068) (49,105) (1,026) (26,243)
Add: Line of credit commitment fee.... 11,630 5,989 66 2,675
--------------------------------------------------------
Net expenses........................ 1,265,445 580,849 6,733 252,382
--------------------------------------------------------
Net investment income (deficit)... (2,166,406) (858,194) (8,304) 951,162
--------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 14,713,894 14,329,285 (4,916) 2,263,112
Net realized foreign exchange gain
(loss).............................. -- -- -- --
Change in net unrealized foreign
exchange gain (loss)................ -- -- -- --
Change in net unrealized appreciation
of investments...................... 63,896,806 17,216,631 598,677 7,112,487
--------------------------------------------------------
Net gain (loss) on investments...... 78,610,700 31,545,916 593,761 9,375,599
--------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 76,444,294 $ 30,687,722 $ 585,457 $ 10,326,761
--------------------------------------------------------
- -------------
+ Commenced operations on July 15, 1997.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
66
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED GOVERNMENT EMERGING SMALL CAP
GROWTH INCOME MONEY MARKET COUNTRIES GROWTH
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from
Master Trust Fund................... $ 125,607 $ 67,585 $ 3,089,229 $ 343,148 $ (49,701)
-------------------------------------------------------------------------
EXPENSES
Accounting fees....................... 3,818 773 38,200 35,545 6,170
Administration fees................... 7,111 4,853 5,000 9,731 5,155
Audit & tax fees...................... 2,489 459 22,550 23,041 2,189
Co-Administration fees................ 5,929 1,190 59,754 55,376 9,643
Distribution fees..................... 14,822 2,977 89,632 138,439 24,108
Insurance............................. 360 70 4,916 3,233 530
Legal fees............................ 1,925 171 6,056 5,357 1,397
Miscellaneous......................... 2,400 25 6,715 3,439 515
Organization costs.................... 6,768 6,506 5,422 4,324 --
Registration fees -- federal.......... 53 -- 9,169 7,785 1,146
Registration fees -- state............ 3,136 6,058 15,513 12,683 7,057
Shareholder reporting fees............ 2,492 563 11,895 43,763 5,792
Shareholder servicing fees............ 5,929 1,191 59,754 55,375 9,617
Transfer agent fees................... 26,384 22,407 47,908 63,114 48,177
Trustees' fees........................ 1,270 1,270 1,270 1,270 1,270
-------------------------------------------------------------------------
Total expenses...................... 84,886 48,513 383,754 462,475 122,766
Less: Reimbursement to (from)
advisor............................. (40,420) (43,844) (369,649) (54,056) (55,262)
Less: Co-Administration fees waived... (5,929) (1,097) (18,226) (48,479) (9,643)
Add: Line of credit commitment fee.... 415 84 4,121 3,865 665
-------------------------------------------------------------------------
Net expenses........................ 38,952 3,656 -- 363,805 58,526
-------------------------------------------------------------------------
Net investment income (deficit)... 86,655 63,929 3,089,229 (20,657) (108,227)
-------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 1,250,244 46,449 666 (3,344,810) 795,420
Net realized foreign exchange gain
(loss).............................. 19,730 8,046 -- (223,033) (64,490)
Change in net unrealized foreign
exchange gain (loss)................ (4,003) (1,706) -- 2,440 3,187
Change in net unrealized appreciation
of investments...................... 543,858 27,575 -- 7,662,903 3,433,741
-------------------------------------------------------------------------
Net gain (loss) on investments...... 1,809,829 80,364 666 4,097,500 4,167,858
-------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 1,896,484 $ 144,293 $ 3,089,895 $ 4,076,843 $ 4,059,631
-------------------------------------------------------------------------
- -------------
+ Commenced operations on July 15, 1997.
<CAPTION>
INTERNATIONAL WORLDWIDE
CORE GROWTH GROWTH
<S> <C> <C>
---------------------------
INVESTMENT INCOME
Net investment income (deficit) from
Master Trust Fund................... $ 5,759 $ (2,239)
---------------------------
EXPENSES
Accounting fees....................... 2,065 18,970
Administration fees................... 3,162 8,287
Audit & tax fees...................... 525 3,869
Co-Administration fees................ 3,272 29,444
Distribution fees..................... 8,179 73,611
Insurance............................. 132 1,815
Legal fees............................ 417 1,935
Miscellaneous......................... 563 3,609
Organization costs.................... -- 7,076
Registration fees -- federal.......... -- 8
Registration fees -- state............ 6,501 8,863
Shareholder reporting fees............ 1,796 43,734
Shareholder servicing fees............ 3,272 29,444
Transfer agent fees................... 19,972 38,678
Trustees' fees........................ 1,270 1,270
---------------------------
Total expenses...................... 51,126 270,613
Less: Reimbursement to (from)
advisor............................. (28,224) (52,084)
Less: Co-Administration fees waived... (3,272) (27,141)
Add: Line of credit commitment fee.... 214 2,065
---------------------------
Net expenses........................ 19,844 193,453
---------------------------
Net investment income (deficit)... (14,085) (195,692)
---------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ (204,310) 5,587,679
Net realized foreign exchange gain
(loss).............................. (11,581) (90,756)
Change in net unrealized foreign
exchange gain (loss)................ 3,054 7,316
Change in net unrealized appreciation
of investments...................... 1,606,379 4,485,372
---------------------------
Net gain (loss) on investments...... 1,393,542 9,989,611
---------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $1,379,457 $ 9,793,919
---------------------------
- -------------
+ Commenced operations on July 15, 1997.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
67
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1998
- -------------------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH+ GROWTH
<S> <C> <C> <C> <C>
--------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from
Master Trust Fund................... $ (237,576) $ (130,094) $ 124 $ 678,392
--------------------------------------------------
EXPENSES
Accounting fees....................... 27,367 24,465 648 13,607
Administration fees................... 5,000 2,915 3,944 3,975
Audit & tax fees...................... 15,278 6,282 377 4,170
Co-Administration fees................ 42,715 38,046 1,072 23,484
Distribution fees..................... 320,365 285,334 8,044 159,116
Insurance............................. 2,594 2,346 62 1,242
Legal fees............................ 6,007 4,261 254 3,131
Miscellaneous......................... 873 782 136 1,348
Organization costs.................... 625 625 -- 625
Registration fees -- federal.......... 11,477 2,407 -- 12,860
Registration fees -- state............ 10,016 10,722 590 6,483
Shareholder reporting fees............ 19,790 1,082 716 685
Shareholder servicing fees............ 106,497 95,112 2,681 53,039
Transfer agent fees................... 66,745 22,660 8,392 16,472
Trustees' fees........................ 1,270 1,270 877 1,270
--------------------------------------------------
Total expenses...................... 636,619 498,309 27,793 301,507
Less: Reimbursement to (from)
advisor............................. (4,431) 26,155 (12,778) (10,152)
Less: Co-Administration fees waived... -- (21,437) (1,072) (14,915)
Add: Line of credit commitment fee.... 2,960 2,655 70 1,460
--------------------------------------------------
Net expenses........................ 635,148 505,682 14,013 277,900
--------------------------------------------------
Net investment income (deficit)... (872,724) (635,776) (13,889) 400,492
--------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 381,876 3,050,020 1,096 517,879
Net realized foreign exchange gain
(loss).............................. -- -- -- --
Change in net unrealized foreign
exchange gain (loss)................ -- -- -- --
Change in net unrealized appreciation
of investments...................... 14,835,512 10,415,682 418,619 4,675,204
--------------------------------------------------
Net gain on investments............. 15,217,388 13,465,702 419,715 5,193,083
--------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 14,344,664 $ 12,829,926 $ 405,826 $ 5,593,575
--------------------------------------------------
- -------------
+ Commenced operations on July 15, 1997.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
68
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED GOVERNMENT EMERGING SMALL CAP INTERNATIONAL WORLDWIDE
GROWTH INCOME COUNTRIES GROWTH CORE GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from
Master Trust Fund................... $ 66,794 $ 105,394 $ 179,184 $ (40,071) $ (1,744) $ (3,694)
---------------------------------------------------------------------------
EXPENSES
Accounting fees....................... 1,972 1,261 22,246 5,098 2,453 5,247
Administration fees................... 3,656 7,419 6,096 4,273 4,089 2,296
Audit & tax fees...................... 1,013 613 13,018 3,563 701 134
Co-Administration fees................ 3,067 1,948 34,702 7,954 3,891 8,171
Distribution fees..................... 23,003 9,739 260,263 59,657 29,181 61,282
Insurance............................. 180 119 2,067 481 213 493
Legal fees............................ 442 304 3,788 1,110 584 1,127
Miscellaneous......................... 499 439 2,364 1,605 526 468
Organization costs.................... 625 625 636 625 -- 625
Registration fees -- federal.......... 214 344 4,401 921 75 716
Registration fees -- state............ 575 749 11,523 5,311 6,133 3,834
Shareholder reporting fees............ 15 145 5,390 250 1,891 159
Shareholder servicing fees............ 7,668 4,870 86,754 19,831 9,727 20,427
Transfer agent fees................... 4,360 27,988 36,794 7,360 1,056 8,764
Trustees' fees........................ 1,270 1,270 1,270 1,270 1,270 1,270
---------------------------------------------------------------------------
Total expenses...................... 48,559 57,833 491,312 119,309 61,790 115,013
Less: Reimbursement to (from)
advisor............................. (5,621) (42,251 ) (9,708) (11,929 ) (9,264 ) (978)
Less: Co-Administration fees waived... (3,067) (1,948 ) (30,482) (7,954 ) (3,891 ) (7,813)
Add: Line of credit commitment fee.... 213 135 2,423 552 259 570
---------------------------------------------------------------------------
Net expenses........................ 40,084 13,769 453,545 99,978 48,894 106,792
---------------------------------------------------------------------------
Net investment income (deficit)... 26,710 91,625 (274,361) (140,049 ) (50,638 ) (110,486)
---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 453,670 70,234 (2,526,329) 551,766 (173,620 ) 965,691
Net realized foreign exchange gain
(loss).............................. 9,722 12,807 (139,431) (50,019 ) (14,609 ) (24,660)
Change in net unrealized foreign
exchange gain (loss)................ (1,926) (3,554 ) 1,702 4,612 2,412 1,973
Change in net unrealized appreciation
of investments...................... 458,423 36,785 4,232,568 2,162,717 1,223,177 1,382,445
---------------------------------------------------------------------------
Net gain on investments............. 919,889 116,272 1,568,510 2,669,076 1,037,360 2,325,449
---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 946,599 $ 207,897 $ 1,294,149 $2,529,027 $ 986,722 $ 2,214,963
---------------------------------------------------------------------------
- -------------
+ Commenced operations on July 15, 1997.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
69
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1998
- -------------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH+ GROWTH
<S> <C> <C> <C> <C>
---------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from
Master Trust Fund................... $ (1,179,251) $ (526,808) $ (280) $ 2,219,470
---------------------------------------------------
EXPENSES
Accounting fees....................... 138,274 107,702 141 45,416
Administration fees................... 5,000 12,829 709 13,863
Audit & tax fees...................... 100,413 80,821 128 30,403
Co-Administration fees................ 214,915 166,961 228 75,929
Distribution fees..................... 1,611,870 1,252,206 1,711 528,197
Insurance............................. 13,219 10,295 7 4,316
Legal fees............................ 27,837 6,913 44 708
Miscellaneous......................... 19,445 14,521 83 5,045
Organization costs.................... 3,862 9,484 -- 7,584
Registration fees -- federal.......... 3,495 2 -- 4
Registration fees -- state............ 12,646 16,532 394 10,179
Shareholder reporting fees............ 140,458 99,882 175 38,323
Shareholder servicing fees............ 535,822 417,402 570 176,066
Transfer agent fees................... 280,014 184,384 7,737 48,585
Trustees' fees........................ 1,270 1,270 877 1,270
---------------------------------------------------
Total expenses...................... 3,108,540 2,381,204 12,804 985,888
Less: Reimbursement to (from)
advisor............................. (28,000) -- (9,611) (20,397)
Less: Co-Administration fees waived... (15,913) (96,946) (228) (47,119)
Add: Line of credit commitment fee.... 15,084 11,777 15 4,948
---------------------------------------------------
Net expenses........................ 3,079,711 2,296,035 2,980 923,320
---------------------------------------------------
Net investment income (deficit)..... (4,258,962) (2,822,843) (3,260) 1,296,150
---------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 17,676,088 30,274,794 4,048 4,493,108
Net realized foreign exchange gain
(loss).............................. -- -- -- --
Change in net unrealized foreign
exchange gain (loss)................ -- -- -- --
Change in net unrealized appreciation
of investments...................... 64,509,334 28,924,425 122,382 12,743,454
---------------------------------------------------
Net gain on investments............. 82,185,422 59,199,219 126,430 17,236,562
---------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 77,926,460 $ 56,376,376 $ 123,170 $ 18,532,712
---------------------------------------------------
- -------------
+ Commenced operations on July 15, 1997.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
70
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BALANCED GOVERNMENT EMERGING SMALL CAP INTERNATIONAL WORLDWIDE
GROWTH INCOME COUNTRIES GROWTH CORE GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income (deficit) from
Master Trust Fund................... $ 408,251 $ 245,188 $ 170,368 $ (24,041) $ 142 $ (10,953)
------------------------------------------------------------------------------
EXPENSES
Accounting fees....................... 12,451 2,887 24,160 3,184 781 50,952
Administration fees................... 23,216 17,728 6,634 2,661 1,248 22,317
Audit & tax fees...................... 2,762 1,715 10,560 3,663 203 42,023
Co-Administration fees................ 19,303 4,449 37,683 4,959 1,234 79,015
Distribution fees..................... 144,771 22,237 282,621 37,193 9,253 592,610
Insurance............................. 1,197 262 2,260 283 73 4,803
Legal fees............................ 1,224 672 3,925 700 194 8,479
Miscellaneous......................... 4,275 545 2,778 102 379 6,340
Organization costs.................... 6,914 6,599 1,524 -- -- 7,645
Registration fees -- federal.......... 298 216 4,803 672 60 18
Registration fees -- state............ 7,750 8,403 11,502 6,594 16,405 10,077
Shareholder reporting fees............ 5,743 1,172 16,735 260 623 92,514
Shareholder servicing fees............ 48,257 11,119 94,207 12,364 3,085 197,536
Transfer agent fees................... 20,314 8,292 45,075 20,199 10,143 46,922
Trustees' fees........................ 1,270 1,270 1,270 1,270 1,270 1,270
------------------------------------------------------------------------------
Total expenses...................... 299,745 87,566 545,737 94,104 44,951 1,162,521
Less: Reimbursement to (from)
advisor............................. (29,506) (52,424 ) (22,252) (27,158 ) (28,295 ) (66,616)
Less: Co-Administration fees waived... (19,303) (4,008 ) (33,609) (4,959 ) (1,234 ) (68,714)
Add: Line of credit commitment fee.... 1,358 312 2,639 345 82 5,567
------------------------------------------------------------------------------
Net expenses........................ 252,294 31,446 492,515 62,332 15,504 1,032,758
------------------------------------------------------------------------------
Net investment income (deficit)..... 155,957 213,742 (322,147) (86,373 ) (15,362 ) (1,043,711)
------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 3,912,158 165,123 (2,508,576) 434,736 (110,382 ) 14,707,865
Net realized foreign exchange gain
(loss).............................. 63,721 25,686 (153,180) (31,998 ) (3,706 ) (247,164)
Change in net unrealized foreign
exchange gain (loss)................ (12,846) (12,945 ) 2,149 2,689 1,078 20,732
Change in net unrealized appreciation
of investments...................... 2,025,760 94,117 3,924,680 1,336,130 461,551 9,143,405
------------------------------------------------------------------------------
Net gain on investments............. 5,988,793 271,981 1,265,073 1,741,557 348,541 23,624,838
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 6,144,750 $ 485,723 $ 942,926 $1,655,184 $ 333,179 $ 22,581,127
------------------------------------------------------------------------------
- -------------
+ Commenced operations on July 15, 1997.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
71
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING GROWTH CORE GROWTH
----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
-------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (2,166,406) $ (1,925,355) $ (858,194) $ (881,974)
Net realized gain (loss) from
security transactions............. 14,713,894 22,751,958 14,329,285 15,467,542
Net realized foreign exchange gain
(loss)............................ -- -- -- --
Change in net unrealized foreign
exchange gain (loss).............. -- -- -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 63,896,806 (28,323,397) 17,216,631 (13,774,880)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 76,444,294 (7,496,794) 30,687,722 810,688
-------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- -- -- --
Capital gain*....................... (21,481,493) (15,992,011) (19,865,126) (8,361,898)
-------------------------------------------------------------
Total distributions............... (21,481,493) (15,992,011) (19,865,126) (8,361,898)
-------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 1,931,764,538 462,516,007 224,326,301 30,931,782
Proceeds from shares issued for
distribution reinvestment......... 15,132,144 4,994,971 16,459,004 2,545,818
Cost of shares repurchased.......... (1,921,657,761) (460,435,916) (237,096,577) (27,093,474)
-------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest..... 25,238,921 7,075,062 3,688,728 6,384,126
-------------------------------------------------------------
Total increase (decrease) in net
assets.......................... 80,201,722 (16,413,743) 14,511,324 (1,167,084)
NET ASSETS
BEGINNING OF PERIOD................... 121,741,647 138,155,390 76,107,976 77,275,060
-------------------------------------------------------------
END OF PERIOD......................... $ 201,943,369 $ 121,741,647 $ 90,619,300 $ 76,107,976
-------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 8,038,199 7,704,965 4,529,358 4,207,526
Shares sold........................... 104,820,578 26,044,720 12,405,504 1,620,624
Shares issued for distributions
reinvested.......................... 830,976 280,974 1,012,862 136,067
Shares repurchased.................... (103,463,758) (25,992,460) (13,082,835) (1,434,859)
-------------------------------------------------------------
Ending balance...................... 10,225,995 8,038,199 4,864,889 4,529,358
-------------------------------------------------------------
</TABLE>
- -------------
* See Financial Highlights for per share distribution amounts.
