NICHOLAS APPLEGATE INVESTMENT TRUST, N-30B-2, 1996-06-06

NICHOLAS APPLEGATE INVESTMENT TRUST
N-30B-2, 1996-06-06

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<PAGE>
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NICHOLAS/APPLEGATE-Registered Trademark- MUTUAL FUNDS

ANNUAL REPORT

GLOBAL PORTFOLIOS, SERIES A, B AND C MARCH 31, 1996
- --------------------------------------------------------------------------------

WORLDWIDE GROWTH

INTERNATIONAL GROWTH

EMERGING COUNTRIES

- --------------------------------------------------------------------------------
NICHOLAS-APPLEGATE
Investing in some of the world's most dynamic companies
- --------------------------------------------------------------------------------
<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
- -----------------------------------------------------------------------
600 West Broadway
San Diego, California 92101
800-551-8643

TRUSTEES OF NICHOLAS-APPLEGATE MUTUAL FUNDS

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

TRUSTEES OF NICHOLAS-APPLEGATE INVESTMENT TRUST

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

OFFICERS

John D. Wylie, President
Peter J. Johnson, Vice President
Ashley T. Rabun, 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

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<PAGE>
TABLE OF CONTENTS
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<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...................................................... 26
The Portfolios'
Financial Highlights.................................................... 38
Statements of Assets and Liabilities.................................... 44
Statements of Operations................................................ 47
Statements of Changes in Net Assets..................................... 50
Notes to the Financial Statements....................................... 53
Notes to the Funds' Financial Statements.................................. 59
Report of Independent Auditors
Nicholas-Applegate Mutual Funds......................................... 62
Nicholas-Applegate Investment Trust..................................... 63
</TABLE>

- ------------
This report is authorized for distribution to shareholders and to others only
when preceded or accompanied by a currently effective prospectus for
Nicholas-Applegate Series A, B and C Global Portfolios. Distributor: Nicholas-
Applegate Securities.

<PAGE>
(This page intentionally left blank)
<PAGE>
LETTER TO SHAREHOLDERS
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DEAR FELLOW SHAREHOLDERS,

The world and our lives are changing in remarkable ways and at a jarring pace.

You might not be surprised to hear that in our lifetimes the industrial output
of emerging countries will exceed that of developed countries. You might be
surprised to know that I'm not talking about the year 2020, or 2010, or even
2000. According to data from the World Bank, that breakthrough should occur in
1997 or 1998. By 2020, today's emerging countries are projected to be producing
more than 60% of the world's goods and services.

As these once-poor countries grow and prosper, the world's traditional
economic superpowers are being startled to high levels of alertness.
Multinational companies are rethinking, retrenching and redefining themselves
first to survive and then to prosper.

No doubt your life is changing too. Longer life expectancies and a better
outlook for health promise us enriched years of active adulthood, but economic
uncertainties can cloud this vision. Lifelong employment with a single company,
a corporate pension, affordable health care and public education are not the
sure things they were once perceived to be. Like multinational companies, the
most successful individuals today are rethinking the paths they hope to take
through life and are redefining themselves to make it.

As you review this Annual Report for our Global Portfolios, I hope you will
think about what lies ahead for yourself and your world. A diversified
investment plan today means taking advantage of the best opportunities the world
has to offer.

At Nicholas-Applegate, we believe the way to do this is through careful and
comprehensive consideration of all the world's investment opportunities.

For many investors, the financial responsibilities of retirement, child
rearing, and long-term health care hold the potential to overwhelm existing
savings and investment programs, leaving significant gaps between future needs
and resources. Growth-stock investing with Nicholas-Applegate means making your
money work harder, much harder. We call this approach BRIDGING THE GAP. For more
than a decade, Nicholas-Applegate Capital Management has been helping some of
America's most respected corporations, endowments and institutions provide for
their future needs in this same way. We welcome the opportunity to continue
helping you build the financial resources you need to create the future you
desire.

Sincerely,

[SIGNATURE]
John D. Wylie
President

Nicholas-Applegate Mutual Funds

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1
<PAGE>
ORGANIZATION
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Nicholas-Applegate Mutual Funds (the "Trust") is organized as a diversified,
open-end management investment company which offers 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 March 31, 1996, the Funds and corresponding Portfolios are as
follows:

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

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

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

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

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>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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2
<PAGE>
CAPITAL MARKETS REVIEW
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International stock markets rebounded in the fiscal year that ended March 31,
1996. The turnaround meant some of the period's best returns for U.S. investors
came from non-U.S. sources. Primary markets in Mexico, Brazil, Argentina, Spain,
Switzerland, Sweden and Poland all beat the 32.1% return of the domestic market,
as represented by the Standard & Poor's 500 Index. Other countries, including
Germany, Australia, Canada, Belgium, Norway and Ireland posted gains in excess
of 20%*. Overall, international stocks, as measured by Morgan Stanley Capital
International's (MSCI) Europe, Australia and Far East Index, advanced 12.2% for
the period. The MSCI World Index, which measures a mix of U.S. and international
issues, rose 19.9%.

Much of the return from international stocks came in the closing quarter of
the fiscal year, with exceptionally strong growth from companies in the emerging
market countries. Asian markets rallied. Malaysia, Indonesia and the Philippines
all began 1996 with notably strong performance. The stocks of most developed
countries also showed added strength in the first three months of 1996. Japan,
the largest non-U.S. stock market, delivered excellent returns then, building on
the momentum that has resulted from weakening of the yen against the dollar. A
weaker yen improves the export outlook for Japanese manufacturers that sell to
U.S. markets.

In Europe, weakness in the German economy has translated into declining
interest rates throughout the continent. This, combined with a strengthening
U.S. dollar, has helped European manufacturers and exporters. Swiss stock prices
received a boost with the announced merger of Ciba-Geigy, a major chemical
manufacturer, and Sandoz, a pharmaceutical company. On the downside, the United
Kingdom's poor showing of -1.4% in the last quarter of the fiscal year was due
to political and economic uncertainties and was compounded by fears related to
mad-cow disease.

Nicholas-Applegate Global Portfolios -- the International Growth Portfolios,
Worldwide Growth Portfolios and Emerging Countries Portfolios -- fared well over
the fiscal year, delivering performances that were in line with or better than
their respective benchmark indexes.

Investors should know that investments in overseas markets can pose more risks
than U.S. investments, and the Global Portfolios' share prices are expected to
be more volatile. The Global Portfolios' returns will fluctuate with changes in
stock market conditions, currency values, interest rates, foreign government
regulations and economic and political conditions. These risks are generally
intensified for investments in emerging markets.

We believe international stocks will continue to offer excellent investment
opportunities. While economic conditions vary by region, we know that a
country's economy does not always determine a company's potential for growth.
Our bottom-up investment style enables us to compare many companies around the
world by examining their fundamentals: the strength of their operations and the
soundness of their balance sheets. We draw upon an established global network of
analysts, extensive computer databases, and company visits to identify healthy,
thriving companies regardless of economic conditions. In this way, we offer our
investors entry into the world's capital markets through solid companies poised

for growth.

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

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3
<PAGE>
WORLDWIDE GROWTH PORTFOLIO
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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: Aided by a fast-rising U.S. stock market and dynamic
global economies, the Worldwide Growth Portfolio advanced steadily through the
fiscal year.

As of March 31, 1996, more than half of the Portfolio's assets were invested
in companies in the U.S. and Japan, the two largest world markets. (This
distribution includes Global and American Depository Receipts of non-U.S.
companies as U.S. holdings.) United Kingdom stocks comprised 8.4% of the
Portfolio, German stocks 5.7% and emerging markets companies 11.9%. Technology
stocks were the largest single group at 20.5% of assets, while 13.7% of the
Portfolio was invested in the producers/manufacturing sector and 10.2% was
invested in financial services companies.

Telecommunications companies contributed significantly to the Portfolio's
performance during the period. The industry is benefiting from political and
regulatory reform as governments around the world curtail or eliminate policies
that have constrained the industry. This opens the door for companies to enter
previously restricted areas and to compete for market share.

Among the top performing stocks in the Portfolio during the period were
Fresenius, a German medical products manufacturer. The company benefited from an
announced merger with Grace's National Medical Unit. The merger will make
Fresenius the world's largest integrated dialysis manufacturing, distribution
and service company. Altera Corp., a U.S. manufacturer of computer chips, and
Telecom Italia Mobile were other standout performers on the strength of sales of
their technology and telecommunications products.

We continue to find and invest in strong companies displaying positive
fundamentals, seasoned and resourceful managers, and innovative products,
services and delivery methods. As world economies further expand, we believe the
Portfolio is well positioned to keep producing attractive returns for investors.

REPRESENTATIVE HOLDINGS

Fresenius AG, Germany
Hoya Corp., Japan
Ascend Communications, Inc., U.S.A.
Elan PLC, (ADR) Ireland
British Bio-Technology PLC (ADR), U.K.
Memtec Ltd. (ADR), Australia
OYL Industries BHD, Malaysia
IHC Caland, Netherlands
Hilton Hotels Corp., U.S.A.
Korea Mobile Telecom Corp., S. Korea

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

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

Q. LORETTA, THERE WAS GOOD NEWS FROM ALL OVER
DURING THE FISCAL YEAR AND IT TRANSLATED INTO A GREAT RETURN FOR THE PORTFOLIO.
WHAT IN THE WORLD WAS GOING ON?

A. In the early months of the fiscal year, back in
the spring of 1995, the U.S. companies in the Portfolio were providing the
lion's share of the return. U.S. interest rates were low, the U.S. dollar was
low and inflationary pressures were nonexistent. Our technology holdings, in
particular, delivered solid returns. Then in the summer, the G3 countries -- the
U.S., Japan, and Germany -- began acting in concert to raise the dollar against
the yen and the mark. That has helped Japanese and European exporters because it
makes their products less expensive to U.S. consumers. Finally, with Germany's
economy sluggish, its central bank lowered interest rates to stimulate economic
activity. This has created a favorable environment for lower interest rates
throughout continental Europe. This helped many European companies as well as
the Portfolio.

Q. SOME GLOBAL MUTUAL FUNDS ALLOCATE THEIR
INVESTMENTS ON A COUNTRY-BY-COUNTRY BASIS ACCORDING TO AN INDEX. TO WHAT EXTENT
DOES THE WORLDWIDE GROWTH PORTFOLIO FOLLOW SUCH A COUNTRY-WEIGHTING POLICY?

