<PAGE>
As filed with the Securities and Exchange Commission
on February 19, 1998
Registration No. 33-56094
811-7428
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. __ [ ]
POST-EFFECTIVE AMENDMENT NO. 51 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 53
(Check appropriate box or boxes)
------------------
NICHOLAS-APPLEGATE MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
600 WEST BROADWAY, 30TH FLOOR
SAN DIEGO, CALIFORNIA 92101
(Address of Principal Executive Offices, including Zip Code)
ARTHUR E. NICHOLAS
C/O NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
600 WEST BROADWAY, 30TH FLOOR
SAN DIEGO, CALIFORNIA 92101
(Name and Address of Agent for Service)
COPY TO: ROBERT E. CARLSON
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 S. FLOWER STREET, TWENTIETH FLOOR
LOS ANGELES, CALIFORNIA 90071
------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE FOLLOWING EFFECTIVE DATE.
------------------
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on ______________ pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(i)
[ ] on ____________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii), of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has registered an indefinite number of shares by this Registration Statement.
Registrant filed a Notice under such Rule for its fiscal year ended March 31,
1997 on May 30, 1997.
------------------
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
N-1A ITEM NO. LOCATION
- ------------- --------
PART A
Item 1. Cover Page. . . . . . . . . . . . . . Cover Page
Item 2. Synopsis. . . . . . . . . . . . . . . Overview; Global Funds; U.S.
Funds; Fixed Income Funds
Item 3. Condensed Financial Information . . . Global Funds; U.S. Funds;
Fixed Income Funds
Item 4. General Description of Registrant . . Overview; Global Funds; U.S.
Funds; Fixed Income Funds
Item 5. Management of Fund. . . . . . . . . . Organization and Management;
Portfolio Teams
Item 6. Capital Stock and Other Securities. . Your Account
Item 7. Purchase of Securities Being Offered. Your Account
Item 8. Redemption or Repurchase. . . . . . . Your Account
Item 9. Pending Legal Proceedings . . . . . . Not Applicable
PART B
Item 10. Cover Page. . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . General Information
Item 13. Investment Objectives and Policies. . Investment Objectives,
Policies and Risks; Investment
Restrictions
Item 14. Management of the Fund. . . . . . . . Trustees and Officers;
Administrators; Distributor
Item 15. Control Persons and Principal
Holders of Securities . . . . . . . . Not Applicable
Item 16. Investment Advisory and Other
Services. . . . . . . . . . . . . . . Administrators; Investment
Adviser; Distributor;
Custodian, Transfer and
Dividend Disbursing Agent,
Independent Auditors and Legal
Counsel
Item 17. Brokerage Allocation and Other
Practices . . . . . . . . . . . . . . Portfolio Transactions and
Brokerage
Item 18. Capital Stock and Other Securities. . Miscellaneous
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered . . . . . Purchase and Redemption of
Fund Shares; Shareholder
Services
Item 20. Tax Status. . . . . . . . . . . . . . Dividends, Distributions and
Taxes
<PAGE>
Item 21. Underwriters. . . . . . . . . . . . . Distributor
Item 22. Calculation of Performance Data . . . Performance Information
Item 23. Financial Statements. . . . . . . . . Not Applicable
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to the Registration Statement.
<PAGE>
NICHOLAS/APPLEGATE(R)
M U T U A L F U N D S
PRELIMINARY PROSPECTUS
The prospectus contains vital information about the Class I Shares of
these Funds. For your own benefit and protection, please read it before you
invest, and keep it on hand for future reference.
Please note that these shares
- are not bank deposits
- are not federally insured
- are not endorsed by any bank or government agency
- are not guaranteed to achieve their investment objectives
THE EMERGING MARKETS BOND FUND, LATIN AMERICA FUND, STRATEGIC INCOME FUND
AND HIGH YIELD BOND FUND MAY INVEST WITHOUT LIMITATION IN DEBT SECURITIES
RATED BELOW INVESTMENT GRADE, SOMETIMES REFERRED TO AS "JUNK BONDS." THESE
LOWER-RATED SECURITIES ARE SPECULATIVE AND INVOLVE GREATER RISKS, INCLUDING
DEFAULT, THAN HIGHER-RATED SECURITIES. SEE "RISK FACTORS AND SPECIAL
CONSIDERATIONS."
LIKE ALL MUTUAL FUND SHARES, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
GLOBAL FUNDS
GLOBAL BLUE CHIP
INTERNATIONAL CORE GROWTH
WORLDWIDE GROWTH
INTERNATIONAL SMALL CAP GROWTH
GLOBAL GROWTH & INCOME
EMERGING COUNTRIES
GLOBAL TECHNOLOGY
EMERGING MARKETS BOND
PACIFIC RIM
GREATER CHINA
LATIN AMERICA
US FUNDS
LARGE CAP GROWTH
CORE GROWTH
VALUE
EMERGING GROWTH
MINICAP
INCOME & GROWTH
BALANCED GROWTH
FIXED INCOME FUNDS
SHORT INTERMEDIATE
FULLY DISCRETIONARY
STRATEGIC INCOME
HIGH YIELD BOND
, 1998
- ---------
SUBJECT TO COMPLETION: DECEMBER 15, 1997. INFORMATION CONTAINED HEREIN IS
SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY AN OFFER TO BUY BE ACCEPTED PRIOR TO THE TIME
THE PROSPECTUS IS DELIVERED IN FINAL FORM. UNDER NO CIRCUMSTANCES SHALL THIS
PRELIMINARY PROSPECTUS CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF SUCH JURISDICTION.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
OVERVIEW............................... 3
A FUND BY FUND LOOK AT GOALS, GLOBAL FUNDS
GLOBAL BLUE CHIP....................... 4
STRATEGIES, RISKS, AND INTERNATIONAL CORE GROWTH.............. 6
WORLDWIDE GROWTH....................... 8
FINANCIAL HISTORY. INTERNATIONAL SMALL CAP GROWTH......... 10
GLOBAL GROWTH & INCOME................. 12
EMERGING COUNTRIES..................... 14
GLOBAL TECHNOLOGY...................... 16
EMERGING MARKETS BOND.................. 18
PACIFIC RIM............................ 20
GREATER CHINA.......................... 22
LATIN AMERICA.......................... 24
US FUNDS
LARGE CAP.............................. 26
CORE GROWTH............................ 28
VALUE.................................. 30
EMERGING GROWTH........................ 32
MINICAP................................ 34
INCOME & GROWTH........................ 36
BALANCED GROWTH........................ 38
FIXED INCOME FUNDS
SHORT INTERMEDIATE..................... 40
FULLY DISCRETIONARY.................... 42
STRATEGIC INCOME....................... 44
HIGH YIELD BOND........................ 46
POLICIES AND INSTRUCTIONS FOR SIMPLIFIED ACCOUNT
INFORMATION
OPENING, MAINTAINING AND Opening an Account..................... 48
Buying Shares.......................... 48
CLOSING AN ACCOUNT IN ANY Selling and Redeeming Shares........... 49
Signature Guarantees................... 50
FUND. Exchanging Shares...................... 50
YOUR ACCOUNT
Transaction Policies................... 51
Features and Account Policies.......... 51
DETAILS THAT APPLY TO THE ORGANIZATION AND MANAGEMENT
FUNDS AS A GROUP. Investment Adviser Compensation........ 53
Administrator Compensation............. 53
Distributor............................ 53
Portfolio Trades....................... 53
Investment Objectives.................. 53
Diversification........................ 53
Portfolio Teams........................ 54
RISK FACTORS AND SPECIAL
CONSIDERATIONS 58
</TABLE>
2
<PAGE>
OVERVIEW
FUND INFORMATION
CONCISE FUND DESCRIPTIONS BEGIN ON THE NEXT PAGE. EACH DESCRIPTION PROVIDES THE
FOLLOWING INFORMATION:
INVESTMENT OBJECTIVE
The Fund's particular investment goal.
INVESTMENT STRATEGY
The strategy the Fund intends to use in pursuing the investment objective.
PRINCIPAL INVESTMENTS
The primary types of securities in which the Fund invests. Secondary investments
are described in "Risk Factors and Special Considerations" at the end of the
prospectus.
RISK FACTORS
The major risk factors associated with the Fund. Other risk factors are also
described in "Risk Factors and Special Considerations."
INVESTOR EXPENSES
The overall costs borne by an investor in the Class I Shares, including sales
charges and annual expenses.
FINANCIAL HIGHLIGHTS
A table showing the financial performance for each predecessor Portfolio since
inception.
GOAL OF THE NICHOLAS-APPLEGATE MUTUAL FUNDS
The Nicholas-Applegate Mutual Funds (the "Trust") are designed to provide
investors with a well-rounded investment program by offering investors various
portfolios each with different investment objectives and policies (each a
"Fund"). The Class I Shares of each Fund represent interests in a portfolio of
an open-end management investment company (a mutual fund).
Each Fund employs its own strategy and has its own risk/reward profile. Because
you could lose money by investing in these Funds, be sure to read all risk
disclosures carefully before investing.
WHO MAY WANT TO INVEST IN THE EQUITY FUNDS
- those investing for retirement or other long-term goals
- those who want higher potential for gain but are willing to accept higher
risks associated with investing in foreign companies
- those who want professional portfolio management
WHO MAY NOT WANT TO INVEST IN THE EQUITY FUNDS
- those who are investing with a shorter time frame
- those who are uncomfortable with an investment that will go up and down in
value
- those who are unable to accept the special risks associated with foreign
investing
WHO MAY WANT TO INVEST IN THE FIXED INCOME FUNDS
- those who are investing for retirement or other long-term goals
- those who desire current income
- those who want a high level of liquidity
- those who want professional portfolio management
WHO MAY NOT WANT TO INVEST IN THE FIXED INCOME FUNDS
- those who are investing with a shorter time frame
- those who are uncomfortable with an investment that will go up and down in
value
THE INVESTMENT ADVISER
Nicholas-Applegate Capital Management (the "Investment Adviser") serves as
investment adviser to the Funds. Arthur E. Nicholas and 23 other partners with a
staff of approximately 400 employees currently manage over $30 billion of
discretionary assets for numerous clients, including employee benefit plans of
corporations, public retirement systems and unions, university endowments,
foundations, and other institutional investors and individuals.
3
<PAGE>
GLOBAL BLUE CHIP FUND
INVESTMENT OBJECTIVE
Maximum long-term capital appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser follows a global investment strategy of
investing primarily in common stocks traded in U.S. and foreign securities
markets. The Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial conditions and competitiveness of individual
companies worldwide. It uses a blend of both traditional fundamental
research, calling on the expertise of many external analysts in different
countries throughout the world, and systematic disciplines to uncover signs
of "change at the margin"--positive business developments which are not yet
fully reflected in a company's stock price. It gathers financial data on
20,000 companies in over 50 countries, and searches for successful, growing
companies managing change advantageously and poised to exceed growth
expectations.
The Fund invests primarily in companies that have substantial capitalization
- -generally in the top two-thirds of publicly traded companies worldwide
- -companies that have an established history of earnings, easy access to credit,
good industry position, and a reputation as a global leader in their industry.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total
assets in securities of issuers located in at least three different
countries, one of which may be the U.S.
Under normal conditions, the Fund invests at least 75% of its total
assets in common and preferred stocks, warrants and convertible securities.
It invests the remainder primarily in debt securities of any maturity issued
by foreign companies and foreign governments and their agencies and
instrumentalities. The Fund may invest up to 10% of its total assets in debt
securities rated Baa or BBB, or, if unrated, of comparable quality, and up to
5% of its total assets in debt securities rated Ba or BB, or, if unrated, of
comparable quality. The Fund may also use options, futures contracts and
interest rate and currency swaps as hedging techniques.
PORTFOLIO MANAGEMENT
Portfolio Management: The Investment Adviser emphasizes a team approach to
portfolio management to maximize its overall effectiveness. For a complete
listing of the portfolio team, see "Portfolio Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies day to day in response to the
activities of individual companies and general market and economic conditions.
As with any international fund, performance also depends upon changing values in
foreign currencies, different political and regulatory environments, and other
overall economic factors in the countries where the Fund invests. To the extent
the Fund invests in bonds rated BBB or Baa and below, such bonds may have
speculative characteristics and changes in economic conditions may affect their
ability to make interest and principal payments. For a further explanation, see
"Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those known.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases................................................... None
Sales charge on reinvested dividends................................................ None
Deferred sales charge............................................................... None
Redemption fee...................................................................... None
Exchange fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS: (after expense
deferral)
Management fees..................................................................... 0.80%
12b-1 expenses...................................................................... None
Other expenses (after expense deferral)(1).......................................... 0.40%
Total operating expenses (after expense deferral)(1)................................ 1.20%
</TABLE>
- ------------------------
(1) The Investment Advisor has agreed to defer its management fees and to absorb
other operating expenses. Other expenses and Total operating expenses are
expected to be 2.00% and 2.80%, respectively, absent the deferral. See
"Investment Adviser Compensation."
4
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000.00 OVER THE
VARIOUS TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVESTED ALL
DIVIDENDS AND THAT THE AVERAGE ANNUAL RETURN WAS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ------------------------------------- -------------------------------------
<S> <C>
$14 $44
</TABLE>
- ------------------------
This example is for comparison purposes only and is not a representation
of the Fund's actual expenses and returns, either past or future.
5
<PAGE>
INTERNATIONAL CORE GROWTH FUND
INVESTMENT OBJECTIVE
Maximum long-term capital appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial conditions and competitiveness of individual
companies worldwide. It uses a blend of both traditional fundamental
research, calling on the expertise of many external analysts in different
countries throughout the world, and systematic disciplines to uncover signs
of "change at the margin"--positive business developments which are not yet
fully reflected in a company's stock price. It gathers financial data on
20,000 companies in over 50 countries, and searches for successful, growing
companies managing change advantageously and poised to exceed growth
expectations.
PRINCIPAL INVESTMENTS
The Fund invests in the larger capitalized companies in each country.
Generally, this means issuers in each country whose market capitalizations
are in the top 75% of publicly traded companies as measured by
capitalizations in that country. Under normal conditions, the Fund invests at
least 65% of its total assets in securities of issuers located in at least
three countries outside the U.S. The Fund may invest up to 35% of its total
assets in U.S. issuers.
Under normal conditions, the Fund invests at least 75% of its total
assets in common and preferred stocks, warrants and convertible securities.
It invests the remainder primarily in investment grade debt securities of any
maturity issued by foreign companies and foreign governments and their
agencies and instrumentalities. The Fund may also use options and futures
contracts as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management
to maximize its overall effectiveness. For a complete listing of the
portfolio team, see "Portfolio Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies from day to day in response to
the activities of individual companies and general market and economic
conditions. As with any international fund, performance also depends upon
changing values in foreign currencies, different political and regulatory
environments, and other overall economic factors in the countries where the
Fund invests. For further explanation, see "Risk Factors and Special
Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases................................................... None
Sales charge on reinvested dividends................................................ None
Deferred sales charge............................................................... None
Redemption fee...................................................................... None
Exchange fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS: (after expense
deferral)
Management fees..................................................................... 1.00%
12b-1 expenses...................................................................... None
Other expenses (after expense deferral)(1).......................................... 0.40%
Total operating expenses (after expense deferral)(1)................................ 1.40%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 3.14% and
Other expenses would have been 2.14% absent the deferral. See "Investment
Adviser Compensation."
6
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE
VARIOUS TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS
AND THE AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------- --------- --------- ---------
<S> <C> <C> <C>
$14 $44 $77 $168
</TABLE>
- ------------------------
This example is for comparison purposes only and is not a representation
of the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital
stock of the predecessor Institutional Portfolio outstanding throughout each
period indicated. The figures for the period ending September 30, 1997 are
unaudited. The other figures have been audited by Ernst & Young L.L.P., with
respect to the fiscal year ended March 31, 1997. Please read in conjunction
with the Trust's 1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
12/27/96 4/1/97
TO 3/31/97 TO 9/30/97
----------- -----------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................... $ 12.50 $ 14.13
Income from investment operations:
Net investment income (deficit)........................................................ -- --
Net realized and unrealized gains (losses) on securities and foreign currency.......... 1.63 3.80
----------- -----------
Total from investment operations......................................................... 1.63 3.80
Less distributions:
Dividends from net investment income................................................... -- --
Distributions from capital gains....................................................... -- --
----------- -----------
Net asset value, end of period........................................................... $ 14.13 $ 17.93
----------- -----------
TOTAL RETURN:............................................................................ 13.04% 26.89%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period......................................................... $ 4,593 $ 34,813
Ratio of expenses to average net assets, after expense reimbursement+.................... 1.40%* 1.29%*
Ratio of expenses to average net assets, before expense reimbursement+................... 3.14%* 1.85%*
Ratio of net investment income (deficit) to average net assets, after expense
reimbursement+......................................................................... 0.43%* 0.26%*
Ratio of net investment income (deficit) to average net assets, before expense
reimbursement+......................................................................... (0.41%)* (0.30%)*
Portfolio turnover**..................................................................... 75.53% 89.81%
Average commission rate paid**........................................................... $ 0.0106 $ 0.0111
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
7
<PAGE>
WORLDWIDE GROWTH FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial conditions and competitiveness of individual companies
worldwide. It uses a blend of both traditional fundamental research, calling on
the expertise of many external analysts in different countries throughout the
world, and systematic disciplines to uncover signs of "change at the
margin"--positive business developments which are not yet fully reflected in a
company's stock price. It gathers financial data on 20,000 companies in over 50
countries, and searches for successful, growing companies managing change
advantageously and poised to exceed growth expectations.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in securities of issuers located in at least three different countries, one of
which may be the U.S. The Fund may invest up to 50% of its total assets in U.S.
issuers.
Under normal conditions the Fund invests at least 75% of its total assets in
common and preferred stocks, warrants and convertible securities. It invests the
remainder in investment grade debt securities of any maturity issued by foreign
companies and foreign governments and their agencies and instrumentalities. The
Fund may also use options and futures contracts as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies from day to day in response to
the activities of individual companies, and general market and economic
conditions. The securities of small, less well-known companies may be more
volatile than those of larger companies. As with any international fund,
performance also depends upon changing currency values, different political and
regulatory environments, and other overall economic factors in the countries
where the Fund invests. The risks are magnified in countries with emerging
markets, since these countries may have unstable governments and less
established markets. For a further explanation, see "Risk Factors and Special
Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases.................................................... None
Sales charge on reinvested dividends................................................. None
Deferred sales charge................................................................ None
Redemption fee....................................................................... None
Exchange fee......................................................................... None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees...................................................................... 1.00%
12b-1 expenses....................................................................... None
Other expenses (after expense deferral)(1)........................................... 0.35%
-----
Total operating expenses (after expense deferral)(1)................................. 1.35%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 3.05% and
Other expenses would have been 2.05% absent the deferral. See "Investment
Adviser Compensation."
8
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
$14 $43 $74 $162
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
12/27/93 4/1/94 4/1/95 4/1/96 4/1/97
TO 3/31/94 TO 3/31/95 TO 3/31/96 TO 3/31/97 TO 9/30/97
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............... $ 12.50 $ 13.15 $ 13.06 $ 15.42 $ 14.21
Income from investment operations:
Net investment income (deficit)................... -- (0.01) 0.06 (0.12) (0.27)
Net realized and unrealized gains (losses) on
securities and foreign currency.................. 0.65 (0.04) 2.58 2.08 3.48
Total from investment operations................... 0.65 (0.05) 2.64 1.96 3.21
Less distributions:
Dividends from net investment income.............. -- (0.04) (0.28) -- --
Distributions from capital gains.................. -- -- -- (3.17) --
Net asset value, end of period..................... $ 13.15 $ 13.06 $ 15.42 $ 14.21 $ 17.96
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN:...................................... 5.20% (0.34%) 20.37% 13.18% 26.39%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period................... $ 2,982 $ 4,087 $ 3,163 $ 2,656 $ 10,232
Ratio of expenses to average net assets, after
expense reimbursement+........................... 1.34%* 1.35% 1.35% 1.35% 1.36%*
Ratio of expenses to average net assets, before
expense reimbursement+........................... 3.58%* 2.50% 2.60% 3.05% 2.02%*
Ratio of net investment income (deficit) to average
net assets, after expense reimbursement+......... (0.05%)* 0.05% 0.20% (0.43%) (0.01%)*
Ratio of net investment income (deficit) to average
net assets, before expense reimbursement+........ (2.19%)* (1.10%) (0.99%) (2.06%) (0.68%)*
Portfolio turnover**............................... 95.09% 98.54% 132.20% 181.81% 90.09%
Average commission rate paid**..................... N/A N/A $ 0.0187 $ 0.0078 $ 0.0111
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
9
<PAGE>
INTERNATIONAL SMALL CAP GROWTH FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial conditions and competitiveness of individual companies
worldwide. It uses a blend of both traditional fundamental research, calling on
the expertise of many external analysts in different countries throughout the
world, and systematic disciplines to uncover signs of "change at the
margin"--positive business developments which are not yet fully reflected in a
company's stock price. It gather financial data on 20,000 companies in over 50
countries, and searches for successful, growing companies managing change
advantageously and poised to exceed growth expectations.
The Fund emphasizes companies in the bottom 75% of publicly traded companies
as measured by market capitalizations in each country ("small cap securities").
The Fund may have less U.S. exposure (up to 35% of its total assets in U.S.
issuers) than the Worldwide Growth Fund.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests 65% of its total assets in small
cap securities of issuers located in at least three different countries outside
the U.S. Under normal conditions, the Fund invests at least 75% of its total
assets in common and preferred stock, warrants and convertible securities. It
invests the remainder primarily in invest ment grade debt securities of any
maturity issued by foreign companies and foreign governments and their agencies
and instrumentalities. The Fund may also use options and futures contracts as
hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies from day to day in response to
the activities of individual companies, and general market and economic
conditions. As with any international fund, the Fund's performance also depends
upon changing currency values, different political and regulatory environments,
and other overall economic factors in the countries where the Fund invests. In
addition to the risks posed by foreign investing, the securities of smaller,
less well-known companies may be more volatile than larger companies and may
trade less frequently. The information regarding these smaller companies may
also be less available, incomplete or inaccurate. Accordingly, the securities of
the companies in which the Fund invests may be more volatile and speculative
than those of larger companies. The risks are magnified in countries with
emerging markets since these countries may have unstable governments and less
established markets. For further explanation, see "Risk Factors and Special
Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases.................................................... None
Sales charge on reinvested dividends................................................. None
Deferred sales charge................................................................ None
Redemption fee....................................................................... None
Exchange fee......................................................................... None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees...................................................................... 1.00%
12b-1 expenses....................................................................... None
Other expenses (after expense deferral)(1)........................................... 0.40%
Total operating expenses (after expense deferral)(1)................................. 1.40%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to waive or defer its management fees and
to absorb other operating expenses payable by the Funds and the Portfolios.