+ Commenced operations on July 15, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
72
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP
GROWTH INCOME & GROWTH
------------- -----------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31,
1998+ 1998 1997
<S> <C> <C> <C>
---------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (8,304) $ 951,162 $ 876,497
Net realized gain (loss) from
security transactions............. (4,916) 2,263,112 4,451,706
Net realized foreign exchange gain
(loss)............................ -- -- --
Change in net unrealized foreign
exchange gain (loss).............. -- -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 598,677 7,112,487 (1,334,608)
---------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 585,457 10,326,761 3,993,595
---------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- (947,084) (886,133)
Capital gain*....................... (882) (3,863,504) (1,316,886)
---------------------------------------------
Total distributions............... (882) (4,810,588) (2,203,019)
---------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 4,334,894 12,820,279 6,259,230
Proceeds from shares issued for
distribution reinvestment......... 871 2,762,320 1,074,289
Cost of shares repurchased.......... (177,917) (5,890,494) (8,754,583)
---------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest..... 4,157,848 9,692,105 (1,421,064)
---------------------------------------------
Total increase (decrease) in net
assets.......................... 4,742,423 15,208,278 369,512
NET ASSETS
BEGINNING OF PERIOD................... -- 32,081,563 31,712,051
---------------------------------------------
END OF PERIOD......................... $ 4,742,423 $ 47,289,841 $ 32,081,563
---------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... -- 1,933,759 2,022,208
Shares sold........................... 314,594 709,278 381,186
Shares issued for distributions
reinvested.......................... 65 154,229 65,578
Shares repurchased.................... (13,075) (323,387) (535,213)
---------------------------------------------
Ending balance...................... 301,584 2,473,879 1,933,759
---------------------------------------------
<CAPTION>
BALANCED GROWTH GOVERNMENT INCOME
----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
-------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ 86,655 $ 110,794 $ 63,929 $ 75,317
Net realized gain (loss) from
security transactions............. 1,250,244 500,670 46,449 (33,783)
Net realized foreign exchange gain
(loss)............................ 19,730 -- 8,046 --
Change in net unrealized foreign
exchange gain (loss).............. (4,003) -- (1,706) --
Change in net unrealized
appreciation (depreciation) of
investments....................... 543,858 (135,773) 27,575 4,940
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 1,896,484 475,691 144,293 46,474
-------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. (87,066) (110,672) (63,726) (75,947)
Capital gain*....................... (526,756) (492,706) (14,006) (27,737)
-------------------------------------------------------------
Total distributions............... (613,822) (603,378) (77,732) (103,684)
-------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 5,582,957 2,150,368 2,155,896 1,068,961
Proceeds from shares issued for
distribution reinvestment......... 526,715 161,907 54,548 41,246
Cost of shares repurchased.......... (5,615,525) (3,188,811) (1,927,402) (1,237,165)
-------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest..... 494,147 (876,536) 283,042 (126,958)
-------------------------------------------------------------
Total increase (decrease) in net
assets.......................... 1,776,809 (1,004,223) 349,603 (184,168)
NET ASSETS
BEGINNING OF PERIOD................... 4,897,987 5,902,210 1,113,290 1,297,458
-------------------------------------------------------------
END OF PERIOD......................... $ 6,674,796 $ 4,897,987 $ 1,462,893 $ 1,113,290
---------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 315,190 365,215 91,535 101,818
Shares sold........................... 305,352 127,031 167,594 85,134
Shares issued for distributions
reinvested.......................... 29,098 9,776 4,312 3,298
Shares repurchased.................... (307,910) (186,832) (149,990) (98,715)
-------------------------------------------------------------
Ending balance...................... 341,730 315,190 113,451 91,535
---------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
73
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
- --------------------------------------------------------------------------------
SERIES A PORTFOLIOS
<TABLE>
<CAPTION>
MONEY MARKET EMERGING COUNTRIES
----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
-------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ 3,089,229 $ 877,328 $ (20,657) $ (187,913)
Net realized gain (loss) from
security transactions............. 666 (2) (3,344,810) 2,620,500
Net realized foreign exchange gain
(loss)............................ -- -- (223,033) (25,273)
Change in net unrealized foreign
exchange gain (loss).............. -- -- 2,440 (2,504)
Change in net unrealized
appreciation (depreciation) of
investments....................... -- -- 7,662,903 733,976
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 3,089,895 877,326 4,076,843 3,138,786
-------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. (3,089,229) (877,328) -- --
Capital gain*....................... -- -- (3,291,344) (297,905)
-------------------------------------------------------------
Total distributions............... (3,089,229) (877,328) (3,291,344) (297,905)
-------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 2,706,958,706 523,124,504 56,508,617 35,141,939
Proceeds from shares issued for
distribution reinvestment......... 2,089,292 771,842 2,308,126 161,618
Cost of shares repurchased.......... (2,620,443,059) (490,766,887) (27,275,872) (4,174,308)
-------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest..... 88,604,939 33,129,459 31,540,871 31,129,249
-------------------------------------------------------------
Total increase (decrease) in net
assets.......................... 88,605,605 33,129,457 32,326,370 33,970,130
NET ASSETS
BEGINNING OF PERIOD................... 36,258,680 3,129,223 38,687,897 4,717,767
-------------------------------------------------------------
END OF PERIOD......................... $ 124,864,285 $ 36,258,680 $ 71,014,267 $ 38,687,897
-------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 36,259,004 3,129,545 2,249,748 336,371
Shares sold........................... 2,706,958,706 523,124,504 3,249,713 2,155,019
Shares issued for distributions
reinvested.......................... 2,089,292 771,842 149,478 10,441
Shares repurchased.................... (2,620,443,059) (490,766,887) (1,564,308) (252,083)
-------------------------------------------------------------
Ending balance...................... 124,863,943 36,259,004 4,084,631 2,249,748
-------------------------------------------------------------
</TABLE>
- -------------
* See Financial Highlights for per share distribution amounts.
++ Commenced operations on February 28, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
74
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP
GROWTH INTERNATIONAL CORE GROWTH
----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997++
<S> <C> <C> <C> <C>
-------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (108,227) $ (29,476) $ (14,085) $ --
Net realized gain (loss) from
security transactions............. 795,420 151,811 (204,310) 13
Net realized foreign exchange gain
(loss)............................ (64,490) (11,302) (11,581) (2)
Change in net unrealized foreign
exchange gain (loss).............. 3,187 (493) 3,054 (1)
Change in net unrealized
appreciation (depreciation) of
investments....................... 3,433,741 289,270 1,606,379 20
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 4,059,631 399,810 1,379,457 30
-------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- (2,119) -- --
Capital gain*....................... (623,639) (28,766) (52,492) --
-------------------------------------------------------------
Total distributions............... (623,639) (30,885) (52,492) --
-------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 109,494,069 4,459,847 38,637,232 612
Proceeds from shares issued for
distribution reinvestment......... 383,230 11,339 47,981 --
Cost of shares repurchased.......... (107,699,737) (326,836) (27,349,807) --
-------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest..... 2,177,562 4,144,350 11,335,406 612
-------------------------------------------------------------
Total increase (decrease) in net
assets.......................... 5,613,554 4,513,275 12,662,371 642
NET ASSETS
BEGINNING OF PERIOD................... 5,569,084 1,055,809 1,642 1,000
-------------------------------------------------------------
END OF PERIOD......................... $ 11,182,638 $ 5,569,084 $ 12,664,013 $ 1,642
-------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 373,205 80,298 129 80
Shares sold........................... 6,608,889 313,534 2,435,374 49
Shares issued for distributions
reinvested.......................... 24,582 800 3,344 --
Shares repurchased.................... (6,427,019) (21,427) (1,694,382) --
-------------------------------------------------------------
Ending balance...................... 579,657 373,205 744,465 129
-------------------------------------------------------------
<CAPTION>
WORLDWIDE GROWTH
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31,
1998 1997
<S> <C> <C>
-----------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (195,692) $ (224,650)
Net realized gain (loss) from
security transactions............. 5,587,679 3,695,538
Net realized foreign exchange gain
(loss)............................ (90,756) (78,051)
Change in net unrealized foreign
exchange gain (loss).............. 7,316 (4,962)
Change in net unrealized
appreciation (depreciation) of
investments....................... 4,485,372 (553,127)
-----------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 9,793,919 2,834,748
-----------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- --
Capital gain*....................... (4,403,661) (2,322,037)
-----------------------------
Total distributions............... (4,403,661) (2,322,037)
-----------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 108,061,899 11,772,722
Proceeds from shares issued for
distribution reinvestment......... 3,565,008 455,819
Cost of shares repurchased.......... (102,391,906) (12,199,661)
-----------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest..... 9,235,001 28,880
-----------------------------
Total increase (decrease) in net
assets.......................... 14,625,259 541,591
NET ASSETS
BEGINNING OF PERIOD................... 24,022,177 23,480,586
-----------------------------
END OF PERIOD......................... $ 38,647,436 $ 24,022,177
-----------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 1,423,429 1,416,819
Shares sold........................... 5,937,921 685,931
Shares issued for distributions
reinvested.......................... 213,726 27,509
Shares repurchased.................... (5,575,601) (706,830)
-----------------------------
Ending balance...................... 1,999,475 1,423,429
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
75
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING GROWTH
----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31,
1998 1997
<S> <C> <C>
----------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (872,724) $ (510,915)
Net realized gain (loss) from
security transactions............. 381,876 (288,290)
Net realized foreign exchange gain
(loss)............................ -- --
Change in net unrealized foreign
exchange gain (loss).............. -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 14,835,512 (2,501,896)
----------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 14,344,664 (3,301,101)
----------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- --
Capital gain*....................... -- --
----------------------------
Total distributions............. -- --
----------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 30,441,105 24,330,440
Proceeds from shares issued for
distribution reinvestment......... -- --
Cost of shares repurchased.......... (17,600,099) (6,625,486)
----------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 12,841,006 17,704,954
----------------------------
Total increase (decrease) in net
assets........................ 27,185,670 14,403,853
NET ASSETS:
BEGINNING OF PERIOD................... 28,029,591 13,625,738
----------------------------
END OF PERIOD......................... $ 55,215,261 $ 28,029,591
----------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 1,807,110 816,643
Shares sold........................... 1,553,380 1,363,267
Shares issued for distributions
reinvested.......................... -- --
Shares repurchased.................... (909,702) (372,800)
----------------------------
Ending balance.................... 2,450,788 1,807,110
----------------------------
</TABLE>
- -------------
* See Financial Highlights for per share distribution amounts.
+ Commenced operations on July 15, 1997.
++ Commenced operations on February 28, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
76
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP
CORE GROWTH GROWTH INCOME & GROWTH
----------------------------- ------------- -------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998+ 1998 1997
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (635,776) $ (385,898) $ (13,889) $ 400,492 $ 158,493
Net realized gain (loss) from
security transactions............. 3,050,020 765,218 1,096 517,879 298,853
Net realized foreign exchange gain
(loss)............................ -- -- -- -- --
Change in net unrealized foreign
exchange gain (loss).............. -- -- -- -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 10,415,682 (1,661,676) 418,619 4,675,204 282,117
------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 12,829,926 (1,282,356) 405,826 5,593,575 739,463
------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- -- -- (401,392) (159,208)
Capital gain*....................... (2,515,167) -- (3,379) (788,469) --
------------------------------------------------------------------------
Total distributions............. (2,515,167) -- (3,379) (1,189,861) (159,208)
------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 20,188,443 22,036,974 3,275,198 21,634,970 10,404,427
Proceeds from shares issued for
distribution reinvestment......... 2,326,535 -- 3,000 972,857 109,978
Cost of shares repurchased.......... (15,026,369) (2,938,203) (493,670) (3,026,200) (480,034)
------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 7,488,609 19,098,771 2,784,528 19,581,627 10,034,371
------------------------------------------------------------------------
Total increase (decrease) in net
assets........................ 17,803,368 17,816,415 3,186,975 23,985,341 10,614,626
NET ASSETS:
BEGINNING OF PERIOD................... 29,002,393 11,185,978 -- 12,739,703 2,125,077
------------------------------------------------------------------------
END OF PERIOD......................... $ 46,805,761 $ 29,002,393 $ 3,186,975 $ 36,725,044 $12,739,703
------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 1,775,837 688,351 -- 767,845 142,019
Shares sold........................... 1,072,549 1,254,123 239,436 1,126,063 648,630
Shares issued for distributions
reinvested.......................... 123,360 -- 224 50,922 6,743
Shares repurchased.................... (799,428) (166,637) (35,907) (158,706) (29,547)
------------------------------------------------------------------------
Ending balance.................... 2,172,318 1,775,837 203,753 1,786,124 767,845
------------------------------------------------------------------------
<CAPTION>
BALANCED GROWTH
--------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31,
1998 1997
<S> <C> <C>
--------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ 26,710 $ 21,467
Net realized gain (loss) from
security transactions............. 453,670 (20,222)
Net realized foreign exchange gain
(loss)............................ 9,722 --
Change in net unrealized foreign
exchange gain (loss).............. (1,926) --
Change in net unrealized
appreciation (depreciation) of
investments....................... 458,423 29,343
--------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 946,599 30,588
--------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. (27,039) (21,202)
Capital gain*....................... (68,754) --
--------------------------
Total distributions............. (95,793) (21,202)
--------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 1,865,891 1,680,671
Proceeds from shares issued for
distribution reinvestment......... 85,892 16,798
Cost of shares repurchased.......... (681,006) (246,899)
--------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 1,270,777 1,450,570
--------------------------
Total increase (decrease) in net
assets........................ 2,121,583 1,459,956
NET ASSETS:
BEGINNING OF PERIOD................... 2,132,890 672,934
--------------------------
END OF PERIOD......................... $ 4,254,473 $2,132,890
--------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 143,328 47,473
Shares sold........................... 101,305 110,729
Shares issued for distributions
reinvested.......................... 4,600 1,106
Shares repurchased.................... (37,270) (15,980)
--------------------------
Ending balance.................... 211,963 143,328
--------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
77
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
- --------------------------------------------------------------------------------
SERIES B PORTFOLIOS
<TABLE>
<CAPTION>
GOVERNMENT INCOME
----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31,
1998 1997
<S> <C> <C>
----------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ 91,625 $ 44,511
Net realized gain (loss) from
security transactions............. 70,234 17,066
Net realized foreign exchange gain
(loss)............................ 12,807 --
Change in net unrealized foreign
exchange gain (loss).............. (3,554) --
Change in net unrealized
appreciation (depreciation) of
investments....................... 36,785 (24,165)
----------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 207,897 37,412
----------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. (92,302) (44,764)
Capital gain*....................... (23,620) (12,311)
----------------------------
Total distributions............. (115,922) (57,075)
----------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 3,623,518 1,747,622
Proceeds from shares issued for
distribution reinvestment......... 81,924 19,774
Cost of shares repurchased.......... (2,064,499) (530,556)
----------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 1,640,943 1,236,840
----------------------------
Total increase (decrease) in net
assets........................ 1,732,918 1,217,177
NET ASSETS:
BEGINNING OF PERIOD................... 1,344,705 127,528
----------------------------
END OF PERIOD......................... $ 3,077,623 $ 1,344,705
----------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 110,839 10,174
Shares sold........................... 283,781 141,955
Shares issued for distributions
reinvested.......................... 6,469 1,600
Shares repurchased.................... (161,770) (42,890)
----------------------------
Ending balance.................... 239,319 110,839
----------------------------
</TABLE>
- -------------
* See Financial Highlights for per share distribution amounts.