A. Our stock-selection process is driven from the
bottom up by company fundamentals. Our country allocations result largely from
this process. It reflects the number of opportunities we are finding within a
nation or region, relative to other nations and regions. To control portfolio
risk, we have established acceptable ranges of investment exposure within
specific countries and regions. But that doesn't interfere with our efforts to
put the strongest set of growth companies into the Portfolio.

Q. ARE THERE ANY INDUSTRIES OR COUNTRIES THAT HAVE
BEEN PARTICULARLY ATTRACTIVE OR PROBLEMATIC?

A. Telecommunications and technology companies
have been rewarding investments. Changes in the regulatory environment and
privatization of national telephone monopolies are leading to a more competitive
environment that offers many attractive investment opportunities. Cellular
communications is another growth area, with service providers steadily
increasing their penetration rates.

A prevalent theme in our Portfolio is to identify companies that are adapting
to change to compete more successfully in the global marketplace. Technology is
the innovation that is helping companies reduce costs, improve productivity, and
manage information and distribution in ways that improve their global
competitiveness. Many exciting companies provide products or services to help
customers operate more efficiently. They range from companies that provide
better access to information to temporary employment agencies to software
companies in the client-server network field or in financial-services
processing.

Semiconductor and computer companies suffered in the fourth quarter.
Inventories built up rapidly in anticipation of strong Christmas sales and
heightened demand from the introduction of Microsoft's Windows 95 product, but
that gave way to a severe decline in chip prices as demand fell short of
capacity and production.

Q. DID THIS SITUATION AFFECT PORTFOLIO HOLDINGS?

A. A relatively small percentage of the Portfolio was
invested in electronics or computer hardware-oriented companies. We sold these
holdings, such as Unitech, a United Kingdom company that produces electronic
components and power supplies, and we shifted assets into another part of the
technology sector: software companies. Among these additions was Lernout &
Hauspie Speech Products, a Belgian company that specializes in speech
recognition systems and interfaces.

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5
<PAGE>
WORLDWIDE GROWTH PORTFOLIO A
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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 -- 03/31/96) (04/01/95 -- 03/31/96)
10.55% 13.50%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
<S> <C> <C>
Worldwide
Growth MSCI World
Portfolio A Index
4/19/93 9475 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 12966 13212
12/95 12706 13840
3/31/96 13444 14403
</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, 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 deferred by Nicholas-Applegate Capital Management. Total
return results would have been lower had there been no deferral of fees and
expenses in excess of expense limitations.

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

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

Past performance is no guarantee of future performance. Investment return and
the principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.

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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 -- 03/31/96)
8.98%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
<S> <C> <C>
Worldwide
Growth MSCI World
Portfolio B Index
5/31/95 10000 10000
6/95 10168 9995
9/95 11104 10539
12/95 10848 11039
3/31/96 10898 11489
</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, 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.

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7
<PAGE>
WORLDWIDE GROWTH PORTFOLIO C
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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 -- 03/31/96) (04/01/95 -- 03/31/96)
11.89% 18.95%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
<S> <C> <C>
Worldwide
Growth MSCI World
Portfolio C Index
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
12/95 13182 13840
3/31/96 13930 14403
</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, 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.

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8
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
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WORLDWIDE
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS -- 98.0%
- ----------------------------------------------

<TABLE>
<S> <C> <C>
ARGENTINA -- 0.7%
Compania Naviera Perez
SA-B................. 51,415 $ 292,551
Cresud SA.............. 225,000 443,250
------------
735,801
------------
AUSTRALIA -- 1.2%
Australian Gas & Light
Co. LTD.............. 120,000 505,440
Broken Hill Proprietary
Co. LTD.............. 1,620 23,023
F.H. Faulding & Co.
LTD.................. 4,200 21,130
Pioneer International
LTD.................. 98,000 292,001
Westfield Holdings
LTD.................. 30,000 421,200
------------
1,262,794
------------
BELGIUM -- 0.8%
Banque Bruxelles
Lambert SA........... 1,930 361,039
Barco NV............... 2,880 398,126
------------
759,165
------------
DENMARK -- 0.3%
Sparekassen Bikuben
A/S.................. 8,300 291,433
------------
FRANCE -- 5.3%
Accor SA............... 2,568 387,497
Axime Ex Segin*........ 5,700 725,248
Castorama Dubois....... 3,100 566,998
Cetelem................ 3,600 702,823
Christian Dior SA...... 4,200 560,278
Coflexip SA*........... 15,000 641,153
Lagardere Groupe SA.... 15,500 411,382
Salomon SA............. 470 302,744
Sidel SA............... 130 33,237
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
FRANCE (CONTINUED)
Total SA-B............. 14,200 $ 959,841
------------
5,291,201
------------
GERMANY -- 5.7%
Adidas AG.............. 10,000 738,983
Fresenius AG........... 6,700 1,233,254
Gerresheimer Glas AG... 2,900 544,610
Mannesmann AG.......... 2,400 877,831
RWE AG................. 18,000 726,102
SGL Carbon AG.......... 10,100 973,708
Siemens AG............. 1,100 603,919
------------
5,698,407
------------
GREECE -- 0.2%
OTE Hellenic*.......... 9,670 160,648
------------
HONG KONG -- 1.6%
C.P. Pokphand Co.
LTD.................. 482,000 229,064
Cheung Kong Holdings
LTD.................. 50,000 352,386
Hong Kong & China Gas
Co. LTD.............. 170,000 335,251
Hopewell Holdings
LTD.................. 11,000 6,401
HSBC Holdings LTD...... 30,000 450,019
Tai Cheung Holdings
LTD.................. 10,000 9,117
Tingyi (Cayman Island)
Holdings Co. LTD*.... 1,030,000 269,721
------------
1,651,959
------------
ITALY -- 1.1%
Ente Nazionale
Idrocarburi SpA...... 122,000 442,260
Telecom Italia SpA..... 182,000 287,886
Telecom Italia Mobile
SpA.................. 182,000 330,172
------------
1,060,318
------------
</TABLE>

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

9
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------

WORLDWIDE
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
JAPAN -- 20.0%
Aida Engineering LTD... 14,000 $ 119,280
Canon, Inc............. 49,000 938,988
Daiichi Corp........... 43,000 1,001,738
Daiwa House Industry
Co. LTD.............. 104,000 1,641,257
Gunze LTD.............. 87,000 503,424
Hitachi Cable Co....... 75,000 608,708
Honda Motor Co. LTD.... 38,000 831,713
Hoya Corp.............. 25,000 864,215
Matsushita Industrial
Electric Co.......... 64,000 1,046,076
Minebea Co. LTD........ 98,000 842,328
Mitsubishi Bank LTD.... 47,250 1,003,100
Mitsubishi Estate Co.
LTD.................. 50,000 690,433
Mitsui Marine and Fire
Insurance Co......... 128,000 969,123
Nissan Motors Co.
LTD.................. 142,000 1,104,467
Olympus Optical Co.
LTD*................. 105,000 1,025,786
Onward Kashiyama Co.,
LTD.................. 35,000 532,619
Sanwa Bank LTD......... 50,000 1,009,816
Sekisui Chemical Co.... 43,000 565,497
Sekisui Plastics Co.
LTD.................. 79,000 457,132
Terumo Corp............ 82,000 916,631
Toyoda Machine Works
LTD.................. 100,000 1,080,269
Yamazen Corp.*......... 190,000 1,086,938
Yodogawa Steel Works
LTD.................. 90,000 709,314
Yokogawa Electric
Corp................. 45,000 473,439
------------
20,022,291
------------
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
KOREA -- 0.6%
Korea Housing Bank*.... 15,000 $ 436,729
Korea Mobile
Telecommunications
Corp................. 180 228,119
------------
664,848
------------
MALAYSIA -- 1.2%
Hume Industries........ 47,000 237,599
Malayan Banking BHD.... 52,000 484,676
O.Y.L. Industries BHD.. 50,000 434,439
------------
1,156,714
------------
MEXICO -- 1.6%
Corporacion Industrial
San Luis SA de CV.... 88,000 474,304
Gruma SA............... 84,000 297,375
Grupo Industria Alfa,
SA de CV............. 22,000 291,408
Transportacion Maritima
Mexicana SA de CV.... 74,000 566,136
------------
1,629,223
------------
NETHERLANDS -- 2.5%
Hagemeyer NV........... 7,644 521,792
Hollandsche Beton Groep
NV................... 18 3,020
IHC Caland NV.......... 9,800 400,073
Koninklijke Volker
Stevin NV CVA........ 5,400 365,669
NV Holdingmaatschappij
De Telegraaf CVA..... 3,500 708,056
Oce-Van Der Grinten
NV................... 5,800 541,005
------------
2,539,615
------------
NORWAY -- 0.3%
Sensonor AS*........... 39,100 341,645
------------
</TABLE>

