NICHOLAS APPLEGATE INVESTMENT TRUST, N-30D, 1995-11-30

NICHOLAS APPLEGATE INVESTMENT TRUST
N-30D, 1995-11-30

Previous: NICHOLAS APPLEGATE INVESTMENT TRUST, N-30D, 1995-11-30

Next: NICHOLAS APPLEGATE INVESTMENT TRUST, N-30D, 1995-11-30

<PAGE>

COVER OF SEMI-ANNUAL REPORT

NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS

SEMI-ANNUAL REPORT

GLOBAL PORTFOLIOS, SERIES A, B AND C SEPTEMBER 30, 1995

WORLDWIDE GROWTH

INTERNATIONAL GROWTH

EMERGING COUNTRIES

NICHOLAS-APPLEGATE HAS
TURNED THE WORLD UPSIDE DOWN!
INVESTING IN SOME OF THE MOST DYNAMIC COMPANIES IN THE WORLD.

<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
- -----------------------------------------------------------------------
600 West Broadway
San Diego, California 92101
800-551-8043

TRUSTEES OF NICHOLAS-APPLEGATE MUTUAL FUNDS

Fred C. Applegate
Dr. Arthur B. Laffer
Arthur E. Nicholas, Chairman
Charles E. Young

TRUSTEES OF NICHOLAS-APPLEGATE INVESTMENT TRUST

Dann V. Angeloff
Walter A. Auch
Theodore J. Coburn
Darlene T. DeRemer
George F. Keane
Arthur E. Nicholas, Chairman

OFFICERS

Arthur E. Nicholas, Chairman
Ashley Rabun, President
Pete J. Johnson, Vice President
Thomas Pindelski, Treasurer
E. Blake Moore, Jr., Secretary

INVESTMENT MANAGER

Nicholas-Applegate Capital Management

DISTRIBUTOR

Nicholas-Applegate Securities

CUSTODIAN

PNC Bank

TRANSFER AGENT

State Street Bank & Trust Company

- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------------------------

<TABLE>
<CAPTION>
PAGE
<S> <C>
Letter to Shareholders.......................................................................................... 1
Organization.................................................................................................... 2
Capital Markets Review.......................................................................................... 3
The Portfolios' Overview, Fund Manager Q&A and the Funds' Schedules of Investments
Worldwide Growth.............................................................................................. 4
International Growth.......................................................................................... 16
Emerging Countries............................................................................................ 28
The Portfolios'
Financial Highlights.......................................................................................... 40
Statements of Assets and Liabilities.......................................................................... 46
Statements of Operations...................................................................................... 48
Statements of Changes in Net Assets........................................................................... 50
Notes to the Financial Statements............................................................................. 53
Notes to the Funds' Financial Statements........................................................................ 59
</TABLE>

- ------------
This report is authorized for distribution to shareholders and to others only
when preceded or accompanied by a current prospectus for Nicholas-Applegate
Mutual Funds. Distributor: Nicholas-Applegate Securities.
<PAGE>
(This page intentionally left blank)
<PAGE>
LETTER TO SHAREHOLDERS
- -------------------------------------------------------------------

DEAR FELLOW SHAREHOLDERS,

We are pleased to present you with this Semi-Annual Report for
Nicholas-Applegate Mutual Funds.

Global markets have, on the whole, performed well this year, although they
have been overshadowed by very strong performance in the U.S. market. Next year,
many analysts are expecting international markets to outperform the U.S. At
Nicholas-Applegate, we believe that the long-term prospects for global markets
have never looked better. The difficulty for many investors is trying to decide
which markets to be in and when. We believe it is more important to remain
broadly diversified in all world markets than to attempt to "time" them. Let me
use the U.S. stock market as an example to explain why we are so optimistic
about the world's future.

In 1932, the depths of the Depression in the United States, the Dow Jones
Industrial Average sank to a low of 40. In September, 1995, it reached a new
high of 4801. That means that over the past 63 years the Dow has multiplied in
value 120 times. And these 63 years included a terrible World War, the
assassination of world leaders, and 40 years of a Cold War that diverted the
energies of many of the world's best and brightest minds.

So what made this phenomenal increase in stock values possible? It's basically
very simple -- companies like those we look for are constantly striving to
introduce new products and services that increase productivity or improve
people's lives in some way. The fax machine. The cassette player on your hip.
The automatic teller at your bank, and in your grocery store. The personal
computer on your desk, or the computer chips under the dashboard of your car.
Shopping from home via cable television. Overnight delivery.

All these innovations add value to world economies. All are made possible by
the capital invested by people like you through equity ownership. This process
is now picking up even more steam with the opening of major new markets around
the world and the globalization of the world economy. Today many of the toys
lining our store shelves are manufactured in Mainland China, many U.S.
corporations generate a high percentage of their profits overseas, and young
Americans move to places like Budapest and Prague to make their fortunes.

At Nicholas-Applegate, we believe that change creates opportunity. In a world
where so much is changing, we think the prospects for long-term investors look
very bright indeed. Keep your eyes on your goals, stick to your financial plan,
and remember -- true wealth comes from staying invested for the long term and
being diversified throughout the globe.

Sincerely,

[SIGNATURE]

Ashley Rabun
President

Nicholas-Applegate Mutual Funds

- --------------------------------------------------------------------------------

1
<PAGE>
ORGANIZATION
- -------------------------------------------------------------------

Nicholas-Applegate Mutual Funds (the "Trust") is organized as a diversified,
open-end management investment company which offers 43 separate series comprised
of Portfolios A, with an initial sales charge, B, with a contingent deferred
sales charge, C, with a level asset-based sales charge, Institutional, with no
load, and Qualified, with no load (each a "Portfolio" and collectively the
"Portfolios"). The Portfolios of the Trust seek to achieve their respective
investment objectives by investing all of their assets in corresponding series
of Nicholas-Applegate Investment Trust (the "Master Trust"), a diversified
open-end management investment company offering 12 investment vehicles (the
"Funds"). As of September 30, 1995, the Funds and corresponding Portfolios are
as follows:

<TABLE>
<CAPTION>
INCLUDED
IN INCLUDED IN
FUNDS OF THE PORTFOLIOS OF THIS ANOTHER
MASTER TRUST THE TRUST REPORT REPORT
- ----------------------- --------------------------------------------- ---------- -------------
<S> <C> <C> <C>
Mini-Cap Growth Mini-Cap Growth Institutional x
Emerging Growth Emerging Growth A x
Emerging Growth B x
Emerging Growth C x
Emerging Growth Institutional x
Emerging Growth Qualified x

Core Growth Core Growth A x
Core Growth B x
Core Growth C x
Core Growth Institutional x
Core Growth Qualified x

Income & Growth Income & Growth A x
Income & Growth B x
Income & Growth C x
Income & Growth Institutional x
Income & Growth Qualified x

Balanced Growth Balanced Growth A x
Balanced Growth B x
Balanced Growth C x
Balanced Growth Institutional x
Balanced Growth Qualified x

Government Income Government Income A x
Government Income B x
Government Income C x
Government Income Qualified x

Money Market Money Market Portfolio x

Worldwide Growth Worldwide Growth A x
Worldwide Growth B x
Worldwide Growth C x
Worldwide Growth Institutional x
Worldwide Growth Qualified x

International Growth International Growth A x
International Growth B x
International Growth C x
International Growth Institutional x
International Growth Qualified x

Emerging Countries Emerging Countries A x
Emerging Countries B x
Emerging Countries C x
Emerging Countries Institutional x
Emerging Countries Qualified x

Fully Discretionary Fully Discretionary Institutional x

Short-Intermediate Short-Intermediate Institutional x
</TABLE>

- --------------------------------------------------------------------------------

2
<PAGE>
CAPITAL MARKETS REVIEW
- -------------------------------------------------------------------

The international investing environment improved significantly this summer as
a global rally in technology and telecommunications stocks helped
high-technology companies' shares worldwide. The benchmark for foreign equities,
Morgan Stanley Capital International's EAFE (Europe, Australia and Far East)
Index, advanced 4.0%, from July through September 1995.* This was a sharp break
from the four previous quarters, during which international stocks returned, on
average, only 0.4%. The reemergence of the Japanese market was the largest
factor in the increase.

Japanese stocks, which had been in a general state of decline since 1990,
advanced 4.3%, on average, in the third quarter. The turnaround was spurred by a
combination of government spending, a weakening of the yen and an easing of
monetary policy. The weakening yen helped improve prospects for Japanese
manufacturers, whose products were becoming increasingly expensive and
uncompetitive in export markets. Elsewhere in Asia, country returns were mostly
higher during spring and summer. Hong Kong and Korea enjoyed especially strong
market advances, although Taiwan suffered severe declines.

European stock markets advanced broadly during the summer. The Nordic
countries, where returns are dominated by a handful of telecommunications
companies, set the pace for world markets on the strength of a 50.5% advance in
Finland's stocks from April through September. The continent's largest equity
markets, the United Kingdom and Germany recorded solid gains for the period as
did the smaller markets of Switzerland, Spain, Ireland and Greece. The French
market was the continent's biggest disappointment. It fell 4.4% from April
through September.

Emerging market countries advanced through spring and summer, mostly on the
strength of a rebound in Latin American share prices. They rose 21.8% from April
through September with the largest gains recorded in Peru and Mexico. Average
share prices in those countries rose 50.2% and 33.8%, respectively, from April
through September.

These somewhat choppy market conditions showed a major advantage of our
bottom-up investment style, which focuses on finding successful growing
companies rather than advancing national markets. We use sophisticated
traditional and systematic research tools to sort through the ranks of the
world's companies in search of the best available investments. In this way, we
look for healthy, growing companies that are responding well to change and are
poised for growth regardless of economic conditions. We remain optimistic about
the outlook for our investment style in international markets. We continue to
find and invest in companies that are benefiting from the rapid societal and
economic changes occurring worldwide and we believe the world's capital markets

will continue to reward these companies and our investors.

- ------------
* All returns in this Capital Markets Review are
measured in U.S. dollars.

- --------------------------------------------------------------------------------

3
<PAGE>
WORLDWIDE GROWTH PORTFOLIO
- -------------------------------------------------------------------

GOAL: Seeks to maximize long-term capital appreciation through investment in a
portfolio of growth stocks of U.S. and foreign companies.

REVIEW AND OUTLOOK: The Worldwide Growth Portfolio advanced strongly through
spring and summer, outperforming the benchmark MSCI World Index. Among the best
performing issues in the Portfolio were: Diesel engine manufacturer China
Yuchai, up 33% for the period on the strength of mid-sized engine sales in
China; and Telecom Italia Mobile, a company that was spun off from Telecom
Italia in July and has risen 30% in share price on the strength of its share in
Italy's growing cellular telephone market.

As of September 30, 1995, 38% of the Portfolio's net assets were invested in
U.S. companies, 18% were in Japanese companies and 8% were in United Kingdom
companies. (This distribution includes the Global and American Depository
Receipts of non-U.S. companies as U.S. holdings.) We held 33% of assets in
equities of companies that produce goods for other manufacturers, 22% in
technology company shares and 5% in financial services companies. Other sectors
represented in the Portfolio included: consumer durable products, 7%; utilities,
5%; and retailers, 3%.

Economic growth appears to be slowing globally to a stable, sustainable level
and that has led to lower interest rates internationally. This is an attractive
market environment for the kinds of growth companies that we seek for the
Portfolio. We look for companies that we believe can grow earnings regardless of
the economic environment. In periods of slow growth, these companies can command
premium stock prices because earnings growth is relatively harder to find.

We believe the global investing environment remains positive for U.S.
investors and further improvements in the relative performances of non-U.S.
companies is likely. This should bode well for U.S. investors and cause global
investing to remain an important strategy for achieving superior long-term
returns.

REPRESENTATIVE HOLDINGS

Autoliv AB, Sweden
Fresenius Co., Germany
NTT Data Communications Systems, Japan
Micron Technology, U.S.A.
Sidel, France
Storehouse, United Kingdom
China Yuchai International LTD., Singapore
IRO AB, Sweden
Telecom Italia Mobile, Italy
Varitronix, Hong Kong

- --------------------------------------------------------------------------------

4
<PAGE>
A CONVERSATION WITH LORETTA MORRIS
- -------------------------------------------------------------------

Loretta Morris
[PHOTO] Portfolio Manager
Global Management Team
Worldwide Growth Portfolio

Q. LORETTA, THE WORLDWIDE GROWTH PORTFOLIO
PRODUCED VERY ATTRACTIVE GAINS FROM APRIL THROUGH SEPTEMBER DESPITE CHOPPY
CONDITIONS FOR GLOBAL INVESTORS. WHAT WAS HAPPENING IN THE WORLD'S EQUITY
MARKETS AND IN THE PORTFOLIO?

A. Well, a lot of the choppiness and also a lot of
the gain was rooted in the changing values of the world's currencies, especially
the U.S. dollar, the Japanese yen and the German mark. These three countries
each contributed to the global easing of monetary policy during the period, and
that had an expansionary effect on worldwide economic activity. Within that
monetary easing was a coordinated effort by these three countries, to boost the
value of the dollar at the expense of the yen and the mark. This provided an
important turning point for the export-driven Japanese economy. It made Japanese
products more competitively priced. Japanese stock prices rose with the
strengthening dollar and the Portfolio's Japanese holdings gained value.

Q. HOW DID NICHOLAS-APPLEGATE'S INVESTING STYLE
CONTRIBUTE TO THE PORTFOLIO'S STRONG RELATIVE PERFORMANCE DURING THE PERIOD?

A. We routinely analyze returns from the Portfolio
and compare them to returns from the World Index to see how we're doing on a
relative basis. We know from this analysis that our individual stock-selection
decisions made the big difference in our outperformance against the Index. These
decisions were much more important, for example, than our weightings within
countries or industries. Since we consider our expertise as investment managers
to be our stock-picking abilities, this is very satisfying.

Q. DO YOU FACTOR POLITICAL AND CURRENCY RISKS INTO
YOUR INVESTMENT DECISIONS? HOW DO YOU ACCOUNT FOR THOSE FACTORS?

A. We're bottom-up investors, so our decisions are
based on the fundamental strengths of individual companies. However, in light of
that, we have to take into account how certain economic conditions are going to
affect the companies in the Portfolio. So we do monitor and keep abreast of
conditions on a macroeconomic level and how that influences the companies we're
considering. It doesn't really lead us to make a decision to increase or
decrease the percentage of the Portfolio that is invested in a specific country.
Those country weighting decisions are really just the net result of our
individual investment decisions. They come about from the fact that we're either
finding or not finding attractive companies in these countries in light of the
economic environment.

Q. WHAT ARE SOME EXAMPLES OF STOCKS THAT YOU
ADDED OR SOLD DURING THE PERIOD?

A. We invested in SGL Carbon, a German company
that engineers and performs industrial applications to create specialty graphite
products and also produces carbon electrodes used to raise the temperatures of
the industrial blast furnaces that produce specialty steels. We think there is a
lot of room for growth in the price of this new stock. The company was spun off
from German chemical giant Hoechst and it has made some acquisitions of other
companies that add a lot of value to its core business, which is growing
rapidly. We also purchased shares of Honda Motor, a company that we have owned
in the Portfolio previously. Honda is benefiting from strong new model offerings
on the sales side and from significant offshore manufacturing capacity that
helps control expenses. We sold shares of the German airline Lufthansa during
the period because we started to see a slowdown in passenger traffic, and we
believe the benefits from the company's recent restructuring are now fully
reflected in the stock price. We also sold our position in Swedish steel maker
SSAB because of expectations that the company's earnings growth will decelerate
in 1996.