+ Commenced operations on July 15, 1997.
++ Commenced operations on February 28, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
78
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP
EMERGING COUNTRIES GROWTH INTERNATIONAL CORE GROWTH
-------------------------- ---------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997 1998 1997++
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (274,361) $ (204,544) $ (140,049) $ (49,877) $ (50,638) --
Net realized gain (loss) from
security transactions............. (2,526,329) 1,803,877 551,766 139,789 (173,620) $ 9
Net realized foreign exchange gain
(loss)............................ (139,431) (17,335) (50,019) (11,214) (14,609) (3)
Change in net unrealized foreign
exchange gain (loss).............. 1,702 (1,898) 4,612 (390) 2,412 --
Change in net unrealized
appreciation (depreciation) of
investments....................... 4,232,568 605,621 2,162,717 325,117 1,223,177 13
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 1,294,149 2,185,721 2,529,027 403,425 986,722 19
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- -- -- (5,186) -- --
Capital gain*....................... (1,710,737) (67,888) (558,388) -- (42,219) --
---------------------------------------------------------------------------------------
Total distributions............. (1,710,737) (67,888) (558,388) (5,186) (42,219) --
---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 22,259,145 19,948,661 8,303,957 3,702,565 7,549,895 8
Proceeds from shares issued for
distribution reinvestment......... 1,591,405 38,740 517,182 4,495 40,158 --
Cost of shares repurchased.......... (9,195,436) (1,104,793) (3,838,911) (512,097) (593,538) --
---------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 14,655,114 18,882,608 4,982,228 3,194,963 6,996,515 8
---------------------------------------------------------------------------------------
Total increase (decrease) in net
assets........................ 14,238,526 21,000,441 6,952,867 3,593,202 7,941,018 27
NET ASSETS:
BEGINNING OF PERIOD................... 24,557,521 3,557,080 5,079,996 1,486,794 1,027 1,000
---------------------------------------------------------------------------------------
END OF PERIOD......................... $ 38,796,047 $24,557,521 $ 12,032,863 $ 5,079,996 $ 7,942,045 $ 1,027
---------------------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 1,420,199 253,774 319,641 106,534 81 80
Shares sold........................... 1,214,038 1,230,640 463,887 246,154 500,774 1
Shares issued for distributions
reinvested.......................... 101,517 2,483 31,709 290 2,781 --
Shares repurchased.................... (535,990) (66,698) (218,409) (33,337) (39,156) --
---------------------------------------------------------------------------------------
Ending balance.................... 2,199,764 1,420,199 596,828 319,641 464,480 81
---------------------------------------------------------------------------------------
<CAPTION>
WORLDWIDE GROWTH
---------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31,
1998 1997
<S> <C> <C>
---------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (110,486) $ (61,411)
Net realized gain (loss) from
security transactions............. 965,691 227,470
Net realized foreign exchange gain
(loss)............................ (24,660) (13,875)
Change in net unrealized foreign
exchange gain (loss).............. 1,973 (1,290)
Change in net unrealized
appreciation (depreciation) of
investments....................... 1,382,445 186,506
---------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 2,214,963 337,400
---------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- --
Capital gain*....................... (549,378) --
---------------------------
Total distributions............. (549,378) --
---------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 5,360,286 3,764,249
Proceeds from shares issued for
distribution reinvestment......... 449,135 --
Cost of shares repurchased.......... (3,334,259) (132,022)
---------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 2,475,162 3,632,227
---------------------------
Total increase (decrease) in net
assets........................ 4,140,747 3,969,627
NET ASSETS:
BEGINNING OF PERIOD................... 5,941,869 1,972,242
---------------------------
END OF PERIOD......................... $ 10,082,616 $ 5,941,869
---------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 370,791 137,552
Shares sold........................... 292,727 241,408
Shares issued for distributions
reinvested.......................... 25,906 --
Shares repurchased.................... (187,737) (8,169)
---------------------------
Ending balance.................... 501,687 370,791
---------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
79
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
EMERGING GROWTH CORE GROWTH
----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
-------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (4,258,962) $ (4,223,186) $ (2,822,843) $ (2,899,449)
Net realized gain (loss) from
security transactions............. 17,676,088 33,211,523 30,274,794 35,664,077
Net realized foreign exchange gain
(loss)............................ -- -- -- --
Change in net unrealized foreign
exchange gain (loss).............. -- -- -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 64,509,334 (42,199,307) 28,924,425 (30,168,671)
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations.................... 77,926,460 (13,210,970) 56,376,376 2,595,957
-------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- -- -- --
Capital gain*....................... (29,182,909) (23,811,530) (43,761,677) (17,382,672)
-------------------------------------------------------------
Total distributions............. (29,182,909) (23,811,530) (43,761,677) (17,382,672)
-------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 72,644,552 67,825,520 29,917,347 35,028,635
Proceeds from shares issued for
distribution reinvestment......... 24,837,499 2,692,729 39,590,055 2,654,979
Cost of shares repurchased.......... (104,107,897) (57,920,772) (72,773,773) (42,857,133)
-------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... (6,625,846) 12,597,477 (3,266,371) (5,173,519)
-------------------------------------------------------------
Total increase (decrease) in net
assets........................ 42,117,705 (24,425,023) 9,348,328 (19,960,234)
NET ASSETS
BEGINNING OF PERIOD................... 182,906,982 207,332,005 157,501,096 177,461,330
-------------------------------------------------------------
END OF PERIOD......................... $ 225,024,687 $ 182,906,982 $ 166,849,424 $ 157,501,096
-------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 12,451,381 11,765,386 9,555,544 9,825,753
Shares sold........................... 4,136,702 3,815,165 1,750,377 1,872,637
Shares issued for distributions
reinvested.......................... 1,443,201 156,388 2,641,098 144,369
Shares repurchased.................... (5,945,903) (3,285,558) (4,220,870) (2,287,215)
-------------------------------------------------------------
Ending balance.................. 12,085,381 12,451,381 9,726,149 9,555,544
-------------------------------------------------------------
</TABLE>
- -------------
* See Financial Highlights for per share distribution amounts.
+ Commenced operations on July 15, 1997.
++ Commenced operations on February 28, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
80
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP
GROWTH+ INCOME & GROWTH BALANCED GROWTH
------------- ----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998+ 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (3,260) $ 1,296,150 $ 1,348,417 $ 155,957 $ 218,565
Net realized gain (loss) from
security transactions............. 4,048 4,493,108 8,550,614 3,912,158 1,455,500
Net realized foreign exchange gain
(loss)............................ -- -- -- 63,721 --
Change in net unrealized foreign
exchange gain (loss).............. -- -- -- (12,846) --
Change in net unrealized
appreciation (depreciation) of
investments....................... 122,382 12,743,454 (2,403,198) 2,025,760 (647,319)
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations.................... 123,170 18,532,712 7,495,833 6,144,750 1,026,746
-----------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- (1,289,510) (1,361,226) (156,906) (218,006)
Capital gain*....................... (758) (7,550,432) (1,851,637) (1,399,326) (1,482,915)
-----------------------------------------------------------------------------
Total distributions............. (758) (8,839,942) (3,212,863) (1,556,232) (1,700,921)
-----------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 890,031 14,822,064 10,562,292 2,671,793 4,321,529
Proceeds from shares issued for
distribution reinvestment......... 742 7,387,102 564,331 1,410,891 180,525
Cost of shares repurchased.......... (53,621) (12,484,704) (12,263,595) (4,877,213) (3,424,124)
-----------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 837,152 9,724,462 (1,136,972) (794,529) 1,077,930
-----------------------------------------------------------------------------
Total increase (decrease) in net
assets........................ 959,564 19,417,232 3,145,998 3,793,989 403,755
NET ASSETS
BEGINNING OF PERIOD................... -- 62,143,307 58,997,309 16,990,094 16,586,339
-----------------------------------------------------------------------------
END OF PERIOD......................... $ 959,564 $ 81,560,539 $ 62,143,307 $ 20,784,083 $ 16,990,094
-----------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... -- 3,644,102 3,712,379 1,089,607 1,023,861
Shares sold........................... 65,178 791,856 628,939 145,671 256,836
Shares issued for distributions
reinvested.......................... 55 407,608 33,465 76,757 10,900
Shares repurchased.................... (3,829) (672,422) (730,681) (267,567) (201,990)
-----------------------------------------------------------------------------
Ending balance.................. 61,404 4,171,144 3,644,102 1,044,468 1,089,607
-----------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
81
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- CONTINUED
- --------------------------------------------------------------------------------
SERIES C PORTFOLIOS
<TABLE>
<CAPTION>
GOVERNMENT INCOME EMERGING COUNTRIES
----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
-------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ 213,742 $ 178,882 $ (322,147) $ (248,884)
Net realized gain (loss) from
security transactions............. 165,123 (40,291) (2,508,576) 2,299,477
Net realized foreign exchange gain
(loss)............................ 25,686 -- (153,180) (21,984)
Change in net unrealized foreign
exchange gain (loss).............. (12,945) -- 2,149 (2,323)
Change in net unrealized
appreciation (depreciation) of
investments....................... 94,117 (29,932) 3,924,680 696,295
-------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations.................... 485,723 108,659 942,926 2,722,581
-------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. (214,469) (180,214) -- --
Capital gain*....................... -- -- (2,230,447) (163,843)
-------------------------------------------------------------
Total distributions............. (214,469) (180,214) (2,230,447) (163,843)
-------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 5,032,937 2,994,991 20,756,465 24,484,540
Proceeds from shares issued for
distribution reinvestment......... 143,985 47,133 2,109,145 63,361
Cost of shares repurchased.......... (4,477,044) (2,262,515) (13,967,608) (2,075,412)
-------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 699,878 779,609 8,898,002 22,472,489
-------------------------------------------------------------
Total increase (decrease) in net
assets........................ 971,132 708,054 7,610,481 25,031,227
NET ASSETS
BEGINNING OF PERIOD................... 3,694,341 2,986,287 29,375,971 4,344,744
-------------------------------------------------------------
END OF PERIOD......................... $ 4,665,473 $ 3,694,341 $ 36,986,452 $ 29,375,971
-------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 300,707 236,490 1,747,147 316,899
Shares sold........................... 385,426 241,093 1,150,487 1,557,372
Shares issued for distributions
reinvested.......................... 11,270 3,781 139,493 4,177
Shares repurchased.................... (343,130) (180,657) (859,084) (131,301)
-------------------------------------------------------------
Ending balance.................. 354,273 300,707 2,178,043 1,747,147
-------------------------------------------------------------
</TABLE>
- -------------
* See Financial Highlights for per share distribution amounts.
+ Commenced operations on July 15, 1997.
++ Commenced operations on February 28, 1997.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
82
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP
GROWTH INTERNATIONAL CORE GROWTH WORLDWIDE GROWTH
--------------------------- --------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997++ 1998 1997
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (86,373) $ (45,116) $ (15,362) $ (1) $ (1,043,711) $ (1,132,641)
Net realized gain (loss) from
security transactions............. 434,736 80,654 (110,382) (262) 14,707,865 11,316,290
Net realized foreign exchange gain
(loss)............................ (31,998) (8,590) (3,706) (17) (247,164) (232,218)
Change in net unrealized foreign
exchange gain (loss).............. 2,689 (293) 1,078 (14) 20,732 (14,511)
Change in net unrealized
appreciation (depreciation) of
investments....................... 1,336,130 278,387 461,551 357 9,143,405 (1,872,212)
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations.................... 1,655,184 305,042 333,179 63 22,581,127 8,064,708
---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*.............. -- (1,204) -- -- -- --
Capital gain*....................... (396,026) -- -- -- (12,370,507) (7,050,772)
---------------------------------------------------------------------------------------
Total distributions............. (396,026) (1,204) -- -- (12,370,507) (7,050,772)
---------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold........... 7,326,296 3,600,080 3,488,506 42,012 7,995,043 12,717,331
Proceeds from shares issued for
distribution reinvestment......... 352,544 872 -- -- 10,934,587 871,898
Cost of shares repurchased.......... (4,516,362) (1,245,898) (347,719) -- (15,192,388) (15,413,631)
---------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in
shares of beneficial interest... 3,162,478 2,355,054 3,140,787 42,012 3,737,242 (1,824,402)
---------------------------------------------------------------------------------------
Total increase (decrease) in net
assets........................ 4,421,636 2,658,892 3,473,966 42,075 13,947,862 (810,466)
NET ASSETS
BEGINNING OF PERIOD................... 3,592,314 933,422 43,075 1,000 70,344,561 71,155,027
---------------------------------------------------------------------------------------
END OF PERIOD......................... $ 8,013,950 $ 3,592,314 $ 3,517,041 $ 43,075 $ 84,292,423 $ 70,344,561
---------------------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance..................... 241,603 71,526 3,396 80 4,158,310 4,244,437
Shares sold........................... 440,799 255,944 224,635 3,316 435,836 746,203
Shares issued for distributions
reinvested.......................... 23,528 60 -- -- 663,935 52,366
Shares repurchased.................... (273,436) (85,927) (23,087) -- (833,591) (884,696)
---------------------------------------------------------------------------------------
Ending balance.................. 432,494 241,603 204,944 3,396 4,424,490 4,158,310
---------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
83
<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 56 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 17 investment vehicles (the "Funds"). For
a description of the investments 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, and capital loss carryforwards.
As of March 31, 1998, Large Cap Growth Portfolio A and International Core
Growth Portfolios A, B and C had available for Federal tax purposes $4,075,
$178,203, $157,149 and $103,363, respectively, of unused capital loss carryovers
which expire in 2006. In addition, Emerging Growth Portfolio B had available for
Federal tax purposes $115,925 of unused capital loss carryovers which expire in
2005.
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 describes each Portfolio's policies with
respect to declaration and payment of dividends and distribution of capital
gains.
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.