Total operating expenses would have been 1.68% and Other expenses would have
been .68% absent the deferral. See "Investment Adviser Compensation."
10
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
$14 $44 $77 $168
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
12/27/93 4/1/94 4/1/95 4/1/96 4/1/97
TO 3/31/94 TO 3/31/95 TO 3/31/96 TO 3/31/97 TO 9/30/97
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............... $ 12.50 $ 13.47 $ 13.09 $ 15.05 $ 17.02
Income from investment operations:
Net investment income (deficit)................... 0.01 0.02 0.06 -- (0.10)
Net realized and unrealized gains (losses) on
securities and foreign currency.................. 0.96 (0.22) 2.02 2.28 3.68
Total from investment operations................... 0.97 (0.20) 2.08 2.28 3.58
Less distributions:
Dividends from net investment income.............. -- (0.06) (0.12) (0.08) --
Distributions from capital gains.................. -- (0.12) -- (0.23) --
Net asset value, end of period..................... $ 13.47 $ 13.09 $ 15.05 $ 17.02 $ 20.60
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN:...................................... $ 7.60% (1.54%) 15.99% 15.25% 20.96%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period................... $ 3,668 $ 16,924 $ 20,245 $ 48,505 $ 40,709
Ratio of expenses to average net assets, after
expense reimbursement+........................... 1.40%* 1.40% 1.40% 1.40% 1.41%*
Ratio of expenses to average net assets, before
expense reimbursement+........................... 2.35%* 1.92% 2.44% 1.68% 1.76%*
Ratio of net investment income (deficit) to average
net assets, after expense reimbursement+......... 0.36%)* 0.19% 0.34% (0.38%) (0.20%)*
Ratio of net investment income (deficit) to average
net assets, before expense reimbursement+........ (0.59%)* (0.33%) (0.07%) (0.63%) (0.56%)*
Portfolio turnover**............................... 23.71% 74.85% 141.02% 206.07% 103.72%
Average commission rate paid**..................... N/A N/A $ 0.128 $ 0.0098 $ 0.0091
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
11
<PAGE>
GLOBAL GROWTH & INCOME FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser actively manages a blended portfolio of equity
and fixed income securities. For the equity portion, the Investment Adviser
focuses on a "bottom-up" analysis that evaluates the financial conditions and
competitiveness of individual companies worldwide. It uses a blend of both
traditional fundamental research, calling on the expertise of many external
analysts in different countries throughout the world, and systematic disciplines
to uncover signs of "change at the margin"--positive business developments which
are not yet fully reflected in a company's stock price. It gathers financial
data on 20,000 companies in over 50 countries, and searches for successful,
growing companies managing change advantageously and poised to exceed growth
expectations.
The Investment Adviser actively manages the fixed income portion to take
advantage of current interest rates and bond market trends by varying the
structure, duration and allocation of fixed income vehicles from all sectors of
the market.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in securities of issuers located in at least three different countries, one of
which may be the U.S. The Fund invests at least 60% of its total assets in
equity securities and warrants. It invests the remainder in debt securities of
any maturity issued by foreign corporations and foreign governments and their
agencies and instrumentalities, a portion of which (less than 35% of its net
assets) may be rated below investment grade by a nationally recognized
statistical rating agency, or of comparable quality if unrated. The Fund may
also use options and futures contracts as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize it overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any fund that invests in both stocks and bonds, the value of your
investment will fluctuate in response to movements in the stock and bond
markets. Stock values fluctuate in response to the activities of individual
companies and general market and economic conditions. The value of the Fund's
debt securities will change as interest rates fluctuate: if rates rise, bond
price fall; if rates fall, bond prices rise. Lower rated securities, while
usually offering higher yields, generally have more risk and volatility than
higher-rated securities because of reduced creditworthiness and greater chance
of default. Accordingly, the lower-rated investment grade bonds in which the
Fund invests may be considered speculative and subject to greater volatility and
risk of loss than higher-rated bonds. As with any international fund, the Fund's
performance also depends upon changing foreign currency values, different
political and regulatory environments, and other overall economic factors in the
countries where the Fund invests. To the extent the Fund invests in emerging
countries, the risks are magnified since these countries may have unstable
governments and less established markets. For further explanation, see "Risk
Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases.................................................... None
Sales charge on reinvested dividends................................................. None
Deferred sales charge................................................................ None
Redemption fee....................................................................... None
Exchange fee......................................................................... None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees...................................................................... 0.85%
12b-1 expenses....................................................................... None
Other expenses (after expense deferral)(1)........................................... 0.50%
------
Total operating expenses (after expense deferral)(1)................................. 1.35%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses are expected to be 2.00%
and Other expenses are expected to be 1.15% absent the deferral. See
"Investment Adviser Compensation."
12
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
$14 $43 $74 $162
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding for the period ending
September 30, 1997. The Global Growth & Income Portfolio commenced operations on
June 30, 1997. The figures are unaudited. Please read in conjunction with the
Trust's 1997 Annual Report and 1997-1998 Semi Annual Report.
<TABLE>
<CAPTION>
4/1/97
TO 9/30/97
-----------
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period.................................................................. $ 12.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (deficit)...................................................................... 0.08
Net realized and unrealized gains (losses) on securities and foreign currency........................ 3.33
Total from investment operations...................................................................... --
Less distributions:
Dividends from net investment income................................................................. --
Distributions from capital gains..................................................................... --
Net asset value, end of period........................................................................ $ 15.91
TOTAL RETURN:......................................................................................... 27.28%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period...................................................................... $ 5,003
Ratio of expenses to average net assets, after expense reimbursement+................................. 1.36%*
Ratio of expenses to average net assets, before expense reimbursement+................................ 2.45%*
Ratio of net investment income (deficit) to average net assets, after expense reimbursement+.......... 2.73%*
Ratio of net investment income (deficit) to average net assets, before expense reimbursement+......... 1.63%*
Portfolio turnover**.................................................................................. 169.4%
Average commission rate paid**........................................................................ $ 0.1056
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
13
<PAGE>
EMERGING COUNTRIES FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund invests primarily in equity securities of issuers located in
countries with emerging securities markets--that is, countries with securities
markets which are, in the opinion of the Investment Adviser, emerging as
investment markets but have yet to reach a level of maturity associated with
developed foreign stock markets, especially in terms of participation by foreign
investors. The Investment Adviser seeks issuers in the early stages of
development, growth companies, cyclical companies, or companies believed to be
undergoing a basic change in operations. The Investment Adviser currently
selects portfolio securities from an investment universe of approximately 6,000
foreign issuers in over 20 emerging markets.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in securities of issuers located in at least three different countries. These
countries include but are not limited to: Argentina, Brazil, Chile, China,
Colombia, the Czech Republic, Greece, Hungary, India, Indonesia, Israel, Jordan,
Malaysia, South Africa, South Korea, Taiwan, Thailand, Italy and Venezuela.
Under normal market conditions, the Fund invests at least 75% of its total
assets in corporate stock (common and preferred), warrants and convertible
securities. It invests the remainder primarily in investment grade bonds of
foreign companies and foreign governments and their agencies and
instrumentalities. The Fund may also use options and futures contracts as
hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies from day to day in response to
the activities of individual companies and general market and economic
conditions. As with any fund investing in foreign securities, the Fund's
performance also depends upon changing currency values, different political and
regulatory environments, and other overall economic factors in the countries
where the Fund invests. Emerging countries markets may present greater
opportunity for gain, but also involve greater risk than more developed markets.
These countries tend to have less stable governments and less established
markets. The markets tend to be less liquid and more volatile, and offer less
regulatory protection for investors. The economies of emerging countries may be
predominantly based on only a few industries or dependent on revenue from
particular commodities, international aid or other assistance. For further
explanation, see "Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases.................................................... None
Sales charge on reinvested dividends................................................. None
Deferred sales charge................................................................ None
Redemption fee....................................................................... None
Exchange fee......................................................................... None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)...........................................................
Management fees...................................................................... 1.25%
12b-1 expenses....................................................................... None
Other expenses (after expense deferral)(1)........................................... 0.40%
------
Total operating expenses (after expense deferral)(1)................................. 1.65%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 1.87% and
Other expenses would have been .62% absent the deferral. See "Investment
Adviser Compensation."
14
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
$17 $52 $90 $195
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
11/28/94 4/1/95 4/1/96 4/1/97
TO 3/31/95 TO 3/31/96 TO 3/31/97 TO 9/30/97
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................ $ 12.50 $ 10.91 $ 14.02 $ 17.45
Income from investment operations:
Net investment income (deficit)................................. 0.08 -- (0.06) 0.06
Net realized and unrealized gains (losses) on securities and
foreign currency.............................................. (1.66) 3.16 3.62 3.31
Total from investment operations................................ (1.58) 3.16 3.56 3.37
Less distributions:
Dividends from net investment income............................ (0.01) (0.05) -- --
Distributions from capital gains................................ -- -- (0.13) --
Net asset value, end of period.................................. $ 10.91 $ 14.02 $ 17.45 $ 20.82
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN:................................................... (12.64%) 29.06 25.48% 19.31%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period................................ $ 2,021 $ 6,878 $ 56,918 $ 84,756
Ratio of expenses to average net assets, after expense
reimbursement+................................................ 1.65%* 1.65% 1.65% 1.66%*
Ratio of expenses to average net assets, before expense
reimbursement+................................................ 2.14%* 3.59% 1.87% 1.93%*
Ratio of net investment income (deficit) to average net assets,
after expense reimbursement+.................................. 1.73%* 0.29% (0.52%) 0.61%*
Ratio of net investment income (deficit) to average net assets,
before expense reimbursement+................................. 1.24%* (1.41%) (0.76%) 0.34%*
Portfolio turnover**............................................ 60.79% 118.21% 176.2% 119.86%
Average commission rate paid**.................................. N/A $ 0.0022 $ 0.0021 $ 0.0022
</TABLE>
- ------------------------
* Annualized
** For corresponding Fund of the Master Trust
+ Includes expenses allocated from Master Trust
15
<PAGE>
GLOBAL TECHNOLOGY FUND
INVESTMENT OBJECTIVE
Maximum long-term capital appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial conditions and competitiveness of individual companies
worldwide. It uses a blend of both traditional fundamental research calling on
the expertise of many external analysts in different countries throughout the
world, and systematic disciplines to uncover signs of "change at the
margin"--positive business developments which are not yet fully reflected in a
company's stock price. It gathers financial data on 20,000 companies in over 50
countries, and searches for successful, growing companies managing change
advantageously and poised to exceed growth expectations.
PRINCIPAL INVESTMENTS
The Fund invests at least 65% of its total assets in the equity securities
of companies with business operations in science, technology and
technology-related industries, located in at least three different countries,
one of which may be the U.S. The Fund may invest up to 50% of its total assets
in U.S. issuers.
Under normal conditions, the Fund invests at 75% of its total assets in
common and preferred stocks, warrants and convertible securities. It invests the
remainder in debt securities of any maturity issued by foreign companies and
foreign governments, and their agencies and instrumentalities. The Fund may
invest up to 35% of its net assets in debt securities rated below investment
grade by a nationally recognized statistical rating agency, or of comparable
quality if unrated. The Fund may also use options and futures contracts as
hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete listing of the portfolio
team, see "Portfolio Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies from day to day in response to
activities of individual companies, and general market and economic conditions.
As with any international fund, the Fund's performance also depends upon
changing currency values, different political and regulatory environments, and
overall economic factors in the countries where the Fund invests. In addition to
the risks posed by foreign investing, the securities of smaller science and
technology-related companies may be more volatile than larger companies and may
trade less frequently. The information regarding these smaller companies may
also be less available, incomplete or accurate. Accordingly, the securities of
companies in which the Fund invests may be more volatile and speculative than
those of larger companies. The risks are magnified in countries with emerging
markets, since these countries may have unstable governments and less
established markets. Lower rated securities in which the Fund invests are
considered speculative and subject to greater volatility and risk of loss than
investment grade securities, particularly in deteriorating economic periods. For
further explanation, see "Risk Factors and Special Considerations" starting on
page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. The figures
below show the expected expenses for the Fund for its first year of operation.
Actual expenses may be more or less than those shown.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases......................................................................... None
Sales charge on reinvested dividends...................................................................... None
Deferred sales charge..................................................................................... None
Redemption fee............................................................................................ None
Exchange fee.............................................................................................. None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees........................................................................................... 1.00%
12b-1 expenses............................................................................................ None
Other expenses (after expense deferral)(1)................................................................ 0.40%
Total operating expenses (after expense deferral)(1)...................................................... 1.40%
</TABLE>
(1) The Investment Adviser has agreed to defer its management fees and to
absorb other operating expenses payable by the Fund. Total operating
expenses for the fiscal year ended March 31, 1998 are expected to be
3.00% and other expenses are expected to be 2.00% absent the deferral.
See "Investment Adviser Compensation."
16
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1.000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ----------- -----------
<S> <C>
$14 $44
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
17
<PAGE>
EMERGING MARKETS BOND FUND
INVESTMENT OBJECTIVE
Total return and high current income.
INVESTMENT STRATEGY
The Fund invests primarily in debt securities of issuers located in emerging
countries. Emerging countries are those which, in the opinion of the Investment
Adviser, are emerging as investment markets but have yet to reach a level of
economic development associated with developed industrial nations. When
evaluating any bond, the Investment Adviser selects bonds based upon a "top
down" analysis of economic trends. It also analyzes credit quality, the yield to
maturity of the security, the currency denomination of the security, the
interest rate sensitivity of the security, and the effect the security will have
on the average yield to maturity of the Fund.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 80% of its total assets
in debt securities of issuers located in at least three different countries.
These countries include but are not limited to: Argentina, Brazil, Bulgaria,
Chile, Colombia, the Czech Republic, Ecuador, Greece, Hungary, India, Indonesia,
Israel, Malaysia, Mexico, Morocco, Nigeria, Poland, Russia, South Africa,
Thailand, and Venezuela. The Fund may also invest up to 35% of its net assets in
debt securities of issuers located in the U.S. and other developed markets.
There is no limit on either the portfolio maturity or the acceptable rating of
the securities bought by the Fund. The Fund may also use options, futures
contracts and interest rate and currency swaps as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete listing of the portfolio
team, see "Portfolio Teams" on page 54.
RISK FACTORS
As with any fund that invests in bonds, the values of the Fund's investments
fluctuate in response to movements in interest rates. If rates go up, the value
of bonds fall; if rates go down, the value of bonds rise. Lower rated securities
in which the Fund invests are considered speculative and subject to greater
volatility and risk of loss than investment growth securities, particularly in
deteriorating economic periods. Emerging markets debt securities, while offering
higher yields, tend to be of lower credit quality and subject to greater risk of
default than higher rated securities. Periods of high interest rates and
recession may adversely affect the issuer's ability to make interest and
principal payments. Additionally, emerging markets tend to be less liquid and
more volatile, offer less regulatory protection for investors, and in countries
that have less stable governments than more established markets. The Fund's
performance may also depend upon changing currency values, different political
and regulatory environments, and other overall economic factors in the countries
where the Fund invests. For a further explanation, see "Risk Factors and Special
Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. The figures
below show the expected expenses for the Fund for its first year of operation.
Actual expenses may be more or less than those shown.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases......................................................................... None
Sales charge on reinvested dividends...................................................................... None
Deferred sales charge..................................................................................... None
Redemption fee............................................................................................ None
Exchange fee.............................................................................................. None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees........................................................................................... 0.70%
12b-1 expenses............................................................................................ None
Other expenses (after expense deferral)(1)................................................................ 0.25%
Total operating expenses (after expense deferral)(1)...................................................... 0.95%
</TABLE>
(1) The Investment Adviser has agreed to defer its management fees and to
absorb other operating expenses. Operating expenses and Total operating
expenses are expected to be 2.00% and 2.70% respectively, absent the
deferral. See "Investment Adviser Compensation."
18
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVESTED ALL DIVIDENDS AND THAT
THE AVERAGE ANNUAL RETURN WAS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ----------- -----------
<S> <C>
$10 $32
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
19
<PAGE>
PACIFIC RIM FUND
INVESTMENT OBJECTIVE
Long-term growth of capital.
INVESTMENT STRATEGY
The Investment Adviser focuses on a "bottom-up" analysis that evaluates
the financial conditions and competitiveness of individual companies
worldwide. It uses a blend of both traditional fundamental research, calling
on the expertise of many external analysts in different countries throughout
Asia and the Pacific Rim, and systematic disciplines to uncover signs of
"change at the margin" --positive business developments which are not yet
fully reflected in a company's stock price. The Investment Adviser does not
emphasize any particular company size but instead considers investments which
in its opinion offer the potential for capital appreciation.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in equity and debt securities of any maturity of issuers that satisfy at least
one of the following criteria: (i) they derive 50% or more of their total
revenue from goods produced, sales made or services produced in one or more
Pacific Rim countries; (ii) they are organized under the laws of, or have a
principal office in, a Pacific Rim country; (iii) they maintain 50% or more of
their assets in one or more Pacific Rim countries; or (iv) the principal trading
market for a class of their securities is in a Pacific Rim countries. The Fund
intends to invest in securities of issuers located in at least three Asian or
the Pacific Rim countries. These countries may include Australia, China, Hong
Kong, Japan, India, Indonesia, South Korea, Malaysia, New Zealand, Pakistan, the
Philippines, Singapore, Sri Lanka, Taiwan, and Thailand. The Fund invests the
remainder primarily in a combination of equity and debt securities of issuers
located throughout the world. Under normal circumstances, the Fund invests no
more than 25% of its total assets in issuers of any one country. The Fund may
invest up to 35% of its net assets in debt securities rated below investment
grade by a nationally recognized statistical rating agency, or of comparable
quality if unrated. The Fund may also use options, futures contracts and
interest rate and currency swaps as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser together with its Hong Kong and Singapore affiliates
emphasize a team approach to portfolio management to maximize their overall
effectiveness. For a complete listing of the portfolio team, see "Portfolio
Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies day to day in response to the
activities of individual companies and general market and economic conditions.
As with any international fund, performance also depends upon changing values in
foreign currencies, different political and regulatory environments, and other
overall economic factors in the countries where the Fund invests. These risks
are magnified in countries with emerging markets. Certain Asian and Pacific Rim
countries may have relatively unstable governments, economies based on only a
few industries or heavily dependent upon foreign trade, and securities markets
that trade infrequently or in low volumes. Lower rated securities in which the
Fund invests are considered speculative and subject to greater volatility and
risk of loss than investment grade securities, particularly in deteriorating
economic periods. For a further explanation , see "Risk Factors and Special
Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. The figures
below show the expected expenses for the Fund for its first year of operation.
Actual expenses may be more or less than those shown.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases......................................................................... None
Sales charge on reinvested dividends...................................................................... None
Deferred sales charge..................................................................................... None
Redemption fee............................................................................................ None
Exchange fee.............................................................................................. None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees........................................................................................... 1.00%
12b-1 expenses............................................................................................ None
Other expenses (after expense deferral)(1)................................................................ 0.40%
Total operating expenses (after expense deferral)(1)...................................................... 1.40%
</TABLE>
(1) The Investment Adviser has agreed to defer its management fees and to
absorb other operating expenses. Operating expenses and Total operating
expenses are expected to be 3.00% and 2.00% respectively, absent the
deferral. See "Investment Adviser Compensation."
20
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVESTED ALL DIVIDENDS AND THAT
THE AVERAGE ANNUAL RETURN WAS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ----------- -------------
<S> <C>
$14 $44
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
21
<PAGE>
GREATER CHINA FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Investment Adviser focuses on a "bottom-up" analysis that evaluates the
financial conditions and competitiveness of individual companies worldwide. It
uses a blend of both traditional research, calling on the expertise of many
external analysts in Asia, and systematic disciplines to uncover signs of
"change at the margin"--positive business developments which are not yet fully
reflected in a company's stock price. The Investent Adviser does not emphasize
any particular company size but instead considers investments which in its
opinion offer the potential for capital appreciation.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in equity and debt securities of any maturity of issuers that satisfy at least
one of the following criteria: (i) their securities are traded principally on
stock exchanges in China, Hong Kong or Taiwan, (ii) they derive 50% or more of
their total revenue from goods produced, sales made or services performed in
China, Hong Kong or Taiwan, (iii) they maintain 50% or more of their assets in
China, Hong Kong or Taiwan, or (iv) they are organized under the laws of China,
Hong Kong or Taiwan. The Fund invests the remainder primarily in a combination
of equity and debt securities of issuers located throughout the world. The Fund
may invest up to 35% of its net assets in debt securities rated below investment
grade by a nationally recognized statistical rating agency, or of comparable
quality if unrated. The Fund may also use options, futures contracts, currency
swaps and forward currency transactions as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser together with its Hong Kong and Singapore affiliates
emphasize a team approach to portfolio management to maximize their overall
effectiveness. For a complete listing of the portfolio teams, see "Portfolio
Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies from day to day in response to
the activities of individual companies and general market and economic
conditions. As with any international fund, performance also depends upon
changing values in foreign currencies, different political and regulatory
environments, and other overall economic factors in the countries where the Fund
invests. Because the Fund invests its assets primarily in securities of issuers
operating in the greater China area, its performance is expected to be closely
tied to economic and political conditions in the area and the Fund's performance
will be more volatile than more geographically diversified funds. Lower rated
securities in which the Fund invests are considered speculative and subject to
greater volatility and risk of loss than investment grade securities,
particularly in deteriorating economic periods. For a further explanation see
"Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. The figures
below show the expected expenses for the Fund for its first year of operation.