- --------------------------------------------------------------------------------

5
<PAGE>
WORLDWIDE GROWTH PORTFOLIO A
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
WORLDWIDE GROWTH PORTFOLIO A WITH THE MSCI WORLD INDEX

<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(04/19/93 -- 09/30/95) (10/01/94 -- 09/30/95)
11.19% 5.18%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
Worldwide Growth Portfolio A MSCI World Index
<S> <C> <C>
4/19/93 9425 10000
6/93 9975 10283
9/93 10756 10766
12/93 10809 10941
3/94 11325 11007
6/94 11127 11338
9/94 11681 11582
12/94 11074 11498
3/95 11223 12018
6/95 11867 12530
9/95 12967 13212
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Worldwide Growth Portfolio A (front load) with the
Morgan Stanley Capital International ("MSCI") World Index from the commencement
of operations of the Portfolio on April 19, 1993 to the end of the Trust's
semi-annual period on September 30, 1995, on a cumulative basis. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses applicable to the
Portfolio. The maximum sales charge is reflected in the total return
computation.

The total returns for the Portfolio reflect the fact that fees and expenses in
excess of certain expense limits specified in the investment management
agreement have been assumed by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no assumption of fees and
expenses in excess of expense limitations.

MSCI World Index consists of more than 1,400 securities listed on exchanges in
the U.S., Europe, Canada, Australia, New Zealand, and the Far East. The Index is
a market-value weighted combination of countries and is unmanaged.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

6
<PAGE>
WORLDWIDE GROWTH PORTFOLIO B
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
WORLDWIDE GROWTH PORTFOLIO B WITH THE MSCI WORLD INDEX.

<TABLE>
<S> <C>
TOTAL RETURN SINCE INCEPTION
(05/31/95 -- 09/30/95)
5.49%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
Worldwide Growth Portfolio B MSCI World Index
<S> <C> <C>
5/31/95 10000 10000
6/95 9650 9995
7/95 10344 10479
8/95 10298 10243
9/95 10549 10539
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Worldwide Growth Portfolio B (back-end load) with the
Morgan Stanley Capital International ("MSCI") World Index from the commencement
of operations of the Portfolio on May 31, 1995 to the end of the Trust's
semi-annual period on September 30, 1995, on a cumulative basis. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses applicable to the
Portfolio. The maximum contingent deferred sales charge is included in the total
return computation.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

7
<PAGE>
WORLDWIDE GROWTH PORTFOLIO C
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
WORLDWIDE GROWTH PORTFOLIO C WITH THE MSCI WORLD INDEX

<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(04/19/93 -- 09/30/95) (10/01/94 -- 09/30/95)
12.96% 10.27%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
Worldwide Growth Portfolio C MSCI World Index
<S> <C> <C>
4/19/93 10000 10000
6/93 10520 10283
9/93 11320 10766
12/93 11352 10941
3/94 11888 11007
6/94 11656 11338
9/94 12224 11582
12/94 11565 11498
3/95 11711 12018
6/95 12352 12530
9/95 13479 13212
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Worldwide Growth Portfolio C (level load) with the
Morgan Stanley Capital International ("MSCI") World Index from the commencement
of operations of the Portfolio on April 19, 1993 to the end of the Trust's
semi-annual period on September 30, 1995, on a cumulative basis. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses applicable to the
Portfolio.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

8
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------

WORLDWIDE
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS -- 92.6%
- ----------------------------------------------

<TABLE>
<S> <C> <C>
ARGENTINA -- 0.1%
Capex SA, Class A..... 15,000 $ 112,500
------------
AUSTRALIA -- 1.1%
Advance Bank of
Australia LTD....... 979 7,207
Broken Hill
Proprietary Co.
LTD................. 17,828 245,773
Capral Aluminium LTD.. 28,000 65,815
F. H. Faulding & Co.
LTD................. 46,200 207,762
ICI Australia LTD..... 2,200 16,628
National Australia
Bank LTD............ 1,487 13,149
Pioneer International
LTD................. 98,000 259,239
Westfield Holdings
LTD................. 27,000 281,203
------------
1,096,776
------------
BELGIUM -- 0.7%
Tessenderlo Chemie
S.A................. 1,900 690,116
------------
CANADA -- 0.4%
Noranda, Inc.......... 18,000 366,711
------------
DENMARK -- 1.2%
Bang & Olufsen Holding
A/S, Class B........ 1,800 636,387
East Asiatic Co.,
LTD*................ 10,000 277,788
Sparekassen Bikuben
A/S*................ 8,300 279,970
------------
1,194,145
------------
FINLAND -- 0.4%
Kymmene OY............ 11,500 355,337
------------
FRANCE -- 3.0%
Accor SA.............. 2,568 318,274
Club Mediterranee
SA.................. 5,300 513,654
Europeenne de
Propulsion SA....... 5,228 319,939
Lafarge Coppee SA..... 4,510 296,708
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FRANCE (CONTINUED)
Michelin (C.G.D.E.),
Class "B"........... 10,300 $ 451,820
PSA Peugeot Citroen... 3,400 464,911
Sidel, SA............. 2,030 648,372
------------
3,013,678
------------
GERMANY -- 5.2%
BASF AG............... 3,000 656,421
Bayer AG.............. 2,300 587,642
Fresenius AG.......... 1,370 1,170,284
Mannesmann AG......... 2,400 785,268
RWE AG................ 1,800 615,922
SGL Carbon AG*........ 10,100 656,974
VEBA AG............... 20,000 793,306
------------
5,265,817
------------
HONG KONG -- 1.2%
China Light & Power
Co. LTD............. 87,000 450,095
Guangdong Investments
LTD................. 468,000 279,951
Hopewell Holdings
LTD................. 11,000 7,469
San Miguel Brewery
Hong Kong LTD....... 370,000 221,329
Tai Cheung Holdings
LTD................. 10,000 8,795
Varitronix
International LTD... 50,000 101,854
Yizheng Chemical Fibre
Co. LTD............. 660,000 194,201
------------
1,263,694
------------
IRELAND -- 1.6%
Bank of Ireland....... 93,353 585,041
Grafton Group PLC..... 69,890 507,989
Smurfit (Jefferson)
Group PLC........... 178,000 531,885
------------
1,624,915
------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

9
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------

WORLDWIDE
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
ITALY -- 1.8%
Fiat SpA.............. 115,000 $ 430,760
Snia BPD SpA*......... 300,000 325,023
Stet Societa'
Finanziaria
Telefonica SpA...... 155,000 471,008
Telecom Italia SpA.... 182,000 300,794
Telecom Italia Mobile
SpA*................ 182,000 303,615
------------
1,831,200
------------
JAPAN -- 17.8%
Aica Kogyo Co. LTD.... 70,000 431,357
Aida Engineering...... 14,000 101,121
Daiichi Corp.......... 33,000 656,733
Fujitsu LTD........... 71,000 896,555
Gunze LTD............. 87,000 484,261
Hitachi LTD........... 69,000 752,803
Honda Motor Co........ 50,000 899,081
Hoya Corp............. 20,000 589,959
Izumiya Co. LTD....... 10,000 163,653
Keyence Corp.......... 6,000 745,530
Kokusai Electric
Co.................. 31,000 707,748
Kubota Corp........... 85,000 573,593
Kureha Chemical
Industry Co., LTD... 50,000 212,648
Kyocera Corp.......... 8,000 657,844
Life Co. LTD.......... 42,000 127,286
Minebea Co. LTD....... 58,000 439,438
Mizuno Corp........... 64,000 598,040
Nakayama Steel Works
LTD................. 38,000 223,033
NEC Corp.............. 55,000 766,744
Nippon Steel Co....... 133,000 464,875
Noritz Corp........... 33,000 563,390
NTT Data
Communications
Systems Corp........ 500 1,166,785
Sekisui Chemical
Co.................. 27,000 343,671
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
JAPAN (CONTINUED)
Sekisui Plastics Co.
LTD................. 59,000 $ 296,222
Suzuki Motor Co. LTD.. 30,000 324,275
Tokyu Corp............ 100,000 674,816
Toshiba Corp.......... 88,000 644,510
Tostem Corp........... 17,000 547,833
Toyoda Machine Works,
LTD................. 100,000 691,989
Xebio Co. LTD......... 11,000 407,819
Yamanouchi
Pharmaceutical Co.,
LTD................. 36,000 778,261
Yodogawa Steel Works.. 90,000 723,709
Yokogawa Electric..... 45,000 402,313
------------
18,057,895..
------------
KOREA -- 0.2%
Korea Mobile
Telecommunications
Corp.*.............. 180 191,675
------------
MALAYSIA -- 0.6%
Bandar Raya
Developments BHD.... 100,000 188,657
DCB Holdings BHD...... 77,000 214,527
Malayan Banking BHD... 26,000 210,070
------------
613,254
------------
MEXICO -- 3.1%
Cemex S.A............. 194,000 868,974
Gruma S.A.*........... 80,000 264,996
Grupo Carso S.A. de
CV, Series A1*...... 64,000 400,940
Grupo Financiero
Inbursa, S.A. de CV,
Class C............. 45,000 152,936
Grupo Modelo S.A. de
CV, Series C*....... 80,000 301,958
Grupo Industria Alfa,
S.A. de CV.......... 22,000 295,975
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

10
<PAGE>
- -------------------------------------------------------------------

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
MEXICO (CONTINUED)
Transportacion
Maritima Mexicana
S.A. de CV*......... 116,000 $ 813,908
------------
3,099,687
------------
NETHERLANDS -- 2.5%
Borsumij Wehry NV
CVA................. 325 7,169
Crown Van Gelder
Gemeenschappelijk
Bezit NV CVA........ 2,700 255,624
DSM NV................ 3,000 240,720
Hollandsche Benton
Groep NV............ 18 2,711
Koninklijke Hoogovens
NV CVA.............. 8,950 356,837
Koninklijke Volker
Stevin NV CVA....... 5,400 360,405
NV Holdingmaatschappij
De Telegraaf CVA.... 3,500 479,003
Philips Electronics
NV.................. 10,100 492,313
Sphinx Kon Gustavsberg
CVA................. 12,000 358,455
------------
2,553,237
------------
SINGAPORE -- 0.3%
City Developments
LTD................. 50,000 309,206
United Overseas Bank
LTD................. 495 4,279
------------
313,485
------------
SPAIN -- 1.9%
Acerinox SA........... 5,060 576,976
Gas Natural SDG, Class
E................... 6,000 755,489
Hidroelectrica del
Cantabrico SA, Class
C................... 20,770 629,878
------------
1,962,343
------------
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SWEDEN -- 1.3%
Ericsson.............. 19,500 $ 481,481
IRO AB*............... 32,000 425,096
Mo och Domsjoe AB,
Class B............. 6,500 409,212
------------
1,315,789
------------
SWITZERLAND -- 2.2%
Aare-Tessin AG fur
Elektrizitat........ 500 322,371
Alusuisse-Lonza
Holding AG.......... 600 445,002
Ascom Holding AG,
Bearer*............. 300 319,342
Landis & Gyr AG....... 450 274,557
Merck AG.............. 500 483,773
Zurich Versicherungs-
gesellschaft........ 1,500 420,597
------------
2,265,642
------------
THAILAND -- 0.2%
K.R. Precision Public
Co., LTD*........... 25,700 152,592
------------
UNITED KINGDOM -- 7.9%
Bank of Scotland...... 123,270 471,425
British Petroleum Co.
PLC................. 78,634 590,260
British Steel PLC..... 223,000 639,619
Burton Group PLC...... 310,000 536,433
Dewhirst Group PLC.... 100,000 304,998
GKN PLC............... 64,400 841,649
Imperial Chemical
Industries PLC...... 46,000 583,731
London International
Group*.............. 100,000 208,600
Next PLC.............. 100,000 641,602
Pilkington PLC........ 184,000 578,642
RMC Group PLC......... 33,200 569,780
RTZ Corp. PLC......... 38,000 556,676
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

11
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------

WORLDWIDE
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
UNITED KINGDOM
(CONTINUED)
Smith (David S.)
Holdings PLC........ 55,000 $ 537,144
Storehouse PLC........ 97,000 454,502
Thorn EMI PLC......... 19,000 442,579
------------
7,957,640
------------
UNITED STATES OF AMERICA++ -- 37.9%
Alex Brown, Inc....... 6,600 385,275
Alliance Semiconductor
Corp.*.............. 22,725 903,319
Altera Corp.*+........ 14,600 910,675
American Financial
Group Inc........... 12,800 384,000
Arbed SA Sponsored ADS
(Belgium)*+......... 20,000 527,540
Asarco, Inc........... 23,600 743,400
Autoliv AB Sponsored
ADS (Sweden)*+...... 20,000 1,219,820
Bear Stearns
Companies, Inc...... 13,000 279,500
Boise Cascade Corp.... 23,700 956,888
Bowater, Inc.......... 6,700 312,388
Burr Brown Corp.*..... 10,300 383,675
Cabletron Systems,
Inc.*............... 4,450 293,144
Charter One Financial,
Inc................. 10,100 297,950
China Yuchai
International LTD
(China)............. 29,000 355,250
Compania Cervecerias
Unidas Sa Sponsored
ADR (Chile)......... 6,000 128,250
Cognex Corp.*......... 6,800 328,100
Compusa, Inc.*........ 9,000 387,000
Conner Peripherals,
Inc.*............... 25,400 422,275
Continental Airlines,
Inc.*............... 11,400 417,525
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)

Credence Systems
Corp.*.............. 10,000 $ 362,500
Cytec Industries,
Inc.*............... 6,500 376,188
Danaher Corp.......... 12,600 412,650
Dimon, Inc............ 19,400 291,000
Electronics For
Imaging, Inc.*...... 6,400 458,400
Federal Paper Board
Co.................. 9,900 379,913
FMC Corp.............. 11,600 881,600
Fleming Companies,
Inc................. 11,600 278,400
FSI Internationa,
Inc.*............... 12,400 412,300
Gaylord Container
Corp., Class A*..... 32,800 309,550
Glatfelter (P.H.)
Co.................. 15,100 339,750
Grand Casinos,
Inc.*............... 10,700 434,688
Green Tree Financial
Corp................ 1,600 97,600
Harbin Power Equipment
Co. LTD (China)..... 10,500 267,801
IBP, Inc.............. 9,200 491,050
Indigo NV
(Netherlands)*...... 17,500 404,687
Inversiones y
Representaciones SA
Sponsored GDR
(Argentina)*........ 16,200 388,800
J&L Specialty Steel,
Inc................. 12,700 266,700
Kemet Corp.*.......... 22,000 760,350
King World
Productions,
Inc.*............... 6,900 252,712
Kulicke & Soffa
Industries*......... 8,500 310,250
Lattice Semiconductor
Corp.*+............. 7,800 316,875
Lehman Brothers
Holdings, Inc.*+.... 13,400 309,875
L.G. Electronics, Inc.
Sponsored GDR (South
Korea).............. 28,600 354,068
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

12
<PAGE>
- -------------------------------------------------------------------

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
L.G. Electronics, Inc.
Sponsored GDR New
(South Korea)*...... 1,668 $ 28,109
Lincare Holdings,
Inc.*............... 10,400 267,800
Louisiana Land &
Exploration Co...... 7,100 252,937
Lyondell Petrochemical
Co.................. 24,400 631,350
Marshall
Industries*......... 10,900 411,475
McAfee Associates,
Inc.*............... 8,500 437,750
Medic Computer
Systems, Inc.*...... 6,200 314,650
Micron Technology,
Inc................. 12,400 985,800
Mobile
Telecommunication
Technology*......... 11,000 339,625
Moneda Chile Fund
(Chile)*............ 42,000 425,250
Old Republic
International....... 12,300 355,162
Olin Corp............. 7,400 508,750
Olympic Financial,
LTD*................ 11,700 320,287
Oxford Health Plans,
Inc.*............... 6,500 472,875
Petro Canada*......... 43,000 209,625
Potash Corporation of
Saskatchewan,
Inc................. 19,900 1,238,775
Rayonier, Inc......... 8,800 344,300
Reading & Bates
Corp.*.............. 30,600 367,200
Reynolds Metals Co.... 6,500 375,375
Rhodia-Ster SA
Sponsored GDR
(Brazil)............ 38,000 510,340
Robert Half
International,
Inc.*............... 23,200 791,700
Safeway, Inc.......... 2,200 91,850
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
Samsung Electronics
Co. LTD (Non-voting)
-- New*+............ 3,071 $ 196,237
Samsung Electronics
Co. LTD Sponsored
GDS (South
Korea)(Non-voting)
-- New*+............ 244 15,592
Samsung Electronics
Co. LTD (Voting) --
New*+............... 183 19,764
Samsung Electronics
Co. LTD Sponsored
GDR (South Korea)
(Voting)*+.......... 928 111,360
Samsung Electronics
Co. LTD Sponsored
GDR (South Korea)
(Non-voting)*+...... 15,520 1,101,920
Samsung Engineering &
Construction*+...... 17,200 163,400
Samsung Engineering &
Construction
Sponsored GDR (South
Korea)*+............ 6,985 66,357
Seagate Technology*... 7,400 311,725
Sonat Offshore
Drilling Co......... 8,900 290,363
Sterling Chemicals,
Inc................. 5,100 42,075
Sun Microsystems,
Inc.*............... 9,100 573,300
S3, Inc.*............. 7,300 254,587
Tele Danmark A/S
Sponsored ADR
(Denmark)........... 20,000 517,500
Telecomunicacoes
Brasileiras S/A -
Telebras Sponsored
ADR (Brazil)........ 13,000 611,091
Tencor Instruments*... 16,800 743,400
Tidewater, Inc........ 13,700 385,313
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