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

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

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
PHILIPPINES -- 0.3%
C&P Homes, Inc......... 150,000 $ 113,073
Fortune Cement
Corp.*............... 440,000 205,725
------------
318,798
------------
SINGAPORE -- 0.7%
City Developments
LTD.................. 50,000 444,207
DBS Land LTD........... 70,000 268,657
United Overseas Bank
LTD.................. 495 4,996
------------
717,860
------------
SOUTH AFRICA -- 0.1%
Liberty Life
Association of Africa
LTD.................. 4,000 125,313
------------
SPAIN -- 1.8%
Gas Natural SDG SA,
Class E.............. 4,000 691,645
Iberdrola SA........... 40,000 369,027
Telefonica de Espana
SA................... 48,000 761,905
------------
1,822,577
------------
SWEDEN -- 0.8%
Ericsson LM B-F........ 21,450 471,182
Nordbanken AB+......... 20,000 330,245
------------
801,427
------------
SWITZERLAND -- 2.7%
Ascom Holding AG....... 400 447,059
Ciba Geigy AG.......... 565 706,962
Holderbank Financiere
Glaris............... 10 7,546
Sandoz AG.............. 525 615,441
Schw
Rueckversicherungs... 450 456,050
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
SWITZERLAND (CONTINUED)
Zurich
Versicherungsgesellschaft.. 1,500 $ 431,093
------------
2,664,151
------------
THAILAND -- 0.2%
K.R. Precision Public
Co. LTD -- Foreign... 34,860 176,821
------------
UNITED KINGDOM -- 6.3%
Bank of Scotland....... 2,020 7,347
British Aerospace PLC.. 48,000 628,788
British Petroleum Co.
PLC.................. 634 5,545
Danka Business Systems
PLC.................. 64,000 668,560
Dixons Group PLC....... 90,000 613,507
GKN PLC................ 64,400 933,977
Next PLC............... 100,000 773,937
Siebe PLC.............. 50,000 667,188
Smith (David S.)
Holdings PLC......... 110,000 516,670
Thorn EMI PLC.......... 19,126 491,175
Victrex PLC............ 48,000 217,404
WPP Group PLC.......... 260,000 793,000
------------
6,317,098
------------
UNITED STATES OF AMERICA++ -- 42.0%
Altera Corp.*+......... 14,600 815,775
America Online, Inc.*.. 8,200 459,200
Ascend Communications,
Inc.*................ 15,200 818,900
Aspect
Telecommunications,
Inc.*................ 9,200 420,900
Bed Bath & Beyond,
Inc.*................ 9,100 480,025
BMC Industries, Inc.... 13,300 285,950
Boston Chicken, Inc.*.. 6,800 231,625
</TABLE>

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

11
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------

WORLDWIDE
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
British Biotech PLC
(United Kingdom)*.... 8,000 $ 628,000
C Tec Corp.*........... 10,500 391,125
C-Cube Microsystems,
Inc.*................ 4,800 252,000
Cabletron Systems,
Inc.*................ 2,650 175,562
Cadence Design Systems,
Inc.*................ 7,700 339,762
Callaway Golf Co....... 14,400 385,200
Cambridge Tech
Partners, Inc.*...... 4,100 234,212
Camco International,
Inc.................. 11,900 374,850
Cellular
Communications,
Inc.*................ 1,700 86,912
Chesapeake Energy
Co.*................. 9,400 434,750
Cisco Systems, Inc.*... 7,400 343,175
Cognex Corp.*.......... 13,600 348,500
CompUSA, Inc.*......... 9,000 498,375
Concord EFS, Inc.*..... 5,500 145,750
Continental Airlines,
Inc.*................ 11,400 642,675
Danaher Corp........... 3,000 111,000
Elamex SA de CV
(Mexico)*............ 36,000 324,000
Elan Corp. PLC
Sponsored ADR
(Ireland)*........... 12,300 790,275
Electroglas, Inc.*..... 8,800 135,300
Electronics For
Imaging, Inc.*....... 12,800 556,800
Flextronics
International LTD
(Singapore)*......... 38,000 1,159,000
Fremont General
Corp................. 11,250 265,781
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
FSI International,
Inc.................. 12,400 $ 144,150
Gartner Group, Inc.*... 6,800 414,800
Gilead Sciences,
Inc.*................ 4,200 120,750
Grand Casinos, Inc.*... 12,350 370,500
Green Tree Financial
Corp................. 10,700 367,812
Grupo Tribasa SA de CV
Sponsored ADR
(Mexico)*............ 40,000 275,000
GTECH Holdings
Corp.*............... 10,400 322,400
Gucci Group NV
(Italy)*............. 14,800 710,400
HBO & Co............... 3,600 339,300
HFS Inc.*.............. 8,000 389,000
Hilton Hotels Corp..... 3,600 338,400
International Specialty
Products, Inc.*...... 24,000 303,000
Jones Medical
Industries, Inc...... 11,550 444,675
Kemet Corp.*........... 22,200 502,275
Kent Electonics
Corp.*............... 9,800 346,675
Koor Industries LTD
Sponsored ADR
(Israel)............. 16,900 327,437
Larsen & Toubro LTD
Sponsored GDR
(India).............. 30,000 471,000
Lattice Semiconductor
Corp.*............... 800 22,700
Lehman Brothers
Holdings, Inc........ 13,400 358,450
Lernout & Hauspie
Speech Products NV
(Belgium)*........... 35,000 1,128,750
L.G. Electronics, Inc.
Sponsored GDR New
(South Korea)*+...... 1,668 22,695
</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)
Linear Technology,
Inc.................. 8,300 $ 346,525
Liposome Company,
Inc.*................ 15,500 323,562
Liz Claiborne, Inc..... 9,200 315,100
Macromedia, Inc.*...... 6,700 286,425
Marshall Industries*... 10,900 332,450
Maxim Integrated
Products, Inc.*...... 10,000 310,000
McAfee Associates,
Inc.*................ 12,750 698,063
Medic Computer Systems,
Inc.*................ 6,200 469,650
Memtec LTD Sponsored
ADR (Australia)...... 19,000 510,625
Mentor Corp............ 11,800 275,825
Mercury General
Corp................. 5,800 241,425
Meredith Corp.......... 6,100 251,625
Microsoft Corp.*....... 3,500 360,938
Moneda Chile Fund LTD
(Chile)*............. 42,000 399,000
Money Store, Inc....... 15,750 439,031
Morgan Stanley Group,
Inc.................. 7,200 372,600
Nautica Enterprises,
Inc.*................ 7,300 348,575
Nice-Systems LTD
(Israel)*............ 40,000 520,000
North Fork
Bancorporation, Inc.. 8,500 202,938
Old Republic
International Corp... 12,300 399,750
Omnicare, Inc.......... 7,400 398,675
PT Telekomunikasi
Sponsored ADR
(Indonesia)*......... 16,000 494,000
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
Pairgain Technology,
Inc.*................ 6,000 $ 388,500
Penncorp Financial
Group, Inc........... 9,600 302,400
Peoplesoft Inc.*....... 7,200 414,000
Petro Canada........... 43,000 274,125
Phycor, Inc.*.......... 7,200 316,800
Picturetel Corp.*...... 7,800 241,800
Primark Corp........... 10,900 403,300
Quintiles Transnational
Corp.*............... 5,100 331,500
Reading & Bates
Corp.*............... 30,600 604,350
Robert Half
International,
Inc.*................ 18,700 909,288
Ross Stores, Inc....... 17,100 429,638
Saville Systems PLC
(Ireland)*........... 18,400 347,300
Seagate Technology,
Inc.*................ 11,952 654,372
Sonat Offshore Drilling
Co................... 8,900 453,900
Staples, Inc.*......... 15,300 311,738
Structural Dynamics
Research Corp.*...... 14,400 486,000
Student Loan Marketing
Association.......... 4,600 351,900
Sun Microsystems,
Inc.*................ 18,200 796,250
TCF Financial Corp..... 9,800 355,250
Telecom Corporation of
New Zealand Sponsored
ADR (New Zealand).... 5,000 358,125
Telefonos de Mexico SA
Sponsored ADR
(Mexico)............. 17,500 575,313
</TABLE>

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

13
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------

WORLDWIDE
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
Thermo Cardiosystems,
Inc.*................ 3,200 $ 216,800
Tidewater, Inc......... 13,700 520,600
Tuntex Distinct Corp.
(China).............. 5,001 31,911
Universal Health Realty
Income Trust*........ 5,600 297,500
U.S. Robotics Corp.*... 5,200 672,100
USA Waste Services,
Inc.*................ 10,100 257,550
Valero Energy Corp..... 10,700 263,488
Videotron Holdings PLC
Sponsored ADR (United
Kingdom)*............ 67,000 1,122,250
Watson
Pharmaceuticals*..... 7,600 304,000
Wyle Electronics,
Inc.................. 8,000 277,000
Xeikon NV Sponsored ADR
(Belgium)*........... 5,600 108,500
Xilinx, Inc.*.......... 4,300 136,525
Zions Bancorporation... 3,900 275,925
20th Century
Industries*.......... 10,300 172,525
------------
42,114,853
------------
TOTAL COMMON STOCKS
(Cost $83,191,256)................. 98,324,960
------------
</TABLE>

NUMBER
OF SHARES VALUE

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

<TABLE>
<S> <C> <C>
WARRANTS/RIGHTS -- 0.0%
- ---------------------------------------------------
SINGAPORE
United Overseas Bank
LTD, 06/17/97
(Cost $1,333)........ 208 $ 880
------------
TOTAL INVESTMENTS -- 98.0%
(Cost $83,192,589)................. $ 98,325,840
OTHER ASSETS IN EXCESS OF LIABILITIES
-- 2.0%............................ 2,017,186
------------
NET ASSETS -- 100.0%................. $100,343,026
------------
</TABLE>

- ------------
* Non-income producing security.
+ Rule 144A security.
++ Certain securities issued by foreign companies 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 MARCH 31, 1996
- ------------------------------------------------------------------------

WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Advertising................................... 0.8%
Aerospace..................................... 0.6
Agriculture................................... 1.0
Airlines...................................... 0.6
Apparel....................................... 3.0
Automobiles................................... 1.9
Automotive Equipment.......................... 1.4
Biotechnology................................. 1.0
Building Material Chains...................... 0.6
Building Materials............................ 1.2
Chemicals..................................... 1.1
Closed End Country Funds...................... 0.4
Clothing Chains............................... 0.4
Computers/Office Automation................... 3.8
Containers.................................... 1.1
Contract Drilling............................. 1.1
Drugs/Pharmaceuticals......................... 3.5
Electric Utilities............................ 0.4
Electronic Data Processing.................... 0.1
Electronic Instruments........................ 2.6
Electronics/Music Chains...................... 2.1
Entertainment................................. 0.5
Environmental Services........................ 0.3
Finance Companies............................. 1.9
Gas Utilites.................................. 1.5
Grocery Products.............................. 0.3
Home Furnishings.............................. 0.5
Homebuilding.................................. 1.7
Hospitals..................................... 0.3
Industrial Engineering/Construction........... 0.7
Integrated Oil Companies...................... 0.3
Investment Companies.......................... 0.7
Leisure/Gaming................................ 1.0
Life Insurers................................. 0.1

<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Lodging....................................... 0.8%
Machinery/Equipment........................... 4.7
Medical Supplies.............................. 3.8
Medical/Health Services....................... 0.3
Metals........................................ 0.7
Miscellaneous................................. 0.4
Money-Center Banks............................ 4.1
Multi-Line Insurers........................... 1.2
Oil/Gas Production............................ 2.4
Oilfield Services/Equipment................... 1.9
Other Commercial/Industrial Services.......... 2.0
Other Consumer Services....................... 0.5
Other Energy.................................. 0.7
Other Financial Services...................... 1.1
Other Health Services......................... 0.3
Other Production/Manufacturing................ 4.1
Other Transportation.......................... 0.6
Other Utilities............................... 1.1
Property--Casualty Insurance.................. 2.0
Publishing.................................... 1.8
Real Estate Brokers/Services.................. 1.5
Recreational Products......................... 1.4
Regional Banks................................ 0.7
Restaurants................................... 0.2
Savings & Loan Associations................... 0.4
Semiconductors................................ 5.6
Software...................................... 4.3
Specialty Chains.............................. 1.1
Telecommunications Equipment.................. 3.5
Telephone..................................... 4.0
Wholesale Distribution........................ 2.3
Other Assets in Excess of Liabilities......... 2.0
-----
NET ASSETS.................................... 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: The International Growth Portfolio benefited from strong
positive trends in telecommunications and from revived consumer spending in
international markets during the fiscal year that ended March 31, 1996. The
Portfolio's return exceeded that of the benchmark Morgan Stanley Capital
International Europe, Australia and Far East Index on the strength of individual
stock selection.