Actual expenses may be more or less than those shown.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases......................................................................... None
Sales charge on reinvested dividends...................................................................... None
Deferred sales charge..................................................................................... None
Redemption fee............................................................................................ None
Exchange fee.............................................................................................. None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees........................................................................................... 1.00%
12b-1 expenses............................................................................................ None
Other expenses (after expense deferral)(1)................................................................ 0.40%
Total operating expenses (after expense deferral)(1)...................................................... 1.40%
</TABLE>
(1) The Investment Adviser has agreed to defer its management fees and to
absorb other operating expenses. Operating expenses and Total operating
expenses are expected to be 3.00% and 2.00% respectively, absent the
deferral. See "Investment Adviser Compensation."
22
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVESTED ALL DIVIDENDS AND THAT
THE AVERAGE ANNUAL RETURN WAS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ----------- -------------
<S> <C>
$14 $44
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
23
<PAGE>
LATIN AMERICA FUND
INVESTMENT OBJECTIVE
Long-term growth of capital.
INVESTMENT STRATEGY
Fund's Investment Adviser focuses on a "bottom-up" analysis that evaluates
the financial condition and competitiveness of individual companies worldwide.
It uses a blend of both traditional and fundamental research, calling on the
expertise of many external analysts in different countries throughout Latin
America, and systematic disciplines to uncover signs of "change at the margin"
- -positive business developments which are not yet fully reflected in a company's
stock price. The Investment Adviser does not emphasize any particular company
size but instead considers investments which in its opinion offer potential for
capital appreciation.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in equity and debt securities of any maturity of issuers that satisfy at least
one of the following criteria: (i) they derive 50% or more of their total
revenue from goods produced, sales made or services performed in one or more
Latin American countries, (ii) they are organized under the laws of, or have a
principal office in, a Latin American country; (iii) they maintain 50% or more
of their assets in one or more Latin American countries, or (iv) the principal
trading market for a class of their securities is in a Latin American country.
These countries may include: Argentina, the Bahamas, Barbados, Belize, Bolivia,
Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador,
French Guiana, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, the
Netherlands Antilles, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and
Tobago, Uruguay and Venezuela. The Fund invests the remainder primarily in a
combination of equity and debt securities of issuers located throughout the
world. The Fund may invest without limitation in debt securities rated below
investment grade by a nationally recognized statistical rating agency, or of
comparable quality if unrated. The Fund may also use options, futures contracts,
currency swaps, and forward currency transactions as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
The value of the Fund's investments varies from day to day in response to
the activities of individual companies, and general market and economic
conditions. As with any international fund, performance also depends upon
changing currency values, different political and regulatory environments, and
other overall economic factors in the countries where the Fund invests. These
risks are magnified in many Latin American countries, since these countries have
unstable governments, less established markets, and volatile currencies. Lower
rated securities in which the Fund invests are considered speculative and
subject to greater volatility and risk of loss than investment grade securities,
particularly in deteriorating economic periods. For a further explanation, see
"Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. The figures
below show the expected expenses for the Fund for its first year of operation.
Actual expenses may be more or less than those shown.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases....................... None
Sales charge on reinvested dividends.................... None
Deferred sales charge................................... None
Redemption fee.......................................... None
Exchange fee............................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF
AVERAGE NET ASSETS:
(after expense deferral)
Management fees......................................... 1.25%
12b-1 expenses.......................................... None
Other expenses (after expense deferral) (1)............. 0.40%
Total operating expenses (after expense deferral) (1)... 1.65%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses and Other expenses are
expected to be 3.25% and 2.00% respectively, absent the deferral. See
"Investment Adviser Compensation."
24
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ----------- -----------
<S> <C>
$ 17 $ 52
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
25
<PAGE>
LARGE CAP GROWTH FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial condition and competitiveness of individual companies.
It uses a blend of both traditional fundamental research and computer intensive
systematic disciplines to uncover signs of "change at the margin"-- positive
business developments which are not yet fully reflected in a company's stock
price. It searches for successful, growing companies that are managing change
advantageously and poised to exceed growth expectations.
The Fund emphasizes equity securities of U.S. companies with market
capitalizations generally above $3 billion and whose earnings and stock prices
are expected to grow faster than the S&P 500 ("large cap securities").
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in large cap securities, including common and preferred stocks, warrants, and
convertible securities of U.S. companies. It invests the remainder of its assets
primarily in investment grade corporate debt securities of any maturity, U.S.
Government securities, and equity securities of foreign issuers. The Fund may
also use options and futures contracts as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any growth fund, the value of your investment will fluctuate from
day to day with movements in the stock markets as well as in response to the
activities of individual companies. To the extent the Fund is overweighted in
certain market sectors compared to the S&P 500, the Fund may be more volatile
than the S&P 500. Additionally, to the extent the Fund invests in foreign
issuers, the risks and volatility are magnified since the performance of foreign
stocks also depends on changes in foreign currency values, different regulatory
and political environments, and overall political and economic conditions in
countries where the Fund invests. For further explanation, see "Risk Factors and
Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases....................... None
Sales charge on reinvested dividends.................... None
Deferred sales charge................................... None
Redemption fee.......................................... None
Exchange fee............................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF
AVERAGE NET ASSETS:
(after expense deferral)
Management fees......................................... 0.75%
12b-1 expenses.......................................... None
Other expenses (after expense deferral) (1)............. 0.25%
Total operating expenses (after expense deferral) (1)... 1.00%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 4.99% and
Other expenses would have been 4.24% absent the deferral. See "Investment
Adviser Compensation."
26
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
$ 10 $ 32 $ 55 $ 122
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital
stock of the predecessor Institutional Portfolio outstanding throughout each
period indicated. The figures for the period ending September 30, 1997 are
unaudited. The other figures have been audited by Ernst & Young L.L.P., with
respect to the fiscal year ended March 31, 1997. Please read in conjunction
with the Trust's 1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
12/27/96 4/1/97
TO 3/31/97 TO 9/30/97
----------- -----------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................... $ 12.50 $ 13.00
Income from investment operations:
Net investment income (deficit)........................................................ -- (0.02)
Net realized and unrealized gains (losses) on securities and foreign currency.......... 0.50 5.00
----------- -----------
Total from investment operations......................................................... 0.50 4.98
Less distributions:
Dividends from net investment income................................................... -- --
Distributions from capital gains....................................................... -- --
----------- -----------
Net asset value, end of period........................................................... $ 13.00 $ 17.98
----------- -----------
TOTAL RETURN:............................................................................ 4.00% 38.31%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period......................................................... $ 1,293 $ 1,783
Ratio of expenses to average net assets, after expense reimbursement+.................... 1.00%* 1.01%*
Ratio of expenses to average net assets, before expense reimbursement+................... 4.99%* 4.13%*
Ratio of net investment income (deficit) to average net assets, after expense
reimbursement+......................................................................... (0.06)%* (0.24)%
Ratio of net investment income (deficit) to average net assets, before expense
reimbursement+......................................................................... (1.68)%* (3.36)%
Portfolio turnover**..................................................................... 320.73% 269.87%
Average commission rate paid**........................................................... $ 0.0594 $ 0.0599
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
27
<PAGE>
CORE GROWTH FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial condition and competitiveness of individual companies.
It uses a blend of both traditional fundamental research and computer intensive
systematic disciplines to uncover what it calls "change at the margin" -
positive business developments which are not yet fully reflected in the
company's stock price. It searches for successful, growing companies that are
managing change advantageously and poised to exceed growth expectations.
The Fund emphasizes companies with market capitalizations above $500
million.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 75% of its total assets
in common stocks. It invests the remainder of its assets primarily in preferred
and convertible securities, investment grade debt securities of any maturity,
and securities issued by the U.S. Government and its agencies and
instrumentalities. The Fund may invest up to 20% of its total assets in foreign
securities. The Fund may also use options and futures contracts as hedging
techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any growth fund, the value of your investment will fluctuate from
day to day with movements in the stock markets. The companies in which the Fund
invests may be more subject to volatile market movements than securities of
larger, more established companies. To the extent the Fund invests in foreign
securities, the risks and volatility are magnified since the performance of
foreign stocks also depends upon changes in foreign currency values, different
political and regulatory environments, and the overall political and economic
conditions in countries where the Fund invests. For further explanation, see
"Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases....................... None
Sales charge on reinvested dividends.................... None
Deferred sales charge................................... None
Redemption fee.......................................... None
Exchange fee............................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF
AVERAGE NET ASSETS:
(after expense deferral)
Management fees......................................... 0.75%
12b-1 expenses.......................................... None
Other expenses (after expense deferral) (1)............. 0.25%
Total operating expenses (after expense deferral) (1)... 1.00%
</TABLE>
- ------------------------
(1) The Investment Advisor has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 1.02% and
Other expenses would have been .27% absent the deferral. See "Investment
Adviser Compensation."
28
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
$ 10 $ 32 $ 55 $ 122
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital
stock of the predecessor Institutional Portfolio outstanding throughout each
period indicated. The figures for the period ending September 30, 1997 are
unaudited. The other figures have been audited by Ernst & Young L.L.P., with
respect to the fiscal year ended March 31, 1997. Please read in conjunction
with the Trust's 1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
4/19/93 4/1/94 4/1/95 4/1/96 4/1/97
TO 3/31/94 TO 3/31/95 TO 3/31/96 TO 3/31/97 TO 9/30/97
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............... $ 12.50 $ 12.68 $ 12.62 $ 16.26 $ 15.39
Income from investment operations:
Net investment income (deficit).................. (0.01) (0.01) (0.03) (0.08) (0.05)
Net realized and unrealized gains (losses) on
securities and foreign currency................ 0.92 0.38 4.47 0.49 4.75
----------- ----------- ----------- ----------- -----------
Total from investment operations................... 0.91 0.37 4.44 0.41 4.70
Less distributions:
Dividends from net investment income............. -- -- -- -- --
Distributions from capital gains................. (0.73) (0.43) (0.80) (1.28) --
----------- ----------- ----------- ----------- -----------
Net asset value, end of period..................... $ 12.68 $ 12.62 $ 16.26 15.39 20.09
----------- ----------- ----------- ----------- -----------
TOTAL RETURN:...................................... 6.84% 3.30% 35.81% 1.74% 30.54%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period................... $ 77,947 $ 72,826 $ 149,969 $ 156,443 $ 160,854
Ratio of expenses to average net assets, after
expense reimbursement+........................... 0.97%* 0.99% 0.98% 1.00% 0.99%
Ratio of expenses to average net assets, before
expense reimbursement+........................... 1.14%* 1.07% 1.06% 1.02% 1.21%*
Ratio of net investment income (deficit) to average
net assets, after expense reimbursement +........ (0.07%)* (0.06%) (0.32%) (0.45%) (0.22%)*
Ratio of net investment income (deficit) to average
net assets, before expense reimbursement+........ (0.24%)* (0.14%) (0.40%) (0.47%) (0.44%)*
Portfolio turnover**............................... 84.84% 98.09% 114.48% 153.20% 99.41%
Average commission rate paid**..................... N/A N/A $ 0.0593 $ 0.0582 $ 0.0581
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
29
<PAGE>
VALUE FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial condition and competitiveness of individual companies.
It uses a blend of traditional fundamental research and computer intensive
systematic disciplines to uncover signs of "change at the margin"--positive
business developments which are not yet fully reflected in a company's stock
price. It searches for successful, growing companies that are managing change
advantageously and poised to exceed growth
expectations.
The Fund emphasizes companies with market capitalizations generally above $5
billion.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 80% of its total assets
in equity securities. It invests the remainder primarily in preferred and
convertible securities, investment grade debt securities of any maturity, and
securities issued by the U.S. Government and its agencies and instrumentalities.
The Fund may also use options and futures contracts as hedging techniques.
The Fund's portfolio is designed to have risk, capitalization and industry
characteristics similar to those of the S&P 500 Index.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any equity fund, the value of your investment will fluctuate from
day to day with movements in the stock markets. To the extent the Fund invests
in foreign securities, the risks and volatility are magnified since the
performance of foreign stocks depends upon changes in foreign currency values,
different political and regulatory environments, and the overall political and
economic conditions in countries where the Fund invests. For further
explanation, see "Risk Factors and Special Considerations" starting on page 60
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases............ None
Sales charge on reinvested dividends......... None
Deferred sales charge........................ None
Redemption fee............................... None
Exchange fee................................. None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees.............................. 0.75%
12b-1 expenses............................... None
Other expenses (after expense deferral) (1).. 0.25%
Total operating expenses (after expense
deferral) (1).............................. 1.00%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 3.34% and
Other expenses would have been 2.59% absent the deferral. See "Investment
Adviser Compensation."
30
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
$ 10 $ 32 $ 55 $ 122
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital
stock of the predecessor Institutional Portfolio outstanding throughout each
period indicated. The figures for the period ending September 30, 1997 are
unaudited. The other figures have been audited by Ernst & Young L.L.P., with
respect to the fiscal year ended March 31, 1997. Please read in conjunction
with the Trust's 1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
4/1/96 4/1/97
TO 3/31/97 TO 9/30/97
----------- -----------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................... $ 12.50 $ 15.06
Income from investment operations:
Net investment income (deficit)........................................................ 1.50 .05
Net realized and unrealized gains (losses) on securities and foreign currency.......... 3.11 5.26
----------- -----------
Total from investment operations......................................................... 4.61 5.31
Less distributions:
Dividends from net investment income................................................... (1.44) --
Distributions from capital gains....................................................... (0.61) --
----------- -----------
Net asset value, end of period........................................................... $ 15.06 $ 20.37
----------- -----------
TOTAL RETURN:............................................................................ 26.77% 35.26%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period......................................................... $ 3,062 $ 8,699
Ratio of expenses to average net assets, after expense reimbursement+.................... 1.00%* 1.01%*
Ratio of expenses to average net assets, before expense reimbursement+................... 3.34%* 2.76%*
Ratio of net investment income (deficit) to average net assets, after expense
reimbursement+......................................................................... 1.64%* 1.34%*
Ratio of net investment income (deficit) to average net assets, before expense
reimbursement+......................................................................... 0.59%* (0.41)%*
Portfolio turnover**..................................................................... 139.27% 24.78%
Average commission rate paid**........................................................... $ 0.0589 $ 0.0600
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
31
<PAGE>
EMERGING GROWTH FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial condition and competitiveness of individual companies.
It uses a blend of both traditional fundamental research and computer intensive
systematic disciplines to uncover what it calls "change at the margin" --
positive business developments which are not yet fully reflected in the
company's stock price. It searches for successful, growing companies that are
managing change advantageously and poised to exceed growth expectations.
The Fund emphasizes companies with market capitalizations below $500 million
at the time of purchase.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 75% of its total assets
in common stocks. It invests the remainder primarily in preferred and
convertible securities, investment grade debt securities of any maturity, and
securities issued by the U.S. Government and its agencies and instrumentalities.
The Fund may invest up to 20% of its total assets in foreign securities. The
Fund may also use options and futures contracts as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any growth fund, the value of your investment will fluctuate from
day to day with movements in the stock markets. Although small-cap stocks have a
history of long-term growth, they tend to be more volatile and speculative than
stocks of larger, more established companies. To the extent the Fund invests in
foreign issuers, the investment risks and volatility are magnified since the
performance of foreign stocks depends on changes in foreign currency values,
different political and regulatory environments, and the overall political and
economic conditions in the foreign countries where the Fund invests. For further
explanation, see "Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases................................................... None
Sales charge on reinvested dividends................................................ None
Deferred sales charge............................................................... None
Redemption fee...................................................................... None
Exchange fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees..................................................................... 1.00%
12b-1 expenses...................................................................... None
Other expenses (after expense deferral)(1).......................................... 0.17%
Total operating expenses (after expense deferral)(1)................................ 1.17%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 1.26%
and Other expenses would have been .26% absent the deferral. See "Investment
Adviser Compensation."
32
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------- --------- --------- ---------
<S> <C> <C> <C>
$12 $37 $64 $142
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
10/1/93 4/1/94 4/1/95 4/1/96 4/1/97
TO 3/31/94 TO 3/31/95 TO 3/31/96 TO 3/31/97 TO 9/30/97
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............... $ 12.50 $ 11.38 $ 11.58 $ 15.10 $ 11.06
Income from investment operations:
Net investment income (deficit).................. (0.04) (0.05) (0.11) (0.08) (0.01)
Net realized and unrealized gains (losses) on
securities and foreign currency................ (0.69) 0.95 4.45 (0.31) 5.13
Total from investment operations................... (0.73) 0.90 4.34 (0.39) 5.12
Less distributions:
Dividends from net investment income............. -- -- -- -- --
Distributions from capital gains................. (0.39) (0.70) (0.82) (3.65) --
Net asset value, end of period..................... $ 11.38 $ 11.58 $ 15.10 11.06 16.18
----------- ----------- ----------- ----------- -----------
TOTAL RETURN:...................................... (6.06%) 8.69% 38.27% (5.66%) 46.29%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period................... $ 165,940 $ 206,696 $ 224,077 $ 167,230 $ 276,162
Ratio of expenses to average net assets, after
expense reimbursement+........................... 1.17%* 1.18% 1.16% 1.17% 1.17%*
Ratio of expenses to average net assets, before
expense reimbursement+........................... 1.18%* 1.24% 1.20% 1.26% 1.43%*
Ratio of net investment income (deficit) to average
net assets, after expense reimbursement+......... (0.83%)* (0.58%) (0.62%) (0.72%) (0.65%)*
Ratio of net investment income (deficit) to average
net assets, before expense reimbursement+........ (0.84%)* (0.64%) (0.66%) (0.81%) (0.90%)*
Portfolio turnover**............................... 50.51% 100.46% 129.59% 112.90% 46.99%
Average commission rate paid**..................... N/A N/A $ 0.0523 $ 0.0520 $ 0.0531
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
33
<PAGE>
MINI CAP FUND
INVESTMENT OBJECTIVE
Maximum long-term appreciation.
INVESTMENT STRATEGY
The Fund's Investment Adviser focuses on a "bottom-up" analysis that
evaluates the financial condition and competitiveness of individual companies.
It uses a blend of traditional fundamental research and computer intensive
systematic disciplines to uncover signs of "change at the margin"--positive
business developments which are not yet fully reflected in a company's stock
price. It searches for successful, growing companies that are managing change
advantageously and poised to exceed growth expectations.
The Fund emphasizes companies with market capitalizations generally up to
$100 million.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 75% of its total assets
in common stocks. It invests the remainder primarily in preferred and
convertible securities, investment grade debt securities of any maturity, and
securities issued by the U.S. Government and its agencies and instrumentalities.
The Fund may invest up to 20% of its total assets in foreign securities. The
Fund may also use options and futures contracts as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize it overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any growth fund, the value of your investment will fluctuate from
day to day with movements in the stock markets. The companies in which the Fund
will invest may be more subject to volatile market movements than securities of
larger, more established companies. To the extent the Fund invests in foreign
securities, the risks and volatility are magnified since the performance of
foreign stocks depends upon changes in foreign currency values, different
political and regulatory environments, and the overall political and economic
conditions in countries where the Fund invests. For further explanation, see
"Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases................................................... None
Sales charge on reinvested dividends................................................ None
Deferred sales charge............................................................... None
Redemption fee...................................................................... None
Exchange fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees..................................................................... 1.25%
12b-1 expenses...................................................................... None
Other expenses (after expense deferral)(1).......................................... 0.31%
Total operating expenses (after expense deferral)(1)................................ 1.56%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 1.99% and
Other expenses would have been 0.74% absent the deferral. See "Investment
Adviser Compensation."
34
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- --------- ---------
<S> <C>
$16 $49
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
4/1/95 4/1/96 4/1/97
TO 3/31/96 TO 3/31/97 TO 9/30/97
----------- ----------- -----------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period......................................... $ 12.50 $ 15.85 $ 15.94
Income from investment operations:
Net investment income (deficit)............................................ (0.05) (0.17) (0.04)
Net realized and unrealized gains (losses) on securities and foreign
currency................................................................. 3.40 0.84 9.32
Total from investment operations............................................. 3.35 0.67 9.36
Less distributions:
Dividends from net investment income....................................... -- -- --
Distributions from capital gains........................................... -- (0.58) --
Net asset value, end of period............................................... $ 15.85 $ 15.94 $ 25.30
----------- ----------- -----------
TOTAL RETURN:................................................................ 26.80% 3.90% 58.72%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period............................................. $ 25,237 $ 28,712 $ 102,223
Ratio of expenses to average net assets, after expense reimbursement+........ 1.55%* 1.56% 1.57%*
Ratio of expenses to average net assets, before expense reimbursement+....... 2.46%* 1.99% 1.88%*
Ratio of net investment income (deficit) to average net assets, after expense
reimbursement+............................................................. (0.98%)* (1.08%) (1.17%)*
Ratio of net investment income (deficit) to average net assets, before
expense reimbursement+..................................................... (1.36%)* (1.30%) (1.48%)*
Portfolio turnover**......................................................... 106.99% 164.01% 46.43%
Average commission rate paid**............................................... $ 0.0529 $ 0.0455 $ 0.0504
</TABLE>
- ------------------------
* Annualized
** For corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust
35
<PAGE>
INCOME & GROWTH FUND
INVESTMENT OBJECTIVE
Maximum total return, consisting of long-term capital appreciation and
current income.
INVESTMENT STRATEGY
The Fund invests primarily in convertible securities. The Investment Adviser
evaluates each security's investment characteristics as a fixed income
instrument as well as its potential for capital appreciation. In evaluating
convertibles, the Investment Adviser searches for what it calls "change at the
margin"--positive business developments which are not yet fully reflected in the
company's stock price. It searches for successful growing companies that are
managing change advantageously and poised to exceed growth expectations.