13
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------

WORLDWIDE
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
U. S. Robotics
Corp.*.............. 5,200 $ 443,300
Union Camp Corp....... 6,200 357,275
Usiminas Siderurg
Minas Gerais
Sponsored ADR
(Brazil)*+.......... 77,000 848,309
Valmet
Corp.(Finland)...... 12,700 414,359
Videotron Holdings PLC
Sponsored ADR
(United Kingdom)*... 30,700 510,388
Wellman, Inc.......... 16,500 404,250
Westvaco Corp......... 9,500 433,437
Willamette
Industries.......... 4,900 327,075
Wyle Electronics,
Inc................. 8,000 359,000
Xilinx, Inc.*......... 7,500 360,937
------------
38,336,980
------------
TOTAL COMMON STOCKS
(Cost $80,222,169)............... 93,635,108
------------
- -------------------------------------------------
WARRANTS/RIGHTS -- 0.1%
- -------------------------------------------------
MALAYSIA
DCB Holdings BHD,
12/28/99............ 19,250 19,461
------------
SINGAPORE
United Overseas Bank
LTD, 06/17/97....... 209 818
------------
SWEDEN
Ericsson, 10/27/95.... 1,950 22,807
------------
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------

<TABLE>
<S> <C> <C>
SWITZERLAND
Holderbank Financiere
Glaris AG,
12/20/95............ 2,150 $ 2,512
------------
UNITED KINGDOM
RMC Group, 10/16/95... 8,300 17,838
------------
UNITED STATES OF AMERICA
Merrill Lynch Hong
Kong Call,
12/15/95............ 18,000 11,812
------------
TOTAL WARRANTS/RIGHTS
(Cost $97,072)................... 75,248
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
- ------------------------------------------------------------
COMMERCIAL PAPER -- 3.7%
- ------------------------------------------------------------
JP Morgan 6.500%,
10/02/95................ $ 3,269,000 3,267,819
Melville 6.650%,
10/02/95................ 525,000 524,806
---------------
TOTAL COMMERCIAL PAPER
(Cost $3,792,625) ............. 3,794,000 3,792,625
---------------
TOTAL INVESTMENTS -- 96.4%
(Cost $84,111,866)....................... 97,502,981
OTHER ASSETS LESS LIABILITIES -- 3.6%......
3,665,836
---------------
NET ASSETS -- 100.0%....................... $ 101,168,817
---------------
</TABLE>

- ------------
* Non-income producing security.
+ Rule 144A restricted security.
++ These securities are classified as United States securities as their
underlying currency is the U.S. Dollar.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

14
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Aerospace..................................... 0.3%
Agriculture................................... 1.5
Airlines...................................... 0.4
Alcohol Beverages............................. 0.6
Apparel....................................... 1.3
Automobiles................................... 2.1
Automotive Equipment.......................... 2.0
Broadcasting.................................. 0.8
Building Material Chains...................... 0.5
Building Materials............................ 3.5
Chemicals..................................... 5.3
Closed End Country Funds...................... 0.4
Clothing Chains............................... 0.4
Computer Office Automation.................... 2.8
Consumer Electricals.......................... 0.6
Containers.................................... 1.3
Contract Drilling............................. 0.7
Department/Discount Stores.................... 0.6
Drugs/Pharmaceuticals......................... 1.4
Electric Utilities............................ 2.1
Electronic Instruments........................ 7.0
Entertainment................................. 0.3
Finance Companies............................. 0.4
Gambling...................................... 0.9
Gas Utilities................................. 0.8
Grocery Products.............................. 0.5
Industrial Engineering........................ 1.0
Investment Companies.......................... 1.2
Lodging....................................... 0.6
Machinery/Equipment........................... 4.3
Managed Healthcare/HMO's...................... 0.5
Medical/Health Services....................... 0.3
Metals........................................ 4.0

<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Military/Defense Technology................... 1.4%
Money-Center Banks............................ 1.6
Multi-Line Insurers........................... 0.8
Oil/Gas Production............................ 1.7
Other Consumer Industrial Services............ 1.1
Other Consumer Non-Durables................... 0.4
Other Consumer Durables....................... 0.4
Other Consumer Services....................... 0.4
Other Energy.................................. 0.4
Other Financial Services...................... 0.4
Other Health Technical Services............... 1.2
Other Manufacturing........................... 6.0
Other Transportation.......................... 0.8
Other Utilities............................... 0.5
Paper......................................... 5.0
Property-Casualty Insurance................... 0.8
Publishing.................................... 0.5
Railroads..................................... 0.7
Real Estate Brokers........................... 0.9
Recreational Products......................... 0.6
Retail/Food Distribution...................... 0.3
Savings & Loan Associations................... 0.3
Semiconductors/Elec Comp...................... 7.9
Soaps/Cosmetics............................... 0.2
Software...................................... 2.4
Specialty Chains.............................. 1.7
Telecommunications Equip...................... 1.5
Telephone..................................... 1.8
Tobacco Products.............................. 0.3
Other Assets Less Liabilities................. 3.6
-----
TOTAL......................................... 100.0%
-----
-----
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

15
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
- -------------------------------------------------------------------

GOAL: Seeks to maximize long-term capital appreciation through investment in a
portfolio of equity securities of foreign companies only.

REVIEW AND OUTLOOK: International stocks improved through spring and summer as
market conditions in the developed and emerging markets of Europe, Asia and the
Americas offered signs of renewed growth. Among the leading financial markets
and their returns for the period were Finland, 52%; Sweden, 36%; Brazil, 32%;
and Spain, 18%.

Companies contributing to the International Growth Portfolio's performance
during the period included Swedish airbag and seat-belt manufacturer Autoliv.
Among other products, Autoliv manufactures the side-impact airbag being
installed on new Volvos. Shares of British retailer Storehouse also rose. The
company grew earnings during the period through increased sales of its infants'
and children's clothing and furnishings and from its stores specializing in
clothing for mothers.

As of September 30, 1995, more than half of the Portfolio's assets were
invested in growth-oriented companies in the three largest foreign markets:
Japan, the United Kingdom and Germany. About 10% of assets were invested in
companies in emerging-markets countries. The remainder of the Portfolio was
invested in companies in the other industrialized countries of Europe, Asia and
the Americas.

We see several themes developing across world markets: economic growth is
slowing, even in the emerging markets. Inflationary forces appear to have been
dampened by fierce global competition for jobs. Finally, global export growth is
growing steadily, representing a powerful engine for prosperity. These forces
all help the type of companies that we favor in the Portfolio. We use a
company-by-company investment process to identify companies that are responding
positively to change and that are poised to grow their earnings, regardless of
the economic environment. Recently, this process has led us to excellent
opportunities among manufacturers of high-technology, industrial and consumer
products as well as among financial services companies.

We remain upbeat about the long-term prospects for international investing and
for the International Growth Portfolio. We continue to identify healthy, dynamic
companies that we believe are responding well to changes in local and global
economic environments.

REPRESENTATIVE HOLDINGS:

Autoliv AB, Sweden
SGL Carbon AG, Germany
Hoya Corp., Japan
Bang & Olufsen, Denmark
Storehouse, United Kingdom
Sidel, France
China Yuchai International Ltd., Singapore
IRO AB, Sweden
Safilo, Italy
Korea Mobile Telecom, South Korea

- --------------------------------------------------------------------------------

16
<PAGE>
A CONVERSATION WITH LORETTA MORRIS
- -------------------------------------------------------------------

Loretta Morris
[PHOTO] Portfolio Manager
Global Management Team
International Growth Portfolio

Q. LORETTA, INTERNATIONAL EQUITIES SHOWED A LOT OF
PRICE MOVEMENT, BOTH UP AND DOWN, FROM APRIL THROUGH SEPTEMBER. WHAT WAS
HAPPENING IN THE MARKETS AND HOW DID THAT IMPACT THE INTERNATIONAL GROWTH
PORTFOLIO?

A. There was quite a bit of price movement in the
period. Fortunately, markets went up more than they went down, and investors
were rewarded for their patience. There were some major developments in
international business and economics during the period. While these were largely
positive, they added to the choppiness of international financial markets. There
were some big currency moves, for example. The dollar weakened during the winter
but was supported in early summer by the governments of Japan and Germany, whose
exports were becoming quite costly to customers purchasing with dollars. There
was a global easing of monetary policy by the U.S., Japan and Germany, which had
the expansionary effect of putting money into international markets. The U.S.
and Japan resolved their trade dispute over autos and auto parts and that helped
steady the markets. Finally, the trend toward restructuring companies and
improving productivity that has been so much a part of domestic corporate
culture in the 1990s really began to take hold globally. This helped the
technology companies in the Portfolio because they supply the tools that enhance
productivity. It also helped the companies in the Portfolio that have
effectively restructured their operations and improved their operating margins.

Q. DOES YOUR RECENT PERFORMANCE REPRESENT A
DEPARTURE FROM YOUR APPROACH TO INVESTING IN THESE INTERNATIONAL MARKETS IN 1994
AND THE FIRST QUARTER OF 1995?

A. We haven't changed the way we manage the
Portfolio. We still look for and invest in companies showing positive change at
the margin -- new products, new market niches, new management plans or other
factors enabling them to improve profitability. A lot of international companies
have been improving earnings through restructuring this year but this theme is
getting a bit played out. A lot of the big gains have already been realized from
restructuring and this is now built into the stock prices. So we are finding
some of our best opportunities now in more traditional growth themes: companies
developing innovative, new products and services or finding and claiming niche
markets.

Q. THE DOMESTIC STOCK MARKET HAS BEEN VERY
STRONG THIS YEAR. GIVEN THIS, WHY WOULD YOU ADVISE U.S. INVESTORS TO REMAIN IN
INTERNATIONAL MARKETS THAT HAVE BEEN UNDERPERFORMING THEIR NATIVE MARKETS?

A. Domestic and international markets are both
subject to random cycles of advances and declines and these cycles have very low
correlation. That means that returns in domestic markets have been independent
of what has occurred internationally. We do know that the best ten-year,
fifteen-year and twenty-year stock-market performances through 1994 were turned
in by international markets. We also know that, in the past, investors have been
able to improve total returns, reduce risk and smooth out the fluctuations of a
domestic portfolio by adding international investments. So I would advise
investors to work with their financial consultants to develop

- --------------------------------------------------------------------------------

17
<PAGE>
- -------------------------------------------------------------------
investment plans that are suited to their specific needs and that are based on
the best information available. I'm confident most investors will find these
plans include a significant international component.

Q. WHAT ARE SOME EXAMPLES OF STOCKS YOU ADDED
AND SOLD DURING THE PERIOD?

A. We recently bought shares of Safilo, an Italian
manufacturer of eyeglass frames. We see growth in certain niches of global
consumer markets and Safilo's management is positioning the company to take
advantage of that growth. We also purchased shares of NTT Data Systems Corp., a
subsidiary of Nippon Telegraph and Telephone Corp. and the largest information
systems company in Japan. The company's software development business is poised
to grow as Japanese companies and public sector agencies strive to improve
productivity. We sold shares of a pair of European steel companies, Thyssen of
Germany and Hoogovens of the Netherlands, on expectations of decelerating
earnings growth for the companies in 1996.

- --------------------------------------------------------------------------------

18
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO A
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
INTERNATIONAL GROWTH PORTFOLIO A WITH THE MSCI EAFE INDEX

<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(08/31/94 -- 09/30/95) (10/01/94 -- 09/30/95)
-5.00% -3.32%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
International Growth Portfolio A MSCI EAFE Index
<S> <C> <C>
8/31/94 9475 10000
9/94 9270 9685
12/94 8951 9586
3/95 8731 9761
6/95 8860 9832
9/95 9460 10229
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the International Growth Portfolio A (front load) with the
Morgan Stanley Capital International ("MSCI") EAFE Index from the commencement
of operations of the Portfolio on August 31, 1994 to the end of the Trust's
semi-annual period on September 30, 1995, on a cumulative basis. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses applicable to the
Portfolio. The maximum sales charge is reflected in the total return
computation.

The MSCI Europe, Australia, Far East ("EAFE") Index is an unmanaged index that
is a generally accepted benchmark for major overseas markets. The MSCI EAFE
Index weightings represent the relative capitalizations of the major overseas
markets included in the index on a U.S. dollar adjusted basis.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

19
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO B
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
INTERNATIONAL GROWTH PORTFOLIO B WITH THE MSCI EAFE INDEX

TOTAL RETURN SINCE INCEPTION
(05/31/95 -- 09/30/95)
-0.06%

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
International Growth Portfolio B MSCI EAFE Index
<S> <C> <C>
5/31/95 10000 10000
6/95 9371 9825
7/95 9971 10422
8/95 9857 10025
9/95 9994 10221
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the International Growth Portfolio B (back-end load) with
the Morgan Stanley Capital International ("MSCI") EAFE Index from the
commencement of operations of the Portfolio on May 31, 1995 to the end of the
Trust's semi-annual period on September 30, 1995, on a cumulative basis. All
return calculations reflect the reinvestment of income dividends and capital
gains distributions, if any, as well as all fees and expenses applicable to the
Portfolio. The maximum contingent deferred sales charge is reflected in the
total return computation.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

20
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO C
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
INTERNATIONAL GROWTH PORTFOLIO C WITH THE MSCI EAFE INDEX

<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(08/31/94 -- 09/30/95) (10/01/94 -- 09/30/95)
-1.37% -0.04%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
International Growth Portfolio C MSCI EAFE Index
<S> <C> <C>
9/1/94 10000 10000
9/94 9856 9685
12/94 9484 9586
3/95 9075 9761
6/95 9235 9832
9/95 9852 10229
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the International Growth Portfolio C (level load) with the
Morgan Stanley Capital International ("MSCI") EAFE Index from the commencement
of operations of the Portfolio on August 31, 1994 to the end of the Trust's
semi-annual period on September 30, 1995, on a cumulative basis. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses applicable to the
Portfolio.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

21
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------

INTERNATIONAL
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS -- 92.2%
- ----------------------------------------------