As of March 31, Japanese and United Kingdom companies comprised the largest
share of the Portfolio at 29.5% and 12.4%, respectively. French and German
companies followed with 6.9% and 5.7% of the Portfolio's assets. Companies in
the emerging market countries of the world drew 15.19% of assets, including 3.7%
in Mexican companies.

Contributors to the International Growth Portfolio's performance included
Safilo, an Italian manufacturer of eyeglass frames. A new management team has
enhanced the company's competitive focus and has reduced its operating costs. A
recent addition to the Portfolio is Christian Dior, a well-known French luxury
goods manufacturer which reports increasing sales in its luggage and perfume
divisions and improving profit margins in its champagne and cognac divisions.
Another new holding is Elan, a pharmaceutical firm located in Ireland known for
its expertise in drug delivery technologies and aggressiveness in product
development.

Producers/manufacturing companies represent the largest single sector exposure
of the Portfolio at 21.3% of assets. This group includes such companies as Hoya
Corp., a Japanese producer of glass products for the electronics and other
industries. Other leading sectors include technology at 12.3% and financial
services at 11.3%.

We remain optimistic about the long-term prospects for international investing
and the International Growth Portfolio. We continue to identify dynamic
companies offering excellent investment opportunities. We are confident that the
Portfolio is well positioned to deliver solid, long-term investment returns to
our investors.

REPRESENTATIVE HOLDINGS

Fresenius AG, Germany
Safilo, Italy
Elan PLC, Ireland
British Bio-Technology PLC (ADR), U.K.
Memtec Ltd. (ADR), Australia
Hoya Corp., Japan
IHC Caland, Netherlands
OYL Industries, Malaysia
Korea Mobile Telecom, S. Korea
Republic Glass Holdings, Philippines

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

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

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

Q. LORETTA, WHAT DO YOU SEE AS THE MAIN FORCES
INFLUENCING INTERNATIONAL STOCKS TODAY?

A. It seems we are in a global environment of low
interest rates, low inflation and moderate growth, with many markets in Asia
offering significantly greater economic growth. The equity market environment in
much of Europe is favorable, due to continued declining interest rates. The
market in Japan offers more upside potential as the yen has depreciated,
corporations have become more efficient, the economy continues to strengthen,
and domestic investor confidence has returned.

We live in a dynamic time. Exciting investment opportunities abound as a
result of increasing global competitiveness and the appearance of more emerging
market participants on the playing field. This Portfolio invests in
opportunities in the major developed markets as well as emerging markets, such
as the Philippines, Thailand, Mexico and Brazil.

Q. SPEAKING OF LATIN AMERICA, ARE THESE MARKETS
STILL RECOVERING FROM THE 1994 MEXICAN PESO DEVALUATION?

A. Mexico is the benchmark for Latin America.
Events that affect Mexico typically have a significant impact on the region's
other stock markets. One effect of the devaluation was the abrupt slowing of
investment capital, which reduced this region's growth in 1995. The outlook for
increased capital flow to Latin America is highly favorable. In addition,
positive local news in a number of Latin American countries combined with a
favorable global environment produced a recovery for the major Latin American
stock markets toward the end of 1995. Latin America represents about 6% of the
International Growth Portfolio.

Q. DID ANY MARKET SECTORS OR COMPANIES THAT
PERFORMED POORLY IN 1995 TURN AROUND IN EARLY 1996?

A. Overall, 1995 was not a great year for Japanese
financial stocks, as sizable losses from delinquent loans became public
knowledge. While Japan's banking system still has issues to work out, it appears
concrete steps are being taken to restore it. Mitsubishi Bank Ltd. is expected
to improve its earnings as a result of aggressive cost cutting and its recent
merger with the Bank of Tokyo. As a strengthened entity, Mitsubishi Bank will
have the most diversified income structure in terms of geography and services in
Japan. We bought Mitsubishi shares in March.

Q. WHAT ARE SOME OTHER STOCKS YOU BOUGHT OR
SOLD DURING THE PERIOD?

A. Another notable purchase was Sandoz, a Swiss-
based pharmaceutical company. After we purchased this stock, Sandoz merged with
Ciba-Geigy, a chemical company which is also based in Switzerland. Prior to
merging, both companies had trimmed corporate expenses by down-sizing their
operations in the U.S. Just a few weeks after purchase, the stock was up
approximately 30%.

We sold shares of several banks: Banco De Santander (Spain), Bank of Scotland
(United Kingdom), and Promise Financial Services (Japan), and we sold shares of
a Danish telecommunications firm, Tele Danmark, all on expectations of
decelerating earnings growth.

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

17
<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> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96 INCEPTION TO
1 YEAR 5 YEARS DATE
9.39% 5.36% 2.58%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
<S> <C> <C>
International MSCI
Growth EAFE
Portfolio A Index
6/7/90 9475 10000
6/90 9604 9912
9/90 7482 7810
12/90 7793 8633
3/91 8462 9275
6/91 8018 8769
9/91 8653 9521
12/91 8664 9680
3/92 7867 8532
6/92 8194 8712
9/92 7873 8844
12/92 7551 8502
3/93 8324 9522
6/93 9398 10480
9/93 9814 11175
12/93 9465 11271
3/94 10171 11664
6/94 10557 12260
9/94 10667 12272
12/94 10300 12146
3/95 10047 12368
6/95 10195 12459
9/95 10885 12960
12/95 10867 13485
3/31/96 11599 13874
</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, 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. Performance
results reflect the total returns of a predecessor limited partnership managed
by Nicholas-Applegate Capital Management prior to the effective date of the
Portfolio's registration statement which was 12/31/93. Limited partnership
returns are restated to reflect all fees and expenses applicable to the
Portfolio and share class. If the limited partnership had been registered as an
investment company under the federal securities laws, its performance might have
been adversely affected because of the additional restrictions applicable to
registered investment companies. The 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 capitalization 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.

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

18
<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.

<TABLE>
<S> <C> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96 INCEPTION TO
1 YEAR 5 YEARS DATE
8.88% 5.22% 2.37%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
INTERNATIONAL MSCI
<S> <C> <C>
Growth EAFE
Portfolio B Index
06/07/90 10000 10000
6/90 10130 9912
9/90 7878 7810
12/90 8193 8633
3/91 8882 9275
6/91 8402 8769
9/91 9053 9521
12/91 9050 9680
3/92 8204 8532
6/92 8531 8712
9/92 8183 8844
12/92 7835 8502
3/93 8624 9522
6/93 9721 10480
9/93 10135 11175
12/93 9759 11271
3/94 10470 11664
6/94 10850 12260
9/94 10950 12272
12/94 10474 12146
3/95 10201 12368
6/95 10326 12459
9/95 11013 12960
12/95 10971 13485
03/31/96 11691 13874
</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, 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.
Performance results reflect the total returns of a predecessor limited
partnership managed by Nicholas-Applegate Capital Management prior to the
effective date of the Portfolio's registration statement which was 12/31/93.
Limited partnership returns are restated to reflect all fees and expenses
applicable to the Portfolio and share class. If the limited partnership had been
registered as an investment company under the federal securities laws, its
performance might have been adversely affected because of the additional
restrictions applicable to registered investment companies. The 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.

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

19
<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> <C>
ANNUALIZED TOTAL RETURNS
As of 03/31/96 INCEPTION TO
1 YEAR 5 YEARS DATE
15.30% 5.68% 2.75%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
INTERNATIONAL MSCI
<S> <C> <C>
Growth EAFE
Portfolio C Index
6/7/90 10000 10000
6/90 10130 9912
9/90 7878 7810
12/90 8193 8633
3/91 8882 9275
6/91 8402 8769
9/91 9053 9521
12/91 9050 9680
3/92 8204 8532
6/92 8531 8712
9/92 8183 8844
12/92 7835 8502
3/93 8624 9522
6/93 9721 10480
9/93 10135 11175
12/93 9759 11271
3/94 10470 11664
6/94 10850 12260
9/94 11032 12272
12/94 10615 12146
3/95 10157 12368
6/95 10337 12459
9/95 11028 12960
12/95 10994 13485
3/31/96 11712 13874
</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, 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. Performance
results reflect the total returns of a predecessor limited partnership managed
by Nicholas-Applegate Capital Management prior to the effective date of the
Portfolio's registration statement which was 12/31/93. Limited partnership
returns are restated to reflect all fees and expenses applicable to the
Portfolio and share class. If the limited partnership had been registered as an
investment company under the federal securities laws, its performance might have
been adversely affected because of the additional restrictions applicable to
registered investment companies.

The 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.