The Fund seeks to capture approximately 70-80% of the upside performance of
the underlying equities with 50% or less of the downside exposure.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in convertible securities. It invests the remainder primarily in common and
preferred stocks, debt securities of any maturity, and securities issued by the
U.S. Government and its agencies and instrumentalities. The Fund may also use
options and futures contracts as hedging techniques.
At all times, the Fund invests a minimum of 25% of its total assets in
common and preferred stocks, and 25% in other income producing convertible and
debt securities. The Fund may also invest up to 35% of its net assets in debt
securities rated below investment grade by a nationally recognized statistical
rating agency, or of comparable quality if unrated.
The Fund emphasizes companies with market capitalizations above $500
million.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
Convertible securities have the investment characteristics of both equity
and debt securities. Accordingly, the value of your investment will fluctuate
with movements in the stock and bond markets. The companies in which the Fund
invests may be subject to more volatile market movements than securities of
larger, more established companies. The value of the Fund's debt securities will
change as interest rates fluctuate: if rates go up, the value of debt securities
goes down; if rates go down, the value of debt securities goes up. In addition,
the lower-rated convertible securities in which the Fund may invest are
considered predominately speculative and are subject to greater volatility and
risk of loss than investment grade securities, particularly in deteriorating
economic periods. For further explanation, see "Risk Factors and Special
Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases................................................... None
Sales charge on reinvested dividends................................................ None
Deferred sales charge............................................................... None
Redemption fee...................................................................... None
Exchange fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees..................................................................... 0.75%
12b-1 expenses...................................................................... None
Other expenses (after expense deferral)(1).......................................... 0.25%
Total operating expenses (after expense deferral)(1)................................ 1.00%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 1.37% and
Other expenses would have been .62% absent the deferral.See "Investment
Adviser Compensation."
36
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------- --------- --------- ---------
<S> <C> <C> <C>
$10 $32 $55 $122
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
4/19/93 4/1/94 4/1/95 4/1/96 4/1/97
TO 3/31/94 TO 3/31/95 TO 3/31/96 TO 3/31/97 TO 9/30/97
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............... $ 12.50 $ 13.39 $ 11.86 $ 14.45 14.97
Income from investment operations:
Net investment income (deficit).................. 0.42 0.54 0.53 0.51 0.35
Net realized and unrealized gains (losses) on
securities and foreign currency................ 2.12 (0.85) 2.59 1.51 2.86
----------- ----------- ----------- ----------- -----------
Total from investment operations................... 2.54 (0.31) 3.12 2.02 3.21
Less distributions:
Dividends from net investment income............. (0.42) (0.54) (0.53) (0.52) (0.21)
Distributions from capital gains................. (1.23) (0.68) -- (0.98) --
----------- ----------- ----------- ----------- -----------
Net asset value, end of period..................... $ 13.39 $ 11.86 $ 14.45 $ 14.97 $ 17.98
----------- ----------- ----------- ----------- -----------
TOTAL RETURN:...................................... 20.18% (2.02%) 26.69% 14.37% 21.56%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period................... $ 18,332 $ 12,506 $ 17,239 $ 18,344 $ 64,380
Ratio of expenses to average net assets, after
expense reimbursement+........................... .99%* 1.00% 1.00% 1.00% 0.99%
Ratio of expenses to average net assets, before
expense reimbursement+........................... 1.50%* 1.48% 1.53% 1.37% 1.32%*
Ratio of net investment income (deficit) to average
net assets, after expense reimbursement+......... 3.36%* 4.28% 3.88% 3.43% 3.27%*
Ratio of net investment income (deficit) to average
net assets, before expense reimbursement+........ 2.85%* 3.80% 3.34% 3.03% 2.94%*
Portfolio turnover**............................... 177.52% 125.51% 144.97% 166.86% 76.54%
Average commission rate paid**..................... N/A N/A $ 0.0597 $ 0.0154 $ 0.0599
</TABLE>
- ------------------------
* Annualized
** For the corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust Fund
37
<PAGE>
BALANCED GROWTH FUND
INVESTMENT OBJECTIVE
A balance of long-term capital appreciation and current income.
INVESTMENT STRATEGY
The Fund's Investment Adviser actively manages a blended portfolio of equity
and fixed income securities with an emphasis on the overall total return. For
the equity portion, the Investment Adviser focuses on a "bottom-up" analysis
that evaluates the financial condition and competitiveness of individual
companies. It primarily uses computer intensive systematic disciplines to
uncover "change at the margin"--positive business developments that are not yet
fully reflected in a company's stock price. The fixed income portion is actively
managed to take advantage of current interest rates and bond market trends by
varying the structure, duration and allocation of fixed income investments from
various business sectors.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund allocates about 60% of its total assets
(but no more than 70% and no less than 50%) to equity securities, with an
emphasis on companies with market capitalizations in excess of $500 million, and
about 40% of its total assets to debt securities of any maturity issued by
corporations and the U.S. Government and its agencies and instrumentalities. A
portion of the Fund's net assets (less than 35%) may be invested in debt
securities rated below investment grade by a nationally recognized statistical
rating agency, or of comparable quality if unrated. The Fund may invest up to
20% of its total assets in securities of foreign issuers. The Fund may also use
options as a hedging technique.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any fund that invests in common stocks and debt obligations, the
value of your investment will fluctuate with movements in the stock and bond
markets. Equity securities in which the Fund invests may be more volatile than
securities of larger, more established companies. The value of the Fund's debt
securities will change as interest rates fluctuate: if rates go up, the value of
debt securities goes down; if rates go down, the value of debt securities goes
up. Lower-rated securities in which the Fund invests are considered speculative
and are subject to greater volatility and risk of loss than investment grade
securities, particularly in deteriorating economic periods. For further
explanation, see "Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales charge on purchases................................................... None
Sales charge on reinvested dividends................................................ None
Deferred sales charge............................................................... None
Redemption fee...................................................................... None
Exchange fee........................................................................ None
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees..................................................................... 0.75%
12b-1 expenses...................................................................... None
Other expenses (after expense deferral)(1).......................................... 0.25%
Total operating expenses (after expense deferral)(1)................................ 1.00%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 7.37% and
Other expenses would have been 6.62% absent the deferral. See "Investment
Adviser Compensation."
38
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------- --------- --------- ---------
<S> <C> <C> <C>
$10 $32 $55 $122
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
10/1/93 4/1/94 4/1/95 4/1/96 4/1/97
TO 3/31/94 TO 3/31/95 TO 3/31/96 TO 3/31/97 TO 9/30/97
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............... $ 12.50 $ 11.71 $ 12.01 $ 14.20 13.94
Income from investment operations:
Net investment income (deficit).................. 0.08 0.22 0.37 0.36 0.33
Net realized and unrealized gains (losses) on
securities and foreign currency................ (0.79) 0.30 2.19 0.75 3.79
----------- ----------- ----------- ----------- -----------
Total from investment operations................... (0.71) 0.52 2.56 1.11 4.12
Less distributions:
Dividends from net investment income............. (0.08) (0.22) (0.37) (0.33) (0.18)
Distributions from capital gains................. -- -- -- (1.04) --
----------- ----------- ----------- ----------- -----------
Net asset value, end of period..................... $ 11.71 $ 12.01 $ 14.20 $ 13.94 $ 17.88
----------- ----------- ----------- ----------- -----------
TOTAL RETURN:...................................... (5.66%) 4.56% 21.45% 7.46% 29.66%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period................... $ 143 $ 284 $ 625 $ 710 $ 884
Ratio of expenses to average net assets, after
expense reimbursement+........................... 0.99%* 1.00% 1.00% 1.00% 1.01%
Ratio of expenses to average net assets, before
expense reimbursement+........................... 43.16%* 20.66% 9.90% 7.37% 4.49%*
Ratio of net investment income (deficit) to average
net assets, after expense........................ 1.59%* 2.06% 2.74% 2.49% 1.88%*
Ratio of net investment income (deficit) to average
net assets, before expense reimbursement+........ (40.58%*) (17.60%) (5.74%) (3.63%) (1.61%)*
Portfolio turnover**............................... 85.43% 110.40% 197.19% 212.95% 136.75%
Average commission rate paid**..................... N/A N/A $ 0.0594 $ 0.0586 $ 0.0600
</TABLE>
- ------------------------
* Annualized
** For the corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust Fund
39
<PAGE>
SHORT INTERMEDIATE FIXED INCOME FUND
INVESTMENT OBJECTIVE
Preserving principal and liquidity while seeking a relatively high level of
current income.
INVESTMENT STRATEGY
The Fund's Investment Adviser invests primarily in a portfolio of
short-to-intermediate-term bonds that it expects to generate a greater return
than the return on one-to three-year U.S. Treasury obligations over a full
market cycle. When evaluating any bond, the Investment Adviser selects bonds
based upon a "top down" analysis of economic trends. Its investment philosophy
emphasizes interest rate decisions and shifts among sectors of the bond market.
It also analyzes credit quality, the yield to maturity of the security, and the
effect the security will have on the average yield to maturity of the Fund. The
Investment Adviser seeks to add value by positioning portfolio securities among
various market sectors and maturities along the yield curve.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 90% of its total assets
in an actively managed portfolio of investment grade debt obligations issued by
U.S. and foreign corporations, U.S. and foreign governments, and their agencies
and instrumentalities. All such obligations are payable in U.S. dollars or, if
not payable in U.S. dollars, are fully hedged. The Fund may also use options,
futures contracts, and interest rate and currency swaps as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any fund that invests primarily in bonds, the value of the Fund's
investments fluctuates in response to movements in interest rates. If rates go
up, the value of debt securities fall; if rates go down, the value of debt
securities rise. However, the Investment Adviser expects the Fund's fluctuations
to be more moderate than those of a fund with a longer average portfolio
duration. To the extent the Fund invests in foreign securities, different
political, regulatory environments and other overall economic factors in the
countries where the Fund invests may affect performance. For further
explanation, see "Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases........................... None
Sales charge on reinvested dividends........................ None
Deferred sales charge....................................... None
Redemption fee.............................................. None
Exchange fee................................................ None
ANNUAL PORTFOLIO OPERATING EXPENSES
AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees............................................. 0.30%
12b-1 expenses.............................................. None
Other expenses (after expense deferral)(1).................. 0.05%
Total operating expenses (after expense deferral)(1)........ 0.35%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 2.86% and
Other expenses would have been 2.56% absent the deferral. See "Investment
Adviser Compensation."
40
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
$4 $11 $20 $44
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
8/31/95 4/1/96 4/1/97
TO 3/31/96 TO 3/31/97 TO 9/30/97
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period....................................... $ 12.50 $ 12.79 $ 12.66
Income from investment operations:
Net investment income (deficit)........................................... 0.37 0.79 0.79
Net realized and unrealized gains (losses) on securities and foreign
currency................................................................ 0.29 (0.13) (0.28)
---------- ---------- ----------
Total from investment operations........................................... 0.66 0.66 0.51
Less distributions:
Dividends from net investment income...................................... (0.37) (0.79) (0.42)
Distributions from capital gains.......................................... -- -- --
---------- ---------- ----------
Net asset value, end of period............................................. $ 12.79 $ 12.66 $ 12.76
---------- ---------- ----------
TOTAL RETURN:.............................................................. 5.33% 5.30% 4.12%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period........................................... $ 4,726 $ 5,364 $ 12,921
Ratio of expenses to average net assets, after expense reimbursement+...... 0.35%* 0.35% 0.36%
Ratio of expenses to average net assets, before expense reimbursement+..... 3.17%* 2.86% 1.51%*
Ratio of net investment income (deficit) to average net assets, after
expense reimbursement+................................................... 5.81%* 6.18% 6.68%*
Ratio of net investment income (deficit) to average net assets, before
expense reimbursement+................................................... (4.01%*) 4.95% 5.53%*
Portfolio turnover**....................................................... 114.38% 132.30% 123.64%
Average commission rate paid**............................................. -- -- --
</TABLE>
- ------------------------
* Annualized
** For the corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust Fund
41
<PAGE>
FULLY DISCRETIONARY FIXED INCOME FUND
INVESTMENT OBJECTIVE
Maximum total return.
INVESTMENT STRATEGY
The Fund's Investment Adviser seeks to outperform the total return of an
index of either government/ corporate investment grade debt or
government/corporate/ mortgage investment grade debt over a full market cycle
through an actively managed diversified portfolio of debt securities. When
evaluating any bond, the Investment Adviser selects bonds based upon a "top
down" analysis of economic trends. Its investment philosophy emphasizes interest
rate decisions and shifts among sectors of the bond market. It also analyzes
credit quality, the yield to maturity of the security, and the effect the
security will have on the Fund.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in investment grade debt securities issued by U.S. and foreign corporations,
U.S. and foreign governments, and their agencies and instrumentalities. These
securities include bonds, notes, mortgage-backed and asset-backed securities
with rates that are fixed, variable or floating. The Fund may invest up to 20%
of its total assets in debt securities rated below investment grade by a
nationally recognized statistical rating agency, or of comparable quality if
unrated. For a description of these ratings, see "Corporate Bond Ratings"
beginning on page 64. The Fund may also use options, futures contracts and
interest rate and currency swaps as hedging techniques. The average portfolio
duration of the Fund will range from two to eight years. The Fund may invest up
to 30% of its total assets in securities payable in foreign currencies.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any fund that invests in bonds, the value of the Fund's investments
fluctuates in response to movements in interest rates. If interest rates go up,
the value of bonds fall; if rates go down, the value of bonds rise. However, the
Investment Adviser expects the Fund's fluctuations to be more moderate than
those of a fund with a longer average duration. The lower-rated debt securities
in which the Fund invests are considered speculative and are subject to greater
volatility and risk of loss than investment grade securities, particularly in
deteriorating economic periods. To the extent the Fund invests in foreign
securities, performance also depends upon changing currency values, different
political and economic environments, and other overall economic conditions in
countries where the Fund invests. For further explanation, see "Risk Factors and
Special Considerations" starting on page 58..
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases........................... None
Sales charge on reinvested dividends........................ None
Deferred sales charge....................................... None
Redemption fee.............................................. None
Exchange fee................................................ None
ANNUAL FUND OPERATING EXPENSES
AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees............................................. 0.45%
12b-1 expenses.............................................. None
Other expenses (after expense deferral)(1).................. --
Total operating expenses (after expense deferral)(1)........ 0.45%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 3.74% and
Other expenses would have been 3.29% absent the deferral. See "Investment
Adviser Compensation."
42
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
$5 $14 $25 $57
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
8/31/95 4/1/96 4/1/97
TO 3/31/96 TO 3/31/97 TO 9/30/97
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period......................................... $ 12.50 $ 12.72 $ 12.54
Income from investment operations:
Net investment income (deficit)............................................. 0.45 0.79 0.80
Net realized and unrealized gains (losses) on securities and foreign
currency................................................................... 0.47 (0.17) 0.09
---------- ---------- ----------
Total from investment operations............................................. 0.92 0.62 0.89
Less distributions:
Dividends from net investment income........................................ (0.44) (0.80) (0.42)
Distributions from capital gains............................................ (0.26) -- --
---------- ---------- ----------
Net asset value, end of period............................................... $ 12.72 $ 12.54 $ 13.01
---------- ---------- ----------
TOTAL RETURN:................................................................ 5.49% 4.98% 7.18%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period............................................. $ 4,414 $ 15,865 $ 14,220
Ratio of expenses to average net assets, after expense reimbursement+........ 0.45%* 0.45% 0.46%*
Ratio of expenses to average net assets, before expense reimbursement+....... 6.45%* 3.74% 1.61%*
Ratio of net investment income (deficit) to average net assets, after expense
reimbursement+............................................................. 6.39%* 6.12% 6.35%*
Ratio of net investment income (deficit) to average net assets, before
expense reimbursement+..................................................... 2.63%* 4.71% 5.20%*
Portfolio turnover**......................................................... 60.06% 190.83% 220.55%
Average commission rate paid**............................................... -- -- --
</TABLE>
- ------------------------
* Annualized
** For the corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust Fund
43
<PAGE>
STRATEGIC INCOME FUND
INVESTMENT OBJECTIVE
High level of current income.
INVESTMENT STRATEGY
The Fund's Investment Adviser generally invests across three sectors
- -international fixed income securities, lower-rated debt securities, and
mortgage-backed securities--but may invest all of the Fund's assets in one
sector if, in its judgment, an opportunity exists to generate higher income
without undue risk to principal. When evaluating any bond, the Investment
Adviser selects bonds based upon a "top down" analysis of economic trends. It
also analyzes credit quality, the yield to maturity of the security, and the
effect the security will have on the Fund. The Investment Adviser believes it
can lower the risks of investing in lower-rated debt through these professional
management techniques and through diversification.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund invests at least 65% of its total assets
in income producing securities such as international fixed income securities,
lower-rated debt securities, and mortgage-related securities. There is no limit
on the portfolio maturity or the acceptable rating of a security to be bought by
the Fund; however, under normal conditions the average rating of the Fund will
be investment grade. The Fund may invest without limitation in debt securities
rated below investment grade by a nationally recognized statistical rating
agency, or of comparable quality if unrated. For a description of these ratings,
see "Corporate Bond Ratings" beginning on page 64. The Fund may also buy common
and preferred stocks and may also use options, futures contracts and interest
rate and currency swaps as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any fund that invests primarily in income producing securities, the
value of the Fund's investments fluctuates in response to movements in interest
rates. If interest rates go up, the value of debt securities falls; if rates go
down, the value of debt securities rises. Lower-rated securities, while usually
offering higher yields, generally have more risk and volatility than
higher-rated securities because of reduced creditworthiness and greater chance
of default. Periods of high interest rates or recession may adversely affect the
issuer's ability to pay interest and principal. Mortgage-related securities have
yield and maturity characteristics of the underlying mortgages, and thus have
higher prepayments than other securities during periods of declining interest
rates. To the extent the Fund invests in foreign securities, performance also
depends upon changing currency values, different political and regulatory
environments, and other overall economic factors in countries where the Fund
invests. For further explanation, see "Risk Factors and Special Considerations"
starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases........................... None
Sales charge on reinvested dividends........................ None
Deferred sales charge....................................... None
Redemption fee.............................................. None
Exchange fee................................................ None
ANNUAL PORTFOLIO OPERATING EXPENSES
AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees............................................. 0.60%
12b-1 expenses.............................................. None
Other expenses (after expense deferral)(1).................. 0.15%
Total operating expenses (after expense deferral)(1)........ 0.75%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 2.33% and
Other expenses would have been 1.73% absent the deferral. See "Investment
Adviser Compensation."
44
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE VARIOUS
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS AND THE
AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
$8 $24 $42 $93
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
7/31/96 4/1/97
TO 3/31/97 TO 9/30/97
---------- ----------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................... $ 12.50 $ 13.06
Income from investment operations:
Net investment income (deficit)......................................................... 0.61 0.87
Net realized and unrealized gains (losses) on securities and foreign currency........... 0.76 0.82
---------- ----------
Total from investment operations......................................................... 1.37 1.69
Less distributions:
Dividends from net investment income.................................................... (0.61) 0.43
Distributions from capital gains........................................................ (0.20) --
---------- ----------
Net asset value, end of period........................................................... $ 13.06 $ 14.32
---------- ----------
TOTAL RETURN:............................................................................ 11.07% 13.12%
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period......................................................... $ 4,206 $ 4,285
Ratio of expenses to average net assets, after expense reimbursement+.................... 0.77%* 0.76%*
Ratio of expenses to average net assets, before expense reimbursement+................... 2.33%* 2.94%*
Ratio of net investment income (deficit) to average net assets, after expense
reimbursement+......................................................................... 6.97%* 6.32%*
Ratio of net investment income (deficit) to average net assets, before expense
reimbursement+......................................................................... 6.36%* 4.13%*
Portfolio turnover**..................................................................... 211.63% 205.35%
Average commission rate paid**........................................................... $ 0.0600 $ 0.0267
</TABLE>
- ------------------------
* Annualized
** For the corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust Fund
45
<PAGE>
HIGH YIELD BOND FUND
INVESTMENT OBJECTIVE
High level of current income and capital growth.
INVESTMENT STRATEGY
The Fund invests primarily in lower-rated debt securities commonly referred
to as "junk bonds." When evaluating any bond, the Investment Adviser selects
bonds based upon a combination of both "top-down" analysis of economic trends
and "bottom-up" analysis that evaluates the financial condition and
competitiveness of individual companies. It also analyzes credit quality, the
yield to maturity of the security, and the effect the security will have on the
average yield to maturity of the Fund. The Investment Adviser believes it can
lower the risks of investing in lower-rated debt through these professional
management techniques and through diversification.
PRINCIPAL INVESTMENTS
Under normal conditions, the Fund allocates at least 65% of its total assets
in lower-rated debt securities and convertible securities rated below investment
grade by a nationally recognized statistical rating agency, or of comparable
quality if unrated. There is no limit on either the portfolio maturity or the
acceptable rating of securities bought by the Fund. For a description of these
ratings, see "Corporate Bond Ratings" beginning on page 64. Securities may bear
rates that are fixed, variable or floating. The Fund may invest up to 35% of its
total assets in equity securities of U.S. and foreign companies. The Fund is not
restricted to investments in companies of any particular size, but currently
intends to invest principally in companies with market capitalizations above
$100 million at the time of purchase. The Fund may also use options, futures
contracts and interest rate and currency swaps as hedging techniques.
PORTFOLIO MANAGEMENT
The Investment Adviser emphasizes a team approach to portfolio management to
maximize its overall effectiveness. For a complete list of the portfolio team,
see "Portfolio Teams" on page 54.
RISK FACTORS
As with any fund that invests primarily in bonds, the value of the Fund's
investments fluctuates in response to movements in interest rates. When rates go
up, debt security prices fall; when rates go down, debt security prices rise.
Lower-rated securities, while usually offering higher yields, generally have
more risk and volatility than higher-rated securities because of reduced
creditworthiness and greater chance of default. Periods of high interest rates
and recession may adversely affect the issuer's ability to pay interest and
principal. To the extent the Fund invests in stocks, the value of those
investments will fluctuate day to day with movements in the stock market as well
as in response to the activities of individual companies. The companies in which
the Fund invests may be more subject to volatile market movements than
securities of larger, more established companies. To the extent the Fund invests
in foreign securities, performance also depends on changes in foreign currency
values different political and regulatory environments, and overall economic
factors in the countries where the Fund invests. For further explanation, see
"Risk Factors and Special Considerations" starting on page 58.