<TABLE>
<S> <C> <C>
ARGENTINA -- 0.6%
Capex SA Class A 14,000 $ 105,000
-----------
AUSTRALIA -- 2.8%
Australian Gas Light
Co. LTD............. 20,000 69,533
Caltex Australia
LTD................. 33,000 106,001
Capral Aluminium LTD.. 44,000 103,424
F.H. Faulding & Co.
LTD................. 1,000 4,497
ICI Australia LTD..... 9,600 72,557
Western Mining Corp.
Holdings LTD........ 10,000 65,452
Westfield Holdings
LTD................. 8,600 89,568
-----------
511,032
-----------
BELGIUM -- 0.7%
Banque Bruxelles
Lambert SA.......... 380 64,131
Barco N.V............. 565 66,035
-----------
130,166
-----------
DENMARK -- 1.4%
Bang & Olufsen Holding
A/S Class B......... 375 132,581
Ostasiatiske Kompagni
A/S*................ 2,400 66,669
Sparekassen Bikuben
A/S*................ 1,800 60,716
-----------
259,966
-----------
FINLAND -- 0.5%
Kymmene............... 3,000 92,697
-----------
FRANCE -- 4.8%
Club Mediterranee..... 1,000 96,916
Labinal............... 550 84,705
Lafarge............... 1,353 89,012
Michelin Cgde Reg
"b"................. 2,200 96,505
PSA Peugeot Citroen... 710 97,084
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FRANCE (CONTINUED)
Sidel................. 430 $ 137,340
Sidergie.............. 400 88,423
Societe Europeene de
Propulsion SA....... 1,295 79,250
Strafor Facom SA...... 850 101,894
-----------
871,129
-----------
GERMANY -- 5.1%
BASF AG............... 675 147,695
Fresenius AG.......... 255 217,827
Mannesmann AG......... 710 232,308
SGL Carbon AG*........ 3,200 208,150
VEBA AG............... 3,000 118,996
-----------
924,976
-----------
HONG KONG -- 1.9%
China Light & Power
Co. LTD............. 20,000 103,470
Hopewell Holdings
LTD................. 2,523 1,713
Paliburg International
Holdings LTD........ 31,500 18,945
San Miguel Brewery
Hong Kong LTD....... 110,000 65,801
Varitronix
International LTD... 50,000 101,853
Yizheng Chemical Fibre
Co.................. 198,000 58,260
-----------
350,042
-----------
IRELAND -- 2.1%
Bank of Ireland....... 23,338 146,259
Grafton Group PLC..... 18,116 131,674
Smurfit (Jefferson)
Group PLC........... 32,000 95,620
-----------
373,553
-----------
ITALY -- 2.0%
Safilo SpA............ 12,000 108,651
Snia BPD SpA*......... 71,000 76,922
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

22
<PAGE>
- -------------------------------------------------------------------

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
ITALY (CONTINUED)
Stet Societa'
Finanziaria
Telefonica SpA...... 21,000 $ 63,814
Telecom Italia SpA.... 31,000 51,234
Telecom Italia Mobile
SpA*................ 31,000 51,715
-----------
352,336
-----------
JAPAN -- 30.2%
Aica Kogyo Co. LTD.... 16,000 98,596
Aida Engineering...... 23,000 166,128
Daiichi Corp.......... 7,000 139,307
Fujitsu LTD........... 17,000 214,668
Gunze LTD............. 31,000 172,553
Honda Motor Co........ 15,000 269,724
Hoya Corp............. 6,000 176,987
Keyence Corp.......... 2,000 248,510
Kubota Corp........... 27,000 182,200
Kurabo Industries..... 44,000 160,905
Life Co. LTD.......... 7,000 21,214
Minebea Co. LTD....... 29,000 219,719
Mitsubishi Gas
Chemical............ 45,000 199,111
Mitsui Marine & Fire
Insurance Co........ 22,000 138,014
Nakayama Steel Works
LTD................. 17,000 99,778
Nippon Steel Co....... 36,000 125,831
Noritz Corp........... 11,000 187,797
Sekisui Plastics Co.
LTD................. 8,000 40,166
Shinko Shoji.......... 12,000 193,959
Sony Corp............. 3,000 155,773
Suzuki Motor Co. LTD.. 14,000 151,328
TEC Corp.*............ 32,000 126,720
Tokyu Construction
Co.................. 36,000 169,108
Tokyu Corp............ 33,000 222,689
Toshiba Corp.......... 4,000 29,296
Tostem Corp........... 10,000 322,255
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
JAPAN (CONTINUED)
Toyota Tsusho Corp.... 30,000 $ 190,928
Wacoal Corp........... 13,000 157,592
Xebio Co. LTD......... 6,000 222,447
Yamanouchi Pharm Jpy.. 11,000 237,802
Yodogawa Steel Works.. 24,000 192,989
Yokogawa Elec......... 22,000 196,687
-----------
5,430,781
-----------
KOREA -- 3.6%
Korea Mobile
Telecommunications*.. 60 63,892
-----------
MALAYSIA -- 1.4%
Bandar Raya
Developments BHD.... 44,000 83,009
DCB Holdings BHD...... 27,000 75,224
Genting BHD........... 400 3,455
Malayan Banking BHD... 12,000 96,955
-----------
258,643
-----------
MEXICO -- 4.1%
CEMEX SA de CV Series
B................... 34,000 152,294
Gruma S.A.*........... 50,000 165,623
Grupo Carso SA de CV
Series A*........... 13,000 81,441
Groupo Industria Alfa
A Share............. 7,000 94,174
Groupo Modelo SA NPA
Series A............ 21,000 79,264
Tmmsa A Mxp*.......... 23,000 161,378
-----------
734,174
-----------
NETHERLANDS -- 3.5%
Borsumij Wehry NV
CVA................. 75 1,654
CVG CVA............... 700 66,273
Philips Electronics
NV.................. 3,500 170,604
Randstad Holdings..... 3,300 141,676
Telegraaf Holdingsmij
CVA................. 1,100 150,544
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

23
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------

INTERNATIONAL
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
NETHERLANDS (CONTINUED)
Volker Stevin NV...... 1,500 $ 100,112
-----------
630,863
-----------
SINGAPORE -- 0.9%
City Developments
LTD................. 10,000 61,841
DBS Land LTD.......... 16,000 47,449
Straits Steamship Land
LTD................. 19,000 52,073
-----------
161,363
-----------
SPAIN -- 1.7%
Acerinox SA........... 880 100,344
Gas Natural SDG SA
Class E............. 900 113,323
Hidroelectrica del
Cantabrico SA Class
C................... 2,840 86,127
-----------
299,794
-----------
SWEDEN -- 2.0%
Ericsson LM B-F....... 6,400 158,025
IRO AB*............... 8,000 106,274
Mo Och Domsjo AB...... 1,500 94,434
-----------
358,733
-----------
SWITZERLAND -- 2.3%
Alusuisse-Lonza
Holding AG.......... 80 59,334
Ascom Holding AG*..... 80 85,158
Nokia-Maillefer
Holding SA.......... 400 198,356
Zurcher Ziegeleien.... 100 73,561
-----------
416,409
-----------
THAILAND -- 0.2%
K.R. Precision Public
Colocal*............ 6,400 38,000
-----------
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED KINGDOM -- 15.4%
Ashtead Group PLC..... 20,000 $ 145,388
Bank of Scotland...... 43,144 164,997
British Petroleum Co.
PLC................. 20,162 151,344
Burton Group Ord...... 108,000 186,886
Dewhirst Group PLC.... 51,000 155,549
GKN Ord............... 13,000 169,898
Goldsmiths Group PLC.. 34,000 95,371
Imperial Chemical
Industries PLC...... 12,000 152,278
London International
Group............... 68,000 141,848
Low & Bonar PLC....... 19,000 149,828
Matthews (Bernard)
PLC................. 76,000 124,306
Pentland Group PLC.... 70,000 132,745
Rank Organisation
PLC................. 17,000 114,177
Renold PLC............ 20,000 87,865
RMC Group PLC......... 6,600 113,269
RTZ Corp. PLC......... 11,098 162,579
Smith (Ds) Holdings... 16,000 156,260
Storehouse PLC........ 30,000 140,568
Thorn EMI............. 5,800 135,103
Vinten Group PLC...... 8,000 91,278
-----------
2,771,537
-----------
UNITED STATES OF
AMERICA++ -- 7.9%
Autoliv AB Sponsored
ADS (Sweden)*....... 4,000 243,964
China Yuchai (China)
International LTD... 9,000 110,250
Harbin Power Equipment
Co. LTD Sponsored
ADR (China)*........ 2,200 58,333
Indigo NV
(Netherlands)*...... 4,400 101,750
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

24
<PAGE>
- -------------------------------------------------------------------

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF
AMERICA++ (CONTINUED)
Inversiones y
Representaciones SA
Sponsored GDR
(Argentina)......... 4,000 $ 96,000
L.G. Electronics, Inc.
Sponsored GDR (South
Korea)*+............ 6,400 79,232
L.G. Electronics, Inc.
(South Korea)*+..... 372 6,269
Moneda Chile Fund
Limited (Chile)*.... 8,000 81,000
Rhodia-Ster SA
Sponsored GDR
(Brazil)*+.......... 7,000 94,010
Samsung Electronics
LTD GDS (South
Korea)*............. 14 894
Samsung Electronics
LTD Sponsored GDR
(South
Korea)(non-voting)*+.. 1,000 71,000
Samsung Electronics
LTD Sponsored GDR
(South
Korea)(voting)*+.... 55 6,600
Samsung Electronics
LTD Sponsored GDR
(South Korea) (new,
non-voting)*+....... 197 12,588
Samsung Electronics
LTD Sponsored GDR
(South Korea)(new,
voting)*+........... 11 1,188
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF
AMERICA++ (CONTINUED)
Samsung Engineering &
Construction
Sponsored GDR (South
Korea) (voting)*+... 2000 $ 19,000
Samsung Engineering &
Construction
Sponsored GDR (South
Korea)
(non-voting)*+...... 810 7,695
Tele Danmark A/S
Sponsored ADR
(Denmark)........... 800 20,700
Telecomunicacoes
Brasileiras S/A --
Telebras Sponsored
ADR (Brazil)........ 3000 141,021
Usiminas Siderurg
Minas Gerais
Sponsored ADR
(Brazil)*+.......... 13,000 143,221
Videotron Holdings PLC
Sponsored ADR
(United Kingdom)*... 7200 119,700
-----------
1,414,415
-----------
TOTAL COMMON STOCKS
(Cost $15,265,980)................ 16,549,501
-----------
- -------------------------------------------------
RIGHTS/WARRANTS -- 0.1%
- -------------------------------------------------
MALAYSIA
DCB Holdings BHD
Warrants, 12/28/99* 6,750 6,824
SWEDEN
Ericsson LM Rights,
10/27/95 640 7,485
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

25
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------

INTERNATIONAL
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
RIGHTS/WARRANTS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SWITZERLAND
Holderbank Financiere
Glarus AG Warrants,
12/20/95* 1,000 $ 1,168
UNITED KINGDOM
RMC Group Rights,
10/16/95 1,650 3,546
-----------
TOTAL RIGHTS/WARRANTS
(Cost $1,066)..................... 19,023
-----------
<CAPTION>

PRINCIPAL
AMOUNT
<S> <C> <C>
- -------------------------------------------------
COMMERCIAL PAPER -- 1.8%
- -------------------------------------------------
Melville
6.650%, 10/02/95
(Cost $329,878) $ 330,000 329,878
-----------
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -- 94.1%
(Cost $15,596,924)................ $16,898,402
OTHER ASSETS LESS LIABILITIES --
5.9%.............................. 1,065,524
-----------
NET ASSETS -- 100.0%................ $17,963,926
-----------
</TABLE>

- ------------
* Non-income producing security.
+ Rule 144A restricted security.
++ These securities are classified as United States securities as their
underlying currency is the U.S. Dollar.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

26
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ------------------------------------------------ ------------
<S> <C>
Aerospace....................................... 0.9%
Agriculture..................................... 1.0
Alcoholic Beverages............................. 0.8
Apparel......................................... 4.5
Automobiles..................................... 4.0
Automotive Equipment............................ 2.8
Broadcasting.................................... 1.4
Building Material Chains........................ 0.7
Building Materials.............................. 4.9
Chemicals....................................... 5.3
Closed End Country Funds........................ 0.4
Clothing Chains................................. 1.3
Computers/Office Automation..................... 1.9
Consumer Electricals............................ 1.6
Containers...................................... 1.9
Department/Discount Stores...................... 0.8
Drugs/Pharmaceuticals........................... 1.3
Electric Utilities.............................. 2.0
Electronic Instruments.......................... 4.6
Entertainment................................... 0.6
Finance Companies............................... 0.1
Gambling........................................ 0.5
Gas Utilities................................... 1.0
Grocery Products................................ 0.7
Industrial Engineering.......................... 1.5
Investment Companies............................ 0.5
Machinery/Equipment............................. 4.3
Metals.......................................... 4.6

<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ------------------------------------------------ ------------
<S> <C>
Money-Center Banks.............................. 3.0%
Oil Refining/Marketing.......................... 0.6
Oil/Gas Production.............................. 0.8
Other Consumer Services......................... 4.1
Other Consumer Non-Durables..................... 0.4
Other Consumer Durables......................... 0.6
Other Consumer Services......................... 0.8
Other Financial Services........................ 0.5
Other Health Services........................... 0.8
Other Prod/Manufacturing........................ 8.4
Other Transportation............................ 0.9
Other Utilities................................. 0.7
Paper........................................... 3.1
Property-Casualty Insurance..................... 1.4
Publishing...................................... 0.8
Railroads....................................... 1.3
Real Estate Brokers............................. 1.9
Semiconductors.................................. 1.1
Soaps/Cosmetics................................. 0.8
Specialty Chains................................ 1.3
Telecommunications Equip........................ 1.5
Telephone....................................... 1.4
Textiles........................................ 0.9
Wholesale Distribution.......................... 1.1
Other Assets Less Liabilities................... 5.9
-----
TOTAL........................................... 100.0%
-----
-----
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

27
<PAGE>
EMERGING COUNTRIES PORTFOLIO
- -------------------------------------------------------------------

GOAL: Seeks long-term capital appreciation and provides geographic
diversification through investment in companies in the developing countries of
the world.

REVIEW AND OUTLOOK: The Emerging Countries Portfolio enjoyed exceptionally
strong performance for the six-month period from April through September 1995.
The Portfolio returns were nearly triple the return of the IFC Investable Index,
the World Bank's benchmark measure of emerging countries stock performance.

As of September 30, 1995, the Portfolio held about one-quarter of its assets
in the stocks of companies based in Hong Kong and Brazil. Within emerging
markets worldwide, we found the best performing companies to be those that are
adapting well to their changing social, economic, and political environments.

Some of these changes include large-scale investments in economic
infrastructure, the establishment of low-cost manufacturing operations, the
privatization of state-owned industries and the emergence of new consumer
cultures. Some of the top performing stocks in the Portfolio during the period
were Brazilian airline TAM Transport Aeros., Korean manufacturer Samsung
Electronics and the Mexican shipping company Transportacion Maratima de Mexico
(TMM). TAM, a local and regional airline, is considered one of South America's
best managed companies. It recorded solid earnings and share price growth
through the period on the strength of added capacity and routes. Samsung
benefited through the period from the improving outlook for its semiconductor
products, especially dynamic random access memory chips or DRAMs. These chips
are important components in personal computers, and Samsung is the world's
leading producer of them. TMM continued to benefit from the growth of Mexican
exports that have resulted from the North American Free Trade Agreement and the
devaluation of the Mexican peso.

The emerging markets of the world are home to some of the world's most dynamic
companies and most exciting investment opportunities. To find and take advantage
of these opportunities, we have developed a unique international investing style
that draws on the best of traditional and systematic research sources to
identify companies with great growth prospects. We remain optimistic and
confident that these emerging market opportunities will help deliver solid,
long-term investment returns to our investors.

REPRESENTATIVE HOLDINGS

TAM Transport Aereos, Brazil
Samsung Electronics, South Korea
ASM Pacific, Hong Kong
CPT Telefonica de Peru, Peru
China Hong Kong Photo, Hong Kong
Oyl Industries, Malaysia
Telec de Sao Paulo, Brazil
Transportacion Maratima Mexicana, Mexico
C&P Homes, Philippines
Korea Mobile Telecom, South Korea

- --------------------------------------------------------------------------------

28
<PAGE>
A CONVERSATION WITH LARRY SPEIDELL
- -------------------------------------------------------------------

Larry Speidell
[PHOTO] Portfolio Manager
Emerging Countries Portfolio

Q. LARRY, THE EMERGING COUNTRIES PORTFOLIO TURNED
IN OUTSTANDING PERFORMANCE IN ITS CLASS FROM APRIL THROUGH SEPTEMBER. WHAT WAS
THE NICHOLAS-APPLEGATE TEAM DOING THAT WAS SO DIFFERENT FROM OTHER
EMERGING-MARKETS PORTFOLIO MANAGERS TO ACCOUNT FOR THIS SUCCESS?