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

20
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
- ------------------------------------------------------------------------

INTERNATIONAL
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS -- 95.1%
- ----------------------------------------------

<TABLE>
<S> <C> <C>
ARGENTINA -- 0.7%
Compania Naviera Perez
SA.................. 10,170 $ 57,867
Cresud SA............. 56,000 110,320
-----------
168,187
-----------
AUSTRALIA -- 2.0%
Australian Gas & Light
Co. LTD............. 41,000 172,692
F.H. Faulding & Co.
LTD................. 1,000 5,031
Pioneer International
LTD................. 50,000 148,980
Westfield Holdings
LTD................. 11,600 162,864
-----------
489,567
-----------
BELGIUM -- 0.6%
Banque Bruxelles
Lambert SA.......... 380 71,085
Barco NV.............. 565 78,105
-----------
149,190
-----------
DENMARK -- 0.3%
Sparekassen Bikuben
A/S................. 1,800 63,202
-----------
FRANCE -- 6.9%
Accor SA.............. 800 120,716
Axime Ex Segin*....... 1,300 165,408
Castorama Dubois...... 800 146,322
Cetelem............... 1,000 195,229
Christian Dior SA..... 1,500 200,099
Coflexip SA*.......... 5,200 222,266
Lagardere Groupe SA... 5,000 132,704
Salomon SA............ 200 128,827
Sidel SA.............. 30 7,670
Total SA-B............ 4,800 324,453
-----------
1,643,694
-----------
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
GERMANY -- 5.7%
Adidas AG............. 2,600 $ 192,136
Fresenius AG.......... 1,650 303,712
Gerresheimer Glas AG.. 800 150,237
Mannesmann AG......... 710 259,691
SGL Carbon AG......... 3,200 308,502
Siemens AG............ 270 148,235
-----------
1,362,513
-----------
GREECE -- 0.2%
OTE Hellenic*......... 3,260 54,117
-----------
HONG KONG -- 2.6%
C.P. Pokphand Co.
LTD................. 104,000 49,424
Cheung Kong Holdings
LTD................. 16,000 112,763
Hong Kong & China Gas
Co. LTD............. 56,000 110,436
Hopewell Holdings
LTD................. 2,523 1,468
HSBC Holdings LTD..... 12,000 180,008
Paliburg International
Holdings LTD........ 31,500 18,840
Tingyi (Cayman
Islands) Holding Co.
LTD*................ 520,000 136,170
-----------
609,109
-----------
ITALY -- 2.0%
Cn Eni SpA............ 30,000 108,752
Safilo SpA............ 12,000 252,069
Telecom Italia SpA.... 31,000 49,036
Telecom Italia Mobile
SpA................. 31,000 56,238
-----------
466,095
-----------
JAPAN -- 29.5%
Aida Engineering LTD.. 23,000 195,961
Canon, Inc............ 14,000 268,282
Daiichi Corp.......... 16,000 372,740
Daiwa House Industry
Co. LTD............. 25,000 394,533
Gunze LTD............. 43,000 248,819
</TABLE>

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

21
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------

INTERNATIONAL
GROWTH FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
JAPAN (CONTINUED)
Hitachi Cable Co...... 15,000 $ 121,742
Honda Motor Co. LTD... 11,000 240,759
Hoya Corp............. 6,000 207,412
Matsushita Electric
Co.................. 25,000 408,623
Minebea Co. LTD....... 29,000 249,260
Mitsubishi Bank LTD... 14,700 312,075
Mitsubishi Estate Co.
LTD................. 20,000 276,173
Mitsubishi Gas
Chemical Co. Inc.... 45,000 216,429
Mitsui Marine & Fire
Insurance Co........ 35,000 264,995
Nissan Motors Co.
LTD................. 43,000 334,451
Olympus Optical Co.
LTD................. 35,000 341,929
Sanwa Bank LTD........ 15,000 302,945
Sekisui Chemical
Co.................. 15,000 197,266
Sekisui Plastics Co.
LTD................. 32,000 185,167
Terumo Corp........... 25,000 279,461
Tokai Rika Co......... 30,000 281,809
Toyoda Machine Works
LTD................. 35,000 378,094
Yamazen Corp.*........ 73,000 417,613
Yodogawa Steel Works
LTD................. 31,000 244,319
Yokogawa Electric
Corp................ 27,000 284,064
-----------
7,024,921
-----------
KOREA -- 0.8%
Korea Housing Bank*... 4,000 116,461
Korea Mobile
Telecommunications... 60 76,040
-----------
192,501
-----------
MALAYSIA -- 1.4%
Hume Industries....... 24,000 121,327
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
MALAYSIA (CONTINUED)
Malayan Banking BHD... 12,000 $ 111,848
O.Y.L. Industries
BHD................. 11,000 95,577
-----------
328,752
-----------
MEXICO -- 2.0%
Corporacion Industrial
San Luis, SA de CV.. 18,000 97,017
Grupo Industria Alfa,
SA de CV............ 7,000 92,721
Gruma SA*............. 50,000 177,009
Transportacion
Maritima Mexicana SA
de CV............... 15,000 114,757
-----------
481,504
-----------
NETHERLANDS -- 5.7%
Baan Co. NV*.......... 3,900 226,063
Hagemeyer NV.......... 3,233 220,690
Holdingsmaatschappij
de Telegraaf NV..... 1,100 222,532
IHC Caland NV......... 5,200 212,284
Oce-Van Der Grinten
NV.................. 1,800 167,898
Randstad Holdings NV.. 3,300 200,878
Volker Stevin NV...... 1,500 101,575
-----------
1,351,920
-----------
NORWAY -- 0.3%
Sensonor AS*.......... 8,000 69,902
-----------
PHILIPPINES -- 1.7%
C & P Homes, Inc...... 60,000 45,229
DMCI Holdings, Inc.*.. 364,000 236,183
Fortune Cement
Corp.*.............. 110,000 51,431
Republic Glass
Holdings Corp....... 192,400 69,029
-----------
401,872
-----------
SINGAPORE -- 1.4%
City Developments
LTD................. 20,000 177,683
</TABLE>

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

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

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
SINGAPORE (CONTINUED)
DBS Land LTD.......... 41,000 $ 157,356
-----------
335,039
-----------
SOUTH AFRICA -- 0.2%
Liberty Life
Association of
Africa LTD.......... 1,500 46,992
-----------
SPAIN -- 1.7%
Acerinox SA........... 80 9,024
Gas Natural SDG SA,
Class E............. 900 155,620
Iberdrola SA.......... 8,000 73,806
Telefonica de Espana
SA.................. 10,000 158,730
-----------
397,180
-----------
SWEDEN -- 1.1%
Ericsson LM B-F....... 7,040 154,644
Nordbanken AB......... 6,400 105,679
-----------
260,323
-----------
SWITZERLAND -- 3.1%
Ascom Holding AG...... 135 150,882
Ciba Geigy AG......... 190 237,739
Holderbank Financiere
Glaris.............. 5 3,773
Sandoz AG............. 170 199,286
Swiss Reinsurance
Co.................. 150 152,017
-----------
743,697
-----------
THAILAND -- 0.2%
K.R. Precision Public
Co. LTD -- Foreign.. 8,400 42,607
-----------
UNITED KINGDOM -- 10.2%
Bank of Scotland...... 707 2,571
British Aerospace
PLC................. 15,000 196,496
British Petroleum Co.
PLC................. 162 1,416
Danka Business Systems
PLC................. 18,000 188,033
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Dixons Group PLC...... 34,000 $ 231,770
GKN PLC............... 18,000 261,050
Next PLC.............. 27,000 208,963
Provident Financial
PLC................. 17,000 235,010
RTZ Corp. PLC......... 98 1,418
Siebe PLC............. 21,000 280,219
Smith (David S.)
Holdings PLC........ 32,000 150,304
Thorn EMI PLC......... 8,838 226,969
Victrex PLC........... 42,000 190,229
WPP Group PLC......... 87,000 265,350
-----------
2,439,798
-----------
UNITED STATES OF AMERICA++ -- 14.8%
British Biotech PLC
(United Kingdom)*... 3,700 290,450
Elamex SA de CV
(Mexico)............ 13,000 117,000
Elan Corp. PLC
Sponsored ADR
(Ireland)*.......... 6,400 411,200
Flextronics
International, LTD
(Singapore)*........ 11,700 356,850
Grupo Tribasa SA de CV
Sponsored ADR
(Mexico)*........... 8,000 55,000
Gucci Group NV
(Italy)*............ 6,200 297,600
Koor Industries LTD
Sponsored ADR
(Israel)............ 3,900 75,562
Larsen & Toubro LTD
Sponsored GDR
(India)............. 8,117 127,437
Lernout & Hauspie
Speech Products NV
(Belgium)*.......... 6,700 216,075
</TABLE>

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

23
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------

INTERNATIONAL
GROWTH FUND 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)*+..... 372 $ 5,061
Memtec LTD Sponsored
ADR (Australia)..... 9,000 241,875
Moneda Chile Fund
Limited (Chile)*.... 8,000 76,000
Nice-Systems LTD
(Israel)*........... 13,000 169,000
Pliva Sponsored GDR
(United Kingdom)*... 2,500 46,775
PT Telekomunikasi
Indonesia Sponsored
ADR (Indonesia)*.... 3,600 111,150
Saville Systems PLC
(Ireland)*.......... 7,000 132,125
Telecom Corporation of
New Zealand
Sponsored ADR (New
Zealand)............ 3,800 272,175
Telefonos de Mexico SA
Sponsored ADR
(Mexico)............ 6,700 220,263
Videotron Holdings PLC
Sponsored ADR
(United Kingdom)*... 10,000 167,500
Xeikon NV Sponsored
ADR (Belgium)*...... 7,000 135,625
-----------
3,524,723
-----------
TOTAL COMMON STOCKS
(Cost $20,111,780)................ 22,647,405
-----------
</TABLE>

PRINCIPAL
AMOUNT VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
REPURCHASE AGREEMENT -- 0.4%
- -------------------------------------------------
J.P. Morgan & Co.,
Inc.,
$73,000 at 5.35%
(Agreement dated
03/29/96, to be
repurchased at
$100,045 on
04/01/96;
collateralized by
$100,000 United
States Treasury
10.625%, due
08/15/15.)
(Cost $100,000)..... $ 100,000 $ 100,000
- -------------------------------------------------
COMMERCIAL PAPER -- 4.3%
- -------------------------------------------------
Associates Corporation
of America 5.43%,
04/01/96 (Cost
$1,016,693)......... 1,017,000 1,016,693
-----------
TOTAL INVESTMENTS -- 99.8%
(Cost $21,228,473)................ $23,764,098
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.2%............... 41,530
-----------
NET ASSETS -- 100.0%................ $23,805,628
-----------
</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.
- --------------------------------------------------------------------------------