INVESTOR EXPENSES--CLASS I SHARES
Investors pay various expenses, either directly or indirectly. Actual
expenses may be more or less than those shown.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum sales charge on purchases........................... None
Sales charge on reinvested dividends........................ None
Deferred sales charge....................................... None
Redemption fee.............................................. None
Exchange fee................................................ None
ANNUAL FUND OPERATING EXPENSES
AS A PERCENTAGE OF AVERAGE NET ASSETS:
(after expense deferral)
Management fees............................................. 0.60%
12b-1 expenses.............................................. None
Other expenses (after expense deferral)(1).................. 0.15%
Total operating expenses (after expense deferral)(1)........ 0.75%
</TABLE>
- ------------------------
(1) The Investment Adviser has agreed to defer its management fees and to absorb
other operating expenses. Total operating expenses would have been 1.95% and
Other expenses would have been 1.35% absent the deferral. See "Investment
Adviser Compensation."
46
<PAGE>
EXAMPLE:
THE TABLE SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE
VARIOUS TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVEST ALL DIVIDENDS
AND THE AVERAGE ANNUAL RETURN IS 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
$8 $24 $42 $93
</TABLE>
This example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
FINANCIAL HIGHLIGHTS
The following schedule provides selected data for a share of capital stock
of the predecessor Institutional Portfolio outstanding throughout each period
indicated. The figures for the period ending September 30, 1997 are unaudited.
The other figures have been audited by Ernst & Young L.L.P., with respect to the
fiscal year ended March 31, 1997. Please read in conjunction with the Trust's
1997 Annual Report and 1997-1998 Semi-Annual Report.
<TABLE>
<CAPTION>
7/31/96 4/1/97
TO 3/31/97 TO 9/30/97
---------- ----------
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................... $ 12.50 $ 13.20
Income from investment operations:
Net investment income (deficit)......................................................... 0.74 1.09
Net realized and unrealized gains (losses) on securities and foreign currency........... 0.95 1.03
Total from investment operations......................................................... 1.69 2.12
---------- ----------
Less distributions:
Dividends from net investment income.................................................... (0.73) (0.54)
Distributions from capital gains........................................................ (0.26) --
---------- ----------
Net asset value, end of period........................................................... $ 13.20 $ 14.78
---------- ----------
TOTAL RETURN:............................................................................ 13.90% 16.40
RATIOS/SUPPLEMENTAL DATA:
Net Assets ($000), end of period......................................................... $ 4,608 $ 4,749
Ratio of expenses to average net assets, after expense reimbursement+.................... 0.75%* 0.76%*
Ratio of expenses to average net assets, before expense reimbursement+................... 1.95%* 2.83%*
Ratio of net investment income (deficit) to average net assets, after expense
reimbursement+......................................................................... 8.47%* 7.67%*
Ratio of net investment income (deficit) to average net assets, before expense
reimbursement+......................................................................... 7.97%* 5.60%*
Portfolio turnover**..................................................................... 465.32% 403.81%
Average commission rate paid**........................................................... $ 0.0200 $ 0.0500
</TABLE>
- ------------------------
* Annualized
** For the corresponding Series of the Master Trust
+ Includes expenses allocated from Master Trust Fund
47
<PAGE>
SIMPLIFIED ACCOUNT INFORMATION
<TABLE>
<CAPTION>
OPENING AN ACCOUNT
---------------------------------------------------------------------------------------------
<S> <C>
This is the minimum $250,000
initial investment
Use this type of application New Account Form (Non-Retirement)
Before completing Each Fund offers a variety of features, which are described in the "Your Account" section of
the application this prospectus. Please read this section before completing the application.
Completing the application If you need assistance, contact your financial representative, or call us at (800) 551-8043.
If you are sending money by Mail application and check, payable to: NICHOLAS-APPLEGATE MUTUAL FUNDS, PO BOX 8326, BOSTON,
CHECK MA 02266-8326. The Trust will not accept third-party checks.
Please read the bank wire or ACH section under the "Buying Shares" section below. You will
If you are sending money by BANK need to obtain an account number with the Trust by sending a completed application to:
WIRE or ACH NICHOLAS-APPLEGATE MUTUAL FUNDS, PO BOX 8326, BOSTON, MA 02266-8326. To receive your account
number, call either your financial representative or us at (800) 551-8043.
<CAPTION>
BUYING SHARES
---------------------------------------------------------------------------------------------
<S> <C>
This is the minimum $10,000
subsequent investment
The Trust is generally open on days that the New York Stock Exchange is open. All
The price you will receive transactions received in good order before the market closes receive that day's price.
Instruct your bank to wire the amount you wish to invest to: STATE STREET BANK & TRUST
If you are sending money by CO.--ABA #011000028 DDA #9904-645-0 STATE STREET BOS, ATTN: MUTUAL FUNDS Credit:
BANK WIRE NICHOLAS-APPLEGATE [FUND NAME][SHARE CLASS], [YOUR NAME], [ACCOUNT NAME OR NUMBER]
Call your bank to ensure (1) that your bank supports ACH, and (2) this feature is active on
your bank account. To establish this option, either complete the appropriate sections when
If you are sending money by ACH opening an account, or contact your financial representative, or call us at (800) 551-8043
for further information. To initiate an ACH purchase, call the Trust at (800) 551-8043.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
SELLING OR REDEEMING SHARES
--------------------------------------------------------------------------------------------------
IN WRITING BY PHONE
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Selling shares by phone is a service option
which must be established on your account
prior to making a request. See the "Your
Account" section, or contact your financial
Certain requests may require a SIGNATURE GUARANTEE. representative or the Trust at (800) 551-8043
Things you should know See that section below for further information. for further information. The maximum amount
You may sell up to the full account value. which may be requested by phone, regardless of
account size, is $50,000. Amounts greater than
that must be requested in writing. If you wish
to receive your monies by bank wire, the
minimum request is $5,000.
If you purchased shares through a financial representative, or plan administrator/sponsor, you
should call them regarding the most efficient way to sell shares. If you bought shares recently by
check, they may not be available to be sold for up to 15 calendar days from the date of purchase.
Sales by a corporation, trust or fiduciary may have special requirements. Please call your
financial representative, a plan administrator/sponsor or us for further information.
The Trust is open on days that the New York Stock Exchange is open.
The price you will receive All transactions received in good order before the market closes receive that day's price.
Please put your request in writing, including:
the name of the account owners, account number
and Fund and share Class you are redeeming from, Either contact your financial representative
If you want to receive your the share or dollar amount you wish to sell, or call us at (800) 551-8043.
monies by BANK WIRE signed by all account owners. Mail this request to: The proceeds will be sent to the existing bank
NICHOLAS-APPLEGATE MUTUAL FUNDS, WIRE ADDRESS LISTED ON THE ACCOUNT.
PO BOX 8326, BOSTON, MA 02266-8326.
The check will be sent to the existing bank wire
address listed on the account.
Either contact your financial representative
or call us at (800) 551-8043.
If you want to receive The proceeds will be sent to the existing ACH
your monies by ACH Please call us at (800) 551-8043. instructions on the account and will generally
be received at your bank two business days after
your request is received.
</TABLE>
49
<PAGE>
SIMPLIFIED ACCOUNT INFORMATION
<TABLE>
<CAPTION>
SIGNATURE GUARANTEES
--------------------------------------------------------------------------------------------------
<S> <C>
A signature guarantee is required of a financial institution to verify the authenticity of
A definition an individual's signature. It can usually be obtained from a broker, commercial or savings
bank, or credit union.
A signature guarantee is needed when making a written request for the following reasons:
1. When selling more than $50,000 worth of shares;
2. When you want a check or bank wire sent to a name or address that is not currently
listed on the account;
When you need one 3. To sell shares from an account controlled by a corporation, partnership, trust or fiduciary; or
4. If your address was changed within the last 60 days.
</TABLE>
<TABLE>
<CAPTION>
EXCHANGING SHARES
---------------------------------------------------------------------------------------------
<S> <C>
This is the minimum exchange $250,000
amount to open a new account
The Trust is open on days that the New York Stock Exchange is open.
The price you will receive All transactions received in good order before the market closes receive that day's price.
The exchange must be to the Class I Shares of another Fund or to the Money
Market Fund and to an account with the same registration.
If opening an account as part of an exchange, you must obtain and read the prospectus.
Things you should know If you intend to keep money in the Fund you are exchanging from, make sure that you leave an
amount equal to or greater than the Fund's minimum account size (see the "Opening an Account"
section). To protect other investors, the Trust may limit the number of exchanges you can make.
Either contact your financial representative, or call the Trust at (800) 551-8043.
How to request an The Trust will accept a request by phone if this feature was previously established on your
exchange by PHONE account. See the "Your Account" section for further information.
Please put your exchange request in writing, including: the name on the account, the name of
How to request an the Fund and the account number you are exchanging from, the shares or dollar amount you wish
exchange by MAIL to exchange, and the Fund you wish to exchange to. Mail this request to:
PO BOX 8326, BOSTON, MA 02266-8326.
</TABLE>
50
<PAGE>
YOUR ACCOUNT
TRANSACTION POLICIES
PURCHASE OF SHARES. Class I Shares are offered at net asset value without a
sales charge to qualified retirement plans, financial and other institutions
and "wrap accounts." The minimum initial investment is $250,000, and the
minimum subsequent investment is $10,000. The Distributor may waive these
minimums from time to time. Certain Funds also offer Class A, B, C and Q
Shares, which have different sales charges and other expenses that may affect
their performance. You can obtain more information about these other share
Classes from Nicholas-Applegate Securities at (800) 551-8643.
VALUATION OF SHARES. The net asset value per share (NAV) for Class I Shares
of the Fund is determined each business day at the close of regular trading
on the New York Stock Exchange (usually 4 p.m. Eastern Time) by dividing the
Class' net assets by the number of its shares outstanding.
BUY AND SELL PRICES. When you buy shares, you pay the NAV, as described
earlier. When you sell shares, you receive the NAV. Your financial
institution may charge you a fee to execute orders on your behalf.
EXECUTION OF REQUESTS. Each Fund is open on the days the New York Stock
Exchange is open, usually Monday-Friday. Buy and sell requests are executed
at the NAV next calculated after your request is received in good order by
the transfer agent or another agent designated by the Trust.
At times of peak activity, it may be difficult to place requests by phone.
During these times, consider sending your request in writing. Each Fund
reserves the right to reject any purchase or to suspend or modify the
continuous offering of its shares. Your financial representative is
responsible for forwarding payment promptly to the transfer agent. The Trust
reserves the right to cancel any buy request if payment is not received
within three days.
In unusual circumstances, any Fund may temporarily suspend the processing of
sell requests, or may postpone payment of proceeds for up to three business
days or longer, as allowed by federal securities laws.
TELEPHONE TRANSACTIONS. For your protection, telephone requests may be
recorded in order to verify their accuracy. In addition the Trust will take
measures to verify the identity of the caller, such as asking for name,
account number, Social Security or taxpayer ID number and other relevant
information. If these measures are not taken, your Fund may be responsible
for any losses that may occur in your account due to an unauthorized
telephone call.
CERTIFICATED SHARES. Most shares are electronically recorded. If you wish to
have certificates for your shares, please write to the transfer agent.
Certificated shares can only be sold by returning the certificates to the
transfer agent, along with a letter of instruction or a stock power and a
signature guarantee.
SALES IN ADVANCE OF PURCHASE PAYMENTS. When you place a request to sell
shares for which the purchase money has not yet been collected, the request
will be executed in a timely fashion, but the Fund will not release the
proceeds to you until your purchase payment clears. This may take up to
fifteen calendar days after the purchase.
SHAREHOLDER INQUIRIES. Shareholder inquiries should be addressed to the
Trust, c/o the Trust's transfer agent,
State Street Bank and Trust Company
Attention: Nicholas-Applegate Mutual Funds
P.O. Box 8326
Boston, MA 02266-8326
Telephone inquiries can be made by calling 1-800-551-8043 or, from outside
the U.S., 1-617-774-5000 (collect).
FEATURES AND ACCOUNT POLICIES
The services referred to in this section may be terminated or modified at any
time upon 60 days' written notice to shareholders. Shareholders seeking to
add to, change or cancel their selection of available services should contact
the transfer agent at the address and telephone number provided above.
RETIREMENT PLANS. You may invest in each Fund through various retirement
plans, including IRAs, Simplified Employee Plan (SEP) IRAs, 403(b) plans, 457
plans, and all qualified retirement plans. For further information about any
of the plans, agreements, applications and annual fees, contact the
Distributor, your financial representative or plan sponsor. To determine
which retirement plan is appropriate for you, consult your tax adviser.
51
<PAGE>
YOUR ACCOUNT
ACCOUNT STATEMENTS. In general, you will receive account statements as follows:
- - After every transaction that affects your account balance.
- - After any changes of name or address of the registered owner(s).
- - In all other circumstances, every quarter.
Every year you will also receive an applicable tax information statement,
mailed by January 31.
DIVIDENDS. The Funds generally distribute most or all of their net earnings
in the form of dividends. Each Fund pays dividends of net investment income
as follows:
<TABLE>
<CAPTION>
ANNUALLY QUARTERLY MONTHLY
- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C>
Global Blue Chip Global Growth & Income Short Intermediate
International Core Growth Balanced Growth Fully Discretionary
Worldwide Growth Income & Growth Strategic Income
International Small Cap High Yield Bond
Emerging Countries Emerging Markets
Global Technology Bond
Greater China
Pacific Rim
Latin America
Large Cap Growth
Core Growth
Value
Emerging Growth
MiniCap
</TABLE>
Any net capital gains are distributed annually.
DIVIDEND REINVESTMENTS. If you choose this option, or if you do not indicate
any choice, your dividends will be reinvested on the ex-dividend date.
Alternatively, you can choose to have a check for your dividends mailed to
you. Interest will not accrue or be paid on uncashed dividend checks.
TAXABILITY OF DIVIDENDS. As long as a Fund meets the requirements for being
a tax-qualified regulated investment company, which each Fund has in the past
and intends to in the future, it pays no federal income tax on the earnings
it distributes to shareholders.
Consequently, dividends you receive from a Fund whether reinvested or taken
as cash, are generally considered taxable. Dividends from a Fund's long-term
capital gains are taxable as capital gains; dividends from other sources are
generally taxable as ordinary income.
Some dividends paid in January may be taxable as if they had been paid the
previous December. Corporations may be entitled to take a dividends-received
deduction for a portion of certain dividends they receive.
The tax information statement that is mailed to you details your dividends
and their federal tax category, although you should verify your tax liability
with your tax professional.
TAXABILITY OF TRANSACTIONS. Any time you sell or exchange shares, it is
considered a taxable event for you. Depending on the purchase price and the
sale price of the shares you sell or exchange, you may have a gain or a loss
on the transaction. You are responsible for any tax liabilities generated by
your transactions.
SMALL ACCOUNTS (NON-RETIREMENT ONLY). If you draw down a non-retirement
account so that its total value is less than the Fund minimum, you may be
asked to purchase more shares within 60 days. If you do not take action, the
Fund may close out your account and mail you the proceeds. Your account will
not be closed if its drop in value is due to Fund performance.
AUTOMATIC WITHDRAWALS. You may make automatic withdrawals from a Fund of
$250 or more on a monthly or quarterly basis if you have an account of
$15,000 or more in the Fund. Withdrawal proceeds will normally be received
prior to the end of the month or quarter. See the account application for
further information.
AUTOMATIC INVESTMENT PLAN. You may make regular monthly or quarterly
investments in Class I Shares of each Fund through automatic withdrawals of
specified amounts from your bank account once an automatic investment plan is
established. See the account application for further details about this
service or call the Transfer Agent at 1-800-551-8043.
CROSS-REINVESTMENT. You may cross-reinvest dividends or dividends and capital
gains distributions paid by one Fund into Class I Shares of another Fund,
subject to conditions outlined in the Statement of Additional Information and
the applicable provisions of the qualified retirement plan.
SHAREHOLDER SERVICES. The Investment Adviser may make payments from its own
resources to brokers, consultants and financial institutions for performing
certain services for shareholders and for the maintenance of shareholder
accounts.
52
<PAGE>
ORGANIZATION AND MANAGEMENT
INVESTMENT ADVISER COMPENSATION
Each Fund pays the Investment Adviser a monthly fee pursuant to an investment
advisory agreement. The Emerging Countries Fund and Latin American Fund each
pays at the annual rate of 1.25% of the Fund's net assets. The Global
Technology Fund pays a monthly fee at the annual rate of 1.00% of the Fund's
net assets. The Pacific Rim Fund, the Greater China Fund and the Emerging
Growth Fund each pays at the annual rate of 1.00% of the Fund's net assets.
The Worldwide, International Core Growth and International Small Cap Funds
each pays at the annual rate of 1.00% on the first $500 million of the Fund's
net assets, .90% on the next 500 million of the Fund's net assets, and .85%
on net assets of the Fund in excess of $1 billion. The Global Growth & Income
Fund pays at the annual rate of .85% of the Fund's net assets. The Short
Intermediate Fund pays at the annual rate of 0.30% of the first $250 million
of the Fund's net assets and 0.25% of the average net assets in excess of
$250 million. The Emerging Markets Bond Fund pays at the annual rate of 0.70%
of its net assets. The Global Blue Chip Fund pays at the annual rate of .80%
of the Fund's net assets. The Fully Discretionary Fund pays at the annual
rate of 0.45% of the first $500 million of the Fund's average net assets,
0.40% of the next $250 million of net assets, and 0.35% of net assets in
excess of $750 million. The Strategic Income and High Yield Bond Funds each
pays at the annual rate of 0.60% of the Fund's net assets. The Large Cap
Growth, Core Growth, Value, Mini Cap, Income & Growth, and Balanced Growth
Funds each pays at the annual rate of 0.75% of the first $500 million of the
Fund's net assets, 0.675% of the next $500 million of net assets, and 0.65%
of net assets in excess of $1 billion.
The Investment Adviser has agreed to waive or defer its management fees
payable by the Funds, and to absorb other operating expenses of the Funds, so
that the expenses for the Class I Shares of the Funds will not exceed the
following expense ratios on an annual basis through March 31, 1998: Worldwide
Growth and Global Growth & Income Funds 1.35%, International Core Growth,
International Small Cap Growth, Global Technology Funds--1.40%, Greater China
and Pacific Rim Funds--1.40%, Emerging Countries and Latin America
Funds--1.65%, Short Intermediate Fund--0.35%; Fully Discretionary
Fund--0.45%; Strategic Income and High Yield Bond Funds--0.75%; Income &
Growth, Balanced Growth, Large Cap, Value and Core Growth Funds--1.00%;
Emerging Growth Fund - 1.17%; Mini-Cap Fund - 1.56%; Emerging Markets Bond
Fund--0.95%; and Global Blue Chip Fund--1.20%. Each Fund will reimburse the
Investment Adviser for fees deferred or other expenses paid pursuant to this
Agreement in later years in which operating expenses for the Fund are less
than the percentage limitation set forth above for any such year.
Sub-Advisers. To assist it in the management of the Greater China and Pacific
Rim Funds, the Investment Adviser has entered into sub-advisory agreements
with its investment advisory affiliates, Nicholas-Applegate Capital
Management--Hong Kong, 6th Floor, Three Exchange Square, 8 Connaught Place,
Hong Kong, and Nicholas-Applegate Capital Management--Asia, 65 Chulia Street
#3201/04 OCBC Centre, Singapore (the "Sub-Advisers"). Pursuant to each
sub-advisory agreement, the Investment Adviser pays its affiliates each a fee
ranging from 10% to 40% of the fee it receives. To the extent the Investment
Adviser waives or defers its management fee under circumstances outlined
above, the Sub-Advisers will also waive or defer their fees.
ADMINISTRATOR COMPENSATION
The Funds pay administrative fees for administrative personnel and services
(including certain legal and financial reporting services). Each Fund pays
Nicholas-Applegate Capital Management an annual fee of .10% of net assets.
Each Fund pays Investment Company Administration Corporation (ICAC) an annual
fee at an annual rate ranging from .05% to .01% of average net assets, with a
minimum of $40,000 per Fund.
DISTRIBUTOR
Nicholas-Applegate Securities
600 West Broadway, 30th Floor
San Diego, California 92101
(800) 551-8045
PORTFOLIO TRADES
The Investment Adviser is responsible for the Funds' portfolio transactions.
In placing portfolio trades, the Investment Adviser and Sub-Advisers may use
brokerage firms that sell shares of the Fund or that provide research
services to the Fund, but only when the Investment Adviser and Sub Advisers
believe no other firm offers a better combination of quality execution (i.e.
timeliness and completeness) and favorable price. The Investment Adviser
expects high annual portfolio turnover up to 200%. This is generally higher
than other funds and will result in the Funds incurring higher brokerage
costs.
INVESTMENT OBJECTIVE
Each Fund's investment objective is fundamental and may only be changed with
shareholder approval. The other fundamental limitations are described in the
Statement of Additional Information. All other changes may be made by the
Board of Trustees without shareholder approval.
DIVERSIFICATION
All the Funds are diversified, except the Emerging Markets Bond Fund, which
is non-diversified. All Funds remain subject to the diversification limits
imposed by the Internal Revenue Code.
PRIOR MASTER-FEEDER STRUCTURE
Prior to February 27,1998, the various Classes of each of the Funds were
separate Portfolios of the Trust, and invested all of their assets in
corresponding portfolios of Nicholas-Applegate Investment Trust (the "Master
Trust"). In this "master-feeder" structure, the Investment Adviser served as
the adviser to the Master Trust, and the Trust had no separate adviser. The
master-feeder structure was terminated, with the approval of the shareholders
of the Trust, in order to achieve certain economies for the Trust.