- --------------------------------------------------------------------------------
84
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENT
The investment adviser to the Master Trust is Nicholas-Applegate Capital
Management ("Nicholas-Applegate" or "Investment Adviser"). The advisory fee is
computed daily for the Funds based upon the percentage of each Fund's average
daily net assets.
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
The Trust has adopted a distribution plan whereby Nicholas-Applegate
Securities (the "Distributor"), an affiliate of Nicholas-Applegate Capital
Management, is compensated for distribution-related expenses at an annual rate,
payable monthly, of 0.25%, 0.75% and 0.75% of Series A, B and C Portfolios
average daily net assets, respectively, except for Government Income B and C
Portfolios, for which the rate is 0.50%. The Money Market Portfolio compensates
the Distributor at the rate of 0.15% of average daily net assets.
Under a distribution agreement, the Distributor who is the principal
underwriter for the sale of shares of the Portfolios, retains a portion of any
contingent deferred sales load on redemptions for the Portfolios, and retains a
portion of the initial sales load imposed on purchases of shares of the Series A
Portfolios. This agreement may be terminated by either party upon 60 days'
written notice. For the fiscal year ended March 31, 1998, the Distributor earned
approximately $1,846,000 from sales loads, of which approximately $1,561,000 was
re-allowed to other brokers.
The Trust has adopted a shareholder service plan under which the Distributor
is also compensated for non-distribution related expenses at an annual rate, as
follows: 0.10%, 0.25% and 0.25% of the average daily net asset value of the
Series A (including Money Market Portfolio), Series B, and Series C Portfolios,
respectively.
ADMINISTRATIVE SERVICES AGREEMENT
The Trust pays the Investment Adviser for Co-Administrative services at 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. In addition, the Investment Adviser has agreed to
waive these fees if the related Portfolio's expenses before reimbursement is
greater that the expense limitation.
EXPENSE LIMITATIONS
Nicholas-Applegate and the Trust have undertaken to limit the Portfolios'
expenses to the following annual levels through March 31, 1999. 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>
<CAPTION>
A B C
--------- --------- ---------
<S> <C> <C> <C>
Emerging Growth Portfolios............ 1.95% 2.60% 2.60%
Core Growth Portfolios................ 1.60% 2.25% 2.25%
Large Cap Growth Portfolios........... 1.60% 2.25% 2.25%
Income & Growth Portfolios............ 1.60% 2.25% 2.25%
Balanced Growth Portfolios............ 1.60% 2.25% 2.25%
Government Income Portfolios.......... 0.90% 1.30% 1.30%
Money Market Portfolio................ 1.10% -- --
Emerging Countries Portfolios......... 2.25% 2.90% 2.90%
International Small Cap Growth
Portfolios.......................... 1.95% 2.60% 2.60%
International Core Growth
Portfolios.......................... 1.95% 2.60% 2.60%
Worldwide Growth Portfolios........... 1.85% 2.50% 2.50%
</TABLE>
During the period from November 22, 1993 to March 31, 1998,
Nicholas-Applegate, at its discretion, paid for all of the Money Market
Portfolio expenses. Nicholas-Applegate may continue to make such additional
payments for expenses within the limitation at its discretion.
- --------------------------------------------------------------------------------
85
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
These percentages are based on the average net assets of the Portfolios,
exclusive of interest, taxes, brokerage commissions and other costs incurred in
connection with portfolio securities transactions, capital expenditures, and
extraordinary expenses.
The cumulative unreimbursed amounts paid by Nicholas-Applegate, including
Co-Administration Fees, on behalf of the Portfolios, during the periods from
inception (respectively) to March 31, 1998, are as follows:
<TABLE>
<CAPTION>
A B C
--------- --------- ---------
<S> <C> <C> <C>
Emerging Growth Portfolios..... $ 14,068 $ 70,123 $ 43,913
Core Growth Portfolios......... 114,798 131,138 152,800
Large Cap Growth Portfolios.... 19,049 13,850 9,839
Income & Growth Portfolios..... 272,182 127,379 162,793
Balanced Growth Portfolios..... 330,326 111,554 270,112
Government Income Portfolios... 328,904 123,885 347,100
Money Market Portfolio......... 784,354 -- --
Emerging Countries
Portfolios................... 364,511 169,891 175,052
International Small Cap Growth
Portfolios................... 197,732 123,884 128,668
International Core Growth
Portfolios................... 37,665 26,939 33,935
Worldwide Growth Portfolios.... 323,300 129,555 227,161
</TABLE>
Effective March 31, 1998, Nicholas-Applegate agreed to amend the expense
reimbursement agreement to limit the period within which Nicholas-Applegate may
recoup the above amounts from the Funds, to no later than March 31, 2003. In
addition, the possible recoupment period of any expense reimbursements in each
year subsequent to 1998 will be limited to five years from the year of the
reimbursement. Such recoupments are subject to the Funds' ability to effect such
reimbursement and remain in compliance with applicable expense limitations.
RELATED PARTIES
Certain officers of the Trust and the Master Trust are also officers of the
Investment Adviser and the Distributor.
3. INVESTMENT TRANSACTIONS
Additions and reductions in the investments in the respective Master Trust
Funds for the fiscal year ended March 31, 1998 were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
------------- -------------
<S> <C> <C>
Emerging Growth Portfolio A.... $ 1,931,856 $ 1,929,324
Emerging Growth Portfolio B.... 30,443 18,224
Emerging Growth Portfolio C.... 72,654 111,543
Core Growth Portfolio A........ 224,409 241,209
Core Growth Portfolio B........ 20,219 15,753
Core Growth Portfolio C........ 30,043 79,369
Large Cap Growth Portfolio A... 4,335 178
Large Cap Growth Portfolio B... 3,275 494
Large Cap Growth Portfolio C... 890 54
Income & Growth Portfolio A.... 12,844 8,347
Income & Growth Portfolio B.... 21,802 3,434
Income & Growth Portfolio C.... 20,091 20,467
Balanced Growth Portfolio A.... 5,661 5,871
Balanced Growth Portfolio B.... 1,909 765
Balanced Growth Portfolio C.... 2,834 5,528
Government Income Portfolio
A............................. 2,211 2,050
Government Income Portfolio
B............................. 3,648 2,128
Government Income Portfolio
C............................. 5,461 5,048
Money Market Portfolio......... 2,709,315 2,620,664
Emerging Countries Portfolio
A............................. 56,664 28,785
</TABLE>
- --------------------------------------------------------------------------------
86
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
------------- -------------
<S> <C> <C>
Emerging Countries Portfolio
B............................. $ 22,317 $ 9,790
Emerging Countries Portfolio
C............................. 20,761 14,599
International Small Cap Growth
Portfolio A................... 109,534 108,054
International Small Cap Growth
Portfolio B................... 8,344 4,020
International Small Cap Growth
Portfolio C................... 7,340 4,674
International Core Growth
Portfolio A................... 38,659 27,393
International Core Growth
Portfolio B................... 7,597 642
International Core Growth
Portfolio C................... 3,489 348
Worldwide Growth Portfolio A... 108,085 103,466
Worldwide Growth Portfolio B... 5,415 3,588
Worldwide Growth Portfolio C... 8,010 17,695
</TABLE>
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 March 31, 1998, there were no outstanding borrowings
under the Facility. The maximum amount borrowed under this line of credit at any
time during the fiscal year ended March 31, 1998 was $0.
5. SUBSEQUENT EVENT
In 1998, the Board of Trustees of the Nicholas-Applegate Mutual Funds (the
"Trust") and the Nicholas-Applegate Investment Trust (the "Master Trust")
approved a plan to reorganize the current master-feeder structure into a new
multi-class fund structure, subject to the necessary shareholder approvals. Upon
the effective date of the reorganization, which is planned to take place
subsequent to March 31, 1998, all assets and liabilities of the master-feeder
funds will be transferred to the corresponding multi-class funds, and
shareholders of the Trust will effectively exchange their shares in the Trust
for equal amounts of shares in the respective multi-class funds in a tax free
exchange.
- --------------------------------------------------------------------------------
87
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES FOR THE NICHOLAS-APPLEGATE INVESTMENT TRUST
MARCH 31, 1998
<TABLE>
<CAPTION>
EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH GROWTH
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
-------------------------------------------------------------
ASSETS
Investments, at value*................ $ 747,420,210 $ 490,210,906 $ 12,274,381 $ 250,814,551
Foreign currencies, at value**........ -- -- -- --
Cash.................................. -- 1,326 872 --
Receivable for investment securities
sold................................ 11,854,357 2,889,481 -- 5,171,476
Receivable for interests sold......... 62,204,688 1,819,942 126,687 1,659,439
Dividends receivable.................. 154,994 67,510 2,714 236,152
Interest receivable................... 125,323 67,171 216 1,058,473
Due from advisor...................... -- -- 698 --
Other assets.......................... -- -- -- --
-------------------------------------------------------------
Total assets........................ 821,759,572 495,056,336 12,405,568 258,940,091
-------------------------------------------------------------
LIABILITIES
Payable for investment securities
purchased........................... 7,408,934 6,746,903 125,403 1,550,000
Payable for interests repurchased..... 7,846,802 1,440,660 6,823 235,843
Due to advisor........................ -- 299,820 -- 153,724
Accrued expenses...................... 718,450 66,015 13,995 36,110
Unrealized loss on forward currency
contracts........................... -- -- -- --
Line of credit........................ -- -- -- 3,000,491
Cash overdraft........................ 52,689,460 -- -- 636,193
-------------------------------------------------------------
Total liabilities................... 68,663,646 8,553,398 146,221 5,612,361
-------------------------------------------------------------
NET ASSETS.............................. $ 753,095,926 $ 486,502,938 $ 12,259,347 $ 253,327,730
-------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 335,434,815 $ 211,148,637 $ 10,067,294 $ 158,218,976
Accumulated net investment income
(deficit)........................... (13,574,277) (3,708,476) (2,853) 21,834,679
Accumulated net realized gain
(loss).............................. 173,656,050 166,800,398 540,202 26,893,653
Accumulated net realized foreign
exchange gain (loss)................ -- -- -- --
Net unrealized foreign exchange gain
(loss).............................. -- -- -- --
Net unrealized appreciation on
investments......................... 257,579,338 112,262,379 1,654,704 46,380,422
-------------------------------------------------------------
Net assets.......................... $ 753,095,926 $ 486,502,938 $ 12,259,347 $ 253,327,730
-------------------------------------------------------------
* Investments, at cost................. $ 489,840,872 $ 377,948,527 $ 10,619,677 $ 204,434,129
-------------------------------------------------------------
** Foreign currencies, at cost.......... -- -- -- --
-------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
88
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED MONEY EMERGING
GROWTH GOVERNMENT MARKET COUNTRIES
FUND INCOME FUND FUND FUND
<S> <C> <C> <C> <C>
-------------------------------------------------------------
ASSETS
Investments, at value*................ $ 32,580,277 $ 9,442,122 $ 125,005,112 $ 276,909,907
Foreign currencies, at value**........ 226 8 -- 491,004
Cash.................................. -- 755 749 1,635
Receivable for investment securities
sold................................ 1,210,032 -- -- 3,574,790
Receivable for interests sold......... 330,246 55,669 -- 1,899,945
Dividends receivable.................. 15,036 1,461 -- 2,075,665
Interest receivable................... 120,589 82,534 21,753 460
Due from advisor...................... -- 40,615 -- --
Other assets.......................... -- -- -- 2,334,888
-------------------------------------------------------------
Total assets........................ 34,256,406 9,623,164 125,027,614 287,288,294
-------------------------------------------------------------
LIABILITIES
Payable for investment securities
purchased........................... 996,247 -- -- 4,791,102
Payable for interests repurchased..... 191,472 53,024 -- 455,175
Due to advisor........................ 13,773 -- 18,220 109,055
Accrued expenses...................... 14,400 36,007 9,280 220,108
Unrealized loss on forward currency
contracts........................... 19,084 17,286 -- --
Line of credit........................ -- -- -- --
Cash overdraft........................ 77,825 -- -- --
-------------------------------------------------------------
Total liabilities................... 1,312,801 106,317 27,500 5,575,440
-------------------------------------------------------------
NET ASSETS.............................. $ 32,943,605 $ 9,516,847 $ 125,000,114 $ 281,712,854
-------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 16,585,886 $ 7,720,274 $ 124,999,775 $ 251,487,861
Accumulated net investment income
(deficit)........................... 2,691,561 1,509,477 -- 1,023,873
Accumulated net realized gain
(loss).............................. 8,456,274 221,313 339 (5,151,924)
Accumulated net realized foreign
exchange gain (loss)................ 96,690 46,678 -- (1,026,601)
Net unrealized foreign exchange gain
(loss).............................. (19,415) (17,401) -- (582)
Net unrealized appreciation on
investments......................... 5,132,609 36,506 -- 35,380,227
-------------------------------------------------------------
Net assets.......................... $ 32,943,605 $ 9,516,847 $ 125,000,114 $ 281,712,854
-------------------------------------------------------------
* Investments, at cost................. $ 27,447,668 $ 9,405,616 $ 125,005,112 $ 241,529,680
-------------------------------------------------------------
** Foreign currencies, at cost.......... $ 235 $ 8 -- $ 501,211
-------------------------------------------------------------
<CAPTION>
INTERNATIONAL INTERNATIONAL WORLDWIDE
SMALL CAP CORE GROWTH GROWTH
GROWTH FUND FUND FUND
<S> <C> <C> <C>
---------------------------------------------
ASSETS
Investments, at value*................ $ 84,296,355 $ 56,546,002 $ 136,259,351
Foreign currencies, at value**........ 40,285 61 38,506
Cash.................................. 1,156 1,588 1,275
Receivable for investment securities
sold................................ 1,401,954 149,676 3,744,481
Receivable for interests sold......... 1,091,982 2,802,668 8,479,530
Dividends receivable.................. 126,658 127,727 267,719
Interest receivable................... -- 736 2,294
Due from advisor...................... -- 2,081 --
Other assets.......................... 6,150 2,867 7,934
---------------------------------------------
Total assets........................ 86,964,540 59,633,406 148,801,090
---------------------------------------------
LIABILITIES
Payable for investment securities
purchased........................... 3,882,254 1,380,520 2,912,969
Payable for interests repurchased..... 61,029 -- 215,924
Due to advisor........................ 19,071 -- 110,444
Accrued expenses...................... 61,949 27,833 25,388
Unrealized loss on forward currency
contracts........................... -- -- --
Line of credit........................ -- -- --
Cash overdraft........................ -- -- --
---------------------------------------------
Total liabilities................... 4,024,303 1,408,353 3,264,725
---------------------------------------------
NET ASSETS.............................. $ 82,940,237 $ 58,225,053 $ 145,536,365
---------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $ 51,018,581 $ 49,895,553 $ 70,457,394
Accumulated net investment income
(deficit)........................... (341,593) (3,275) 236,552
Accumulated net realized gain
(loss).............................. 11,905,907 (528,897) 45,411,368
Accumulated net realized foreign
exchange gain (loss)................ (462,261) (136,556) 188,583
Net unrealized foreign exchange gain
(loss).............................. 22,202 17,107 7,150
Net unrealized appreciation on
investments......................... 20,797,401 8,981,121 29,235,318
---------------------------------------------
Net assets.......................... $ 82,940,237 $ 58,225,053 $ 145,536,365
---------------------------------------------
* Investments, at cost................. $ 63,498,954 $ 47,564,881 $ 107,024,033
---------------------------------------------
** Foreign currencies, at cost.......... $ 48,766 $ 71 $ 45,840
---------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
89
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE NICHOLAS-APPLEGATE INVESTMENT TRUST
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
EMERGING CORE LARGE CAP INCOME &
GROWTH GROWTH GROWTH GROWTH
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
--------------------------------------------------------
INVESTMENT INCOME
Dividends............................. $ 1,788,415 $ 1,098,195 $ 21,862 $ 3,420,869
Interest.............................. 2,071,470 1,517,304 16,501 4,307,627
--------------------------------------------------------
Total income........................ 3,859,885 2,615,499 38,363 7,728,496
--------------------------------------------------------
EXPENSES
Advisory fee.......................... 6,613,874 3,422,148 32,530 1,427,198
Accounting fee........................ 351,134 260,887 31,557 121,273
Administration fee.................... 34,905 142,263 1,487 59,961
Audit & tax fees...................... 138,860 88,275 620 21,627
Custodian fee......................... 255,880 91,870 19,002 38,709
Insurance............................. 43,624 30,861 221 12,856