24
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF MARCH 31, 1996
- ------------------------------------------------------------------------

INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Advertising................................... 1.1%
Aerospace..................................... 0.8
Agriculture................................... 1.4
Apparel....................................... 3.1
Automobiles................................... 2.4
Automotive Equipment.......................... 2.7
Building Material Chains...................... 0.6
Building Materials............................ 2.4
Chemicals..................................... 2.4
Closed End Country Funds...................... 0.3
Computers/Office Automation................... 1.8
Containers.................................... 1.3
Drugs/Pharmaceuticals......................... 4.8
Electric Utilities............................ 0.3
Electronic Instruments........................ 3.8
Electronics/Music Chains...................... 2.5
Entertainment................................. 1.0
Finance Companies............................. 1.8
Gas Utilities................................. 1.8
Grocery Products.............................. 0.6
Homebuilding.................................. 1.8
Industrial Engineering/Construction........... 0.7
Integrated Oil Companies...................... 0.2
Life Insurers................................. 0.2
Lodging....................................... 0.5
Machinery/Equipment........................... 6.8
Medical Supplies.............................. 3.9

<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Metals........................................ 1.1%
Miscellaneous................................. 2.0
Money-Center Banks............................ 4.8
Multi-Line Insurers........................... 0.6
Oil/Gas Production............................ 1.8
Oilfield Services/Equipment................... 1.8
Other Commercial/Industrial Services.......... 1.5
Other Financial Services...................... 1.8
Other Production/Manufacturing................ 5.8
Other Transportation.......................... 0.5
Other Utilities............................... 0.7
Property--Casualty Insurance.................. 1.1
Publishing.................................... 1.5
Real Estate Brokers/Services.................. 2.3
Recreational Products......................... 1.3
Regional Banks................................ 0.5
Semiconductors................................ 2.4
Software...................................... 2.1
Specialty Chains.............................. 0.9
Telecommunications Equipment.................. 1.3
Telephone..................................... 4.7
Wholesale Distribution........................ 3.6
Short-Term Obligations........................ 4.7
Other Assets in Excess of Liabilities......... 0.2
-----
NET ASSETS.................................... 100.0%
-----
-----
</TABLE>

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

25
<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 Fund delivered strong returns
during the fiscal year, which ended March 31, 1996. Lipper Analytical Services,
Inc., the mutual fund ranking company, ranked the Fund's Institutional Series,
Series A, and Series C Portfolios first, second and third, respectively, among
63 emerging markets funds during the period. The Fund's one-year return was more
than 75% higher than the increase in the International Finance Corp.'s
Investable Index, a benchmark measure of emerging-markets investment
performance.

The Fund's impressive growth reflects strong performance by its Asian and
Latin American holdings, specifically those in Singapore, Mexico, Malaysia,
Thailand, Hong Kong and Argentina. As of March 31, the producers/manufacturers
sector commanded the largest single-sector share of the Fund, at 27.4% of
assets. Financial services and consumer non-durable goods companies followed
with 14.2% and 10.5%, respectively.

One of the top performing stocks in the Fund during the period was Serm Suk, a
Southeast Asian soft-drink bottler headquartered in Thailand and serving the
growing consumer cultures of Laos, Vietnam and Thailand. Shares of Nice, an
Israeli telecommunications company, also rose sharply on the strength of sales
of its computer-telephony products. And shares of regional Brazilian airline TAM
continued to deliver exceptional returns as investors joined domestic business
air travelers within that country in recognizing the strength of the company's
superior service and amenities.

Emerging markets remain the fastest growing equity markets in the world, with
many of their stocks undervalued and offering attractive upside potential. We
believe the long-term growth prospects in emerging countries are enhanced by the
sustainable high rates of earnings growth of their best companies, and by the
increasing political stability and growing populations. We continue to identify
and invest in exciting, promising growth stocks within these markets and we
remain optimistic about the outlook for continued superior returns from our
unique emerging countries investment style.

REPRESENTATIVE HOLDINGS

Grammy Entertainment PLC, Thailand
Tingyi (Cayman) Holdings Co., Hong Kong
Republic Glass Holdings, Philippines
Corporacion Interamericana Entretenemiento, Mexico
Gujarat Ambuja Cements, India
P.T. Telekomunikasi (ADR), Indonesia
L.G. Info & Comm Ltd., Korea
TAM Transportes Aereos Regionais, Brazil
Turk Siemens Kablo Ve Elektrik Sanayii A.S., Turkey
Metro Cash & Carry, S. Africa

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

26
<PAGE>
A CONVERSATION WITH LARRY SPEIDELL AND PEDRO MARCAL
- -------------------------------------------------------------------

Larry Speidell
[PHOTO] Portfolio Manager
Emerging Countries Portfolio

Pedro Marcal
[PHOTO] Portfolio Manager
Global Management Team
Emerging Countries Portfolio

Q. LARRY, THE FISCAL YEAR THAT ENDED MARCH 31,
1996, WAS TRULY A GREAT PERIOD FOR THE NICHOLAS-APPLEGATE EMERGING COUNTRIES
FUND. IT WAS THE TOP-RATED EMERGING MARKETS FUND IN THE COUNTRY DURING THE
PERIOD AND IT OUTPERFORMED ITS BENCHMARK BY ALMOST 2-TO-1. HOW DID YOU DO IT AND
CAN YOU KEEP IT UP?

LARRY: Our investment style and philosophy require that we search both broadly
and deeply in emerging markets in a continuous effort to identify their best
investment opportunities. We believe that our stringent stock selection process
enables us to uncover great, undiscovered growth opportunities. Because their
potential has not yet been recognized, these stocks are not followed by
traditional analysts and, therefore, they are usually not included in their
countries' stock indexes. In Thailand, for example, the local stock index was up
10% but our holdings in that country were up more than 40%. We saw the same
thing in India; the local stock index was down 7%, whereas our holdings were up
more than 10%.

Going forward, we are optimistic. We continue to find excellent opportunities
and we believe that the outlook for emerging market countries generally remains
very bright.

Q. ARE YOU PAYING A HIGH PREMIUM TO OWN THESE
RAPIDLY GROWING STOCKS?

PEDRO: Actually we're not paying much of a premium at all, and that's another
testament to our stock selection process. Stock prices are commonly measured in
relation to earnings. The most widely used measure, called a price-to-earnings
or P/E ratio is calculated by dividing a company's stock price by its earnings
per share. Currently, stocks in the Fund sell at an average P/E ratio of about
16 times 1996 earnings. That's only slightly higher than the average P/E ratio
of about 15 times 1996 earnings for the stocks in Morgan Stanley Capital
International's Emerging Markets Free Index.

Now, compare that to growth. The companies in our Fund are expected to grow
their earnings at an average rate of about 32% in 1996. The stocks in the Index
are expected to grow earnings at an average rate of only 19%. This means we
expect the Fund to deliver more than two-thirds more earnings growth than the
index at roughly the same price.

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

27
<PAGE>
- -------------------------------------------------------------------

Q. ECONOMIC FREEDOM, THAT IS, RELATIVELY LOW TAXES,
LOW INFLATION, AND LIMITED GOVERNMENT REGULATION -- IS NECESSARY FOR LONG-TERM
ECONOMIC GROWTH. IN WHICH EMERGING COUNTRIES HAVE YOU SEEN THE GREATEST MOVEMENT
TOWARD ECONOMIC FREEDOM?

LARRY: China is a prime example of an emerging market with strong long-term
indicators. We see the same situation in Russia, where former government
officials are now executives in private companies. Russia's economic structure
is improving and numerous privatizations have already taken place. In
comparison, many developing countries continue to see growing fiscal deficits.
Some developing nations prefer to finance these deficits through high tax rates,
regardless of the draining effect on their economies. China and Russia, like
many emerging countries, recognize the importance of foreign investing and are
making strides toward improving their economies by reducing government deficits
and instituting policies to lower taxes.

Q. HOW MUCH DO REGIONAL ANALYSTS ADD TO THE
STOCK SELECTION PROCESS?

PEDRO: We rely on them quite a bit but we are very selective. We work to
establish strong relations with the best local and regional analysts because we
want to obtain information that is fresh and insightful from sources who are
well informed.

We operate on a "real-time" basis in all of the markets we trade in. That
means, when the markets open in Brazil, we have a member of our portfolio
management team on hand, even though it's 5 o'clock in the morning in our
offices. When people return from their lunch hour in Hong Kong, we're on hand to
talk about the day's market opportunities -- at 11:30 p.m. our time. This helps
us build relationships with the people who are closest to the companies we want
to invest in. By building relationships with analysts in smaller markets, such
as Turkey, the Philippines and Peru, we gain a unique insight that augments our
ability to properly interpret and evaluate information relating to stocks in
these markets.

LARRY: These relationships give us a competitive edge. We receive and verify
information quickly, and we have opportunities to participate in initial public
offerings that other portfolio managers do not.

Q. WHAT ARE SOME EXAMPLES OF COMPANIES YOU
HAVE RECENTLY ADDED OR DELETED?

PEDRO: Earlier this year, we were concerned about some of our holdings in Hong
Kong. The negative effects of rising U.S. interest rates on the Hong Kong stock
market, coupled with the political tensions arising between China and Taiwan,
led us to reduce our holdings of bank and property stocks in that market. We
sold shares of ASM Pacific Technology, a Hong Kong manufacturer of equipment
used in the production of computer chips. We felt that the outlook for weak
demand for memory chips would dampen earnings growth at ASM. Similar concerns
led us to sell shares of Samsung Electronics, a South Korean chip maker.

We recently bought shares of Larsen & Toubro, an Indian engineering and
construction company that is expected to grow earnings as a result of
infrastructure investments in that country. And we added to our position in
Grammy Entertainment, a Thai media company with music, radio, and television
operations. The company is benefiting from a rising consumer-driven culture in
Thailand.

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

28
<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

<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(11/28/94 -- 03/31/96) (04/01/95 -- 03/31/96)
5.19% 21.69%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
EMERGING IFC
<S> <C> <C>
Countries Investable
Portfolio A Index
11/28/94 9475 10000
12/94 9052 8460
3/95 8332 7234
6/95 9583 7865
9/95 10166 7833
12/95 9625 7761
3/31/96 10701 8351
</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, 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.