53
<PAGE>
ORGANIZATION AND MANAGEMENT
PORTFOLIO TEAMS
EQUITY MANAGEMENT--INTERNATIONAL/GLOBAL
CATHERINE SOMHEGYI, PARTNER
Chief Investment Officer--Global Equity Management
Joined firm in 1987; prior investment management experience with Professional
Asset Securities, Inc. and Pacific Century Advisers
M.B.A. and B.S.--University of Southern California
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP GROWTH,
EMERGING COUNTRIES, EMERGING GROWTH, GLOBAL GROWTH & INCOME, GLOBAL
TECHNOLOGY, GLOBAL BLUE CHIP, LATIN AMERICA, PACIFIC RIM, AND GREATER CHINA
LARRY SPEIDELL, PARTNER, CFA
Director of Global/Systematic Portfolio Management and Research
Joined firm in 1994; 23 years prior investment management experience with
Batterymarch Financial Management and Putnam Management Company
M.B.A.--Harvard University; B.E.--Yale University
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, GLOBAL GROWTH & INCOME,
INTERNATIONAL SMALL CAP GROWTH, EMERGING COUNTRIES, GLOBAL TECHNOLOGY, GLOBAL
BLUE CHIP, LATIN AMERICA, PACIFIC RIM, GREATER CHINA, VALUE, AND BALANCED GROWTH
JOHN J. KANE, PARTNER
Portfolio Manager--U.S. Systematic
Joined firm in 1994; 25 years prior investment management/economics experience
with ARCO Investment Management Company and General Electric Company
M.A. and B.A.--Columbia University;
M.B.A.--University of California, Los Angeles
GLOBAL TECHNOLOGY, WORLDWIDE GROWTH, VALUE AND BALANCED GROWTH
PEDRO V. MARCAL, PARTNER
Portfolio Manager--Emerging Countries
Joined firm in 1994; 5 years prior investment management experience with A.B.
Laffer, V.A. Canto & Associates, and A- Mark Precious Metals
B.A.--University of California, San Diego
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP,
EMERGING COUNTRIES, GLOBAL TECHNOLOGY, GLOBAL BLUE CHIP, GLOBAL GROWTH & INCOME,
PACIFIC RIM, AND GREATER CHINA
LORETTA J. MORRIS, PARTNER
Portfolio Manager--International
Joined firm in 1990; 10 years prior investment management experience with
Collins Associates--Attended California State University, Long Beach; CFA Level
II candidate
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP GROWTH,
GLOBAL TECHNOLOGY, GLOBAL TECHNOLOGY, GLOBAL BLUE CHIP, AND GLOBAL GROWTH &
INCOME
AARON HARRIS
Portfolio Manager--Emerging Countries
Joined firm in 1995; 1 year prior investment management experience at
Chemical Bank
B.A.--Princeton University
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP,
EMERGING COUNTRIES, GLOBAL TECHNOLOGY, GLOBAL BLUE CHIP,GLOBAL GROWTH & INCOME,
AND LATIN AMERICA
ESWAR MENON
Portfolio Manager--Emerging Countries
Joined firm in 1995; 5 years prior investment management experience with
Koeneman Capital Management and Integrated Device Technology
M.B.A., summa cum laude--University of Chicago;
M.S.--University of California, Santa Barbara;
B.S.--Indian Institute of Technology, Madras
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP,
EMERGING COUNTRIES, GLOBAL TECHNOLOGY, GLOBAL BLUE CHIP, GLOBAL BLUE CHIP,
GLOBAL GROWTH & INCOME, PACIFIC RIM, AND GREATER CHINA
ALEX MUROMCEW
Portfolio Manager--International
Joined firm in 1996; 6 years prior investment management experience with Jardine
Fleming Securities (Japan); Emerging Markets Investors Corporation; Teton
Partners LP
M.B.A.--Stanford University; B.A.--Dartmouth College
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP GROWTH,
GLOBAL TECHNOLOGY, GLOBAL BLUE CHIP, AND GLOBAL GROWTH & INCOME
54
<PAGE>
ERNESTO RAMOS, PH.D.
Portfolio Manager--International
Joined firm in 1994; 14 years prior investment management and quantitative
research experience with Batterymarch Financial Management; Bolt Beranek &
Newman Inc.; and Harvard University
Ph.D.--Harvard University;
B.S.--Massachusetts Institute of Technology
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP GROWTH,
EMERGING COUNTRIES, GLOBAL TECHNOLOGY, GLOBAL BLUE CHIP, GLOBAL GROWTH & INCOME,
AND LATIN AMERICA
MELISA A. GRIGOLITE
Portfolio Manager
Joined firm in 1991; prior experience with SGPA Architecture and Planning
M.S.--San Diego State University;
B.S. Southwest Missouri State University
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP, GLOBAL
TECHNOLOGY, GLOBAL BLUE CHIP, AND GLOBAL GROWTH & INCOME
JOHN TRIBOLET
Investment Analyst
Joined firm in 1997; 5 years prior experience with Kemper Securities, Inc.
and PaineWebber;
M.B.A.--University of Chicago;
B.A.--Columbia University
WORLDWIDE GROWTH, INTERNATIONAL CORE GROWTH, INTERNATIONAL SMALL CAP, AND
GLOBAL TECHNOLOGY
JESSICA HILINSKI
Assistant Portfolio Manager
Joined firm in 1996; 3 years prior experience in Eaton Vance Management and
Union Capital Advisors--Attended University of Pennsylvania
EMERGING COUNTRIES AND GLOBAL TECHNOLOGY
AYLIN UCKUNKAYA
Investment Analyst
Joined firm in 1997; 4 years investment management experience with Global
Securities
B.A. Instanbul University
EMERGING COUNTRIES AND GLOBAL TECHNOLOGY
JON BORCHARDT
Portfolio Manager
Joined firm in 1994; 5 years prior investment management experience with
Union Bank
B.S. University of San Francisco
GLOBAL TECHNOLOGY, EMERGING COUNTRIES, AND LATIN AMERICA
JULIA SZE
Portfolio Manager
Joined firm in 1997; 8 years prior experience with Credit Lyonnais
International Asset Management
M.A. and B.A. Stanford University
GLOBAL TECHNOLOGY AND PACIFIC RIM
NICHOLAS-APPLEGATE CAPITALMANAGEMENT
- -HONG KONG
ROBERT BREWIS
Portfolio Manager
Joined firm in 1997; 9 years prior investment management experience with
Credit Lyonnais International and Thornton Asset Management
M.A. and B.A.--Cambridge University
GLOBAL TECHNOLOGY, GREATER CHINA, AND PACIFIC RIM
TIMOTHY GREATON
Portfolio Manager
Joined firm in 1997; 5 years prior investment management experience with
Credit Lyonnais International Asset Management
B.A.--Middlebury College; also attended graduate programs at Taiwan
University and Nanjing University
GLOBAL TECHNOLOGY, GREATER CHINA, AND PACIFIC RIM
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT--ASIA
YEO BOON HONG
Portfolio Manager
Joined firm in 1997; 8 years prior investment management experience with
Credit Lyonnais International Asset Management and Indosuez Asset Management
M.S.--Wharton School, University of Pennsylvania
GLOBAL TECHNOLOGY AND PACIFIC RIM
REGINALD TAN
Portfolio Manager
Joined firm in 1997; 6 years prior investment experience with Credit
Lyonnais International Asset Management and Mercury Asset Management
B.S.--Wharton School, University of Pennsylvania
GLOBAL TECHNOLOGY AND PACIFIC RIM
EQUITY MANAGEMENT--U.S.
JOHN C. MARSHALL, JR., PARTNER
Chief Investment Officer--Institutional Equity
Management
Joined firm in 1989; 8 years prior investment management experience with
Pacific Century Advisers; San Diego Trust & Savings Bank; Howard, Weill,
Labouisse, Fredrichs Inc.
M.B.A. and B.B.A.--Southern Methodist University
CORE GROWTH AND LARGE CAP GROWTH
55
<PAGE>
ORGANIZATION AND MANAGEMENT
CATHERINE SOMHEGYI, PARTNER
Chief Investment Officer--Global Equity Management
Joined firm in 1987; prior investment management experience with Professional
Asset Securities, Inc. and Pacific Century Advisers
M.B.A. and B.S.--University of Southern California
VALUE, EMERGING GROWTH, MINI CAP, BALANCED GROWTH, INCOME & GROWTH, AND GLOBAL
TECHNOLOGY
THOMAS BLEAKLEY, PARTNER
Portfolio Manager
Joined firm in 1995; 3 years prior investment management experience with
Twentieth Century Investors and Dell Computer Corporation
M.B.A.--University of Texas--Boston University
EMERGING GROWTH, MINI CAP, AND GLOBAL TECHNOLOGY
ANDREW B. GALLAGHER, PARTNER
Portfolio Manager
Joined firm in 1992; 7 years prior investment management experience with Pacific
Century Advisors and Sentinel Asset Management
M.B.A.--San Diego State University;
B.A.--University of California, Irvine
CORE GROWTH, LARGE CAP GROWTH, AND GLOBAL TECHNOLOGY
SANDRA DURN
Portfolio Manager
Joined firm in 1994; prior experience at Science Solutions, Inc. and San Diego
State University Economics Department (instructor)
M.A.--San Diego State University;
B.A.--University of Maryland
INCOME & GROWTH, GLOBAL GROWTH & INCOME, STRATEGIC INCOME, GLOBAL TECHNOLOGY
RONALD J. KRYSTYNIAK CFA
Portfolio Manager
Joined firm in 1996; 7 years prior investment management experience with Pilgrim
Baxter & Associates and Peterson Consulting & Company
B.S.--Syracuse University
EMERGING GROWTH, MINI CAP, AND GLOBAL TECHNOLOGY
MAREN LINDSTROM
Portfolio Manager
Joined firm in 1994; 5 years prior investment management experience with Societe
Generale; Banque D'Orsay; and Prudential Asset Management
M.B.A.--University of California, Los Angeles;
B.A.--University of Michigan
CORE GROWTH, INCOME & GROWTH, AND GLOBAL TECHNOLOGY
JOHN C. MCCRAW
Portfolio Manager
Joined firm in 1992; prior investment management experience with Nations Bank
M.B.A.--University of California, Irvine;
B.A.--Flagler College
EMERGING GROWTH, MINI CAP, AND GLOBAL TECHNOLOGY
MARK STUCKELMAN
Portfolio Manager, U.S. Systematic
Joined firm in 1995; 5 years experience with Wells Fargo Bank Investment
Management Group; Fidelity Management Trust Co.; and BARRA
M.B.A.--University of Pennsylvania/Wharton School;
B.A. -University of California, Berkeley
VALUE AND GLOBAL TECHNOLOGY
STAN ROGERS
Portfolio Manager
Joined firm in 1997; 7 years prior investment management experience with
Tennessee Consolidated Retirement System
B.A.--The University of the South
INCOME & GROWTH AND GLOBAL TECHNOLOGY
THOMAS J. SULLIVAN
Portfolio Manager
Joined firm in 1994; 2 years prior investment experience with Donaldson, Lufkin
& Jenrette Securities Corp.
B.S.--Rochester Institute of Technology
CORE GROWTH AND GLOBAL TECHNOLOGY
FIXED INCOME
FRED S. ROBERTSON, III, PARTNER
Chief Investment Officer--Fixed Income
Joined firm in 1995; 22 years prior investment management experience with
Criterion Investment Management Company and DuPont Chemical Pension Fund
M.B.A.--College of William and Mary;
B.S.--Cornell University
BALANCED GROWTH, FULLY DISCRETIONARY, SHORT INTERMEDIATE, HIGH YIELD BOND,
STRATEGIC INCOME, AND EMERGING MARKETS BOND
CATHERINE SOMHEGYI, PARTNER
Chief Investment Officer--Global Equity Management
Joined firm in 1987; prior investment management experience with Professional
Asset Securities Inc. and Pacific Century Advisers
M.B.A. and B.S.--University of Southern California
STRATEGIC INCOME
56
<PAGE>
JAMES E. KELLERMAN, PARTNER
Portfolio Manager
Joined firm in 1995; 20 years prior investment management experience with
Criterion Investment Management Company and Brown Brothers Harriman and
Equitable Life Insurance Co.
M.B.A.--St. John's University;
B.B.A.--Susquehanna University
BALANCED GROWTH, FULLY DISCRETIONARY, AND SHORT INTERMEDIATE
ALAN J. BROCHSTEIN
Portfolio Manager
Jointed firm in 1994; 8 years prior investment management experience with CS
First Boston Investment Management Group and Kidder Peabody & Co.
B.A.--Northwestern University
STRATEGIC INCOME
MALCOM S. DAY, CFA
Portfolio Manager
Joined firm in 1995; 3 years prior investment management experience with Payden
& Rygel
M.B.A.--University of California, Los Angeles;
B.S.--Northern University
BALANCED GROWTH, FULLY DISCRETIONARY, SHORT INTERMEDIATE, AND EMERGING MARKETS
BOND
DOUGLAS FORSYTH, CFA
Portfolio Manager
Joined firm in 1994; 3 years prior investment management experience with AEGON
USA
B.B.A.--University of Iowa
HIGH YIELD BOND AND STRATEGIC INCOME
JAN FRIEDLI
Portfolio Manager
Joined firm in 1997; 7 years prior investment management experience with Stone
Capital Management, PIMCO, and the Vanguard Group, Inc.
M.B.A.--University of Chicago, B.S. Villanova University
HIGH YIELD BOND AND EMERGING MARKETS BOND
SUSAN MALONE
Portfolio Manager
Joined firm in 1996; 7 years prior investment management experience with BEA
Associates
M.B.A.--New York University;
B.S.--Carnegie Mellon University
BALANCED GROWTH AND HIGH YIELD BOND
DAVID A. SMITH
Portfolio Manager
Joined firm in 1986; 13 years prior investment experience with Salomon Brothers;
Goldman Sachs and Kidder Peabody & Co.
M.B.A.--Wharton School of Finance (University of Pennsylvania);
B.S. and B.A.--Brown University
STRATEGIC INCOME
57
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
MUTUAL FUND CONSIDERATIONS
IN GENERAL
Prospective investors should know that any mutual fund investment is subject
to market fluctuations and other risks inherent in investing in securities.
There can be no assurance that your investment will increase in value. The value
of your investment will go up and down depending upon market forces and you may
not recoup your original investment. You should consider an investment in any of
the Funds as a long-term investment.
DERIVATIVE CONTRACTS AND SECURITIES CONSIDERATIONS
The term "derivative" traditionally applies to certain contracts that
"derive" their value from changes in the value of underlying securities,
currencies, commodities or indices. Investors refer to certain types of
securities that incorporate the performance characteristics of these contracts
as derivatives. Derivatives are sophisticated instruments that typically involve
a small investment of cash relative to the magnitude of risks assumed. These
include swap agreements, options, futures, and convertible securities. The Funds
seek to use derivative contracts and securities to reduce volatility and
increase total performance. While the price reaction of certain derivatives to
market changes may differ from traditional investments such as stocks and bonds,
derivatives do not necessarily present greater market risks than traditional
investments. Derivatives are also subject to credit risks related to the
counterparty's ability to perform, and any deterioration in the counterparty's
creditworthiness could adversely affect the instrument. The Funds will only use
derivatives in a manner consistent with their investment objectives, policies
and limitations.
GLOBAL INVESTING CONSIDERATIONS
CURRENCY FLUCTUATIONS. Because the assets of certain Funds may be invested
in instruments issued by foreign companies, the principal, income and sales
proceeds may be paid to the Funds in local foreign currencies. A reduction in
the value of local currencies relative to the U.S. dollar could mean a
corresponding reduction in the value of the Funds. The value of a foreign
security generally tends to decrease when the value of the U.S. dollar rises
against the foreign currency in which the security is denominated and tends to
increase when the value of the dollar falls against such currency. The Funds may
incur costs in connection with conversions between currencies.
SOCIAL, POLITICAL AND ECONOMIC FACTORS. The economies of many of the
countries where the Funds may invest may be subject to a substantially greater
degree of social, political and economic instability than the United States.
Such instability may result from, among other things, the following:
authoritarian governments; popular unrest associated with demands for improved
political, economic and social conditions; internal insurgencies and terrorist
activities; hostile relations with neighboring countries; and drug trafficking.
This instability might impair the financial conditions of issuers or disrupt the
financial markets in which the Funds invest.
The economies of foreign countries may differ favorably or unfavorably and
significantly from the economy of the United States in such respects as the rate
of growth of gross domestic product, rate of inflation, currency depreciation,
savings rates, fiscal balances, and balance of payments positions. Governments
of many foreign countries continue to exercise substantial control over private
enterprise and own or control many companies. Government actions could have a
significant impact on economic conditions in certain countries which could
affect the value of the securities of the Funds. For example, a foreign country
could nationalize an entire industry. In such a case, the Funds may not be
fairly compensated for their losses and might lose their entire investment in
the country involved.
The economies of certain foreign countries are heavily dependent upon
international trade and accordingly are affected by protective trade barriers
and the economic conditions of their trading partners. The enactment by the
United States or other principal trading partners of protectionist legislation
could have a significant adverse effect on the securities markets of these
countries. Some foreign countries (mostly in Africa and Latin America) are large
debtors of commercial banks, foreign governments, and supranational
organizations. These obligations, as well as future restructurings of debt, may
affect the economic performance and political and social stability of these
countries.
Hong Kong transferred its sovereignty from Great Britain to the People's
Republic of China in 1997. China has espoused policies antagonistic to free
enterprise capitalism and democracy. There can be no assurance that China will
continue to protect property rights in Hong Kong after 1997, although China has
moved toward free enterprise, and has established stock exchanges of its own.
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INFLATION. Certain foreign countries, especially many emerging countries,
have experienced substantial, and in some periods extremely high and volatile,
rates of inflation. Rapid fluctuations in inflation rates and wage and price
controls may continue to have unpredictable effects on the economies, companies
and securities markets of these countries.
MARKET CHARACTERISTICS
DIFFERENCES IN SECURITIES MARKETS. The securities markets in foreign
countries have substantially less trading volume than the markets in the United
States and debt and equity securities of many companies listed on such markets
may be less liquid and more volatile than comparable securities in the United
States. Some of the stock exchanges in foreign countries, to the extent that
established markets exist, are in the earlier stages of their development. The
limited liquidity of certain securities markets may affect the ability of each
Fund to buy and sell securities at the desired price and time. In addition, the
securities markets of some foreign countries are susceptible to being influenced
by large investors trading significant blocks of stocks.
Trading practices in certain foreign countries are also significantly
different from those in the United States. Local commercial, corporation and
securities laws govern the sale and resale of securities, and certain
restrictions may apply. Although brokerage commissions are generally higher than
those in the U.S., the Investment Adviser will seek to achieve the most
favorable net results. In addition, securities settlements and clearance
procedures may be less developed and less reliable than those in the United
States. Delays in settlement could result in temporary periods in which the
assets of the Funds are not fully invested, or could result in the a Fund being
unable to sell a security in a falling market.
CUSTODIAL AND REGISTRATION PROCEDURES. Systems for the registration and
transfer of securities in foreign markets can be less developed than similar
systems in the United States. There may be no standardized process for
registration of securities or a central registration system to track share
ownership. The process for transferring shares may be cumbersome, costly,
time-consuming and uncertain. For example, the share registrar may require a
shareholder to travel to that country to present required documentation before
buying or selling securities. In some instances, there may be no requirements to
maintain back-up shareholder records. Failure by the share registrar to properly
maintain shareholder records, protect the same against fire or computer virus,
or carry adequate insurance against such occurrences, potentially could result
in a loss of a Fund's investment in those securities.
GOVERNMENT SUPERVISION OF SECURITIES MARKETS. Disclosure and regulatory
standards in many foreign countries are in many respects less stringent than
those in the United States. There may be less government supervision and
regulation of securities exchanges, listed companies, investors, and brokers in
foreign countries than in the United States, and enforcement of existing
regulations may be extremely limited.
FINANCIAL INFORMATION AND REPORTING STANDARDS. Issuers in foreign countries
are generally subject to accounting, auditing, and financial standards and
requirements that differ, in some cases materially, from those in the United
States. In particular, the assets and profits appearing in financial statements
may not reflect their financial position or results in the way they would be
reflected had the statements been prepared in accordance with U.S. generally
accepted accounting principles. Consequently, financial data may not reflect the
true condition of those issuers and securities markets.
LOWER RATED SECURITIES
CONSIDERATIONS
The Strategic Income, High Yield Bond, Balanced Growth, Income & Growth,
Global Growth and Income, Emerging Markets Bond, Fully Discretionary Fixed
Income, Pacific Rim, Greater China and Latin America Funds each invest in
debt and convertible securities rated below investment grade. These
securities usually offer higher yields than higher rated securities but are
also subject to more risk than higher rated securities.
Lower-rated or unrated debt obligations are more likely to react to
developments affecting market and credit risks that are more high-rated
securities, which react primarily to movements in the past level of interest
rates. In the past, economic downturns or increases in interest rates caused a
higher incidence of default by issuers of lower-rated securities.
In some cases, such obligations may be highly speculative, and may have poor
prospects for reaching investment grade. To the extent the issuer defaults, the
Fund may incur additional expenses in order to enforce its rights or to
participate in a restructuring of the obligation. In addition, the prices of
lower-rated securities generally tend to be more volatile and the market less
liquid than those of higher-rated securities. Consequently, the Funds may at
times experience difficulty in liquidating their investments at the desired
times and prices.
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RISK FACTORS AND SPECIAL CONSIDERATIONS
The average percentages of assets invested by the Funds listed below in
bonds of each permissible rating, on a monthly dollar-weighted basis, were as
follows for the nine month period ended December 31,1997: Global Growth &
Income--AA- %; A- %; BBB- %; BB- %; B- %; CCC- %;
non-rated- %; Emerging Markets Bond--AA- %; A- %; BBB- %;
BB- %; B- %; CCC- %; non-rated- %; Latin America--AA-
%; A- %; BBB- %; BB- %; B- %; CCC- %;
non-rated- %; Income & Growth--AA- %; A- %; BBB- %;
BB- %; B- %; CCC- %; non-rated- %; Balanced Growth--AA- %;
A- %; BBB- %; BB- %; B- %; CCC- %; non-rated- %;
Fully Discretionary--AA- %; A- %; BBB- %;BB- %; B- %;
CCC- %; non-rated- %; Strategic Income--AA- %; A- %;
BBB- %; BB- %; B- %; CCC- %; non-rated- %; and High Yield
Bond--AA- %; A- %; BBB- %; BB- %; B- %; CCC- %;
non-rated- %. A description of the rating categories is contained in this
prospectus.