Legal fee............................. 21,662 16,316 741 5,588
Miscellaneous......................... 8,044 7,729 2,417 29,317
Organization costs.................... 14,447 16,342 -- 8,104
Trustees' fee......................... 6,501 6,501 6,501 6,501
--------------------------------------------------------
Total expenses...................... 7,488,931 4,083,192 95,076 1,731,134
Less: Reimbursement to (from)
advisor............................. -- (9,400) (53,872) --
--------------------------------------------------------
Net expenses........................ 7,488,931 4,073,792 41,204 1,731,134
--------------------------------------------------------
Net investment income (deficit)... (3,629,046) (1,458,293) (2,841) 5,997,362
--------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 52,691,131 71,334,950 467,201 8,251,684
Net realized foreign exchange gain
(loss).............................. -- -- -- --
Net unrealized foreign exchange gain
(loss).............................. -- -- -- --
Change in net unrealized appreciation
of investments...................... 211,279,518 91,335,002 1,690,444 35,936,585
--------------------------------------------------------
Net gain on investments........... 263,970,649 162,669,952 2,157,645 44,188,269
--------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 260,341,603 $ 161,211,659 $2,154,804 $ 50,185,631
--------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
90
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED GOVERNMENT MONEY EMERGING
GROWTH INCOME MARKET COUNTRIES
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
--------------------------------------------------
INVESTMENT INCOME
Dividends............................. $ 170,631 $ 23,081 -- $ 4,201,465
Interest.............................. 729,420 443,803 $ 3,362,263 688,015
--------------------------------------------------
Total income........................ 900,051 466,884 3,362,263 4,889,480
--------------------------------------------------
EXPENSES
Advisory fee.......................... 220,025 30,897 149,526 2,790,216
Accounting fee........................ 47,688 41,322 52,056 155,300
Administration fee.................... 8,236 2,468 19,247 69,993
Audit & tax fees...................... 7,136 3,332 5,999 45,205
Custodian fee......................... 24,756 35,130 22,197 548,541
Insurance............................. 2,061 502 4,812 14,752
Legal fee............................. 1,733 3,224 3,149 7,256
Miscellaneous......................... 3,720 10,011 3,963 18,582
Organization costs.................... 5,779 5,316 4,553 --
Trustees' fee......................... 6,501 6,501 6,501 6,500
--------------------------------------------------
Total expenses...................... 327,635 138,703 272,003 3,656,345
Less: Reimbursement to (from)
advisor............................. (48,936) (92,358) (2,856) (84,868)
--------------------------------------------------
Net expenses........................ 278,699 46,345 269,147 3,571,477
--------------------------------------------------
Net investment income (deficit)... 621,352 420,539 3,093,116 1,318,003
--------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 5,777,470 279,824 667 (16,745,182)
Net realized foreign exchange gain
(loss).............................. 96,690 46,678 -- (888,532)
Net unrealized foreign exchange gain
(loss).............................. (19,406) (17,401) -- 12,005
Change in net unrealized appreciation
of investments...................... 3,156,828 159,414 -- 30,103,293
--------------------------------------------------
Net gain on investments........... 9,011,582 468,515 667 12,481,584
--------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 9,632,934 $889,054 $ 3,093,783 $ 13,799,587
--------------------------------------------------
<CAPTION>
INTERNATIONAL INTERNATIONAL
GROWTH GROWTH GROWTH
FUND FUND FUND
<S> <C> <C> <C>
-----------------------------------------
INVESTMENT INCOME
Dividends............................. $ 489,878 $ 306,591 $ 1,305,375
Interest.............................. 110,764 103,829 168,567
-----------------------------------------
Total income........................ 600,642 410,420 1,473,942
-----------------------------------------
EXPENSES
Advisory fee.......................... 658,893 308,562 1,251,181
Accounting fee........................ 58,897 38,546 83,526
Administration fee.................... 20,585 9,857 39,024
Audit & tax fees...................... 19,472 4,836 29,368
Custodian fee......................... 183,956 63,560 168,154
Insurance............................. 4,408 1,858 8,512
Legal fee............................. 2,769 1,081 4,515
Miscellaneous......................... 13,382 12,427 15,077
Organization costs.................... 529 -- 6,630
Trustees' fee......................... 6,501 6,501 6,501
-----------------------------------------
Total expenses...................... 969,392 447,228 1,612,488
Less: Reimbursement to (from)
advisor............................. (79,886) (30,669) (111,071)
-----------------------------------------
Net expenses........................ 889,506 416,559 1,501,417
-----------------------------------------
Net investment income (deficit)... (288,864) (6,139) (27,475)
-----------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions........................ 8,954,913 (671,153) 22,128,470
Net realized foreign exchange gain
(loss).............................. (455,981) (122,668) (385,313)
Net unrealized foreign exchange gain
(loss).............................. 28,868 18,429 31,430
Change in net unrealized appreciation
of investments...................... 14,340,358 8,922,576 16,536,369
-----------------------------------------
Net gain on investments........... 22,868,158 8,147,184 38,310,956
-----------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 22,579,294 $8,141,045 $ 38,283,481
-----------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
91
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
EMERGING GROWTH FUND CORE GROWTH FUND
------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (3,629,046) $ (3,743,018) $ (1,458,293) $ (1,567,011)
Net realized gain (loss) from
security transactions............. 52,691,131 96,622,117 71,334,950 76,538,109
Net realized foreign exchange gain
(loss)............................ -- -- -- --
Change in net unrealized foreign
exchange gain (loss).............. -- -- -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 211,279,518 (114,330,357) 91,335,002 (67,826,297)
-----------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 260,341,603 (21,451,258) 161,211,659 7,144,801
-----------------------------------------------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income............... -- -- -- --
-----------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners........... 2,244,783,785 626,817,132 331,745,501 158,154,505
Withdrawals by partners............. (2,253,591,995) (687,889,723) (439,228,153) (153,067,978)
-----------------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests....................... (8,808,210) (61,072,591) (107,482,652) 5,086,527
-----------------------------------------------------------------
Total increase (decrease) in net
assets........................ 251,533,393 (82,523,849) 53,729,007 12,231,328
NET ASSETS
BEGINNING OF PERIOD................... 501,562,533 584,086,382 432,773,931 420,542,603
-----------------------------------------------------------------
END OF PERIOD......................... $ 753,095,926 $ 501,562,533 $ 486,502,938 $ 432,773,931
-----------------------------------------------------------------
</TABLE>
- -------------
+ Commenced operations on December 27, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
92
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP GROWTH FUND
-------------------------- INCOME & GROWTH FUND BALANCED GROWTH FUND
FOR THE ---------------------------- ---------------------------
FOR THE PERIOD FOR THE FOR THE FOR THE FOR THE
YEAR ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997+ 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (2,841) $ (12) $ 5,997,362 $ 4,199,481 $ 621,352 $ 661,170
Net realized gain (loss) from
security transactions............. 467,201 73,001 8,251,684 15,692,945 5,777,470 1,969,019
Net realized foreign exchange gain
(loss)............................ -- -- -- -- 96,690 --
Change in net unrealized foreign
exchange gain (loss).............. -- -- -- -- (19,406) --
Change in net unrealized
appreciation (depreciation) of
investments....................... 1,690,444 (35,740) 35,936,585 (3,821,355) 3,156,828 (768,824)
-------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 2,154,804 37,249 50,185,631 16,071,071 9,632,934 1,861,365
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income............... -- -- -- -- -- --
-------------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners........... 11,528,227 1,347,861 117,443,760 34,105,984 10,624,912 8,738,263
Withdrawals by partners............. (2,742,842) (65,952) (44,953,063) (31,283,589) (12,326,211) (9,432,209)
-------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests....................... 8,785,385 1,281,909 72,490,697 2,822,395 (1,701,299) (693,946)
-------------------------------------------------------------------------------------
Total increase (decrease) in net
assets........................ 10,940,189 1,319,158 122,676,328 18,893,466 7,931,635 1,167,419
NET ASSETS
BEGINNING OF PERIOD................... 1,319,158 -- 130,651,402 111,757,936 25,011,970 23,844,551
-------------------------------------------------------------------------------------
END OF PERIOD......................... $ 12,259,347 $1,319,158 $ 253,327,730 $ 130,651,402 $ 32,943,605 $ 25,011,970
-------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
93
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
GOVERNMENT INCOME FUND MONEY MARKET FUND
---------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
--------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ 420,539 $ 333,374 $ 3,093,116 $ 880,366
Net realized gain (loss) from
security transactions............. 279,824 (56,975) 667 (4)
Net realized foreign exchange gain
(loss)............................ 46,678 -- -- --
Change in net unrealized foreign
exchange gain (loss).............. (17,401) -- -- --
Change in net unrealized
appreciation (depreciation) of
investments....................... 159,414 (49,150) -- --
--------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 889,054 227,249 3,093,783 880,362
--------------------------------------------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income............... -- -- (3,093,116) (880,366)
--------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners........... 11,600,167 5,988,848 2,709,314,843 525,513,379
Withdrawals by partners............. (9,225,979) (4,440,486) (2,620,663,987) (492,338,631)
--------------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests....................... 2,374,188 1,548,362 88,650,856 33,174,748
--------------------------------------------------------------
Total increase (decrease) in net
assets........................ 3,263,242 1,775,611 88,651,523 33,174,744
NET ASSETS
BEGINNING OF PERIOD................... 6,253,605 4,477,994 36,348,591 3,173,847
--------------------------------------------------------------
END OF PERIOD......................... $ 9,516,847 $ 6,253,605 $ 125,000,114 $ 36,348,591
--------------------------------------------------------------
</TABLE>
- -------------
+ Commenced operations on December 27, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
94
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
INTERNATIONAL CORE GROWTH FUND
EMERGING COUNTRIES FUND SMALL CAP GROWTH FUND --------------------------
---------------------------- --------------------------- FOR THE
FOR THE FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1998 1997 1998 1997 1998 1997+
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ 1,318,003 $ (342,535) $ (288,864) $ (163,117) $ (6,139) $ 2,864
Net realized gain (loss) from
security transactions............. (16,745,182) 11,849,728 8,954,913 3,140,492 (671,153) 142,256
Net realized foreign exchange gain
(loss)............................ (888,532) (113,212) (455,981) (171,484) (122,668) (13,888)
Change in net unrealized foreign
exchange gain (loss).............. 12,005 (12,593) 28,868 (4,450) 18,429 (1,322)
Change in net unrealized
appreciation (depreciation) of
investments....................... 30,103,293 3,898,413 14,340,358 3,921,418 8,922,576 58,545
-------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 13,799,587 15,279,801 22,579,294 6,722,859 8,141,045 188,455
-------------------------------------------------------------------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income............... -- -- -- -- -- --
-------------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners........... 187,793,085 143,835,272 144,137,687 37,692,390 82,773,370 4,487,783
Withdrawals by partners............. (78,216,702) (20,677,175) (146,663,288) (5,334,333) (37,358,238) (7,362)
-------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests....................... 109,576,383 123,158,097 (2,525,601) 32,358,057 45,415,132 4,480,421
-------------------------------------------------------------------------------------
Total increase (decrease) in net
assets........................ 123,375,970 138,437,898 20,053,693 39,080,916 53,556,177 4,668,876
NET ASSETS
BEGINNING OF PERIOD................... 158,336,884 19,898,986 62,886,544 23,805,628 4,668,876 --
-------------------------------------------------------------------------------------
END OF PERIOD......................... $ 281,712,854 $ 158,336,884 $ 82,940,237 $ 62,886,544 $ 58,225,053 $4,668,876
-------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
95
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
WORLDWIDE GROWTH FUND
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31,
1998 1998
<S> <C> <C>
-----------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (deficit)..... $ (27,475) $ (281,315)
Net realized gain (loss) from
security transactions............. 22,128,470 15,788,457
Net realized foreign exchange gain
(loss)............................ (385,313) (333,967)
Change in net unrealized foreign
exchange gain (loss).............. 31,430 (21,431)
Change in net unrealized
appreciation (depreciation) of
investments....................... 16,536,369 (2,434,302)
-----------------------------
Net increase (decrease) in net
assets resulting from
operations...................... 38,283,481 12,717,442
-----------------------------
DISTRIBUTIONS TO PARTNERS
Net investment income............... -- --
-----------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners........... 172,434,860 34,174,758
Withdrawals by partners............. (168,997,352) (43,419,850)
-----------------------------
Net increase (decrease) in net
assets from transactions in
interests....................... 3,437,508 (9,245,092)
-----------------------------
Total increase (decrease) in net
assets........................ 41,720,989 3,472,350
NET ASSETS
BEGINNING OF PERIOD................... 103,815,376 100,343,026
-----------------------------
END OF PERIOD......................... $ 145,536,365 $ 103,815,376
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
96
<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 17 investment vehicles (each a "Fund" and collectively the
"Funds") as of March 31, 1998. 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:
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 Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in equity securities of U.S. companies with market
capitalizations above $3 billion whose earnings and prices are expected to grow
faster than the Standard & Poor's 500 Index.
Income & Growth Fund seeks to maximize total return through investment
primarily in convertible and equity securities of U.S. companies.
Balanced Growth Fund seeks to provide a balance of long-term capital
appreciation and current income by investing approximately 60% of its total
assets in equity and convertible securities of primarily U.S. companies and 40%
of its total assets in debt securities, money market instruments and other
short-term investments.
Government Income Fund seeks to maximize current income through investment
primarily in intermediate-term debt securities of the U.S. government and its
agencies and instrumentalities.
Money Market Fund seeks to achieve a high level of current income consistent
with preservation of capital and maintenance of liquidity through investment in
investment grade securities with an average maturity of 90 days.
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
SECURITIES TRANSACTIONS
Equity securities are valued at the last 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 quoted bid 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.
- --------------------------------------------------------------------------------
97
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
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 accreted and
amortized over the life of the respective securities.
FOREIGN CURRENCY TRANSLATION
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.
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" or "Investment Adviser"). The advisory fee is
computed daily based upon the following percentages of each Fund's average daily
net assets:
<TABLE>
<CAPTION>
FIRST $500 NEXT $500 EXCESS OF
FUND MILLION MILLION $1 BILLION
- ---------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Emerging Growth Fund........ 1.00% 1.00% 1.00%
Core Growth Fund............ 0.75% 0.675% 0.65%
Large Cap Growth Fund....... 0.75% 0.675% 0.65%
Income & Growth Fund........ 0.75% 0.675% 0.65%
Balanced Growth Fund........ 0.75% 0.675% 0.65%
Government Income Fund...... 0.40% 0.35% 0.35%
Money Market Fund........... 0.25% 0.2275% 0.2275%
Emerging Countries Fund..... 1.25% 1.25% 1.25%
International 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%
</TABLE>
EXPENSE LIMITATIONS
Nicholas-Applegate and the Master Trust have undertaken to limit the Funds'
expenses to certain annual levels through March 31, 1999. 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.