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

29
<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 -- 03/31/96)
6.55%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
<S> <C> <C>
Emerging IFC
Countries Investable
Portfolio B Index
5/31/95 10000 10000
6/95 10096 10059
9/95 10696 10019
12/95 10112 9926
3/31/96 10655 10681
</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, 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.

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

30
<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.

<TABLE>
<S> <C>
ANNUALIZED TOTAL RETURN
SINCE INCEPTION ONE YEAR TOTAL RETURN
(11/28/94 -- 03/31/96) (04/01/95 -- 03/31/96)
7.17% 27.30%
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
EMERGING IFC
<S> <C> <C>
Countries Investable
Portfolio C Index
11/28/94 10000 10000
12/94 9468 8460
3/95 8620 7234
6/95 9876 7865
9/95 10460 7833
12/95 9900 7761
3/31/96 10973 8351
</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, 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 IFC Investable Index is an unmanaged index and 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 reflects the reinvestment of income dividends and capital gains
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

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

31
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996
- ------------------------------------------------------------------------

EMERGING
COUNTRIES FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS -- 95.6%
- ----------------------------------------------

<TABLE>
<S> <C> <C>
ARGENTINA -- 3.8%
Cresud SA.................................. 101,000 $ 198,970
Compania Naviera Perez SA -- B............. 68,873 391,887
Siderca SA -- A............................ 166,000 166,830
----------
757,687
----------
BRAZIL -- 6.3%
Companhia Cervejaria Brahma *.............. 775,000 392,207
Ficap Marvin SA -- Preferred *............. 939,000 35,165
Itausa Investimentos SA.................... 284,000 192,591
Refripar S.A. *............................ 68,000,000 178,947
Tam Transportes Aereos Regionais SA *...... 5,030,000 218,917
Telec do Rio *............................. 2,576,000 190,071
Unipar-Uniao de Industrias Petroquimicas SA
-- Preferred B........................... 51,863 44,619
----------
1,252,517
----------
CHINA -- 1.0%
Shanghai Post & Telecommunications "B"
Shares *................................. 330,000 190,080
----------
190,080
----------
GREECE -- 2.7%
Alfa Beta Vassilopoulos.................... 6,000 83,665
Alte Technological......................... 4,133 73,154
Hellenic Bottle Co. SA..................... 5,000 186,546
OTE Hellenic *............................. 11,150 185,093
----------
528,458
----------
HONG KONG -- 5.6%
C. P. Pokphand Co. LTD..................... 364,000 172,986
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
HONG KONG (CONTINUED)
Peregrine Investments Holdings LTD......... 164,000 $ 264,037
Sinocan Holdings LTD....................... 748,000 282,930
Tingy (Cayman Islands) Holdings Co. LTD *.. 1,480,000 387,560
----------
1,107,513
----------
INDONESIA -- 3.5%
PT Indorama Synthetics -- Foreign.......... 3,500 11,711
PT Roda Vivatex -- Foreign................. 50,500 32,393
PT Semen Gresik -- Foreign................. 44,000 155,698
PT Sorini Corporation -- Foreign........... 13,000 68,377
PT Tigaraksa Satria -- Foreign............. 50,000 248,022
PT Wicaksana Overseas -- Foreign........... 60,000 174,471
----------
690,672
----------
KOREA -- 5.6%
Cho Hung Bank Co. LTD...................... 6,500 88,023
Daehan City *.............................. 1,270 107,327
Korea Electric Power Corp.................. 3,980 164,386
Korea Housing Bank *....................... 8,000 232,922
Korea Mobile Telecommunications, Corp...... 60 76,040
LG Info & Communications LTD............... 2,100 206,580
Samsung Electronics -- (New) *............. 15 1,763
Seoul City Gas Co. LTD..................... 1900 150,119
</TABLE>

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

32
<PAGE>
- -------------------------------------------------------------------

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
KOREA (CONTINUED)
Shinhan Bank............................... 3500 $ 81,997
----------
1,109,157
----------
MALAYSIA -- 6.1%
Fraser & Neave............................. 45,000 199,052
Fraser & Neave Rights *.................... 18,000 11,161
Hume Industries............................ 31,000 156,714
Jaya Tiasa Holdings BHD.................... 61,000 390,284
Malayan Banking BHD........................ 20,000 186,415
O. Y. L. Industries BHD.................... 31,000 269,352
----------
1,212,978
----------
MEXICO -- 6.0%
Corporacion Interamericana de Entertainment
SA *..................................... 199,000 343,012
Corporacion Industrial San Luis SA de CV... 36,000 194,033
Gruma SA *................................. 43,000 152,228
Grupo Industrial Alfa, SA de CV............ 12,000 158,950
Industrias Penoles SA -- CP................ 25,000 106,736
Tablex SA de CV............................ 52,000 93,768
Transportacion Maratima Mexicana SA -- A... 9,000 68,855
Transportacion Maratima Mexicana SA -- L... 10,000 82,206
----------
1,199,788
----------
PERU -- 1.8%
Cementos Norte Pacasmayo................... 35,749 46,886
CPT Telefonica de Peru SA -- B............. 116,664 240,162
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
PERU (CONTINUED)
Enrique Ferreyros SA....................... 48,874 $ 61,196
----------
348,244
----------
PHILIPPINES -- 6.6%
DMCI Holdings *............................ 475,000 308,206
C & P Homes, Inc........................... 26,500 19,976
Filinvest Land Inc. *...................... 200,000 93,511
Fortune Cement Corp. *..................... 420,000 196,374
Marsman & Co., Inc......................... 315,000 189,361
Republic Glass Holdings Corp............... 1,375,000 493,321
Selecta Dairy Products, Inc................ 50,000 2,901
----------
1,303,650
----------
POLAND -- 0.9%
Elektrim Spolda Akcyjna SA................. 15,000 88,542
Zaklady Przemyslu Cukierniczego Jutrzenka
SA....................................... 6,000 100,463
----------
189,005
----------
SINGAPORE -- 1.9%
City Development LTD....................... 22,000 195,451
DBS Land LTD............................... 50,000 191,898
----------
387,349
----------
SOUTH AFRICA -- 4.5%
Barlow LTD................................. 18,000 230,075
Dorbyl LTD................................. 9,200 131,429
Liberty Life Association of Africa LTD..... 4,500 140,977
Metro Cash & Carry......................... 28,000 121,053
Pick'n Pay Stores LTD...................... 76,000 268,571
----------
892,105
----------
THAILAND -- 8.3%
Grammy Entertainment PLC -- Foreign *...... 39,000 355,459
</TABLE>

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

33
<PAGE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 -- CONTINUED
- --------------------------------------------------------------------------------

EMERGING
COUNTRIES FUND NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
THAILAND (CONTINUED)
K.R. Precision Public Co., LTD --
Foreign.................................. 33,040 $ 167,589
Serm Suk Co. LTD -- Local.................. 2,000 41,371
Serm Suk Co. LTD -- Foreign................ 3,700 110,260
Srithai Superware Company LTD -- Foreign... 24,300 183,923
Thai Farmers Bank -- Foreign............... 29,000 340,162
Thai Stanley Electric Co., LTD --
Foreign.................................. 15,000 70,141
Tipco Asphalt Co. LTD -- Foreign........... 62,800 328,496
United Communication Industry -- Foreign... 4,000 54,844
----------
1,652,245
----------
TURKEY -- 3.5%
Anadolu Biracilik ve Malt Sanayii S.A...... 1,200,000 110,138
Demirbank T. A. S.......................... 3,283,000 127,482
Eregli Demir Ve Celik Fabrikalari T.A.S.... 1,230,000 144,154
Raks Electroni *........................... 230,000 90,935
Tukas *.................................... 340,000 88,817
Turk Siemens Kablo Ve Elektrik Sanayii A.
S........................................ 400,000 141,203
----------
702,729
----------
UNITED STATES OF AMERICA++ -- 27.5%
Banco Frances del Rio de la Plata SA
(Argentina).............................. 10,100 276,488
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
Banco Industrial Colombiano Sponsored ADR
-- (Colombia)............................ 4,000 $ 74,000
Banque Marocaine (Morocco) *............... 14,000 177,800
BSES LTD (India) *......................... 10,000 165,000
Cementos Diamante SA (Peru)................ 3,400 67,283
Czech Republic Fund, Inc. (Czech
Republic)................................ 10,134 140,609
Elamex SA de CV (Mexico)................... 31,000 279,000
Erciyas Biracilik VE Malt Sanayii
(Turkey)................................. 4,000 48,000
First New Independent States Regional *.... 15,000 120,000
Flextronics International LTD (Singapore)
*........................................ 14,100 430,050
Gilat Satellite Networks LTD *(Israel)..... 6,000 145,500
Grasim Industries (India).................. 13,300 232,750
Gujarat Ambuja Cements Sponsored GDR
(India).................................. 22,600 276,737
India Growth Fund, Inc (India)............. 3,867 56,555
Koor Industries LTD Sponsored ADR
(Israel)................................. 4,600 89,125
La Cementos Nacional (Ecuador) 144A *+..... 1,270 196,850
Larsen & Toubro LTD Sponsored GDR
(India).................................. 14,000 219,800
Moneda Chile Fund LTD (Chile) *............ 10,000 95,000
</TABLE>

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

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

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
COMMON STOCKS (Continued)
- ----------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
Morgan Stanley India Investment Fund, Inc.
(India) *................................ 10,000 $ 111,250
Nice Systems LTD (Israel).................. 30,700 399,100
PT Telekomunikasi Sponsored ADR (Indonesia)
*........................................ 7,300 225,387
Pakistan Investment Fund, Inc. (Pakistan).. 18,100 110,862
Pliva Sponsored GDR (United Kingdom)....... 5,500 102,905
ROC Taiwan Fund (Taiwan) *................. 1,000 10,375
Samsung Electronics
Co. -- Voting Sponsored GDR (Korea) *.... 32 1,896
Samsung Electronics
Co. -- New GDS (Korea) *................. 10 571
Saville Systems PLC (Ireland) *............ 10,800 203,850
SDL, Inc. *................................ 1,950 58,500
Siderurgica Venezolana Sivensa, Saica
S.A.C.A. (Venezuela)..................... 47,300 94,600
Taiwan Fund, Inc. (Taiwan)................. 3,750 85,313
Telecomunicacoes Brasileiras S.A. -- ADR
(Brazil)................................. 3,600 179,100
Teledata Communication * (Israel).......... 22,400 238,000
Telefonos De Mexico SA Sponsored ADR
(Mexico)................................. 5,800 190,675
</TABLE>