THE FUNDS' INVESTMENTS
EQUITY SECURITIES. Equity securities include common stocks, convertible
securities and warrants. The Funds may invest in growth companies, cyclical
companies, companies with smaller market capitalizations, or companies believed
to be undergoing a basic change in operations or markets. Although equity
securities have a history of long-term growth in value, their prices rise and
fall as a result of changes in the company's financial condition as well as
movements in the overall securities markets.
SMALLER ISSUERS. Smaller and medium sized issuers may be less seasoned,
have more limited product lines, markets, financial resources and management
depth, and be more susceptible to adverse market conditions than larger issuers.
As a result, the securities of such smaller issuers may be less actively traded
than those of larger issuers and may also experience greater market volatility.
CONVERTIBLE SECURITIES. A convertible security is a fixed income equity
security that may be converted into a prescribed amount of common stock at a
specified formula. A convertible security entitles the owner to receive interest
until the security matures or is converted. Convertibles have several unique
investment characteristics such as: (a) higher yields than common stocks but
lower yields than straight debt securities; (b) lesser degree of fluctuation in
value than the underlying stock since they have fixed income characteristics;
and (c) potential for capital appreciation if the market price of the underlying
security increases.
CORPORATE DEBT SECURITIES. Corporate debt securities are subject to the
risk of an issuer's inability to meet principal and interest payments on the
obligation (credit risk) and may also be subject to price volatility due to such
factors as interest rate sensitivity, market perception of the credit-worthiness
of the issuer and general market liquidity (market risk). When interest rates
decline, the value of the Funds' debt securities can be expected to rise, and
when interest rates rise, the value of those securities can be expected
to decline. Debt securities with longer maturities tend to be more sensitive to
interest rate movements than those with shorter maturities.
Debt obligations that are deemed investment grade carry a rating of at least
BAA from Moody's or BBB from Standard and Poor's, or a comparable rating from
another rating agency or, if not rated by an agency, determined by the
Investment Adviser to be of comparable quality. Bonds rated BBB or Baa may have
speculative characteristics and changes in economic circumstances are more
likely to lead to a weakened capacity to make interest and principal payments
than higher rated bonds. For a further explanation of these ratings, see the
Statement of Additional Information.
U.S. GOVERNMENT SECURITIES. U.S. Government securities are obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
Some U.S. Government securities such as U.S. Treasury bills, notes, bonds, and
certificates issued by the Government National Mortgage Association (GNMA) are
supported by the full faith and credit of the United States. Other U.S.
Government securities, such as securities issued by the Federal National
Mortgage Association (FNMA) and the Federal Home Loan Bank Board, are supported
by the right of the issuer to borrow from the U.S. Treasury. Still others, such
as the Student Loan Marketing Association, are supported only by the credit of
the issuer. U.S. Government securities may include zero coupon securities that
are issued or purchased at a significant discount from face value.
ZERO COUPON SECURITIES. The Income & Growth and Balanced Growth Funds may
invest up to 35% of their net assets in zero coupon securities issued or
guaranteed by the U.S. Government and its agencies and instrumentalities. These
securities are sold at a substantial discount from face value and redeemed at
face value at their maturity date without interim payments of principal and
interest. They may be subject to greater volatility than other securities. In
addition, because income is accrued on a current basis, a Fund may have to sell
other portfolio securities to make necessary income distributions.
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MORTGAGE RELATED SECURITIES. The High Yield Bond, Strategic Income,
Short-Intermediate and Fully Discretionary Funds may invest in mortgage-related
securities and Collateralized Mortgage Obligations (CMO's). CMO's are debt
obligations collateralized by a pool of mortgage loans or mortgage passes-
through securities. Typically CMOs are collateralized by certificates issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, such as
GNMA. GNMA certificates are mortgaged-backed securities representing part
ownership of a pool of mortgage loans, which are issued by lenders such as
mortgage bankers, commercial banks, and savings associations, and are either
insured by the Federal Housing Administration or the Veterans Administration.
ASSET BACKED SECURITIES. The non-mortgage-related asset-backed securities
in which the High Yield Bond, Strategic Income, Short-Intermediate and Fully
Discretionary Funds invest include, but are not limited to, interests in pools
of receivables, such as credit card and accounts receivables and motor vehicle
and other installment purchase obligations and leases. Interests in these pools
are not backed by the U.S. Government and may or may not be secured.
The credit characteristic of asset-backed securities differs in a number of
respects from that of traditional debt securities. Asset-backed securities
generally do not have the benefit of a security interest in collateral that is
comparable to other debt obligations, and there is a possibility that recoveries
on repossessed collateral may not be available to support payment on these
securities
SOVEREIGN DEBT SECURITIES. Certain Funds may invest in sovereign debt
securities issued by governments of foreign countries. The sovereign debt in
which the Funds may invest may be rated below investment grade. These securities
usually offer higher yields than higher rated securities but are also subject to
greater risk than higher rated securities.
BRADY BONDS. The Pacific Rim, Greater China and Latin America Funds may
invest in a type of sovereign debt known as Brady Bonds. These obligations were
created under a debt restructuring plan introduced by former U.S. Secretary of
the Treasury, Nicholas F. Brady, in which foreign entities issued these
obligations in exchange for their existing commercial bank loans. Brady Bonds
have been issued by Argentina, Brazil, Costa Rica, Dominican Republic, Mexico,
Philippines, Uruguay and Venezuela, and may be issued by other emerging
countries.
INVESTMENT COMPANY SECURITIES. Each Fund may invest up to 10% of its total
assets in the shares of other investment companies. The Funds may invest in
money market mutual funds in connection with the management of their daily cash
positions. The Funds may also make indirect foreign investments through other
investment companies that have comparable investment objectives and policies as
the Funds. In addition to the advisory and operational fees each Fund bears
directly in connection with its own operation, the Funds would also bear their
pro rata portions of each other investment company's advisory and operational
expenses.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net assets in
securities that are considered illiquid. An illiquid investment is generally an
investment that is not registered in the under U.S. securities laws, or cannot
be disposed of within seven days in the normal course of business at
approximately the amount at which the Fund values it. Limitations on resale may
adversely affect the marketability of illiquid securities and the Fund may not
be able to dispose of these securities at the desired time and price. A Fund may
bear additional expenses if it has to register these securities under U.S.
securities laws before being resold.
TEMPORARY INVESTMENTS. The Funds may from time to time on a temporary
basis to maintain liquidity or when the Investment Adviser determines that
the market conditions call for a temporary defensive posture, invest all of
their assets in short-term instruments. These temporary investments include:
notes issued or guaranteed by the U.S. government, its agencies or
instrumentalities; commercial paper rated in the highest two rating
categories; certificates of deposit; repurchase agreements and other high
grade corporate debt securities.
THE FUNDS' INVESTMENT TECHNIQUES
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements that
is the purchase by the Fund of a security that seller has agreed to buy back,
usually within one to seven days. The seller's promise to repurchase the
security is fully collateralized by securities equal in value to 102% of the
purchase price, including accrued interest. If the seller defaults and the
collateral value declines, the Fund might incur a loss. If the seller declares
bankruptcy, the Fund may not be able to sell the collateral at the desired time.
The Funds enter into these agreements only
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RISK FACTORS AND SPECIAL CONSIDERATIONS
with brokers, dealers, or banks that meet credit quality standards established
by the Board of Trustees.
SECURITIES SWAPS. Each of the Global Blue Chip, Emerging Markets Bond,
Pacific Rim, Greater China and Latin America Funds may enter into securities
swaps. Securities swaps represent a technique primarily used to indirectly
participate in the securities market of a country from which a Fund would
otherwise be precluded for lack of an established securities custody and
safekeeping system. The Fund deposits an amount of cash with its custodian (or
the broker, if legally permitted) in an amount equal to the selling price of the
underlying security. Thereafter, the Fund pays or receives cash from the broker
equal to the change in the value of the underlying security.
SHORT SALES. A "short sale" is the sale by the Fund of a security which has
been borrowed from a third party on the expectation that the market price will
drop. If the price of the security drops, the Fund will make a profit by
purchasing the security in the open market at lower price than at which it sold
the security. If the price of the security rises, the Fund may have to cover its
short position at a higher price than the short sale price, resulting in a loss.
A short sale can be covered or uncovered. In a covered short sale, the Fund
either (1) borrows and sells securities it already owns (also known as a short
sale "against the box"), or (2) deposits in a segregated account cash, U.S.
government securities, or other liquid securities in an amount equal to the
difference between the market value of the securities and the short sale price.
Use of uncovered short sales is a speculative investment technique and has
potentially unlimited risk. Accordingly, a Fund will not make uncovered short
sales in an amount exceeding the lesser of 2% of the Fund's net assets or 2% of
the securities of such class of the issuer. The Board of Trustees has determined
that no Fund will make short sales if to do so would create liabilities or
require collateral deposits of more than 25% of the Fund's total assets.
WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS. Each Fund may purchase or
sell securities for delivery at a future date, generally 15 to 45 days after the
commitment is made. The other party's failure to complete the transaction may
cause the Fund to miss a price or yield considered to be advantageous. A Fund
may not purchase when-issued securities or enter into firm commitments if, as a
result, more than 15% of the Fund's net assets would be segregated to cover such
securities.
BORROWING. Each Fund may borrow up to 20% of its total assets for
temporary, extraordinary or emergency purposes. Each Fund may also borrow money
through reverse repurchase agreements, uncovered short sales, and other
techniques. All borrowings by a Fund cannot exceed one-third of a Fund's total
assets. As a consequence of borrowing, a Fund will incur obligations to pay
interest, resulting in an increase in expenses.
SECURITIES LENDING. Each Fund may lend securities to financial institutions
such as banks, broker/ dealers and other recognized institutional investors in
amounts up to 30% of the Fund's total assets. These loans earn income for the
Fund and are collateralized by cash, securities, letters of credit or any
combination thereof. The Fund might experience loss if the financial institution
defaults on the loan.
FOREIGN CURRENCY TRANSACTIONS. Each Fund investing in foreign securities
may enter into foreign currency transactions either on a spot or cash basis at
prevailing rates or through forward foreign currency exchange contracts in order
to have the necessary currencies to settle transactions. Each such Fund may also
enter into foreign currency transactions to protect Fund assets against adverse
changes in foreign currency exchange rates. Such efforts could limit potential
gains that might result from a relative increase in the value of such
currencies, and might, in certain cases, result in losses to a Fund.
OPTIONS. Each Fund may deal in options on securities, securities indices
and foreign currencies. The Funds may use options to manage stock prices,
interest rate and currency risks. A Fund may not purchase or sell options if
more than 25% of its net assets would be hedged. The Funds may also write
covered call options and secured put options to seek to generate income or lock
in gains on up to 25% of their net assets.
FUTURES AND OPTIONS ON FUTURES. Each Fund may enter into futures contracts,
or options thereon, involving foreign currency, interest rates, securities, and
securities indices, for hedging purposes only. A stock index futures contract is
a bilateral agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of the last trading day of
the contract and the price at which the futures contract is originally struck.
No physical delivery of the underlying stocks in the index is made. As a general
rule, no Fund will purchase or sell futures if, immediately thereafter, more
than 25% of its net assets would be hedged.
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<PAGE>
RISKS OF FUTURES AND OPTIONS TRANSACTIONS. When a Fund uses options,
futures and options on futures as hedging devices, there is a risk that the
prices of the hedging vehicles may not correlate perfectly with the prices of
the securities in the portfolio. This may cause the futures contract and any
related options to react differently than the Fund's portfolio securities to
market changes. In addition, the Investment Adviser could be incorrect in its
expectations about the direction or the extent of market movements. In these
events, a Fund could lose money on the futures contracts or option.
It is not certain that a secondary market for positions in futures contracts
or for options will exist at all times. Although the Investment Adviser will
consider liquidity before entering into these transactions, there is no
assurance that a liquid secondary market will exist for these instruments.
NON-HEDGING STRATEGIC TRANSACTIONS. Each Fund's options, futures and swap
transactions will generally be entered into for hedging purposes--to protect
against possible changes in the market values of securities held in or to be
purchased for the Fund's portfolio resulting from securities markets, currency,
or interest rate fluctuations, to protect the Fund's unrealized gains in the
values of its portfolio securities, to facilitate the sale of such securities
for investment purposes, to manage the effective maturity or duration of the
Fund's portfolio, or to establish a position in the derivatives markets as a
temporary substitute for purchase or sale of particular securities. However, in
addition to the hedging transactions referred to above, the Strategic Income,
Fully Discretionary, Short-Intermediate, Global Blue Chip, Emerging Markets
Bond, Pacific Rim, Greater China and Latin America Funds may enter into options,
futures and swap transactions to enhance potential gain in circumstances where
hedging is not involved. A Fund's net loss exposure resulting from transactions
entered into for such purposes will not exceed 5% of the Fund's net assets at
any one time and , to the extent necessary, the Fund will close out transactions
in order to comply with this limitation. Such transactions are subject to the
limitations described above under "Options" and "Futures and Options on
Futures."
CORPORATE BOND RATINGS
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS
Aaa--Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes are most unlikely to impair the fundamentally strong
position of such issues.
Aa--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A--Bonds Rated A possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered medium-grade obligations (I.E., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or maintenance of other terms of
the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked short-comings.
C--Bonds rated C are the lowest-rated class of bonds, and such issues can be
regarding as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modified 1 indicates that the security ranks in the higher end of its generic
rating
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RISK FACTORS AND SPECIAL CONSIDERATIONS
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
DESCRIPTION OF S&P'S CORPORATE BOND RATINGS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB--rating.
CCC--Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B -Rating.
CC--Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C--The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC-debt rating. The C rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
CI--The rating CI is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
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NICHOLAS-APPLEGATE MUTUAL FUNDS
FORM N-1A
PART B: STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information of Nicholas-Applegate Mutual Funds
Class I Shares filed on December 15, 1997 with the Securities and Exchange
Commission as part of Post-Effective Amendment No. 48 to Registrant's Form N-1A
Registration Statement is incorporated herein by reference.
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FORM N-1A
PART C: OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
a. Financial Statements
The Schedules of Investments as of March 31, 1997, Statements of
Assets and Liabilities as of March 31, 1997, Statements of Changes in
Net Assets for the period ended March 31, 1997, and related Notes and
Report of Independent Auditors with respect to Registrant's
Institutional Portfolios, the predecessors to the Class I shares of
Registrant's corresponding Funds which are the subject of this
Amendment to Registration Statement, are incorporated by reference in
Part B.
The Schedules of Investments as of September 30, 1997, Statements of
Assets and Liabilities as of September 30, 1997, and related Notes
with respect to Registrant's Institutional Portfolios, the
predecessors to the Class I shares of Registrant's corresponding
Funds which are the subject of this Amendment to Registration
Statement, are incorporated by reference in Part B.
b. Exhibits:
(1.1) Certificate of Trust of Registrant (f).
(1.2) Certificate of Amendment to Certificate of Trust of
Registrant (f).
(1.3) Amended and Restated Declaration of Trust of Registrant (f).
(1.4) Certificate of Trustees dated August 6, 1993, establishing
Emerging Growth Portfolio series (f).
(1.5) Certificate of Trustees dated December 15, 1993,
establishing International Growth Portfolio series (f).
(1.6) Amendment No. 2 to Amended and Restated Declaration of Trust
(f).
(1.7) Amendment No. 3 to Amended and Restated Declaration of Trust
(f).
(1.8) Amendment No. 4 to Amended and Restated Declaration of Trust
(f).
(1.9) Amendment No. 5 to Amended and Restated Declaration of Trust
(f).
(1.10) Amendment No. 6 to Amended and Restated Declaration of Trust
(f).
(1.11) Amendment No. 7 to Amended and Restated Declaration of Trust
(f).
(1.12) Form of Amendment No. 8 to Amended and Restated Declaration
of Trust (f).
(1.13) Amendment No. 9 to Amended and Restated Declaration of Trust
(f).
(1.14) Form of Amendment No. 10 to Amended and Restated Declaration
of Trust (b).
(1.15) Amendment No. 11 to Amended and Restated Declaration of
Trust (i).
C-1
<PAGE>
(1.16) Form of Amendment No. 12 to Amended and Restated Declaration
of Trust (i).
(1.17) Amendment No. 13 to Amended and Restated Declaration of
Trust (j).
(1.18) Form of Amendment No. 14 to Amended and Restated Declaration
of Trust (j).
(1.19) Form of Amendment No. 15 to Amended and Restated Declaration
of Trust (m).
(1.20) Form of Amendment No. 16 to Amended and Restated Declaration
of Trust (r).
(1.21) Form of Amendment No. 17 to Amended and Restated Declaration
of Trust (r).
(1.22) Form of Amendment No. 18 to Amended and Restated Declaration
of Trust (r).
(2.1) Amended Bylaws of Registrant (f).
(2.2) Amendment to Section 2.5 of Bylaws of Registrant (f).
(3) None.
(4) None.
(5.1) Form of Investment Advisory Agreement between Registrant and
Nicholas-Applegate Capital Management, with respect to
Global Blue Chip Fund, Emerging Markets Bond Fund, Pacific
Rim Fund, Greater China Fund and Latin America Fund (n).
(5.2) Form of Sub-Advisory Agreement between Registrant and
Nicholas-Applegate Capital Management-Hong Kong, with
respect to the Pacific Rim Fund and Greater China Fund (n).
(5.3) Form of Sub-Advisory Agreement between Registrant and
Nicholas-Applegate Capital Management-Asia, with respect to
the Pacific Rim Fund and Greater China Fund (n).
(5.4) Amended form of letter agreement between Registrant and
Nicholas-Applegate Capital Management adding the Class A, B,
C, Q and I shares of Registrant's additional Funds to the
Investment Advisory Agreement (s).
(6.1) Distribution Agreement between Registrant and
Nicholas-Applegate Securities dated as of April 19, 1993
(f).
(6.2) Letter agreement between Registrant and Nicholas-Applegate
Securities dated May 17, 1993, adding certain Institutional
(formerly Qualified) Portfolio series and Emerging Growth
Portfolio series to Distribution Agreement (f).
(6.3) Letter agreement between Registrant and Nicholas-Applegate
Securities dated December 15, 1993, adding International
Growth Portfolio series to Distribution Agreement (f).
(6.4) Letter agreement between Registrant and Nicholas-Applegate
Securities dated April 22, 1994, adding Qualified Portfolio
series to Distribution Agreement (f).
(6.5) Letter agreement between Registrant and Nicholas-Applegate
Securities, adding Emerging Countries Growth Portfolio
series, Global Growth & Income Portfolio series and Mini-Cap
Growth Portfolio series to Distribution Agreement (f).
(6.6) Letter agreement between Registrant and Nicholas-Applegate
Securities, adding Series B Portfolios to Distribution
Agreement (f).
C-2
<PAGE>
(6.7) Letter agreement between Registrant and Nicholas-Applegate
Securities, adding Fixed Income and Qualified Portfolio
series to Distribution Agreement (f).
(6.8) Form of letter agreement between Registrant and
Nicholas-Applegate Securities, adding Value Institutional
Portfolio series to Distribution Agreement (a).
(6.9) Form of letter agreement between Registrant and
Nicholas-Applegate Securities, adding High Yield Bond and
Strategic Income Institutional Portfolio series to
Distribution Agreement (b).
(6.10) Form of letter agreement between Registrant and
Nicholas-Applegate Securities adding Large Cap Growth and
Core Growth International Portfolio series to Distribution
Agreement (i).
(6.11) Form of letter agreement between Registrant and
Nicholas-Applegate Securities adding Core Growth
International Portfolio C series to Distribution Agreement
(i).
(6.12) Form of letter agreement between Registrant and
Nicholas-Applegate Securities adding Large Cap Growth
Portfolio A, B, C and Q series to Distribution Agreement
(j).
(6.13) Form of letter agreement between Registrant and
Nicholas-Applegate Securities, adding Global Blue Chip Fund,
Emerging Markets Bond Fund, Pacific Rim Fund, Greater China
Fund and Latin America Fund to Distribution Agreement (n).
(6.14) Amended form of letter agreement between Registrant and
Nicholas-Applegate Securities adding the Class A, B, C, Q
and I shares of Registrant's additional Funds to the
Distribution Agreement (s).
(7) None.
(8.1) Custodian Services Agreement between Registrant and PNC Bank
dated as of April 1, 1993 (f).
(8.2) Letter agreement between Registrant and PNC Bank dated July
19, 1993, adding certain Institutional (formerly Qualified)
Portfolio series to Custodian Services Agreement (f).
(8.3) Letter agreement between Registrant and PNC Bank dated
August 20, 1993, adding Emerging Growth Portfolio series to
Custodian Services Agreement (f).
(8.4) Letter agreement between Registrant and PNC Bank dated
December 15, 1993, adding International Growth Portfolio
series to Custodian Services Agreement (f).
(8.5) Letter agreement between Registrant and PNC Bank dated April
22, 1994, adding Core Growth Qualified Portfolio series to
Custodian Services Agreement (f).
(8.6) Letter agreement between Registrant and PNC Bank, adding
Emerging Countries Growth Portfolio series, Global Growth &
Income Portfolio series and Mini-Cap Growth Portfolio series
to Custodian Services Agreement (f).
(8.7) Letter agreement between Registrant and PNC Bank, adding
Series B Portfolios to Custodian Services Agreement (f).
(8.8) Letter agreement between Registrant and PNC Bank, adding
Fixed Income Portfolio series to Custodian Services
Agreement (f).
(8.9) Form of letter agreement between Registrant and PNC Bank
adding Value Institutional Portfolio series to Custodian
Services Agreement (a).