A. Our investing style is truly bottom-up in nature.
We look for companies that are growing their earnings streams in ways that can
be sustained and that will receive market recognition. To make this style work
in the emerging markets of the world, we developed tools enabling us to make
direct comparisons on a company-by-company basis across industry lines and
national boundaries. I think our performance indicates that our traditional and
systematic research tools and our investing disciplines work very well in these
markets.

Q. EMERGING-MARKET STOCKS HAVE DISPLAYED SOME
RATHER WIDE PRICE SWINGS IN RECENT YEARS. IS THIS THE NATURE OF INVESTING IN
THESE MARKETS?

A. Capital markets, whether they are domestic or
international, established or emerging, typically are subject to random,
short-term cycles of advances and declines. Some markets, such as those for
small-company domestic stocks or international emerging-market stocks, have more
pronounced price swings than others. Generally, the markets that hold out the
prospects for the greatest long-term growth also are subject to greater
short-term fluctuations. We think the prospects for long-term growth from
emerging markets are exceptional, but we also expect some fluctuation along the
way. Most importantly, we believe that, managed properly, these fluctuations can
enhance long-term returns.

Q. GIVEN THESE FREQUENT AND PRONOUNCED PRICE
SWINGS, COULD STOCKS IN EMERGING MARKET COUNTRIES BE CONSIDERED A BIT RISKY FOR
THE AVERAGE INVESTOR?

A. To me, the term "average investor" conjures an
image of someone who is working for a living and trying to save for retirement
and maybe for the college education of a child or two. I think this investor
really needs to take advantage of the long-term investment opportunities
presented by emerging-markets companies. But the average investor also needs to
be mindful of his or her investing time horizon and how emerging-market stocks
will work with the other investments in his or her portfolio. That's why I
encourage investors to discuss these choices with their financial consultant and
to remain focused on meeting their long-term goals.

Q. WHAT MAKES A GOOD EMERGING-COUNTRIES
INVESTMENT?

A. We think good emerging-countries investments
have many of the same qualities as good domestic investments. Emerging countries
are the fastest growing parts of the world economy. The best emerging countries
investments tend to be companies that are managed to take advantage of
opportunities resulting from the rapid changes accompanying that growth. Some of
those changes might result from infrastructure spending, privatization efforts,
new manufacturing opportunities or a burgeoning consumer culture. The effect is
to open up new markets or new niches. We think the best emerging

- --------------------------------------------------------------------------------

29
<PAGE>
- -------------------------------------------------------------------
countries investments are the resourceful companies that are capturing these
market opportunities and prospering from them.

Q. CAN YOU GIVE SOME EXAMPLES OF THE PORTFOLIO'S
RECENT BUYS AND SELLS?

A. Sure, we recently bought shares of K.R.
Precision, a Thailand company that manufactures suspension assemblies for
personal computer disk drives. K.R. commands a 10% share of the market for this
component but is a low-cost producer. The company's excellent product quality
has contributed to its growth in sales and earnings. We also bought Barlow, a
building materials company that we believe is poised to grow as it helps to
build a new South Africa. We sold our position in Land & General, a Malaysian
conglomerate with concentrations in real estate, mining and timber. We think the
Malaysian growth story is ultimately a good one and that Land & General is a
well-run company. However, earnings have been impacted by wet weather and slow
property sales and company fundamentals are also changing as a result of a
fairly high rate of inflation.

- --------------------------------------------------------------------------------

30
<PAGE>
EMERGING COUNTRIES PORTFOLIO A
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING COUNTRIES PORTFOLIO A WITH THE IFC INVESTABLE INDEX

TOTAL RETURN SINCE INCEPTION
(11/28/94 -- 09/30/95)
1.66%

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
Emerging Countries Portfolio A IFC Investable Index
<S> <C> <C>
11/28/94 9475 10000
12/94 9052 8460
3/95 8332 7234
6/95 9583 7865
9/95 10166 7833
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Emerging Countries Portfolio A (front load) with the
International Finance Corporation ("IFC") Investable Index from the commencement
of operations of the Portfolio on November 28, 1994 to the end of the Trust's
semi-annual period on September 30, 1995, on a cumulative basis. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses applicable to the
Portfolio. The maximum sales charge is reflected in the total return
computation.

The IFC Investable Index measures the performance of more than 1,100 stocks that
are legally and practically available in 25 emerging market countries of the
world. The Index is unmanaged.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

31
<PAGE>
EMERGING COUNTRIES PORTFOLIO B
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING COUNTRIES PORTFOLIO B WITH THE IFC INVESTABLE INDEX.

<TABLE>
<S> <C>
TOTAL RETURN SINCE INCEPTION
(05/31/95 -- 09/30/95)
1.61%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
Emerging Countries Portfolio B IFC Investable Index
<S> <C> <C>
5/31/95 10000 10000
6/95 9591 10059
7/95 10222 10379
8/95 10154 10101
9/95 10161 10019
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Emerging Countries Portfolio B (back-end load) with
the International Finance Corporation ("IFC") Investable Index from the
commencement of operations of the Portfolio on May 31, 1995 to the end of the
Trust's semi-annual period on September 30, 1995, on a cumulative basis. All
return calculations reflect the reinvestment of income dividends and capital
gains distributions, if any, as well as all fees and expenses applicable to the
Portfolio. The maximum contingent deferred sales charge is included in the total
return computation.

The IFC Investable Index is unmanaged and measures the performance of more than
1,100 stocks that are legally and practically available in 25 emerging market
countries of the world.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

32
<PAGE>
EMERGING COUNTRIES PORTFOLIO C
- -------------------------------------------------------------------

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN NICHOLAS-APPLEGATE
EMERGING COUNTRIES PORTFOLIO C WITH THE IFC INVESTABLE INDEX

TOTAL RETURN SINCE INCEPTION
(11/28/94 -- 09/30/95)
3.56%

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
Emerging Countries Institutional Portfolio IFC Investable Index
<S> <C> <C>
11/28/94 9900 10000
12/94 9373 8460
3/95 8533 7234
6/95 9777 7865
9/95 10356 7833
</TABLE>

This graph is furnished to you in accordance with SEC regulations. It compares a
$10,000 investment in the Emerging Countries Portfolio C (level load) with the
International Finance Corporation ("IFC") Investable Index from the commencement
of operations of the Portfolio on November 28, 1994 to the end of the Trust's
semi-annual period on September 30, 1995, on a cumulative basis. All return
calculations reflect the reinvestment of income dividends and capital gains
distributions, if any, as well as all fees and expenses applicable to the
Portfolio. A 1.00% redemption fee applicable to withdrawals made within one year
of investment is reflected in the total return computation.

The IFC Investable Index measures the performance of more than 1,100 stocks that
are legally and practically available to outside investors in 25 emerging market
countries of the world. The Index is unmanaged.

The Index reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

Past performance is no guarantee of future performance of any index or
Nicholas-Applegate Mutual Funds.

- --------------------------------------------------------------------------------

33
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------

EMERGING
COUNTRIES FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS -- 85.8%
- ----------------------------------------------

<TABLE>
<S> <C> <C>
ARGENTINA -- 3.7%
Capex S. A. -- A....... 11,500 $ 86,250
Compania Naviera Perez
Companc S. A. -- B... 29,500 129,210
Siderca S.A. -- A...... 82,000 64,124
----------
279,584
----------
BRAZIL -- 6.8%
Aracruz Celulose S. A.
-- Preferred B....... 36,000 74,386
Ficap Marvin S.A. --
Preferred*........... 300,000 59,157
Itausa Investimentos
S.A.................. 100,000 62,933
Tam Transportes Aereos
Regionais S.A........ 5,030,000 164,659
Telecomunicacoes de Sao
Paulo S. A. --
Preferred............ 510,000 83,235
Unipar-Uniao de
Industrias
Petroquimicas S. A.
-- Preferred B....... 51,863 66,909
----------
511,279
----------
HONG KONG -- 9.8%
ASM Pacific
Technology........... 144,000 137,822
China Hong Kong Photo
Production........... 246,000 113,746
Kingboard Chemicals
Holdings LTD......... 390,000 121,060
Luoyang Glass Company
LTD (China).......... 96,000 38,491
Sinocan Holdings LTD... 458,000 168,824
Varitronix
International LTD.... 78,000 158,891
----------
738,834
----------
INDONESIA -- 5.3%
PT Indorama
Synthetics........... 25,000 83,628
PT Kalbe Farma......... 8,000 31,972
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
INDONESIA (CONTINUED)
PT Roda Vivatex........ 34,500 $ 25,519
PT Semen Gresik........ 26,000 73,482
PT Sorini
Corporation.......... 7,000 40,185
PT Sorini Corporation
Local................ 6,000 34,445
PT Tigaraksa Satria.... 11,000 40,561
PT Wicaksana Overseas.. 26,000 69,463
----------
399,255
----------
KOREA -- 2.3%
Korea Electric Power
Corp.*............... 1,670 69,352
Korea Mobile
Telecommunications,
Corp.*............... 60 63,892
Samsung Electronics --
Preferred NV*........ 310 40,626
Samsung Electronics --
Preferred NV -- New.. 3 647
----------
174,517
----------
MALAYSIA -- 3.0%
O. Y. L. Industries
BHD.................. 11,000 91,065
Sistem Televisyen
Malaysia BHD......... 20,000 60,895
United Engineers LTD... 12,000 76,896
----------
228,856
----------
MEXICO -- 9.7%
ALFA, S.A. de C.V. --
A.................... 2,000 26,907
Cemex S.A. -- B........ 11,000 49,272
Gruma S.A.*............ 27,000 89,436
Grupo Carso S.A.*...... 17,000 106,500
Grupo Financiero
Inbursa S. A. -- B... 20,000 67,972
Grupo Modelo S.A. --
C.................... 16,000 60,392
Industrias Penoles S.
A. -- CP............. 25,000 93,187
Tablex S.A. de C.V.*... 52,000 95,286
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

34
<PAGE>
- -------------------------------------------------------------------

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
MEXICO (CONTINUED)
Transportacion Maratima
Mexicana S. A. --
A*................... 9,000 $ 63,148
Transportacion Maratima
Mexicana S. A. --
L*................... 10,000 79,718
----------
731,818
----------
PERU -- 2.4%
Cementos Norte
Pacasmayo*........... 11,748 27,375
CPT Telefonica de Peru
S.A. -- B............ 66,663 127,231
Enrique Ferreyros S.
A.................... 24,310 29,025
----------
183,631
----------
PHILIPPINES -- 2.9%
Bankard, Inc.*......... 90,000 33,231
C & P Homes, Inc.*..... 107,500 67,188
Selecta Dairy Products,
Inc.*................ 200,000 21,154
Southeast Asia Cement
Holdings, Inc.*...... 520,000 66,000
Steniel Manufacturing
Corp................. 150,000 29,423
----------
216,996
----------
SOUTH AFRICA -- 1.4%
Barlow LTD*............ 3,000 33,895
Dorbyl Limited......... 2,800 33,840
Pick'n Pay Stores
LTD*................. 11,000 33,895
----------
101,630
----------
THAILAND -- 7.8%
K.R. Precision Public
Co. LTD -- Local*.... 14,400 85,499
Land and House Company
LTD -- Foreign....... 4,000 62,801
PTT Exploration and
Production --
Foreign.............. 13,000 126,400
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
THAILAND (CONTINUED)
Serm Suk Co. LTD --
Local*............... 2,000 $ 25,184
Serm Suk Co. LTD --
Foreign.............. 3,000 37,776
Srithai Superware
Company LTD --
Foreign.............. 10,000 75,314
Thai Stanley Electric
Co., LTD --
Foreign*............. 15,000 41,243
Tipco Asphalt Co. LTD
-- Local............. 14,800 77,848
United Communication
Industry --
Foreign.............. 4,000 51,963
----------
584,028
----------
TURKEY -- 2.8%
Demirbank T. A. S.*.... 162,000 13,763
Eregli Demir Ve Celik
Fabrikalari T.A.S.... 570,000 70,010
Netas Telekomunik...... 56,000 21,781
Tat Konserve Sanayii A.
S.................... 37,000 24,616
Trakya Cam Sanayii A.
S.................... 138,000 15,255
Turk Siemens Kablo Ve
Elektrik Sanayii A.
S.................... 240,000 65,097
----------
210,522
----------
UNITED STATES OF
AMERICA++ -- 27.8%
Cementos Diamante S. A.
(Columbia)*+......... 3,400 56,049
China Yuchai
International LTD
(China).............. 5,000 61,250
Coca-Cola Femsa S. A.
-- ADR (Mexico)...... 3,500 69,125
Czech Republic Fund,
Inc.................. 3,200 41,200
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

35
<PAGE>
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (UNAUDITED) -- CONTINUED
- --------------------------------------------------------------------------------

EMERGING
COUNTRIES FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF
AMERICA++ (CONTINUED)
Ek Chor China
Motorcycle Co. LTD
(China).............. 6,400 $ 104,000
Emerson Radio Corp.
(Hong Kong)*......... 38,800 116,400
Erciyas Biracilik VE
Malt Sanayii
(Turkey)*+........... 4,000 49,564
Flextronics
International LTD
(Singapore)*......... 4,900 126,175
GT Chile Growth Fund... 1,200 47,100
Gujarat Ambuja Cements
-- GDR (India)....... 3,600 30,600
Hansol Paper LTD -- GDR
(South Korea)*....... 1,900 40,563
India Growth Fund,
Inc.*................ 2,900 50,025
Irsa, Inversiones y
Representaciones S.
A. -- GDR
(Argentina)*......... 3,000 72,000
Korea Fund, Inc........ 1,400 30,975
L.G. Electronics, Inc.
GDR (South Korea)*... 2,800 34,664
L.G. Electronics GDR --
New (South Korea).... 162 2,730
La Cementos Nacional
144A (Ecuador)*+..... 230 49,450
Moneda Chile Fund
LTD*................. 10,000 101,250
Morgan Stanley India
Investment Fund,
Inc.................. 10,000 103,750
Pakistan Investment
Fund, Inc............ 7,600 50,350
Perusahaan Perseroan
Industries -- ADR
(Indonesia).......... 800 28,100
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF
AMERICA++ (CONTINUED)
Rhodia Ster S.A. -- GDR
(Brazil)............. 9,000 $ 120,870
R.O.C. Taiwan Fund*.... 1,000 10,625
Samsung Electronics LTD
-- GDS (South
Korea)*.............. 1,600 113,600
Samsung Electronics LTD
-- GDS -- New (South
Korea)*.............. 197 12,588
Samsung Electronics LTD
-- GDR 144A (South
Korea)*.............. 20 1,278
SDL, Inc.*............. 1,950 55,088
Siliconware Precision
GDR (Taiwan)*........ 9,000 148,500
Taiwan Fund, Inc....... 3,750 83,906
Telecomunicacoes
Brasileiras S.A. --
ADR (Brazil)......... 3,200 150,422
Tower Semiconductor LTD
(Israel)*............ 1,000 32,500
Usiminas S. A. -- ADR
(Brazil)*+........... 8,200 90,339
----------
2,085,036
----------
TOTAL COMMON STOCKS
(Cost $6,048,047).................. 6,445,986
----------
<CAPTION>

PRINCIPAL
AMOUNT
<S> <C> <C>
- -------------------------------------------------
COMMERCIAL PAPER -- 13.1%
- -------------------------------------------------
Melville
6.650%, 10/02/95..... $ 361,000 360,867
JP Morgan
6.500%, 10/02/95..... 620,000 619,776
----------
TOTAL COMMERCIAL PAPER
(Cost $980,643).................... 980,643
----------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