- --------------------------------------------------------------------------------
98
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Funds, during the period from inception (respectively) to March 31, 1998,
are as follows:
<TABLE>
<CAPTION>
FUND
- -----------------------------------------------
<S> <C>
Core Growth Fund............................... $ 9,400
Large Cap Growth Fund.......................... 61,779
Balanced Growth Fund........................... 361,863
Government Income Fund......................... 432,938
Money Market Fund.............................. 361,689
Emerging Countries Fund........................ 174,212
International Small Cap Growth Fund............ 289,126
International Core Growth Fund................. 36,365
Worldwide Growth Fund.......................... 407,491
</TABLE>
Effective March 31, 1998, Nicholas-Applegate agreed to amend the expense
reimbursement agreement to limit the period within which Nicholas-Applegate may
recoup the above amounts from the Funds, to no later than March 31, 2003. In
addition, the possible recoupment period of any expense reimbursements in each
year subsequent to 1998 will be limited to five years from the year of the
reimbursement. Such recoupments are subject to the Funds' ability to effect such
reimbursement and remain in compliance with applicable expense limitations.
C. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investment securities, other than
short-term obligations, for the fiscal year ended March 31, 1998, were as
follows (in 000's):
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- -------------------------------- ----------- -----------
<S> <C> <C>
Emerging Growth Fund............ $ 615,097 $ 587,651
Core Growth Fund................ 879,447 973,993
Large Cap Growth Fund........... 21,636 13,248
Income & Growth Fund............ 371,588 292,929
Balanced Growth Fund............ 74,169 75,690
Government Income Fund.......... 22,840 20,530
Emerging Countries Fund......... 611,978 503,718
International Small Cap Growth
Fund.......................... 126,676 128,068
International Core Growth
Fund.......................... 120,878 78,860
Worldwide Growth Fund........... 245,666 255,361
</TABLE>
At March 31, 1998, the net unrealized appreciation (depreciation) based on the
cost of investments for Federal income tax purposes was as follows (in 000's):
<TABLE>
<CAPTION>
GROSS GROSS NET
TAX COST OF UNREALIZED UNREALIZED UNREALIZED
FUND INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
- -------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Emerging
Growth
Fund........ $ 489,841 $ 262,881 $ 5,302 $ 257,579
Core Growth
Fund........ 377,949 116,342 4,080 112,262
Large Cap
Growth
Fund........ 10,620 1,735 80 1,655
Income &
Growth
Fund........ 204,434 46,887 507 46,380
Balanced
Growth
Fund........ 27,448 5,299 166 5,133
Government
Income
Fund........ 9,406 73 36 37
Money Market
Fund........ 125,005 -- -- --
Emerging
Countries
Fund........ 241,530 41,672 6,292 35,380
International
Small Cap
Growth
Fund........ 63,499 21,696 899 20,797
International
Core Growth
Fund........ 47,565 9,683 702 8,981
Worldwide
Growth
Fund........ 107,024 30,023 788 29,235
</TABLE>
- --------------------------------------------------------------------------------
99
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
D. OFF BALANCE SHEET RISKS AND DERIVATIVE INSTRUMENTS
The Master Trust's investment in foreign securities may entail risks due to
the potential of political and economic instability in the countries where the
securities are being offered. In addition, foreign exchange fluctuations could
affect the value of positions held. It is the Master Trust's policy to
continuously monitor its exposure to these risks.
Some of the Funds may utilize forward foreign currency exchange contracts for
the purpose of hedging against foreign exchange risk. 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.
E. SECURITIES LENDING
The Funds may loan securities to certain brokers, dealers and other financial
institutions who pay the Funds negotiated lenders' fees. The Funds receive cash
collateral, letters of credit or U.S. Government securities in an amount equal
to 102% of the market value of the loaned securities at the inception of each
loan. The loans will be collateralized at all times in an amount equal to at
least 100% of the market value of the securities loaned. At March 31, 1998, the
market value of securities loaned and the collateral received for each fund is
as follows:
<TABLE>
<CAPTION>
MARKET VALUE OF
SECURITIES COLLATERAL
FUND LOANED AMOUNT
- ------------------------------- --------------- ----------
<S> <C> <C>
Emerging Growth Fund........... $77,437,581 $79,867,849
Core Growth Fund............... 41,081,548 42,269,676
Large Cap Growth Fund.......... 158,950 163,200
Income & Growth Fund........... 3,325,875 3,418,700
Balanced Growth Fund........... 432,903 436,800
Emerging Countries Fund........ 14,353,632 15,136,200
International Small Cap Growth
Fund........................... 4,087,255 4,218,400
International Core Growth
Fund........................... 1,517,894 1,547,400
Worldwide Growth Fund.......... 3,796,960 3,849,600
</TABLE>
F. BORROWING AGREEMENT
The Income & Growth Fund had an unsecured bank line of credit at March 31,
1998. The Fund borrowed $3,000,000 at a rate of 8.5%. The principal and interest
were repaid on April 1, 1998.
G. SUBSEQUENT EVENT
In 1998, the Board of Trustees of the Nicholas-Applegate Mutual Funds (the
"Trust") and the Nicholas-Applegate Investment Trust (the "Master Trust")
approved a plan to reorganize the current master-feeder structure into a new
multi-class fund structure, subject to the necessary shareholder approvals. Upon
the effective date of the reorganization, which is planned to take place
subsequent to March 31, 1998, all assets and liabilities of the master-feeder
funds will be transferred to the corresponding multi-class funds, and
shareholders of the Trust will effectively exchange their shares in the Trust
for equal amounts of shares in the respective multi-class funds in a tax free
exchange.
- --------------------------------------------------------------------------------
100
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
H. SELECTED RATIO DATA
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT RATIO OF NET
EXPENSES TO EXPENSES TO INCOME INVESTMENT
AVERAGE NET AVERAGE NET (DEFICIT) TO INCOME (DEFICIT)
ASSETS, ASSETS, AVERAGE NET TO AVERAGE NET
AFTER BEFORE ASSETS, AFTER ASSETS, BEFORE AVERAGE
EXPENSE EXPENSE EXPENSE EXPENSE BROKER
REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS PORTFOLIO COMMISSIONS
(RECOUPMENTS) (RECOUPMENTS) (RECOUPMENTS) (RECOUPMENTS) TURNOVER RATE PER SHARE
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH FUND (1)
For the year ended
3/31/98................... 1.13% 1.13% (0.55%) (0.55%) 91.66% $0.0528
For the year ended
3/31/97................... 1.10% 1.10% (0.64%) (0.64%) 112.90% $0.0520
For the year ended
3/31/96................... 1.11% 1.11% (0.57%) (0.57%) 129.59% $0.0523
For the year ended
3/31/95................... 1.12% 1.11% (0.53%) (0.52%) 100.46% --
For the period ended
3/31/94*.................. 1.12% 1.16% (0.80%) (0.84%) 50.51% --
CORE GROWTH FUND (2)
For the year ended
3/31/98................... 0.89% 0.89% (0.32%) (0.32%) 199.54% $0.0552
For the year ended
3/31/97................... 0.88% 0.88% (0.33%) (0.33%) 153.20% $0.0582
For the year ended
3/31/96................... 0.89% 0.89% (0.22%) (0.22%) 114.48% $0.0593
For the year ended
3/31/95................... 0.89% 0.89% 0.05% 0.05% 98.09% --
For the period ended
3/31/94*.................. 0.92% 0.92% (0.03%) (0.03%) 84.84% --
LARGE CAP GROWTH FUND (3)
For the year ended
3/31/98................... 0.95% 2.19% (0.07%) (1.31%) 305.78% $0.0584
For the period ended
3/31/97*.................. 0.91% 3.32% 0.00% (2.41%) 320.73% $0.0589
INCOME & GROWTH FUND (2)
For the year ended
3/31/98................... 0.91% 0.91% 3.15% 3.15% 159.59% $0.0595
For the year ended
3/31/97................... 0.95% 0.92% 3.49% 3.52% 166.84% $0.0154
For the year ended
3/31/96................... 0.95% 0.94% 3.94% 3.94% 144.97% $0.0597
For the year ended
3/31/95................... 0.93% 0.95% 4.37% 4.35% 125.51% --
For the period ended
3/31/94*.................. 0.94% 0.97% 3.51% 3.48% 177.52% --
BALANCED GROWTH FUND (2)
For the year ended
3/31/98................... 0.95% 1.12% 2.12% 1.95% 260.03% $0.0600
For the year ended
3/31/97................... 0.95% 1.21% 2.53% 2.27% 212.95% $0.0586
For the year ended
3/31/96................... 0.95% 1.37% 2.83% 2.37% 197.19% $0.0594
For the year ended
3/31/95................... 0.95% 1.33% 2.13% 1.75% 110.40% --
For the period ended
3/31/94*.................. 0.94% 1.37% 1.93% 1.50% 85.43% --
GOVERNMENT INCOME FUND (2)
For the year ended
3/31/98................... 0.60% 1.80% 5.44% 4.25% 288.77% --
For the year ended
3/31/97................... 0.60% 2.07% 5.77% 4.30% 573.72% --
For the year ended
3/31/96................... 0.60% 2.75% 6.12% 4.00% 190.47% --
For the year ended
3/31/95................... 0.80% 2.21% 5.32% 3.91% 258.72% --
For the period ended
3/31/94*.................. 0.80% 2.80% 3.43% 1.43% 159.17% --
MONEY MARKET FUND (2)
For the year ended
3/31/98................... 0.45% 0.45% 5.17% 5.17% n/a --
For the year ended
3/31/97................... 0.45% 0.88% 4.97% 4.53% n/a --
For the year ended
3/31/96................... 0.45% 3.20% 5.34% 2.59% n/a --
For the year ended
3/31/95................... 0.31% 3.23% 4.61% 1.69% n/a --
For the period ended
3/31/94*.................. 0.24% 151.02% 2.12% (148.66%) n/a --
EMERGING COUNTRIES FUND (4)
For the year ended
3/31/98................... 1.60% 1.64% 0.59% 0.55% 243.47% $0.0014
For the year ended
3/31/97................... 1.60% 1.57% (0.47%) (0.44%) 176.20% $0.0021
For the year ended
3/31/96................... 1.60% 2.80% 0.30% (0.90%) 118.21% $0.0022
For the period ended
3/31/95*.................. 1.60% 1.81% 1.73% 1.52% 60.79% --
INTERNATIONAL SMALL CAP GROWTH
FUND (5)
For the year ended
3/31/98................... 1.35% 1.47% (0.44%) (0.56%) 198.37% $0.0086
For the year ended
3/31/97................... 1.35% 1.38% (0.34%) (0.37%) 206.07% $0.0098
For the year ended
3/31/96................... 1.35% 1.98% 0.39% (0.24%) 141.02% $0.0128
For the year ended
3/31/95................... 1.35% 1.85% 0.24% (0.26%) 74.88% --
For the period ended
3/31/94*.................. 1.35% 2.28% 0.41% (0.52%) 23.71% --
INTERNATIONAL CORE GROWTH FUND
(3)
For the year ended
3/31/98................... 1.35% 1.45% (0.02%) (0.12%) 274.21% $0.0128
For the period ended
3/31/97*.................. 1.29% 2.25% 0.48% (0.47%) 75.53% $0.0106
WORLDWIDE GROWTH FUND (2)
For the year ended
3/31/98................... 1.20% 1.29% (0.02%) (0.11%) 201.70% $0.0221
For the year ended
3/31/97................... 1.20% 1.26% (0.27%) (0.33%) 181.81% $0.0078
For the year ended
3/31/96................... 1.20% 1.26% 0.31% 0.25% 132.20% $0.0187
For the year ended
3/31/95................... 1.20% 1.30% 0.24% 0.14% 98.54% --
For the period ended
3/31/94*.................. 1.20% 1.36% 0.01% (0.15%) 95.09% --
</TABLE>
- --------------------
(1) Commenced operations on October 1, 1993.
(2) Commenced operations on April 19, 1993.
(3) Commenced operations on December 27, 1996.
(4) Commenced operations on November 28, 1994.
(5) Commenced operations on December 31, 1993.
* Annualized
- --------------------------------------------------------------------------------
101
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------
ERNST & YOUNG LLP
515 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
PHONE: 213 977 3200
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
NICHOLAS-APPLEGATE MUTUAL FUNDS
We have audited the accompanying statements of assets and liabilities of the
Series A, B and C Portfolios of Nicholas-Applegate Mutual Funds (comprising
respectively, Emerging Growth Portfolios A, B and C, Core Growth Portfolios A, B
and C, Large Cap Growth Portfolios A, B and C, Income and Growth Portfolios A, B
and C, Balanced Growth Portfolios A, B and C, Government Income Portfolios A, B
and C, Money Market Portfolio, Emerging Countries Portfolios A, B and C,
International Small Cap Growth (formerly "International Growth") Portfolios A, B
and C, International Core Growth Portfolios A, B and C, and Worldwide Growth
Portfolios A, B and C) (hereinafter the "Portfolios"), as of March 31, 1998, and
the related statements of operations for the fiscal year then ended, the
statements of changes in net assets for each of the two fiscal years in the
period then ended (except for Large Cap Growth Portfolios A, B and C which are
for the fiscal year then ended) and the financial highlights for each of the
three fiscal years in the period then ended (except for Large Cap Growth
Portfolios A, B and C which are for the fiscal year then ended and International
Core Growth Portfolios A, B and C which are for each of the two fiscal years in
the period then ended). These financial statements and financial highlights are
the responsibility of the Portfolios' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The financial highlights for each of the two fiscal years in the
period ended March 31, 1995 were audited by other auditors whose report dated
May 12, 1995 expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the 1996, 1997 and 1998 financial
highlights referred to above present fairly, in all material respects, the
financial position of each of the respective series A, B and C Portfolios of
Nicholas-Applegate Mutual Funds as of March 31, 1998, the results of their
operations for the fiscal year then ended, changes in their net assets for each
of the two fiscal years in the period then ended, and the financial highlights
for each of the three fiscal years in the period then ended, as described in the
first paragraph, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
May 15, 1998
- --------------------------------------------------------------------------------
102
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------
ERNST & YOUNG LLP
515 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
PHONE: 213 977 3200
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
NICHOLAS-APPLEGATE INVESTMENT TRUST
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the following series of
Nicholas-Applegate Investment Trust: Emerging Growth Fund, Core Growth Fund,
Large Cap Growth Fund, Income & Growth Fund, Balanced Growth Fund, Government
Income Fund, Money Market Fund, Emerging Countries Fund, International Small Cap
Growth Fund (formerly "International Growth Fund"), International Core Growth
Fund, and Worldwide Growth Fund (hereinafter the "Funds") as of March 31, 1998,
and the related statements of operations for the fiscal year then ended, and the
statements of changes in net assets for each of the two fiscal years in the
period then ended. These financial statements are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements based on our audits. The selected ratio data for each of
the two fiscal years in the period ended March 31, 1995 were audited by other
auditors whose report dated May 12, 1995 expressed an unqualified opinion on
those selected ratio data.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of March 31, 1998, by correspondence with
the custodians and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective Funds of
Nicholas-Applegate Investment Trust as of March 31, 1998, the results of their
operations for the fiscal year then ended, and changes in their net assets for
each of the two fiscal years in the period then ended, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
May 15, 1998
- --------------------------------------------------------------------------------
103
<PAGE>
NICHOLAS APPLEGATE-Registered Trademark-
MUTUAL FUNDS ANNUAL REPORT
HIGH YIELD BOND FUND
Company by Tradition
INCOME
[GRAPHIC]
CLASS A, B & C SHARES
<PAGE>
TABLE OF CONTENTS
- ------------------------------------------------------------------------
HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
PAGE
<S> <C>
Review and Outlook...................................................... 1
Performance............................................................. 2
Schedule of Investments................................................. 3
Financial Highlights.................................................... 6
Statement of Assets and Liabilities..................................... 8
Statement of Operations................................................. 9
Statements of Changes in Net Assets..................................... 10
Notes to the Financial Statements....................................... 11
Report of Independent Auditors.......................................... 15
</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 High Yield Bond Fund. Distributor: Nicholas-Applegate
Securities.