C-3
<PAGE>
(8.10) Form of letter agreement between Registrant and PNC Bank
adding High Yield Bond and Strategic Income Institutional
Portfolio series to Custodian Services Agreement (b).
(8.11) Form of letter agreement between Registrant and PNC Bank
adding Large Cap Growth and Core Growth International
Portfolio series to Custodian Services Agreement (i).
(8.12) Form of letter agreement between Registrant and PNC Bank
adding Core Growth International Portfolio C series to
Custodian Services Agreement (i).
(8.13) Form of letter agreement between Registrant and PNC Bank
adding Large Cap Growth Portfolio A, B, C and Q series to
Custodian Services Agreement (j).
(8.14) Form of letter agreement between Registrant and PNC Bank,
adding Global Blue Chip Fund and Emerging Markets Bond Fund
to Custodian Services Agreement (l).
(8.15) Form of letter agreement between Registrant and PNC Bank
with respect to custodian services fees related to the
Global Blue Chip Fund and the Emerging Markets Bond Fund
(m).
(8.16) Form of letter agreement between Registrant and PNC Bank,
adding Pacific Rim Fund, Greater China Fund and Latin
America Fund to Custodian Services Agreement (n).
(8.17) Form of letter agreement between Registrant and PNC Bank,
adding the Class A, B, C, Q and I shares of Registrant's
additional Funds to Custodian Services Agreement (o).
(8.18) Form of Sub-Custodian Agreement among Registrant, PNC Bank
and Chase Manhattan Bank, with respect to Global Blue Chip
Fund, Emerging Markets Bond Fund, Greater China Fund,
Pacific Rim Fund and Latin America Fund (o).
(8.19) Amended form of letter agreement among Registrant, PNC Bank
and Chase Manhattan Bank, adding the Class A, B, C, Q and I
shares of Registrant's additional Funds to Sub-Custodian
Agreement (s).
(9.1) Form of amended Administration Agreement between Registrant
and Investment Company Administration Corporation (o).
(9.2) Administrative Services Agreement between Registrant and
Nicholas-Applegate Capital Management dated as of November
18, 1996 (i).
(9.3) Transfer Agency and Service Agreement between Registrant and
State Street Bank and Trust Company dated as of April 1,
1993 (f).
(9.4) Letter agreement between Registrant and State Street Bank
and Trust Company dated July 19, 1993, adding certain
Institutional (formerly Qualified) Portfolio series to
Transfer Agency and Service Agreement (f).
(9.5) Letter agreement between Registrant and State Street Bank
and Trust Company dated August 20, 1993, adding Emerging
Growth Portfolio Series to Transfer Agency and Service
Agreement (f).
(9.6) Letter agreement between Registrant and State Street Bank
and Trust Company dated December 15, 1993, adding
International Growth Portfolio series to Transfer Agency and
Service Agreement (f).
(9.7) Letter agreement between Registrant and State Street Bank
and Trust Company dated April 22, 1994, adding Core Growth
Qualified Portfolio series to Transfer Agency and Service
Agreement (f).
C-4
<PAGE>
(9.8) Letter agreement between Registrant and State Street Bank
and Trust Company, adding Emerging Countries Growth
Portfolio series, Global Growth & Income Portfolio series
and Mini-Cap Growth Portfolio series to Transfer Agency and
Service Agreement (f).
(9.9) Letter agreement between Registrant and State Street Bank
and Trust Company, adding Series B Portfolios to Transfer
Agency and Service Agreement (f).
(9.10) Form of letter agreement between Registrant and State Street
Bank and Trust Company, adding Fixed Income Portfolio series
to Transfer Agency and Service Agreement (f).
(9.11) Form of letter agreement between Registrant and State Street
Bank and Trust Company, adding Value Institutional Portfolio
series to Transfer Agency and Service Agreement (a).
(9.12) Form of letter agreement between Registrant and State Street
Bank and Trust Company, adding High Yield Bond and Strategic
Income Institutional Portfolio series to Transfer Agency and
Service Agreement (b).
(9.13) Form of letter agreement between Registrant and State Street
Bank and Trust Company, adding Large Cap Growth and Core
Growth International Portfolio series to Transfer Agency and
Service Agreement (i).
(9.14) Form of letter agreement between Registrant and State Street
Bank and Trust Company adding Core Growth International
Portfolio C series to Transfer Agency and Service Agreement
(i).
(9.15) Form of letter agreement between Registrant and State Street
Bank and Trust Company adding Large Cap Growth Portfolio A,
B, C and Q series to Transfer Agency and Service Agreement
(j).
(9.16) Form of letter agreement between Registrant and State Street
Bank and Trust Company, adding Global Blue Chip Fund and
Emerging Markets Bond Fund to Transfer Agency and Service
Agreement (l).
(9.17) Form of letter agreement between Registrant and State Street
Bank and Trust Company, adding Pacific Rim Fund, Greater
China Fund and Latin America Fund to Transfer Agency and
Service Agreement (n).
(9.18) Amended form of letter agreement between Registrant and
State Street Bank and Trust Company, adding the Class A, B,
C, Q and I shares of Registrant's additional Funds to
Transfer Agency and Service Agreement (s)
(9.19) Form of amended Shareholder Service Plan between Registrant
and Nicholas-Applegate Securities (o).
(9.20) License Agreement dated as of December 17, 1992, between
Registrant and Nicholas-Applegate Capital Management (f).
(9.21) Accounting Services Agreement between Registrant and PFPC
Inc. dated as of April 1, 1993 (f).
(9.22) Letter agreement between Registrant and PFPC Inc. dated July
19, 1993, adding certain Institutional (formerly Qualified)
Portfolio series to Accounting Services Agreement (f).
(9.23) Letter agreement between Registrant and PFPC Inc. dated
August 20, 1993, adding Emerging Growth Portfolio series to
Accounting Services Agreement (f).
C-5
<PAGE>
(9.24) Letter agreement between Registrant and PFPC Inc. dated
December 15, 1993, adding International Growth Portfolio
series to Accounting Services Agreement (f).
(9.25) Letter agreement between Registrant and PFPC Inc. dated
April 22, 1994, adding Core Growth Qualified Portfolio
series to Accounting Services Agreement (f).
(9.26) Letter agreement between Registrant and PFPC Inc., adding
Emerging Countries Growth Portfolio series, Global Growth &
Income Portfolio series and Mini-Cap Growth Portfolio series
to Accounting Services Agreement (f).
(9.27) Letter agreement between Registrant and PFPC Inc., adding
Series B Portfolios to Accounting Services Agreement (f).
(9.28) Letter agreement between Registrant and PFPC Inc., adding
Fixed Income Portfolio series to Accounting Services
Agreement (f).
(9.29) Form of letter agreement between Registrant and PFPC Inc.
adding Value Institutional Portfolio series to Accounting
Services Agreement (a).
(9.30) Form of letter agreement between Registrant and PFPC Inc.
adding High Yield Bond and Strategic Income Institutional
Portfolio series to Accounting Services Agreement (b).
(9.31) Form of letter agreement between Registrant and PFPC Inc.
adding Large Cap Growth and Core Growth International
Portfolio series to Accounting Services Agreement (i).
(9.32) Form of letter agreement between Registrant and PFPC Inc.
adding Core Growth International Portfolio C series to
Accounting Services Agreement (i).
(9.33) Form of letter agreement between Registrant and PFPC Inc.
adding Large Cap Growth Portfolio A, B, C and Q series to
Accounting Services Agreement (j).
(9.34) Form of letter agreement between Registrant and PFPC Inc.,
adding Global Blue Chip Fund and Emerging Markets Bond Fund
to Accounting Services Agreement (l).
(9.35) Form of letter agreement between Registrant and PFPC Inc.
with respect to accounting services fees related to the
Global Blue Chip Fund and the Emerging Markets Bond Fund
(m).
(9.36) Form of letter agreement between Registrant and PFPC Inc.
adding the Pacific Rim Fund, Greater China Fund and Latin
America Fund (n).
(9.37) Form of letter agreement between Registrant and PFPC Inc.
regarding fees for additional Funds under Accounting
Services Agreement (o).
(9.38) Amended form of letter agreement between Registrant and PFPC
Inc., adding the Class A, B, C, Q and I shares of
Registrant's additional Funds to Accounting Service
Agreement (s).
(9.39) Letter agreement between Registrant and Nicholas-Applegate
Capital Management dated September 27, 1993 regarding
expense reimbursements (f).
(9.40) Form of letter agreement between Registrant and
Nicholas-Applegate Capital Management, adding Global Blue
Chip Fund, Emerging Markets Bond Fund, Pacific Rim Fund,
Greater China Fund and Latin America Fund to agreement
regarding expense reimbursement (n).
(9.41) Amended form of letter agreement between Registrant and
Nicholas-Applegate Capital Management, adding the Class A,
B, C, Q and I shares of Registrant's additional Funds to
agreement regarding expense reimbursement (s).
C-6
<PAGE>
(9.42) Credit Agreement among Registrant, Chemical Bank and certain
other banks dated April 10, 1996 (f).
(9.43) First Amendment Agreement to Credit Agreement dated as of
April 9, 1997 among Registrant, The Chase Manhattan Bank,
and certain other banks (l).
(9.44) Form of Second Amendment Agreement to Credit Agreement among
Registrant, The Chase Manhattan Bank, and certain other
banks (n).
(10) Opinion of Counsel (c).
(11) Consent of independent auditors.
(12) Not Applicable.
(13) Investment Letter of initial investor in Registrant dated
April 1, 1993 (f).
(14.1) IRA Plan Materials (d).
(14.2) 401(k) Profit-Sharing Plan Materials (d).
(15.1) Amended Distribution Plan of Registrant (f)
(15.2) Form of further Amendment to Distribution Plan of Registrant
(o).
(16) Schedule of Computation of Performance Quotations (c).
(17.1) Financial Data Schedule as of March 31, 1997 (p).
(17.2) Financial Data Schedule as of September 30, 1997 (q).
(18) Not Applicable.
(19.1) Limited Powers of Attorney of Trustees (d).
(19.2) Limited Power of Attorney of Walter E. Auch (e).
(19.3) Limited Power of Attorney of John D. Wylie (h).
(19.4) Certified Resolution of Board of Trustees of Registrant
regarding Limited Power of Attorney of John D. Wylie (h).
(19.5) Limited Power of Attorney of Thomas Pindelski (k).
(19.6) Certified Resolution of Board of Trustees regarding Limited
Power of Attorney of Thomas Pindelski (k).
______________________________
(a) Filed as an Exhibit to Amendment No. 28 to Registrant's Form N-1A
Registration Statement on January 19, 1996 and incorporated herein by
reference.
(b) Filed as an Exhibit to Amendment No. 29 to Registrant's Form N-1A
Registration Statement on May 3, 1996 and incorporated herein by reference.
(c) Filed as an Exhibit to Amendment No. 1 to Registrant's Form N-1A
Registration Statement on March 15, 1993 and incorporated herein by
reference.
C-7
<PAGE>
(d) Filed as an Exhibit to Amendment No. 12 to Registrant's Form N-1A
Registration Statement on August 1, 1994 and incorporated herein by
reference.
(e) Filed as an Exhibit to Amendment No. 14 to Registrant's Form N-1A
Registration Statement on September 26, 1994 and incorporated herein by
reference.
(f) Filed as an Exhibit to Amendment No. 32 to Registrant's Form N-1A
Registration Statement on June 3, 1996 and incorporated herein by
reference.
(g) Filed as an Exhibit to Amendment No. 37 to Registrant's Form N-1A
Registration Statement on October 15, 1996 and incorporated herein by
reference.
(h) Filed as an Exhibit to Amendment No. 38 to Registrant's Form N-1A
Registration Statement on October 25, 1996 and incorporated herein by
reference.
(i) Filed as an Exhibit to Amendment No. 40 to Registrant's Form N-1A
Registration Statement on January 3, 1997 and incorporated herein by
reference.
(j) Filed as an Exhibit to Amendment No. 42 to Registrant's Form N-1A
Registration Statement on May 1, 1997 and incorporated herein by reference.
(k) Filed as an Exhibit to Amendment No. 44 to Registrant's Form N-1A
Registration Statement on May 22, 1997 and incorporated herein by
reference.
(l) Filed as an Exhibit to Amendment No. 45 to Registrant's Form N-1A
Registration Statement on July 14, 1997 and incorporated herein by
reference.
(m) Filed as an Exhibit to Amendment No. 47 to Registrant's Form N-1A
Registration Statement on July 28, 1997 and incorporated herein by
reference.
(n) Filed as an Exhibit to Amendment No. 49 to Registrant's Form N-1A
Registration Statement on September 2, 1997 and incorporated herein by
reference.
(o) Filed as an Exhibit to Registrant's Form N-14 Registration Statement on
December 5, 1997 and incorporated herein by reference.
(p) Filed as an Exhibit to Registrant's Form N-SAR on June 9, 1997 and
incorporated herein by reference.
(q) Filed as an Exhibit to Registrant's Form N-SAR on December 12, 1997 and
incorporated herein by reference.
(r) Filed as an Exhibit to Amendment No. 50 to Registrant's Form N-1A
Registration Statement on December 15, 1997 and incorporated herein by
reference.
(s) Filed as an Exhibit to Amendment No. 52 to Registrant's Form N-1A
Registration Statement on December 29, 1997 and incorporated herein by
reference.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
C-8
<PAGE>
Item 26. NUMBER OF HOLDERS OF SECURITIES.
As of November 30, 1997, the number of record holders of each series
of Registrant was as follows:
<TABLE>
<CAPTION>
Title of Series Number of Record Holders
--------------- ------------------------
<S> <C>
Large Cap Growth Portfolio A 58
Core Growth Portfolio A 6,438
Emerging Growth Portfolio A 10,733
Income & Growth Portfolio A 2,496
Balanced Growth Portfolio A 930
Government Income Portfolio A 492
Money Market Portfolio 853
International Core Growth Portfolio A 315
Worldwide Growth Portfolio A 2,044
International Small Cap Growth Portfolio A 799
Emerging Countries Portfolio A 4,598
Large Cap Growth Portfolio B 116
Core Growth Portfolio B 3,351
Emerging Growth Portfolio B 4,273
Income & Growth Portfolio B 1,521
Balanced Growth Portfolio B 347
Government Income Portfolio B 240
International Core Growth Portfolio B 465
Worldwide Growth Portfolio B 810
International Small Cap Growth Portfolio B 688
Emerging Countries Portfolio B 3,713
Large Cap Growth Portfolio C 31
Core Growth Portfolio C 12,653
Emerging Growth Portfolio C 16,227
Income & Growth Portfolio C 5,208
Balanced Growth Portfolio C 1,278
Government Income Portfolio C 475
International Core Growth Portfolio C 186
Worldwide Growth Portfolio C 5,531
International Small Cap Growth Portfolio C 866
Emerging Countries Portfolio C 3,069
Large Cap Growth Institutional Portfolio 39
Core Growth Institutional Portfolio 183
Emerging Growth Institutional Portfolio 185
Income & Growth Institutional Portfolio 121
Balanced Growth Institutional Portfolio 28
International Core Growth Institutional Portfolio 71
Worldwide Growth Institutional Portfolio 79
International Small Cap Growth Institutional Portfolio 81
Emerging Countries Institutional Portfolio 204
Mini Cap Growth Institutional Portfolio 317
Fully Discretionary Institutional Fixed Income Portfolio 13
Short-Intermediate Institutional Fixed Income Portfolio 15
Value Institutional Portfolio 49
High Yield Bond Institutional Portfolio 25
Strategic Income Institutional Portfolio 20
Global Growth & Income Institutional Portfolio 50
Large Cap Growth Qualified Portfolio 12
Core Growth Qualified Portfolio 193
Emerging Growth Qualified Portfolio 75
C-9
<PAGE>
Income & Growth Qualified Portfolio 10
Balanced Growth Qualified Portfolio 9
Government Income Qualified Portfolio 9
International Core Growth Qualified Portfolio 25
Worldwide Growth Qualified Portfolio 9
International Small Cap Growth Qualified Portfolio 12
Emerging Countries Qualified Portfolio 1,678
Emerging Markets Bond Institutional Portfolio 16
Global Blue Chip Fund 80
</TABLE>
C-10
<PAGE>
Item 27. INDEMNIFICATION.
Registrant's trustees, officers, employees and agents against
liabilities incurred by them in connection with the defense or disposition of
any action or proceeding in which they may be involved or with which they may be
threatened, while in office or thereafter, by reason of being or having been in
such office, except with respect to matters as to which it has been determined
that they acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their office
("Disabling Conduct").
Section 8 of Registrant's Administration Agreement, filed herewith as
Exhibit 9.1, provides for the indemnification of Registrant's Administrator
against all liabilities incurred by it in performing its obligations under the
Agreement, except with respect to matters involving its Disabling Conduct.
Section 9 of Registrant's Distribution Agreement, filed herewith as Exhibit 6,
provides for the indemnification of Registrant's Distributor against all
liabilities incurred by it in performing its obligations under the Agreement,
except with respect to matters involving its Disabling Conduct. Section 4 of
the Shareholder Service Agreement, filed herewith as Exhibit 9.3, provides for
the indemnification of Registrant's Distributor against all liabilities incurred
by it in performing its obligations under the Agreement, except with respect to
matters involving its Disabling Conduct.
Registrant has obtained from a major insurance carrier a trustees' and
officers' liability policy covering certain types of errors and omissions.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Nicholas-Applegate Capital Management, the investment adviser to the
Master Trust, is a California limited partnership, the general partner of which
is Nicholas-Applegate Capital Management, Inc. (the "General Partner"). During
the two fiscal years ended December 31, 1996, Nicholas-Applegate Capital
Management has engaged principally in the business of providing investment
services to institutional and other clients. All of the additional information
required by this Item 28 with respect to the Investment Adviser is set forth in
the Form ADV, as amended, of Nicholas-Applegate Capital Management (File No.
801-21442), which is incorporated herein by reference.
Item 29. PRINCIPAL UNDERWRITERS.
(a) Nicholas-Applegate Securities does not act as a principal
underwriter, depositor or investment adviser to any investment company other
than Registrant.
(b) Nicholas-Applegate Securities, the Distributor of the shares of
Registrant's Portfolios, is a California limited partnership and its general
partner is Nicholas-Applegate Capital Management Holdings, L.P. (the "General
Partner"). Information is furnished below with respect to the officers,
partners and directors of the General Partner
C-11
<PAGE>
and Nicholas-Applegate Securities. The principal business address of such
persons is 600 West Broadway, 30th Floor, San Diego, California 92101, except as
otherwise indicated below.
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices with Principal Offices with
Business Address Underwriter Registrant
- ---------------- ----------- ----------
<S> <C> <C>
Arthur E. Nicholas Chairman None
John D. Wylie President President
Peter J. Johnson Vice President Vice President
Thomas Pindelski Chief Financial Officer Chief Financial
Officer
E. Blake Moore, Jr. Secretary Secretary
Todd Spillane Director of Compliance None
</TABLE>
(c) Not Applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder will be maintained either at the offices of the Registrant (600 West
Broadway, 30th Floor, San Diego, California 92101); the Investment Adviser to
the Trust and Master Trust, Nicholas-Applegate Capital Management (600 West
Broadway, 30th Floor, San Diego, California 92101); the primary administrator
for the Trust and Master Trust, Investment Company Administration Corporation
(4455 East Camelback Road, Suite 261-E, Phoenix, Arizona 85018); the Custodian,
PNC Bank (Airport Business Center, International Court 2, 200 Stevens Drive,
Lester, Pennsylvania 19113); or the Transfer and Dividend Disbursing Agent,
State Street Bank & Trust Company (2 Heritage Drive, 7th Floor, North Quincy,
Massachusetts 02171).
Item 31. MANAGEMENT SERVICES.
Not Applicable.
Item 32. UNDERTAKINGS.
Registrant undertakes to file a Post-Effective amendment containing
reasonably current financial statements with respect to its Global Technology
Fund, which need not be certified, within four to six months from the effective
date of this Amendment.
Registrant hereby undertakes that if it is requested by the holders of
at least 10% of its outstanding shares to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee, it will do so and
will assist in communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
C-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on the 17th day
of February, 1998.
NICHOLAS-APPLEGATE MUTUAL
FUNDS
By John D. Wylie*
John D. Wylie
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
John D. Wylie* Principal Executive FEBRUARY 17, 1998
- --------------------------
Officer
John D. Wylie
Principal Financial and
Thomas Pindelski* Accounting Officer FEBRUARY 17, 1998
- --------------------------
Thomas Pindelski
Fred C. Applegate* Trustee FEBRUARY 17, 1998
- --------------------------
Fred C. Applegate
Arthur B. Laffer* Trustee FEBRUARY 17, 1998
- --------------------------
Arthur B. Laffer
Charles E. Young* Trustee FEBRUARY 17, 1998
- --------------------------
Charles E. Young
* s/E. Blake Moore, Jr.
- --------------------------
By: E. Blake Moore, Jr.
Attorney In Fact
C-13
<PAGE>
EXHIBIT INDEX
NICHOLAS-APPLEGATE MUTUAL FUNDS
AMENDMENT NO. 53 TO
FORM N-1A REGISTRATION STATEMENT
FILE NO. 811-7428
Exhibit No. Title of Exhibit
(11) CONSENT OF INDEPENDENT AUDITORS.
C-14
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Custodian, Transfer and Dividend Disbursing Agent, Independent
Auditors and Legal Counsel" and "Financial Statements" and to the use of our
report dated May 13, 1997 by reference therein, in Post-Effective Amendment
No. 48 under the Securities Act of 1933 and Amendment No. 50 under the
Investment Company Act of 1940 to the Registration Statement (Form N-1A, No.
33-56094) and in the related Prospectus and the Statement of Additional
Information of Nicholas-Applegate Mutual Funds which is incorporated by
reference in Post-Effective Amendment No. 51 under the Securities Act of 1933
and Amendment No. 53 under the Investment Company Act of 1940 to the
Registration Statement (Form N-1A, No. 33-56094) and related Prospectus and
Statement of Additional Information of Nicholas-Applegate Mutual Funds.
Los Angeles, California
February 19, 1998