36
<PAGE>
- -------------------------------------------------------------------

PRINCIPAL
AMOUNT VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -- 98.9%
(Cost $7,028,690).................. $7,426,629
OTHER ASSETS
LESS LIABILITIES -- 1.1%........... 84,337
----------
NET ASSETS -- 100.0%................. $7,510,966
----------
</TABLE>

- ------------
* Non-income producing security

+ Rule 144A restricted security

++ These securities are classified as United States securities as their
underlying currency is the U.S. Dollar.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

37
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF SEPTEMBER 30, 1995 (UNAUDITED)
- ------------------------------------------------------------------------

EMERGING COUNTRIES FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Agriculture................................... 1.3%
Airlines...................................... 2.3
Alcoholic Beverages........................... 0.9
Automobiles................................... 1.4
Beverages/Soft Drinks......................... 1.8
Broadcasting.................................. 0.8
Building Materials............................ 5.7
Closed End Country Funds...................... 7.0
Containers.................................... 3.9
Department Discount Stores.................... 0.5
Drugs/Pharmaceuticals......................... 0.4
Electric Utilities............................ 2.1
Electronic Instruments........................ 0.5
Finance Companies............................. 0.5
Gambling...................................... 0.7
Grocery Products.............................. 3.0
Home Furnishings.............................. 0.8
Homebuilding.................................. 0.9
Industrial Engineering........................ 1.5
Integrated Oil Companies...................... 1.8

<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Metals........................................ 3.1%
Money-Center Banks............................ 0.2
Oil/Gas Production............................ 2.7
Other Consumer Services....................... 2.3
Other Consumer Non-Durables................... 2.9
Other Consumer Durables....................... 1.5
Other Financial Services...................... 1.7
Other Manufacturing........................... 5.1
Other Transportation.......................... 2.0
Paper......................................... 2.0
Photographic Products......................... 1.5
Real Estate Brokers........................... 3.1
Semiconductors................................ 14.2
Telecommunications Equipment.................. 3.4
Telephone..................................... 3.7
Textiles...................................... 6.0
Wholesale Distribution........................ 5.7
Other Assets Less Liabilities................. 1.1
-----
TOTAL......................................... 100.0%
-----
-----
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

38
<PAGE>
(This page intentionally left blank)

- --------------------------------------------------------------------------------

39
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------

SERIES A PORTFOLIOS

<TABLE>
<CAPTION>
NET
ASSET
VALUES
AT NET NET REALIZED
BEGINNING INVESTMENT AND UNREALIZED
OF INCOME GAINS (LOSSES)
PERIOD (DEFICIT) ON INVESTMENTS
<S> <C> <C> <C>
- -----------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... $14.29 $(0.02) $2.24
Portfolio A (For the year
ended 03/31/95)........... 14.94 (0.05) (0.09)
Portfolio A (For the period
ended 03/31/94)*.......... 12.50 (0.07) 2.51
INTERNATIONAL GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 11.51 0.02 0.94
Portfolio A (For the period
ended 03/31/95)*.......... 12.50 -- (0.98)
EMERGING COUNTRIES
Portfolio A (For the period
ended 09/30/95)#.......... 11.00 (0.02) 2.43
Portfolio A (For the period
ended 03/31/95)*.......... 12.50 0.04 (1.53)
</TABLE>

- ------------
*Worldwide Growth Portfolio A, International Growth Porfolio A and Emerging
Countries Portfolio A commenced operations on April 19, 1993, August 31, 1994
and November 28, 1994, respectively.

**Annualized.

***The Portfolio's maximum sales charge is not included in the total return
computation.

+Net of expense reimbursement equivalent to 0.25%, 0.33%, 0.38%, 5.22%, 7.82%,
2.53% and 3.90% of average net assets, respectively.

++Including expenses allocated from the Master Trust Worldwide Growth Fund,
International Growth Fund and Emerging Countries Fund of 1.20%, 1.20%,
1.20%, 1.35%, 1.35%, 1.60% and 0.54% respectively, net of expense
reimbursement equivalent to 0.09%, 0.10%, 0.16%, 0.37%, 0.50%, 1.25% and
0.21% of average net assets of the Funds, respectively.

#Unaudited.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

40
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
FROM NET NET ASSET
INVESTMENT DISTRIBUTIONS VALUES AT TOTAL NET ASSETS AT
INCOME FROM CAPITAL GAINS END OF PERIOD RETURN*** END OF PERIOD
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... $ -- $ -- $16.51 15.54% $ 23,290,206
Portfolio A (For the year
ended 03/31/95)........... (0.02) (0.49) 14.29 (0.90)% 22,207,775
Portfolio A (For the period
ended 03/31/94)*.......... -- -- 14.94 19.52% 20,194,105
INTERNATIONAL GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... -- -- 12.47 8.34% 805,988
Portfolio A (For the period
ended 03/31/95)*.......... (0.01) -- 11.51 (7.85%) 610,176
EMERGING COUNTRIES
Portfolio A (For the period
ended 09/30/95)#.......... -- -- 13.41 21.91% 2,501,282
Portfolio A (For the period
ended 03/31/95)*.......... (0.01) -- 11.00 (11.98%) 1,197,361

<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE NET (DEFICIT) TO AVERAGE
ASSETS+++ NET ASSETS+++
<S> <C> <C>
- ------------------------------
WORLDWIDE GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 1.85%** 0.11%**
Portfolio A (For the year
ended 03/31/95)........... 1.85% (0.42%)
Portfolio A (For the period
ended 03/31/94)*.......... 1.85%** (0.69%)**
INTERNATIONAL GROWTH
Portfolio A (For the period
ended 09/30/95)#.......... 1.95%** 0.30%**
Portfolio A (For the period
ended 03/31/95)*.......... 1.95%** (0.31%)**
EMERGING COUNTRIES
Portfolio A (For the period
ended 09/30/95)#.......... 2.25%** (0.01%)**
Portfolio A (For the period
ended 03/31/95)*.......... 2.25%** 1.09%**
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

41
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS (UNAUDITED)
- -------------------------------------------------------------------

SERIES B PORTFOLIOS

- ------------
*Worldwide Growth Portfolio B, International Growth Portfolio B and Emerging
Countries Portfolio B commenced operations on May 31, 1995. These Financial
Highlights have not been audited.

**Annualized.

***The Portfolio's maximum sales charge is not included in the total return
computation.

+Net of expense reimbursement equivalent to 35.11%, 61.30% and 12.60% of
average net assets, respectively.

++Including expenses allocated from the Master Trust Worldwide Growth Fund,
International Growth Fund and Emerging Countries Fund of 1.20%, 1.72% and
1.60%, respectively, net of expense reimbursement equivalent to 0.09%, 0.37%
and 1.25% of average net assets of the Funds, respectively.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

42
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
FROM NET NET ASSET
INVESTMENT DISTRIBUTIONS VALUES AT TOTAL NET ASSETS AT
INCOME FROM CAPITAL GAINS END OF PERIOD RETURN*** END OF PERIOD
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... $ -- $ -- $13.88 11.04% $ 245,640
INTERNATIONAL GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... -- -- 13.15 5.20% 86,670
EMERGING COUNTRIES
Portfolio B (For the period
ended 09/30/95)*.......... -- -- 13.37 6.96% 713,490

<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE (DEFICIT) TO AVERAGE
NET ASSETS+++ NET ASSETS+++
<S> <C> <C>
- ------------------------------
WORLDWIDE GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 2.50%** (1.18%)**
INTERNATIONAL GROWTH
Portfolio B (For the period
ended 09/30/95)*.......... 2.97%** (0.71%)**
EMERGING COUNTRIES
Portfolio B (For the period
ended 09/30/95)*.......... 2.90%** (1.03%)**
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

43
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------

SERIES C PORTFOLIOS

<TABLE>
<CAPTION>
NET
ASSET
VALUES
AT NET NET REALIZED
BEGINNING INVESTMENT AND UNREALIZED
OF INCOME GAINS (LOSSES)
PERIOD (DEFICIT) ON INVESTMENTS
<S> <C> <C> <C>
- -----------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... $14.44 $(0.07) $2.25
Portfolio C (For the period
ended 03/31/95)........... 14.86 (0.15) (0.08)
Portfolio C (For the period
ended 03/31/94)*.......... 12.50 (0.09) 2.45
INTERNATIONAL GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 11.32 (0.04) 0.93
Portfolio C (For the period
ended 03/31/95)*.......... 12.50 (0.04) (1.12)
EMERGING COUNTRIES
Portfolio C (For the period
ended 09/30/95)#.......... 10.79 (0.02) 2.30
Portfolio C (For the period
ended 03/31/95)*.......... 12.50 -- (1.71)
</TABLE>

- ------------
*Worldwide Growth Portfolio C, International Growth Porfolio C and Emerging
Countries Portfolio C commenced operations on April 19, 1993, August 31, 1994
and November 28, 1994, respectively.

**Annualized.

***The Portfolio's maximum sales charge is not included in the total return
computation.

+Net of expense reimbursement equivalent to 0.05%, 0.07%, 0.00%, 25.94%,
72.76%, 7.51% and 239.69% of average net assets, respectively.

++Including expenses allocated from the Master Trust Worldwide Growth Fund,
International Growth Fund and Emerging Countries Fund of 1.20%, 1.20%,
1.20%, 1.72%, 1.35%, 1.60% and 0.54%, respectively, net of expense
reimbursement equivalent to 0.09%, 0.10%, 0.16%, 0.37%, 0.50%, 1.25% and
0.21% of average net assets of the Funds, respectively.

#Unaudited.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

44
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS
FROM NET NET ASSET
INVESTMENT DISTRIBUTIONS VALUES AT TOTAL NET ASSETS AT
INCOME FROM CAPITAL GAINS END OF PERIOD RETURN*** END OF PERIOD
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... $ -- $ -- $16.62 15.10% $ 72,714,223
Portfolio C (For the period
ended 03/31/95)........... -- (0.19) 14.44 (1.49%) 71,200,715
Portfolio C (For the period
ended 03/31/94)*.......... -- -- 14.86 18.88% 66,576,743
INTERNATIONAL GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... -- -- 12.29 8.57% 343,291
Portfolio C (For the period
ended 03/31/95)*.......... (0.02) -- 11.32 (9.25%) 24,066
EMERGING COUNTRIES
Portfolio C (For the period
ended 09/30/95)#.......... -- -- 13.07 21.13% 1,223,726
Portfolio C (For the period
ended 03/31/95)*.......... -- -- 10.79 (13.64%) 59,366

<CAPTION>
RATIO OF NET
RATIO OF EXPENSES INVESTMENT INCOME
TO AVERAGE NET (DEFICIT) TO AVERAGE
ASSETS+++ NET ASSETS+++
<S> <C> <C>
- ------------------------------
WORLDWIDE GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 2.50%** (0.52%)**
Portfolio C (For the period
ended 03/31/95)........... 2.50% (1.06%)
Portfolio C (For the period
ended 03/31/94)*.......... 2.44%** (1.24%)**
INTERNATIONAL GROWTH
Portfolio C (For the period
ended 09/30/95)#.......... 2.60%** (0.51%)**
Portfolio C (For the period
ended 03/31/95)*.......... 2.61%** (0.76%)**
EMERGING COUNTRIES
Portfolio C (For the period
ended 09/30/95)#.......... 2.90%** (0.96%)**
Portfolio C (For the period
ended 03/31/95)*.......... 2.90%** (0.04%)**
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

45
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1995
(UNAUDITED)
- -------------------------------------------------------------------

Series A, B and C Portfolios

<TABLE>
<CAPTION>
WORLDWIDE GROWTH
--------------------------------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C
<S> <C> <C> <C>
--------------------------------------
ASSETS
Investment in Master Trust
Fund, at value
(Cost $18,124,584,
$237,841, $58,373,975,
$753,889, $83,104,
$334,470, $2,333,770,
$715,025, and
$1,201,425,
respectively)........... $23,270,938 $246,017 $72,795,200
Receivables:
Shares of beneficial
interest sold........... 2,790 21,994 48,921
Investments sold in Master
Trust Fund.............. 2,450 -- 63,195
Due from advisor.......... 4,547 3,470 57
Deferred organization
costs..................... 17,172 942 18,550
Other assets................ -- 14,772 --
--------------------------------------
Total assets............ 23,297,897 287,195 72,925,923
--------------------------------------
LIABILITIES
Payables:
Investments purchased in
Master Trust Fund....... 2,790 22,001 48,921
Shares of beneficial
interest repurchased.... 2,450 -- 63,195
Accrued expenses............ 2,451 19,554 99,584
--------------------------------------
Total liabilities....... 7,691 41,555 211,700
--------------------------------------
NET ASSETS.................... $23,290,206 $245,640 $72,714,223
--------------------------------------
COMPOSITION OF NET ASSETS
Paid in capital............. $19,245,248 $237,841 $61,158,793
Accumulated undistributed
net investment income
(deficit)................. (196,855) (342) (1,375,971)
Accumulated undistributed
net realized gain (loss)
on security
transactions.............. 867,166 782 2,534,066
Accumulated undistributed
foreign exchange gain
(loss).................... 223,164 307 734,417
Net unrealized foreign
exchange gain (loss)...... 2,532 (9) 7,656
Net unrealized appreciation
of investments............ 3,148,951 7,061 9,655,262
--------------------------------------
Net assets.............. $23,290,206 $245,640 $72,714,223
--------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 1,410,286 17,703 4,373,889
--------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/Outstanding shares
of beneficial interest)... $16.51 $13.88 $16.62
--------------------------------------
MAXIMUM OFFERING PRICE PER
SHARE OF PORTFOLIO A
($16.51/94.75%,
$12.47/94.75%, and
$13.41/94.75%,
respectively)............... $17.42 -- --
--------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

46
<PAGE>
- -------------------------------------------------------------------

<TABLE>
<CAPTION>
INTERNATIONAL GROWTH EMERGING COUNTRIES
--------------------------------------- ---------------------------------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C PORTFOLIO A PORTFOLIO B PORTFOLIO C
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
ASSETS
Investment in Master Trust
Fund, at value
(Cost $18,124,584,
$237,841, $58,373,975,
$753,889, $83,104,
$334,470, $2,333,770,
$715,025, and
$1,201,425,
respectively)........... $804,963 $ 86,878 $343,824 $ 2,509,211 $714,711 $ 1,226,684
Receivables:
Shares of beneficial
interest sold........... -- -- -- 81,830 18,306 25,008
Investments sold in Master
Trust Fund.............. -- -- 20,000 -- -- 6,333
Due from advisor.......... 3,005 3,368 2,627 4,952 3,782 3,866
Deferred organization
costs..................... -- 943 -- 6,495 943 2,291
Other assets................ -- 14,818 -- -- 15,740 4,363
---------------------------------------------------------------------------------
Total assets............ 807,968 106,007 366,451 2,602,488 753,482 1,268,545
---------------------------------------------------------------------------------
LIABILITIES
Payables:
Investments purchased in
Master Trust Fund....... -- 64 20,000 81,830 18,306 25,008
Shares of beneficial
interest repurchased.... -- -- -- -- -- 6,333
Accrued expenses............ 1,980 19,273 3,160 19,376 21,686 13,478
---------------------------------------------------------------------------------
Total liabilities....... 1,980 19,337 23,160 101,206 39,992 44,819
---------------------------------------------------------------------------------
NET ASSETS.................... $805,988 $ 86,670 $343,291 $ 2,501,282 $713,490 $ 1,223,726
---------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid in capital............. $758,244 $ 83,104 $334,998 $ 2,333,902 $715,025 $ 1,201,426
Accumulated undistributed
net investment income
(deficit)................. 877 (119) (483) 3,438 (974) (2,127)
Accumulated undistributed
net realized gain (loss)
on security
transactions.............. (17,674) (573) (3,447) 10,487 (6,354) 2,410
Accumulated undistributed
foreign exchange gain
(loss).................... 9,384 469 933 (2,334) (222) (553)
Net unrealized foreign
exchange gain (loss)...... 1,080 65 169 (688) (25) (100)
Net unrealized appreciation
of investments............ 54,077 3,724 11,121 156,477 6,040 22,670
---------------------------------------------------------------------------------
Net assets.............. $805,988 $ 86,670 $343,291 $ 2,501,282 $713,490 $ 1,223,726
---------------------------------------------------------------------------------
Shares of beneficial interest,
no par value, issued and
outstanding (unlimited
shares authorized).......... 64,614 6,592 27,930 186,547 53,380 93,600
---------------------------------------------------------------------------------
COMPUTATION OF
Net asset value per share of
beneficial interest (Net
assets/Outstanding shares
of beneficial interest)... $12.47 $13.15 $12.29 $13.41 $13.37 $13.07
---------------------------------------------------------------------------------
MAXIMUM OFFERING PRICE PER
SHARE OF PORTFOLIO A
($16.51/94.75%,
$12.47/94.75%, and
$13.41/94.75%,
respectively)............... $13.16 -- -- $14.15 -- --
---------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