- --------------------------------------------------------------------------------
<PAGE>
HIGH YIELD BOND FUND
- ------------------------------------------------------------------------
MANAGEMENT TEAM
Fred S. Robertson,
Partner, Chief Investment Officer, Fixed Income
Douglas G. Forsyth, CFA,
Portfolio Manager
James E. Kellerman,
Partner, Portfolio Manager
Sandra K. Durn,
Portfolio Manager
Jan Friedli,
Portfolio Manager
Richard J. King, CFA,
Portfolio Manager
Susan Malone,
Portfolio Manager
GOAL: The Nicholas-Applegate High Yield Bond Fund seeks to deliver a high
level of current income and long-term capital growth by investing in a
diversified portfolio consisting primarily of U.S. corporate fixed-income
securities.
REVIEW AND OUTLOOK: The Nicholas-Applegate High Yield Bond Fund delivered
outstanding performance for the year, based on superior bond selection and the
powerful domestic economy. The Fund returned 26.1%, outperforming the First
Boston High Yield Index which returned 14.3%.
Continued domestic growth, stable interest rates, low inflation, high consumer
confidence and low unemployment proved ideal for high yield investing. Strong
inflows, combined with a record pace of new issues, drove the high yield market.
Expert bond selection was the primary factor driving outperformance. Holdings
boosting the Fund's advance included arts and crafts retailer Michael's Stores
and Orbital Sciences, a company operating low-Earth-orbit satellites to track
machinery and systems operations throughout the world.
We discover securities for the High Yield Bond Fund using the tools our equity
teams use to pick stocks. Companies must demonstrate the following criteria to
be included in the portfolio:
- Potential for positive fundamental change leading to earnings and cash
flow growth, debt reduction and possible credit-rating upgrade
- Ability to secure other sources of capital
- Potential recognition as an acquisition target
- Sustainability of growth
- Timeliness of investment
Our outlook is bright for continued outperformance for the Fund, given current
positive market conditions. Moreover, our focus on company fundamentals
positions us to find attractive opportunities regardless of changes to the
macroeconomic environment.
REPRESENTATIVE HOLDINGS
Amresco
Bally Total Fitness
Chancellor Media
IDT
Michael's Stores
Musicland
Omnipoint
Orbital Sciences -- Orbcomm
Viacom
Winstar Communications
- --------------------------------------------------------------------------------
1
<PAGE>
HIGH YIELD BOND FUND
- ------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HIGH YIELD BOND A SHARES FIRST BOSTON HIGH YIELD INDEX
<S> <C> <C>
7/31/96 $9,525.00 $10,000.00
9/30/96 $10,114.29 $10,282.87
12/31/96 $10,585.71 $10,736.37
3/31/97 $10,821.43 $10,894.66
6/30/97 $11,614.29 $11,365.04
9/30/97 $12,578.57 $11,899.69
12/31/97 $12,814.29 $12,092.03
3/31/98 $13,628.57 $12,455.48
Annualized Total Returns As of 03/31/98
1 Year Since Inception
19.96% 20.42%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HIGH YIELD BOND B SHARES FIRST BOSTON HIGH YIELD INDEX
<S> <C> <C>
7/31/96 $10,000.00 $10,000.00
9/30/96 10,614.53 10,282.87
12/31/96 11,094.97 10,736.37
3/31/97 11,329.61 10,894.66
6/30/97 12,134.08 11,365.04
9/30/97 13,139.66 11,899.69
12/31/97 13,363.13 12,092.03
3/31/98 13,801.12 12,455.48
Annualized Total Returns As of 03/31/98
1 Year Since Inception
20.35% 21.34%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HIGH YIELD BOND C SHARES FIRST BOSTON HIGH YIELD INDEX
<S> <C> <C>
7/31/96 $10,000.00 $10,000.00
9/30/96 10,614.53 10,282.87
12/31/96 11,094.97 10,736.37
3/31/97 11,329.61 10,894.66
6/30/97 12,134.08 11,365.04
9/30/97 13,139.66 11,899.69
12/31/97 13,363.13 12,092.03
3/31/98 14,201.12 12,455.48
Annualized Total Returns As of 03/31/98
1 Year Since Inception
25.35% 23.44%
</TABLE>
The graphs compare a $10,000 investment in the High Yield Bond Fund's A Shares
(front load), the B Shares (back-end load) and the C Shares (level load) with a
similar investment in the First Boston High Yield Index, on a cumulative and
average annual total return basis. The Shares calculate their performance based
upon the historical performance of their corresponding series ("Fund") of
Nicholas-Applegate Investment Trust, adjusted to reflect sales charges and share
class operating expenses. The A, B and C Shares became available on 3/2/98.
Performance returns within are calculated on a total return basis and reflect
all fees and expenses with reinvestment of dividends and capital gains, if any.
Performance figures include the maximum applicable sales charge of 5.25% for A
Shares. The effect of the maximum contingent deferred sales charge for B Shares
(maximum 5.00% declining to 0% over six years) is included in B Share
performance. Performance is affected by a 12b-1 Plan which commenced at
inception of each Class.
Total returns reflect the fact that the Investment Adviser has agreed to waive
or defer its management fees and to pay other operating expenses otherwise
payable by the share class, subject to possible later reimbursement during a
five year period. Total return results may have been lower had there been no
waiver or deferral.
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.
Index returns reflect the reinvestment of dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.
Past performance is no guarantee of future performance. Investment returns and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
2
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998
- ------------------------------------------------------------------------
HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
COMMON STOCKS -- 0.8%
- ---------------------------------------------------------------------------------------------------
COMPUTER NETWORKS -- 0.4%
Legato Systems, Inc............................................ 2,000 $ 118,750
------------
GAMING -- 0.4%
Rio Hotel and Casino, Inc.*.................................... 5,000 129,687
------------
TOTAL COMMON STOCK
(Cost $229,425)................................................................ 248,437
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
CORPORATE BONDS -- 87.2%
- ---------------------------------------------------------------------------------------------------
BROADCASTING -- 7.8%
American Mobile Satellite
12.250%, 04/01/08................................................. $ 500,000 520,000
Fox Liberty Networks LLC
8.875%, 08/15/07.................................................. 250,000 260,000
Satelites Mexicanos SA
10.125%, 11/01/04................................................. 250,000 256,875
Source Media, Inc.
12.000%, 11/01/04................................................. 1,300,000 1,293,500
------------
2,330,375
------------
CATALOG RETAILING -- 5.1%
Brylane L.P., Series B
10.000%, 09/01/03................................................. 250,000 265,625
Shop At Home, Inc.
11.000%, 04/01/05................................................. 1,250,000 1,262,500
------------
1,528,125
------------
ELECTRONIC RETAILING -- 0.4%
Electronic Retailing Systems, Inc.
0.000%, 02/01/04*................................................. 200,000 116,000
------------
ENGINEERING SERVICES -- 0.9%
MSX International, Inc.
11.375%, 01/15/08................................................. 250,000 259,375
------------
ENTERTAINMENT -- 0.5%
Premier Parks, Inc.
0.000%, 04/01/08*................................................. 250,000 159,375
------------
EQUIPMENT -- 0.9%
Phase Metrics, Inc.
10.750%, 02/01/05................................................. 250,000 252,812
------------
FINANCIAL SERVICES -- 11.3%
AMRESCO, Inc.
9.875%, 03/15/05.................................................. 1,200,000 1,221,000
Bluegreen Corp.
10.500%, 04/01/08................................................. 750,000 751,875
CRIIMI MAE, Inc.
9.125%, 12/01/02.................................................. 750,000 754,687
MCII Holdings
0.000%, 11/15/02*................................................. 250,000 236,250
Px Escrow Corp.
0.000%, 02/01/06*................................................. 200,000 142,250
Resource America, Inc.
12.000%, 08/01/04................................................. 250,000 262,500
------------
3,368,562
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
FOOD PROCESSING -- 1.7%
Purina Mills, Inc.
9.000%, 03/15/10.................................................. $ 500,000 $ 516,250
------------
HOTELS AND MOTELS -- 0.9%
Extended Stay America
9.150%, 03/15/08.................................................. 250,000 251,875
------------
INDUSTRIAL -- 3.5%
Orbital Imaging Corp.
11.625%, 03/01/05................................................. 950,000 1,045,000
------------
MACHINERY -- 0.9%
Newcor Inc.
9.875%, 03/01/08.................................................. 250,000 253,125
------------
MOTION PICTURES -- 0.9%
Ascent Entertainment Group
0.000%, 12/15/04*................................................. 450,000 264,375
------------
MUSIC/CLUBS -- 0.9%
Imax Corp.
10.000%, 03/01/01................................................. 250,000 261,250
------------
PAPER AND PAPER PRODUCTS -- 1.7%
Plainwell, Inc.
11.000%, 03/01/08................................................. 500,000 506,250
------------
PRODUCERS/MANUFACTURING -- 2.3%
Associated Materials, Inc.
9.250%, 03/01/08.................................................. 200,000 205,500
Doskocil Manufacturing Co., Inc.
10.125%, 09/15/07................................................. 200,000 214,000
Foodmaker, Inc.
9.250%, 03/01/99.................................................. 18,000 18,225
Inter-City Products Corp.
9.750%, 03/01/00.................................................. 250,000 254,063
------------
691,788
------------
PUBLISHING -- 0.9%
Liberty Group Operating
9.375%, 02/01/08.................................................. 250,000 255,625
------------
RECREATIONAL CENTERS -- 1.1%
Bally Total Fitness Holding, Series B
9.875%, 10/15/07.................................................. 300,000 319,500
------------
SOFTWARE -- 2.9%
IDT Corp.
8.750%, 02/15/06.................................................. 875,000 873,906
------------
SPECIAL PURPOSE -- 1.0%
Pinnacle Holdings, Inc.
0.000%, 03/15/08*................................................. 500,000 313,125
------------
SPECIALTY RETAILING -- 4.6%
CompUSA, Inc.
9.500%, 06/15/00.................................................. 150,000 155,063
Maxim Group, Inc., Series B
9.250%, 10/15/07.................................................. 200,000 203,250
Michaels Stores, Inc.
10.875%, 06/15/06................................................. 100,000 112,000
Musicland Group
9.000%, 06/15/03.................................................. 500,000 495,000
Tuesday Morning Corp.
11.000%, 12/15/07................................................. 400,000 412,500
------------
1,377,813
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
3
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 -- CONTINUED
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
CORPORATE BONDS (Continued)
- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TELECOMMUNICATIONS -- 18.6%
Covad Comm Group
0.000%, 03/15/08*................................................. $ 500,000 $ 262,500
Global Telesystems Group
9.875%, 02/15/05.................................................. 625,000 646,094
Nextel Communications
0.000%, 09/15/07*................................................. 1,000,000 668,750
Nextlink Communications
0.000%, 04/15/08*................................................. 1,500,000 950,625
Omnipoint Corp.
11.625%, 08/15/06................................................. 750,000 826,875
ORBCOMM Global, LP, Series B
14.000%, 08/15/04................................................. 1,250,000 1,459,375
Sitel Corp.
9.250%, 03/15/06.................................................. 700,000 707,000
------------
5,521,219
------------
TELEPHONE -- 13.2%
21st Century Telecom Group
0.000%, 02/15/08*................................................. 250,000 147,500
Esprit Telecom Group PLC
11.500%, 12/15/07................................................. 750,000 825,938
Facilicom International
10.500%, 01/15/08................................................. 250,000 261,250
McLeodUSA, Inc.
8.375%, 03/15/08.................................................. 500,000 517,500
Qwest Communications International
0.000%, 10/15/07*................................................. 300,000 220,500
Teligent, Inc.
11.500%, 12/01/07................................................. 600,000 627,000
WinStar Communications, Inc.
0.000%, 10/15/05.................................................. 300,000 251,250
WinStar Communications, Inc.
0.000%, 03/01/07*................................................. 800,000 1,062,000
------------
3,912,938
------------
TRANSPORTATION -- 5.2%
Premier Cruises Ltd.
11.000%, 03/15/08................................................. 500,000 493,750
Trans World Airlines
11.500%, 12/15/04................................................. 1,000,000 1,060,000
------------
1,553,750
------------
TOTAL CORPORATE BONDS
(Cost $25,649,727)................................................................ 25,932,413
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
FOREIGN CORPORATE OBLIGATIONS -- 0.4%
- ---------------------------------------------------------------------------------------------------
INDONESIA -- 0.4%
PT Polysindo Eka Perkasa Interest Promissory Note*.................. $ 10,000 $ 5,900
PT Polysindo Eka Perkasa Interest Promissory Note*.................. 10,000 5,900
PT Polysindo Eka Perkasa Principal Promissory Note*................. 200,000 118,000
------------
129,800
------------
TOTAL FOREIGN CORPORATE OBLIGATIONS
(Cost $129,766)................................................................... 129,800
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
PREFERRED STOCK -- 2.0%
- ---------------------------------------------------------------------------------------------------
BROADCASTING -- 1.0%
Chancellor Media, Inc., Series A, 12.25%....................... 2,000 284,500
------------
TELECOMMUNICATION SERVICES -- 1.0%
Dobson Communication Corp., 12.25%............................. 2,500 275,000
IXC Communciations, Inc., Series B, 12.50%..................... 70 8,540
------------
283,540
------------
TOTAL PREFERRED STOCK
(Cost $507,910)................................................................ 568,040
------------
- ---------------------------------------------------------------------------------------------------
MUTUAL FUND -- 0.0%
- ---------------------------------------------------------------------------------------------------
BOND FUNDS -- 0.0%
Nicholas Applegate High Yield Bond Fund Trust*
(Cost $1,000)................................................ 55 1,000
------------
- ---------------------------------------------------------------------------------------------------
WARRANTS -- 0.0%
- ---------------------------------------------------------------------------------------------------
ELECTRONIC INSTRUMENTS -- 0.0%
Electronic Retailing Systems, Inc.*
(Cost $12,219)............................................... 300 7,500
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
COMMERCIAL PAPER -- 6.0%
- ---------------------------------------------------------------------------------------------------
Associates First Capital Corp.
6.050%, 04/01/98.................................................. $ 587 587,000
Merrill Lynch
6.050%, 04/01/98.................................................. 1,205 1,205,000
------------
TOTAL COMMERCIAL PAPER
(Cost $1,792,000)................................................................. 1,792,000
------------
TOTAL INVESTMENTS -- 96.4%
(Cost $28,322,047)................................................................ 28,679,190
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 3.6%............................................................... 1,055,558
------------
NET ASSETS -- 100.0%................................................................ $ 29,734,778
------------
</TABLE>
- ---------------
* Non-Income Producing Security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
4
<PAGE>
(This page intentionally left blank.)
- --------------------------------------------------------------------------------
5
<PAGE>
HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE AT NET AND UNREALIZED FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT GAINS ON INVESTMENT FROM
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
- -------------------------------------------
A SHARES+
For the period ended March
31, 1998.................. $ 12.70 $ 0.01 $ 0.01 $ -- $ --
B SHARES+
For the period ended March
31, 1998.................. 12.69 0.01 0.01 -- --
C SHARES+
For the period ended March
31, 1998.................. 12.69 0.01 0.01 -- --
I SHARES++
For the year ended March 31,
1998 13.20 1.11 2.02 (1.15) (1.72)
For the period ended March
31, 1997.................. 12.50 0.74 0.95 (0.73) (0.26)
Q SHARES+
For the period ended March
31, 1998.................. 12.70 0.01 0.01 -- --
Portfolio Turnover Rate for
the Year Ended March 31,
1998 484.39%
Portfolio Turnover Rate for
the Period Ended March 31,
1997 465.32%
</TABLE>
- -----------------
+ Commenced Operations on March 27, 1998.
++ Commenced Operations on July 31, 1996.