47
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1995
(UNAUDITED)
- -------------------------------------------------------------------

<TABLE>
<CAPTION>
WORLDWIDE GROWTH
-------------------------------------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C
<S> <C> <C> <C>
-------------------------------------------
INVESTMENT INCOME
Net investment income from
Master Trust Fund......... $ 86,492 $ 35 $ 274,176
-------------------------------------------
EXPENSES
Accounting fees........... 15,600 780 15,600
Administration fees....... 3,315 9 10,423
Audit fees................ 3,603 2,580 6,274
Distribution fees......... 28,503 217 269,146
Insurance................. 139 -- 435
Legal fees................ 4,251 6 11,125
Miscellaneous............. 398 113 1,252
Organization costs........ 3,370 71 3,642
Registration fees......... 2,531 4,364 7,801
Shareholder reporting
fees.................... 6,932 1,485 20,757
Shareholder servicing
fees.................... 11,401 73 89,715
Transfer agent fees....... 21,815 162 45,609
Trustees' fees............ 477 718 1,502
-------------------------------------------
Total expenses.......... 102,335 10,578 483,281
Less: Reimbursement due
from advisor............ (28,227) (10,201) (16,762)
-------------------------------------------
Net expenses............ 74,108 377 466,519
-------------------------------------------
Net investment income
(deficit).......... 12,384 (342) (192,343)
-------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions............ 1,443,487 782 4,255,859
Net realized foreign
exchange gain (loss).... 209,888 307 641,446
Change in net unrealized
appreciation of
investments and foreign
currency................ 1,621,767 7,052 5,380,472
-------------------------------------------
Net gain (loss) on
investments........... 3,275,142 8,141 10,277,777
-------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 3,287,526 $ 7,799 $ 10,085,434
-------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

48
<PAGE>
- -------------------------------------------------------------------

<TABLE>
<CAPTION>
INTERNATIONAL GROWTH EMERGING COUNTRIES
------------------------------------------ ------------------------------------------
PORTFOLIO A PORTFOLIO B PORTFOLIO C PORTFOLIO A PORTFOLIO B PORTFOLIO C
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INVESTMENT INCOME
Net investment income from
Master Trust Fund......... $ 3,408 $ 89 $ 513 $ 5,574 $ 247 $ 763
---------------------------------------------------------------------------------------
EXPENSES
Accounting fees........... 11,700 780 11,700 8,580 780 8,580
Administration fees....... 623 27 113 5,235 456 1,154
Audit fees................ 3,422 2,671 3,416 3,426 2,668 3,416
Distribution fees......... 941 125 520 5,485 704 1,666
Insurance................. 329 -- 246 8 1 5
Legal fees................ 140 24 25 325 17 79
Miscellaneous............. 13 74 2 29 270 5
Organization costs........ -- 71 -- 242 71 85
Registration fees......... 120 4,364 30 268 4,364 82
Shareholder reporting
fees.................... -- 1,391 -- 454 2,636 718
Shareholder servicing
fees.................... 376 42 173 880 235 555
Transfer agent fees....... 4,254 162 2,689 3,081 162 3,250
Trustees' fees............ 16 718 3 37 718 9
---------------------------------------------------------------------------------------
Total expenses.......... 21,934 10,449 18,917 28,050 13,082 19,604
Less: Reimbursement due
from advisor............ (19,676) (10,241) (18,050) (22,328) (11,861) (16,717)
---------------------------------------------------------------------------------------
Net expenses............ 2,258 208 867 5,722 1,221 2,887
---------------------------------------------------------------------------------------
Net investment income
(deficit).......... 1,150 (119) (354) (148) (974) (2,124)
---------------------------------------------------------------------------------------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions............ (5,141) (573) (2,395) 55,494 (6,354) 2,497
Net realized foreign
exchange gain (loss).... 8,022 469 813 (2,495) (222) (555)
Change in net unrealized
appreciation of
investments and foreign
currency................ 51,853 3,789 11,152 233,058 6,015 21,423
---------------------------------------------------------------------------------------
Net gain (loss) on
investments........... 54,734 3,685 9,570 286,057 (561) 23,365
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 55,884 $ 3,566 $ 9,216 $ 285,909 $ (1,535) $ 21,241
---------------------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

49
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

SERIES A PORTFOLIOS

<TABLE>
<CAPTION>
WORLDWIDE GROWTH INTERNATIONAL GROWTH EMERGING COUNTRIES
------------------------------- ------------------------------- -------------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
ENDED ENDED FOR THE PERIOD ENDED FOR THE PERIOD
SEPTEMBER 30, FOR THE YEAR SEPTEMBER 30, ENDED SEPTEMBER 30, ENDED
1995 ENDED 1995 MARCH 31, 1995 MARCH 31,
(UNAUDITED) MARCH 31, 1995 (UNAUDITED) 1995* (UNAUDITED) 1995**
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income
(deficit)................ $ 12,384 $ (93,101) $ 1,150 $ (106) $ (148) $ 3,718
Net realized gain (loss)
from security
transactions............. 1,443,487 (194,764) (5,141) (12,533) 55,494 (45,007)
Net realized foreign
exchange gain (loss)..... 209,888 62,076 8,022 1,362 (2,495) 161
Change in net unrealized
appreciation
(depreciation) on
investments and foreign
currency................. 1,621,767 (85,130) 51,853 3,304 233,058 (77,269)
---------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations........ 3,287,526 (310,919) 55,884 (7,973) 285,909 (118,397)
---------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income+.... -- (28,122) -- (166) -- (132)
Capital gains+............ -- (771,570) -- -- -- --
---------------------------------------------------------------------------------------------------
Total distributions..... -- (799,692) -- (166) -- (132)
---------------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold..................... 804,393 7,644,658 243,393 633,855 1,276,804 1,335,363
Proceeds from shares
issued for distribution
reinvestment............. -- 66,649 -- 56 -- 66
Cost of shares
repurchased.............. (3,009,488) (4,587,026) (103,464) (16,596) (258,792) (20,539)
---------------------------------------------------------------------------------------------------
Increase (decrease) in
net assets from
transactions in shares
of beneficial
interest............... (2,205,095) 3,124,281 139,929 617,315 1,018,012 1,314,890
---------------------------------------------------------------------------------------------------
Total increase in net
assets................. 1,082,431 2,013,670 195,813 609,176 1,303,921 1,196,361
NET ASSETS:
BEGINNING OF PERIOD......... 22,207,775 20,194,105 610,176 1,000 1,197,361 1,000
---------------------------------------------------------------------------------------------------
END OF PERIOD............... $ 23,290,206 $ 22,207,775 $ 805,989 $ 610,176 $ 2,501,282 $ 1,197,361
---------------------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 1,553,541 1,351,376 52,991 80 108,885 80
Shares sold................. 52,125 514,119 19,981 54,404 97,133 110,666
Shares issued for
distributions
reinvested................ -- 4,784 -- 5 -- 5
Shares repurchased.......... (195,380) (316,738) (8,358) (1,498) (19,471) (1,866)
---------------------------------------------------------------------------------------------------
Ending Balance.............. 1,410,286 1,553,541 64,614 52,991 186,547 108,885
---------------------------------------------------------------------------------------------------
</TABLE>

- ---------------
*Commenced operations on August 31, 1994.
**Commenced operations on November 28, 1994.
+See Financial Highlights for per share distributions.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

50
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

SERIES B PORTFOLIOS

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
-------------- -------------- --------------
FOR THE FOR THE FOR THE
PERIOD ENDED PERIOD ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995* 1995* 1995*
(UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment (deficit)................................ $ (342) $ (119) $ (974)
Net realized gain (loss) from security transactions..... 782 (573) (6,354)
Net realized foreign exchange gain (loss)............... 307 469 (222)
Change in net unrealized appreciation
on investments and foreign currency................... 7,052 3,789 6,015
------------------------------------------------
Net increase (decrease) in net assets resulting from
operations........................................... 7,799 3,566 (1,535)
------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from shares sold............................... 237,843 104,235 715,201
Cost of shares repurchased.............................. (2) (21,131) (176)
------------------------------------------------
Increase in net assets from transactions in shares of
beneficial interest.................................. 237,841 83,104 715,025
------------------------------------------------
Total increase in net assets.......................... 245,640 86,670 713,490
NET ASSETS:
BEGINNING OF PERIOD....................................... -- -- --
------------------------------------------------
END OF PERIOD............................................. $ 245,640 $ 86,670 $ 713,490
------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance......................................... -- -- --
Shares sold............................................... 17,703 (1,608) 53,393
Shares issued for distributions reinvested................ -- -- --
Shares repurchased........................................ -- 8,200 (13)
------------------------------------------------
Ending Balance........................................ 17,703 6,592 53,380
------------------------------------------------
</TABLE>

- -------------
*Commenced operations on May 31, 1995.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

51
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

SERIES C PORTFOLIOS

<TABLE>
<CAPTION>
WORLDWIDE GROWTH INTERNATIONAL GROWTH EMERGING COUNTRIES
------------------------------- ------------------------------- -------------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
ENDED ENDED FOR THE PERIOD ENDED FOR THE PERIOD
SEPTEMBER 30, FOR THE YEAR SEPTEMBER 30, ENDED SEPTEMBER 30, ENDED
1995 ENDED 1995 MARCH 31, 1995 MARCH 31,
(UNAUDITED) MARCH 31, 1995 (UNAUDITED) 1995* (UNAUDITED) 1995**
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment
(deficit)................ $ (192,343) $ (775,701) $ (354) $ (100) $ (2,124) $ (2)
Net realized gain (loss)
from security
transactions............. 4,255,859 (1,433,986) (2,395) (1,052) 2,497 (87)
Net realized foreign
exchange gain (loss)..... 641,446 207,276 813 120 (555) 2
Change in net unrealized
appreciation on
investments and foreign
currency................. 5,380,472 309,263 11,152 138 21,423 1,147
---------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations........ 10,085,434 (1,693,148) 9,216 (894) 21,241 1,060
---------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF
BENEFICIAL INTEREST
Net investment income+.... -- -- -- (29) -- (1)
Capital gains+............ -- (1,027,462) -- -- -- --
---------------------------------------------------------------------------------------------------
Total distributions..... -- (1,027,462) -- (29) -- (1)
---------------------------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Proceeds from shares
sold..................... 3,989,806 27,726,843 329,717 35,163 1,185,776 76,983
Proceeds from shares
issued for distribution
reinvestment............. -- 131,345 -- 29 -- 1
Cost of shares
repurchased.............. (12,561,732) (20,513,606) (19,708) (11,203) (42,657) (19,677)
---------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets from transactions
in shares of beneficial
interest................. (8,571,926) 7,344,582 310,009 23,989 1,143,119 57,307
---------------------------------------------------------------------------------------------------
Total increase in net
assets................. 1,513,508 4,623,972 319,225 23,066 1,164,360 58,366
NET ASSETS
BEGINNING OF PERIOD......... 71,200,715 66,576,743 24,066 1,000 59,366 1,000
---------------------------------------------------------------------------------------------------
END OF PERIOD............... $ 72,714,223 $ 71,200,715 $ 343,291 $ 24,066 $ 1,223,726 $ 59,366
---------------------------------------------------------------------------------------------------
CHANGES IN SHARES OF
BENEFICIAL INTEREST
Beginning balance........... 4,932,460 4,480,436 2,162 80 5,503 80
Shares sold................. 251,391 1,864,921 26,483 3,107 91,476 7,179
Shares issued for
distributions
reinvested................ -- 9,315 -- 2 -- --
Shares repurchased.......... (809,962) (1,422,212) (715) (1,027) (3,379) (1,756)
---------------------------------------------------------------------------------------------------
Ending Balance.......... 4,373,889 4,932,460 27,930 2,162 93,600 5,503
---------------------------------------------------------------------------------------------------
</TABLE>

- ---------------
*Commenced operations on August 31, 1994.
**Commenced operations on November 28, 1994.
+See Financial Highlights for per share distributions.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

52
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
- -------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The Portfolios of the Trust seek to achieve their respective investment
objectives by investing all of their assets in corresponding series of Nicholas-
Applegate Investment Trust (the "Master Trust"), a diversified open-end
management investment company offering twelve investment vehicles (the "Funds").

Pursuant to Rule 24f-2 under the Investment Company Act, the Trust has elected
to register an indefinite number of shares. The Trust commenced operations on
April 19, 1993.

RECLASSIFICATIONS

Certain reclassifications have been made to the 1994 balances to conform to
1995 presentation.

INVESTMENT INCOME

Each Portfolio accrues income, net of expenses, daily on its investment in the
applicable Fund. All of the net investment income (deficit) and realized and
unrealized gains and losses from the security transactions and foreign currency
of the Fund are allocated pro rata among the investors in the Fund at the time
of such determination.

FEDERAL INCOME TAXES

It is the Portfolios' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their taxable income to their shareholders. Accordingly, no
federal income tax provisions are required if the Portfolios continue to comply
with such requirements.

The Funds are treated as partnerships for federal income tax purposes. Any
interest, dividends and gains or losses of the Funds will be deemed to have been
"passed through" to the Portfolios.

Net investment income and net realized gains for the year, (or period where
appropriate), differ for financial statement and tax purposes primarily because
of one or all of the following: deferral of wash-sale losses, passive foreign
investments, unrealized appreciation/depreciation, and capital loss
carryforwards.

The character of distributions made during the year (or period where
appropriate), from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes due to book/tax
differences in the character of income and expense recognition.

DEFERRED ORGANIZATION COSTS

Organization Costs incurred by the Trust have been allocated to certain
Portfolios based upon management's best estimate of the costs applicable to each
Portfolio. These costs have been deferred and will be amortized over a period of
60 months from the date the Portfolios commenced operations.

In the event that any of the initial shares are redeemed by the holder during
the period of amortization of the Portfolios' organization costs, the redemption
proceeds will be reduced by any such unamortized organization costs in the same
proportion as the number of initial shares being redeemed bears to the number of
those shares outstanding at the time of redemption.

- --------------------------------------------------------------------------------

53
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) -- Continued
- --------------------------------------------------------------------------------

2. TRANSACTIONS WITH AFFILIATES

ADVISORY AGREEMENTS

The investment adviser to the Master Trust is Nicholas-Applegate Capital
Management ("Nicholas-Applegate" or "Investment Adviser"). The advisory fee is
computed daily for the Funds based upon the percentage of each Fund's average
daily net assets.

DISTRIBUTION AND SHAREHOLDER SERVICE PLAN

The Trust has approved a distribution plan whereby Nicholas Applegate
Securities (the "Distributor"), an affiliate of Nicholas-Applegate, is
compensated for distribution-related expenses at an annual rate, payable
monthly, of 0.25%, 0.75% and 0.75% of Series A, B and C Portfolios average daily
net assets, respectively.

Under a distribution agreement, the Distributor who is the principal
underwriter for the sale of shares of the Portfolios, retains a portion of any
contingent deferred sales load on redemptions for the Portfolios, and retains a
portion of the initial sales load imposes on purchases of shares of the Series A
Portfolios. This agreement may be terminated by either party upon 60 days'
written notice.

The Trust has approved a shareholder service plan under which the Distributor
is also compensated for non-distribution related expenses as follows: .10%, .25%
and .25% of the daily net asset value of the Series A, Series B, and Series C
Portfolios, respectively.

EXPENSE LIMITATIONS

Nicholas-Applegate and the Trust have undertaken to limit the Portfolio's
expenses to the following annual levels through March 31, 1996. In subsequent
years, overall operating expenses for each Portfolio will not fall below the
applicable percentage limitation until the Investment Adviser has been fully
reimbursed for fees foregone or expenses paid by the Investment Adviser under
this agreement, as each Portfolio will reimburse the Investment Adviser in
subsequent years when operating expenses (before reimbursement) are less than
the applicable percentage limitation.

<TABLE>
<CAPTION>
FUND A B C
- ---------------------------- --------- --------- ---------
<S> <C> <C> <C>
Worldwide Growth
Portfolio................. 1.85% 2.50% 2.50%
International Growth
Portfolio................. 1.95% 2.60% 2.60%
Emerging Countries
Portfolio................. 2.25% 2.90% 2.90%
</TABLE>

These percentages are based on the average net assets of the Portfolios,
exclusive of interest, taxes, brokerage commissions and other costs incurred in
connection with portfolio securities transactions, capital expenditures, and
extraordinary expenses.

Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of September 30, 1995, the following Portfolios have amounts due to
Nicholas-Applegate for organizational costs advanced.:

<TABLE>
<S> <C>
Worldwide Growth Portfolio B.......... $1,013
International Growth Portfolio B...... $1,013
Emerging Countries Portfolio B........ $1,013
</TABLE>

3. INVESTMENT TRANSACTIONS

Additions and reductions in the investments in the respective Master Trust
Funds for the period ended September 30, 1995 were as follows:

<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
----------- -----------
<S> <C> <C>
Worldwide Growth Portfolio A.......... $ 828 $ 3,139
Worldwide Growth Portfolio B.......... 238 --
Worldwide Growth Portfolio C.......... 4,045 13,039
International Growth Portfolio A...... 243 103
International Growth Portfolio B...... 104 21
International Growth Portfolio C...... 299 10
Emerging Countries Portfolio A........ 1,277 259
Emerging Countries Portfolio B........ 715 --
Emerging Countries Portfolio C........ 1,186 43
</TABLE>

- --------------------------------------------------------------------------------

54
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) -- Continued
- --------------------------------------------------------------------------------

4. OFF BALANCE SHEET RISKS

The Worldwide Growth Portfolios, International Growth Portfolios and Emerging
Countries Portfolios invest in the Worldwide Growth Fund, International Growth
Fund and Emerging Countries Fund, respectively, whose investment in foreign
securities may entail risks due to the potential of political and economic
instability in the countries where the securities are being offered. In
addition, foreign exchange fluctuations could affect the value of positions
held. It is the Portfolios' policy to continuously monitor their exposure to
these risks.

- --------------------------------------------------------------------------------

55
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------

STATEMENTS OF ASSETS AND LIABILITIES FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
SEPTEMBER 30, 1995 (UNAUDITED)

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
FUND FUND FUND
<S> <C> <C> <C>
----------------------------------------------
ASSETS
Investments at value
(Cost $84,111,866, $15,596,924, and $7,028,690, respectively.)... $ 97,502,981 $ 16,898,402 $ 7,426,629
Foreign currency
(Cost of $2,906,766, $1,471,664, and $132,937, respectively.).... 2,924,738 1,503,472 131,190
Cash............................................................... 2,816 266 601
Receivables:
Dividends........................................................ 304,451 56,414 4,680
Interest......................................................... 687 61 179
Investment securities sold....................................... 3,467,112 26,258 45,600
Interest sold.................................................... 73,705 20,000 125,144
Deferred organization costs and other assets....................... 16,083 1,043 --
----------------------------------------------
Total assets................................................... 104,292,573 18,505,916 7,734,023
----------------------------------------------
LIABILITIES
Payables:
Investment securities purchased.................................. 2,897,240 527,772 208,233
Interests repurchased............................................ 65,645 -- 6,333
Accrued expenses................................................... 160,871 14,218 8,491
----------------------------------------------
Total liabilities.............................................. 3,123,756 541,990 223,057
----------------------------------------------
NET ASSETS........................................................... $ 101,168,817 $ 17,963,926 $ 7,510,966
----------------------------------------------
COMPOSITION OF NET ASSETS
Paid in capital.................................................... $ 80,929,155 $ 16,757,806 $ 7,289,007
Accumulated net investment income.................................. 622,491 121,689 37,672
Accumulated net realized gain (loss)............................... 5,209,729 (405,217) (205,499)
Accumulated net realized foreign exchange gain (loss).............. 1,005,723 161,764 (6,409)
Net unrealized foreign exchange gain (loss)........................ 10,604 26,406 (1,744)
Net unrealized appreciation on investments......................... 13,391,115 1,301,478 397,939
----------------------------------------------
Net assets..................................................... $ 101,168,817 $ 17,963,926 $ 7,510,966
----------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

56
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------

STATEMENTS OF OPERATIONS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
FOR THE PERIOD ENDED SEPTEMBER 30, 1995 (UNAUDITED)

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
FUND FUND FUND
<S> <C> <C> <C>
------------------------------------------
INVESTMENT INCOME
INCOME
Dividends............................................................. $ 898,324 $ 197,469 $ 41,044
Interest.............................................................. 72,941 11,446 14,496
------------------------------------------
Total income........................................................ 971,265 208,915 55,540
------------------------------------------
EXPENSES
Accounting fees....................................................... 37,547 37,500 24,751
Administration fees................................................... 17,726 3,301 893
Advisory fees......................................................... 495,850 92,295 31,368
Audit fees............................................................ 10,434 1,942 544
Custodian fees........................................................ 60,100 17,720 8,616
Insurance............................................................. 1,109 210 92
Legal fees............................................................ 2,079 387 99
Miscellaneous......................................................... 4,803 894 242
Organization costs.................................................... 3,157 150 --
Trustees' fees........................................................ 4,886 4,886 4,886
------------------------------------------
Total expenses...................................................... 637,691 159,285 71,491
Less: Reimbursement from advisor...................................... (42,936) (34,686) (31,340)
------------------------------------------
Net expenses........................................................ 594,755 124,599 40,151
------------------------------------------
Net investment income............................................. 376,510 84,316 15,389
------------------------------------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Security transactions................................................. 5,938,498 (153,763) 15,125
Foreign exchange...................................................... 847,654 220,908 (8,570)
Change net in unrealized appreciation of investments and foreign
currency.............................................................. 7,405,788 1,352,456 770,807
------------------------------------------
Net gain on investments............................................... 14,191,940 1,419,601 777,362
------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... $ 14,568,450 $ 1,503,917 $ 792,751
------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

57
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
NOTES TO THE FINANCIAL STATEMENTS -- Continued
- --------------------------------------------------------------------------------

STATEMENTS OF CHANGES IN NET ASSETS FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
<TABLE>
<CAPTION>
EMERGING
WORLDWIDE GROWTH INTERNATIONAL GROWTH COUNTRIES
--------------------------------- --------------------------------- ---------------
FOR THE FOR THE FOR THE
PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED
SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) 1995* (UNAUDITED) 1995* (UNAUDITED)
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income................. $ 376,510 $ 240,302 $ 84,316 $ 33,806 $ 15,389
Net realized gain (loss) from security
transactions........................ 5,938,498 (1,802,878) (153,763) (293,491) 15,125
Net realized foreign exchange gain
(loss).............................. 847,654 281,823 220,908 (30,063) (8,570)
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... 7,405,788 277,524 1,352,456 (270,042) 770,807
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations........................ 14,568,450 (1,003,229) 1,503,917 (559,790) 792,751
---------------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners............. 6,139,326 39,169,871 1,178,580 15,092,291 3,762,898
Withdrawals by partners............... (17,101,331) (30,285,996) (2,350,968) (609,534) (324,761)
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from transactions in
interests......................... (10,962,005) 8,883,875 (1,172,388) 14,482,757 3,438,137
---------------------------------------------------------------------------------------
Total increase in net assets........ 3,606,445 7,880,646 331,529 13,922,967 4,230,888
NET ASSETS:
BEGINNING OF PERIOD..................... 97,562,372 89,681,726 17,632,397 3,689,430 3,280,078
---------------------------------------------------------------------------------------
END OF PERIOD........................... $ 101,168,817 $ 97,562,372 $ 17,963,926 $ 17,612,397 $ 7,510,966
---------------------------------------------------------------------------------------

FOR THE
PERIOD ENDED
MARCH 31,
1995*
<S> <C>

INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income................. $ 22,283
Net realized gain (loss) from security
transactions........................ (220,624)
Net realized foreign exchange gain
(loss).............................. 461
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency.................... (372,912)

Net increase (decrease) in net
assets resulting from
operations........................ (570,792)

TRANSACTIONS IN INTERESTS
Contributions by partners............. 5,244,412
Withdrawals by partners............... (1,393,542)

Net increase (decrease) in net
assets from transactions in
interests......................... 3,850,870

Total increase in net assets........ 3,280,078
NET ASSETS:
BEGINNING OF PERIOD..................... --

END OF PERIOD........................... $ 3,280,078

</TABLE>

- -------------
*Worldwide Growth Fund commenced operations on April 19, 1993, International
Growth Fund commenced operations on January 3, 1994 and Emerging Countries Fund
commenced operations on November 28, 1994.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------

58
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS (UNAUDITED)
- -------------------------------------------------------------------

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Nicholas-Applegate Investment Trust (the "Master Trust"), a diversified,
open-end management investment company organized as a Delaware business trust,
is comprised of twelve investment vehicles (each a "Fund" and collectively the
"Funds") as of September 30, 1995. Each Fund has up to five Portfolios which
have invested in the respective series of the Master Trust to achieve their
investment objective. The Trust commenced operations on April 19, 1993.

SECURITIES TRANSACTIONS

Equity securities are valued at the last sale price (for exchange-listed
securities) or the mean between the last bid and asked price (if lacking any
sales and for over-the-counter securities). Debt securities generally are valued
at the mean between the last bid and asked prices. Securities with 60 days or
less remaining to maturity are valued on an amortized cost basis which
approximates market value.

Securities for which market quotations are not readily available are valued at
fair value determined in good faith by or under the direction of the Master
Trust's Board of Trustees.

Securities transactions are recognized on the trade date. Realized gains and
losses from securities transactions are calculated using the first-in, first-out
method. Dividend income is recognized on the ex-dividend date, and interest
income is recorded on the accrual basis. Discounts and premiums on securities
purchased are amortized over the life of the respective securities. The
prospectus for the Nicholas-Applegate Mutual Funds describes each Fund's
policies with respect to declaration and payment of dividends and distribution
of capital gains.

FOREIGN CURRENCY TRANSLATION

Foreign currency balances of the Worldwide Growth Fund, International Growth
Fund and Emerging Countries Fund other than the cost of investments, are
translated into U.S. dollar values at the bid price of such currency against the
U.S. dollar last quoted on the valuation date.

Gains and losses on securities transactions resulting from fluctuations in
foreign currency exchange rates are not isolated. The Funds report these foreign
currency related transactions as components of realized and unrealized gains for
financial reporting purposes, whereas such components are treated as ordinary
income for Federal income tax purposes.

FEDERAL INCOME TAXES

The Funds are treated as partnerships for federal income tax purposes. Any
interest, dividends and gains or losses of a Fund will be deemed to have been
"passed through" to the Portfolios.

DEFERRED ORGANIZATION COSTS

Organization costs incurred by the Master Trust have been allocated to the
various Funds based upon management's best estimate of the costs applicable to
each Fund. These costs have been deferred and will be amortized over a period of
60 months from the date the Funds commenced operations.

B. TRANSACTIONS WITH AFFILIATES

ADVISORY AGREEMENTS

The investment adviser to the Master Trust is Nicholas-Applegate Capital
Management ("Nicholas-

- --------------------------------------------------------------------------------

59
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS (UNAUDITED) -- Continued
- --------------------------------------------------------------------------------

Applegate") The advisory fee is computed daily for the Funds based upon the
following percentages of each Fund's average daily net assets:

<TABLE>
<CAPTION>
FIRST $500 NEXT $500 EXCESS OF
FUND MILLION MILLION $1 BILLION
- ------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Worldwide Growth Fund......... 1.00% 0.90% 0.85%
International Growth
Fund........................ 1.00% 0.90% 0.85%
Emerging Countries Fund....... 1.25% 1.25% 1.25%
</TABLE>

C. INVESTMENT TRANSACTIONS

The aggregate purchases and sales of investment securities, other than
short-term obligations, for the period ended September 30, 1995, were as
follows:

<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ----------------------------------- --------- ---------
<S> <C> <C>
Worldwide Growth Fund.............. $ 42,231 $ 58,805
International Growth Fund.......... 8,688 10,497
Emerging Countries Fund............ 4,289 1,596
</TABLE>

At September 30, 1995, the net unrealized appreciation (depreciation) based on
the cost of investments for Federal income tax purposes was as follows (in
000's):

<TABLE>
<CAPTION>
TAX GROSS GROSS NET
COST OF UNREALIZED UNREALIZED UNREALIZED
FUND INVESTMENTS APPRECIATION (DEPRECIATION) APPRECIATION
- ----------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Worldwide
Growth
Fund..... $ 84,112 $ 16,952 $ (3,561) $ 13,391
International
Growth
Fund..... 15,597 2,048 (747) 1,301
Emerging
Countries
Fund..... 7,029 694 (296) 398
</TABLE>

D. OFF BALANCE SHEET RISKS

The Worldwide Growth, International Growth and Emerging Countries Funds'
investment in foreign securities may entail risks due to the potential of
political and economic instability in the countries where the securities are
being offered. In addition, foreign exchange fluctuations could affect the value
of positions held. It is the Funds' policy to continuously monitor its exposure
to these risks.

- --------------------------------------------------------------------------------

60
<PAGE>
NICHOLAS-APPLEGATE INVESTMENT TRUST
NOTES TO THE FUNDS' FINANCIAL STATEMENTS (UNAUDITED) -- Continued
- --------------------------------------------------------------------------------

E. SELECTED RATIO DATA

<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
OPERATING INVESTMENT
EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET PORTFOLIO
ASSETS+ ASSETS+ TURNOVER RATE
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
For the period ended 09/30/95++....................................... 1.20%** 0.76%** 45.16%
For the year ended 03/31/95........................................... 1.20% 0.24% 98.54%
For the period ended 03/31/94*........................................ 1.20%** 0.01%** 95.09%
INTERNATIONAL GROWTH
For the period ended 09/30/95++....................................... 1.35%** 0.91%** 50.20%
For the year ended 03/31/95........................................... 1.35% 0.24% 74.88%
For the period ended 03/31/94*........................................ 1.35%** 0.41%** 23.71%
EMERGING COUNTRIES
For the period ended 09/30/95++....................................... 1.60%** 0.60%** 36.70%
For the period ended 03/31/95*........................................ 1.60%** 1.73%** 60.79%
</TABLE>

- ------------
*Worldwide Growth Fund, International Growth Fund and Emerging Countries Fund
commenced operations on April 19, 1993, January 3, 1994 and November 28, 1994,
respectively.

**Annualized.

+Net of expense reimbursement equivalent to 0.09%, 0.10%, 0.16%, 0.37%, 0.50%,
0.93%, 1.25% and 0.21% of average net assets, respectively.

++Unaudited.

- --------------------------------------------------------------------------------

61
<PAGE>

NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
- -----------------------------------------------------------------------
600 West Broadway
San Diego, California 92101
800-551-8043