* Annualized
** Represents total return for the four day period from March 27, 1998 through
March 31, 1998 for the A, B, C and Q shares (see Note A). The total return
for the period from February 27, 1998 through March 27, 1998 was 1.60%,
1.52%, 1.52% and 1.60%, respectively for the A, B, C and Q shares.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
6
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratio of Ratio of
Expenses to Expenses to
Average Net Average Net
Net Assets Assets, After Assets, Before
Net Asset at Expense Expense
Value at Total End of Reimbursement Reimbursement
End of Period Return** Period and Fee Waiver* and Fee Waiver*
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
A SHARES+
For the period ended March
31, 1998.................. $ 12.72 0.16% $ 4,690,089 1.06% 1.06%
B SHARES+
For the period ended March
31, 1998.................. 12.71 0.16% 8,891,534 1.69% 1.69%
C SHARES+
For the period ended March
31, 1998.................. 12.71 0.16% 4,814,892 1.66% 1.66%
I SHARES++
For the year ended March 31,
1998 13.46 25.49% 10,771,172 0.76% 2.66%
For the period ended March
31, 1997.................. 13.20 13.90% 4,607,559 0.75% 1.95%
Q SHARES+
For the period ended March
31, 1998.................. 12.72 0.16% 567,091 0.97% 0.97%
Portfolio Turnover Rate for
the Year Ended March 31,
1998
Portfolio Turnover Rate for
the Period Ended March 31,
1997
<CAPTION>
Ratio of Net Ratio of Net
Income to Income to
Average Net Average Net
Assets, After Assets, Before
Expense Expense
Reimbursement Reimbursement
and Fee Waiver* and Fee Waiver*
<S> <C> <C>
--------------------------------------
A SHARES+
For the period ended March
31, 1998.................. 7.22% 7.22%
B SHARES+
For the period ended March
31, 1998.................. 6.61% 6.61%
C SHARES+
For the period ended March
31, 1998.................. 6.91% 6.91%
I SHARES++
For the year ended March 31,
1998 8.28% 6.38%
For the period ended March
31, 1997.................. 8.47% 7.97%
Q SHARES+
For the period ended March
31, 1998.................. 7.53% 7.53%
Portfolio Turnover Rate for
the Year Ended March 31,
1998
Portfolio Turnover Rate for
the Period Ended March 31,
1997
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
7
<PAGE>
HIGH YIELD BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
AS OF MARCH 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments, at value*................ $28,679,190
Cash.................................. 376
Interest receivable................... 362,104
Shares sold........................... 4,425,185
Due from advisor...................... 20,117
-----------
Total assets........................ 33,486,972
-----------
LIABILITIES
Investment securities purchased....... 3,714,571
Shares repurchased.................... 91
Accrued expenses...................... 37,532
-----------
Total liabilities................... 3,752,194
-----------
NET ASSETS $29,734,778
-----------
COMPOSITION OF NET ASSETS
Paid-in capital....................... $29,114,851
Accumulated net investment income..... 12,705
Accumulated net realized gain......... 250,079
Net unrealized appreciation on
investments and foreign exchange.... 357,143
-----------
NET ASSETS.............................. $29,734,778
-----------
*INVESTMENTS AT COST.................. $28,322,047
-----------
NET ASSETS
A shares.............................. $ 4,690,089
B shares.............................. 8,891,534
C shares.............................. 4,814,892
I shares.............................. 10,771,172
Q shares.............................. 567,091
-----------
Total............................... $29,734,778
-----------
SHARES OUTSTANDING (NO PAR VALUE,
UNLIMITED SHARES AUTHORIZED)
A shares.............................. 368,665
B shares.............................. 699,624
C shares.............................. 378,767
I shares.............................. 800,128
Q shares.............................. 44,587
-----------
Total............................... 2,291,771
-----------
NET ASSET VALUE
A shares (Maximum Offering Price of
$13.35)............................. $ 12.72
B shares.............................. $ 12.71
C shares.............................. $ 12.71
I shares.............................. $ 13.46
Q shares.............................. $ 12.72
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
8
<PAGE>
HIGH YIELD BOND FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Dividends............................. $ 23,168
Interest.............................. 523,889
-----------
Total income........................ 547,057
EXPENSES
Advisory fee.......................... 36,505
Accounting fee........................ 42,098
Administration fee.................... 6,119
Audit fee............................. 4,284
Co-Administration fee................. 5,938
Custodian fee......................... 24,725
Distribution fee...................... 1,090
Insurance fee......................... 566
Legal fee............................. 2,131
Miscellaneous......................... 2,566
Registration fee- Federal............. 1,200
Registration fee - State.............. 9,516
Shareholder reporting fee............. 1,456
Shareholder servicing fee............. 386
Transfer agent fee.................... 12,391
Trustees' fee......................... 7,686
-----------
Total expenses...................... 158,657
Reimbursement from advisor............ (105,541)
Co-Administration fee waiver.......... (5,938)
Line of credit commitment fee......... 401
-----------
Net expenses........................ 47,579
-----------
Net investment income............. 499,478
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN EXCHANGE
Net realized gain from security
transactions........................ 551,791
Change in net unrealized appreciation
of investments and foreign
exchange............................ 310,375
-----------
Net gain on investments........... 862,166
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS..................... $ 1,361,644
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
9
<PAGE>
HIGH YIELD BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
MARCH 31, MARCH 31,
1998 1997+
<S> <C> <C>
-----------------------------
INCREASE IN NET ASSETS:
OPERATIONS
Net investment income............... $ 499,478 $ 248,226
Net realized gain from security
transactions....................... 551,791 329,760
Change in net unrealized
appreciation (depreciation) of
investments and foreign exchange... 310,375 (23,773)
-----------------------------
Increase in net assets from
operations...................... 1,361,644 554,213
-----------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
I shares.......................... (516,768) (246,559)
Capital gains
I shares.......................... (551,174) (88,423)
-----------------------------
Change in net assets from
shareholder distributions....... (1,067,942) (334,982)
-----------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold (See Note
F)................................. 27,096,275 4,551,209
Value of shares reinvested.......... 237,690 37,643
Cost of shares repurchased.......... (2,500,448) (201,524)
-----------------------------
Increase in net assets derived
from capital share
transactions..................... 24,833,517 4,387,328
-----------------------------
Total increase in net assets.... 25,127,219 4,606,559
NET ASSETS
BEGINNING OF THE PERIOD............... 4,607,559 1,000
-----------------------------
END OF THE PERIOD..................... $ 29,734,778 $ 4,607,559
-----------------------------
CHANGE IN SHARES OUTSTANDING
Beginning share balances.............. 349,046 80
Shares sold (See Note F).............. 2,118,195 361,395
Shares reinvested..................... 17,883 2,861
Shares repurchased.................... (193,353) (15,290)
-----------------------------
Ending share balances........... 2,291,771 349,046
-----------------------------
</TABLE>
- -------------
+ Commenced Operations on July 31, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
10
<PAGE>
HIGH YIELD BOND FUND
NOTES TO THE FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
High Yield Bond Fund (the "Fund") is a series of Nicholas-Applegate Mutual
Funds (the "Trust"), a diversified, open-end management investment company
organized as a Delaware business trust , and offers five classes of shares
namely, A, B, C, I and Q.
Prior to March 27, 1998, the Fund's capital consisted of only Institutional
class. On March 27, 1998, the Fund combined with a similar high yield bond fund
started on February 28, 1998, which was also a series of the Trust (the
"Acquiree"), whose capital consisted of classes A, B, C and Q. The shareholders
of the Acquiree effectively exchanged their shares in the Acquiree for equal
amounts of shares in the respective classes of the Fund in a tax-free exchange.
The Acquiree's net assets at that date, $16,364,513, including $70,541 of
unrealized appreciation, $28,328 of undistributed net investment income and
$8,125 of undistributed net realized gains from investment transactions, were
combined with those of the Fund. The aggregate net assets of the Fund and the
Acquiree immediately before the acquisition were $10,692,136 and $16,364,513,
respectively.
INVESTMENT OBJECTIVE
High Yield Bond Fund seeks a high level of current income and capital growth
through investments primarily in lower rated debt securities and convertible
securities rated below investment grade by a nationally recognized statistical
rating agency.
SECURITIES TRANSACTIONS
Equity securities are valued at the last 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 quoted bid 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 directions of the 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 Fund. Interest income is recorded on the accrual
basis. Discounts and premiums on securities purchased are accreted and amortized
over the life of the respective securities.
FOREIGN CURRENCY TRANSLATION
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
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their taxable income to their shareholders. Accordingly, no
federal income tax provisions are required if the Funds continue to comply with
such requirements.
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, 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
- --------------------------------------------------------------------------------
11
<PAGE>
HIGH YIELD BOND FUND
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
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 describes each Fund's policies with
respect to declaration and payment of dividends and distribution of capital
gains.
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 in the financial statements and accompanying notes. Actual
results could differ from those estimates.
ALLOCATION OF EXPENSES
Expenses arising in connection with a specific class of shares are allocated
directly. All other expenses are allocated pro rata based on relative net
assets.
B. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENTS
The investment advisor to the Trust is Nicholas-Applegate Capital Management
("Nicholas-Applegate" or "Investment Advisor"). The advisory fee is computed
daily at an annual rate of 0.60% of average daily net assets of the Fund.
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
The Trust has adopted a distribution plan whereby Nicholas-Applegate
Securities (the "Distributor"), an affiliate of Nicholas-Applegate Capital
Management, is compensated for distribution-related expenses at an annual rate,
payable monthly, of 0.25%, 0.75% and 0.75% of the average daily net assets of
the Fund's A, B and C shares, respectively.
Under a distribution agreement, the Distributor who is the principal
underwriter for the sale of shares of the Fund, retains a portion of any
contingent deferred sales load on redemptions for the Fund, and retains a
portion of the initial sales load imposed on purchases of shares of the Class A
Shares. This agreement may be terminated by either party upon 60 days' written
notice.
The Trust has adopted a shareholder service plan under which the Distributor
is also compensated for non-distribution related expenses at an annual rate, as
follows: 0.10%, 0.25% and 0.25% of the average daily net asset value of the A,
B, and C shares, respectively.
ADMINISTRATIVE SERVICES AGREEMENT
The Fund pays the Investment Advisor for co-administrative services at an
annual rate of 0.10% of average daily net assets of the Fund. 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 Fund's expenses
to certain annual levels. Overall operating expenses for the 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. The Fund will reimburse the Investment Adviser in subsequent
years when operating expenses (before reimbursement) are less than the
applicable percentage limitation.
<TABLE>
<S> <C>
Class A 1.10%
Class B 1.75%
Class C 1.75%
Class I 0.75%
Class Q 1.00%
</TABLE>
For the year ended March 31, 1998, expense reimbursements recorded by the Fund
were related to expenses incurred by Class I prior to the acquisition discussed
in Note A.
These percentages are based on the average net assets of the classes,
exclusive of interest, taxes brokerage commissions, and other costs incurred in
connection with portfolio securities transactions, capital expenditures, and
extraordinary expenses.
- --------------------------------------------------------------------------------
12
<PAGE>
HIGH YIELD BOND FUND
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
The cumulative unreimbursed amount paid by Nicholas-Applegate on behalf of
Class I, during the inception of the Fund to March 31, 1998 was $130,661.
Effective March 31, 1998, Nicholas-Applegate agreed to amend the expense
reimbursement agreement to limit the possible recoupment period of any expense
reimbursements to five years from the year of the reimbursement, and subject to
the Fund's ability to effect such reimbursement and remain in compliance with
applicable expense limitations.
RELATED PARTIES
Certain officers of the Trust are also officers of the Investment Adviser and
the Distributor.
C. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investment securities, other than
short-term obligations, were $54,671,555 and $33,566,349, respectively, for the
fiscal year ended March 31, 1998.
At March 31, 1998, the net unrealized appreciation (depreciation) based on the
cost of investments for Federal income tax purposes was as follows (in 000's):
<TABLE>
<CAPTION>
GROSS GROSS NET
TAX UNREALIZED UNREALIZED UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
- -------------- ----------- ----------- -----------
<S> <C> <C> <C>
$ 28,322,047 $ 420,472 $ 63,329 $ 357,143
</TABLE>
D. OFF BALANCE SHEET RISKS AND DERIVATIVE INSTRUMENTS
The Fund's investments 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 policy of the Fund to continuously
monitor its exposure to these risks.
The Fund may utilize forward foreign currency exchange contracts as part of
its strategy of preserving capital. Upon entering into forward foreign currency
contracts, the Fund is 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 Fund recognizes a
realized gain or loss when the contract is sold. The forward value of amounts
due to the Fund netted against the forward value of the currency to be delivered
by the Fund and the remaining amount is shown as receivable (payable) for
unrealized gain (loss) on forward currency contracts open in the financial
statements. There were no open forward foreign currency contracts outstanding at
March 31, 1998.
E. CREDIT FACILITY
The Fund participates 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 Fund has agreed to pay commitment fees
on its pro rata portion of the Facility. Interest is charged to the Fund at a
rate based on market rates in effect at the time of borrowings. At March 31,
1998, there were no outstanding borrowings under the Facility. The maximum
amount borrowed under this line of credit at any time during the period ended
March 31, 1998 was $0.
- --------------------------------------------------------------------------------
13
<PAGE>
HIGH YIELD BOND FUND
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
- --------------------------------------------------------------------------------
F. CAPITAL SHARE TRANSACTIONS
The Fund currently offers five classes of shares, namely, A, B, C, I and Q.
Transactions in capital shares for the year ended March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I CLASS Q
-------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Capital share transactions:
Proceeds from shares sold............. $ 2,188,791 $ 1,136,299 $ 907,549 $ 6,471,123 $ 28,000
Proceeds from shares issued in
connection with acquisition (See
Note A)............................. 4,153,263 7,772,553 3,900,531 -- 538,166
Value of shares reinvested............ -- -- -- 237,690 --
Cost of shares repurchased............ (1,658,997) (30,039) (91) (811,321) --
-------------- ------------- ------------- ------------- -----------
Increase in net assets derived from
capital share transactions.......... $ 4,683,057 $ 8,878,813 $ 4,807,989 $ 5,897,492 $ 566,166
-------------- ------------- ------------- ------------- -----------
-------------- ------------- ------------- ------------- -----------
Change in Shares Outstanding
Beginning share balances.............. -- -- -- 349,046 --
Shares sold........................... 173,791 89,467 71,467 492,047 2,205
Shares issued in connection with
acquisition (See Note A)............ 326,993 612,536 307,307 -- 42,382
Shares reinvested..................... -- -- -- 17,883 --
Shares repurchased.................... (132,119) (2,379) (7) (58,848) --
-------------- ------------- ------------- ------------- -----------
Ending share balances................. 368,665 699,624 378,767 800,128 44,587
-------------- ------------- ------------- ------------- -----------
-------------- ------------- ------------- ------------- -----------
</TABLE>
- --------------------------------------------------------------------------------
14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------
ERNST & YOUNG LLP
515 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
PHONE: 213 977 3200
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
NICHOLAS-APPLEGATE MUTUAL FUNDS
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of High Yield Bond Fund (the "Fund"), a
series of Nicholas-Applegate Mutual Funds, as of March 31, 1998, and the related
statement of operations for the fiscal year then ended, the statements of
changes in net assets and the financial highlights for each of the two fiscal
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998, by correspondence with the custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of High
Yield Bond Fund as of March 31, 1998, the results of its operations for the
fiscal year then ended, and the changes in its net assets and the financial
highlights for each of the two fiscal years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
May 15, 1998
- --------------------------------------------------------------------------------
15
<PAGE>
TRUSTEES OF NICHOLAS-APPLEGATE MUTUAL FUNDS
------------------------------------------
Fred C. Applegate, CHAIRMAN
Dr. Arthur B. Laffer
Charles E. Young
OFFICERS
--------
Arthur E. Nicholas, 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
800-551-8043
Nicholas-Applegate Securities, Distributor
www.nacm.com
ANN98ABC