NUMBER
OF SHARES VALUE

- ---------------------------------------------------------
<TABLE>
<S> <C> <C>
UNITED STATES OF AMERICA++ (CONTINUED)
Total Access Communication (Thailand)...... 31,000 $ 272,800
Wockhardt LTD * (India).................... 14,000 115,500
----------
5,491,231
----------
TOTAL COMMON STOCKS
(Cost $17,636,887)...................................... $19,015,408
----------
<CAPTION>

PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
COMMERCIAL PAPER -- 7.2%
- -----------------------------------------------------------------------
Associates Corporation of America,
5.43%, 04/01/96.......................... $ 485,000 485,000
UBS Finance Delaware Inc.
5.43%, 04/01/96.......................... 952,000 952,000
----------
TOTAL COMMERCIAL PAPER
(Cost $1,437,000)....................................... 1,437,000
----------
TOTAL INVESTMENTS -- 102.8%
(Cost $19,073,887)...................................... $20,452,408
LIABILITIES IN EXCESS OF OTHER ASSETS -- (2.8%)...........
(553,422)
----------
NET ASSETS -- 100.0%...................................... $19,898,986
----------
</TABLE>

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

+ Rule 144A restricted security

++ Certain securities issued by foreign companies are classified as United
States securities and their underlying currency is the U.S. Dollar.

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

35
<PAGE>
SCHEDULE OF INVESTMENTS BY INDUSTRY AS OF MARCH 31, 1996
- ------------------------------------------------------------------------

EMERGING COUNTRIES FUND
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Agriculture................................... 2.6
Airlines...................................... 1.1
Alcoholic Beverages........................... 2.4
Automotive Equipment.......................... 1.0
Beverages/Soft Drinks......................... 1.7
Building Materials............................ 11.2
Closed End Country Funds...................... 3.4
Consumer Electricals.......................... 0.9
Containers.................................... 2.4
Department/Discount Stores.................... 1.4
Drugs/Pharmaceuticals......................... 1.5
Electric Utilities............................ 1.7
Entertainment................................. 3.9
Finance Companies............................. 1.3
Food Chains................................... 0.4
Gas Utilites.................................. 1.2
Grocery Products.............................. 3.7
Home Furnishings.............................. 0.2
Homebuilding.................................. 0.6
Industrial Engineering/Construction........... 0.9
Integrated Oil Companies...................... 1.8
Leisure/Gaming................................ 0.2
Life Insurers................................. 0.7
Machinery/Equipment........................... 1.4

<CAPTION>
PERCENT OF
INDUSTRY NET ASSETS
- ---------------------------------------------- ------------
<S> <C>
Metals........................................ 1.6
Miscellaneous................................. 6.0
Money-Center Banks............................ 3.9
Oil/Gas Production............................ 0.2
Other Commercial/Industrial Services.......... 0.3
Other Consumer Durables....................... 0.5
Other Consumer Non-Durables................... 2.2
Other Consumer Services....................... 1.0
Other Financial Services...................... 1.0
Other Production/Manufacturing................ 6.7
Other Retail Trade............................ 0.6
Other Transportation.......................... 0.8
Real Estate Brokers/Services.................. 3.3
Regional Banks................................ 3.0
Semiconductors................................ 3.4
Software...................................... 1.0
Telecommunications Equipment.................. 4.2
Telephone..................................... 7.0
Textiles...................................... 0.3
Wholesale Distribution........................ 0.9
Short-Term Obligations........................ 7.3
Liabilities in Excess of Other Assets......... (2.8)
-----
NET ASSETS.................................... 100.0%
-----
-----
</TABLE>

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

36
<PAGE>
(This page intentionally left blank)

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

37
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------

SERIES A PORTFOLIOS+

<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DISTRIBUTIONS
VALUES AT INVESTMENT AND UNREALIZED FROM NET DISTRIBUTIONS
BEGINNINING INCOME GAINS (LOSSES) INVESTMENT FROM CAPITAL
OF PERIOD (DEFICIT) ON INVESTMENTS INCOME GAINS
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio A (For the year
ended 03/31/96)......... $14.29 $(0.07) $ 2.86 $(0.12) $(0.39)
Portfolio A (For the year
ended 03/31/95)......... 14.94 (0.05) (0.09) (0.02) (0.49)
Portfolio A (For the
period ended 03/31/94) 12.50 (0.07) 2.51 -- --
INTERNATIONAL GROWTH
Portfolio A (For the year
ended 03/31/96) 11.51 (0.02) 1.79 (0.13) --
Portfolio A (For the
period ended 03/31/95) 12.50 -- (0.98) (0.01) --
EMERGING COUNTRIES
Portfolio A (For the year
ended 03/31/96) 11.00 (0.04) 3.15 (0.02) (0.06)
Portfolio A (For the
period ended 03/31/95) 12.50 0.04 (1.54) -- --
</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.
++ Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
* The Portfolio's maximum sales charge is not included in the total return
computation.
** Annualized.

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

38
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
RATIO OF EXPENSES TO INVESTMENT
EXPENSES TO AVERAGE NET (DEFICIT) TO
AVERAGE NET ASSETS, AVERAGE NET
NET ASSET ASSETS, AFTER BEFORE ASSETS, AFTER
VALUES AT END TOTAL NET ASSETS AT EXPENSE EXPENSE EXPENSE
OF PERIOD RETURN* END OF PERIOD REIMBURSEMENT++ REIMBURSEMENT++ REIMBURSEMENT++
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio A (For the year
ended 03/31/96)......... $16.57 19.79% $ 23,480,586 1.85% 2.17% (0.35%)
Portfolio A (For the year
ended 03/31/95)......... 14.29 (0.90%) 22,207,775 1.85% 2.18% (0.42%)
Portfolio A (For the
period ended 03/31/94) 14.94 19.52% 20,194,105 1.85%** 2.23%** (0.69%)**
INTERNATIONAL GROWTH
Portfolio A (For the year
ended 03/31/96) 13.15 15.46% 1,055,809 1.95% 10.06% (0.27%)
Portfolio A (For the
period ended 03/31/95) 11.51 (7.85%) 610,176 1.95%** 9.77%** (0.07%)**
EMERGING COUNTRIES
Portfolio A (For the year
ended 03/31/96) 14.03 28.43% 4,717,767 2.25% 6.72% (0.35%)
Portfolio A (For the
period ended 03/31/95) 11.00 (11.98%) 1,197,361 2.25%** 6.15%** (1.09%)**

<CAPTION>
RATIO OF NET
(DEFICIT) TO
AVERAGE NET
ASSETS,
BEFORE
EXPENSE
REIMBURSEMENT++
<S> <C>
- ------------------------------
WORLDWIDE GROWTH
Portfolio A (For the year
ended 03/31/96)......... (0.61%)
Portfolio A (For the year
ended 03/31/95)......... (0.75%)
Portfolio A (For the
period ended 03/31/94) (1.07%)**
INTERNATIONAL GROWTH
Portfolio A (For the year
ended 03/31/96) (7.75%)
Portfolio A (For the
period ended 03/31/95) (7.89%)**
EMERGING COUNTRIES
Portfolio A (For the year
ended 03/31/96) (3.61%)
Portfolio A (For the
period ended 03/31/95) (4.99%)**
</TABLE>

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

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

SERIES B PORTFOLIOS+

<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUES AT NET AND UNREALIZED FROM NET DISTRIBUTIONS
BEGINNINING INVESTMENT GAINS ON INVESTMENT FROM CAPITAL
OF PERIOD DEFICIT INVESTMENTS INCOME GAINS
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio B (For the
period ended
03/31/96)............... $12.50 $(0.05) $ 1.89 -- --
INTERNATIONAL GROWTH
Portfolio B (For the
period ended
03/31/96)............... 12.50 (0.02) 1.48 -- --
EMERGING COUNTRIES
Portfolio B (For the
period ended
03/31/96)............... 12.50 (0.04) 1.56 -- --
</TABLE>

- -------------
+ All Series B Portfolios commenced operations on May 31, 1995.
++ Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
* The Portfolio's maximum sales charge is not included in the total return
computation.
** Annualized.

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

40
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
RATIO OF EXPENSES TO INVESTMENT
EXPENSES TO AVERAGE NET (DEFICIT) TO
AVERAGE NET ASSETS, AVERAGE NET
NET ASSET ASSETS, AFTER BEFORE ASSETS, AFTER
VALUES AT END TOTAL NET ASSETS AT EXPENSE EXPENSE EXPENSE
OF PERIOD RETURN* END OF PERIOD REIMBURSEMENT++ REIMBURSEMENT++ REIMBURSEMENT++
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio B (For the
period ended
03/31/96)............... $14.34 14.72% $ 1,972,242 2.50%** 9.50%** (1.28%)**
INTERNATIONAL GROWTH
Portfolio B (For the
period ended
03/31/96)............... 13.96 11.68% 1,486,794 2.60%** 16.15%** (0.64%)**
EMERGING COUNTRIES
Portfolio B (For the
period ended
03/31/96)............... 14.02 12.16% 3,557,080 2.90%** 7.58%** (1.05%)**

<CAPTION>
RATIO OF NET
(DEFICIT) TO
AVERAGE NET
ASSETS,
BEFORE
EXPENSE
REIMBURSEMENT++
<S> <C>
- ------------------------------
WORLDWIDE GROWTH
Portfolio B (For the
period ended
03/31/96)............... (8.12%)**
INTERNATIONAL GROWTH
Portfolio B (For the
period ended
03/31/96)............... (13.26%)**
EMERGING COUNTRIES
Portfolio B (For the
period ended
03/31/96)............... (5.44%)**
</TABLE>

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

41
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------

SERIES C PORTFOLIOS+

<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DISTRIBUTIONS
VALUES AT INVESTMENT AND UNREALIZED FROM NET DISTRIBUTIONS
BEGINNINING INCOME GAINS (LOSSES) INVESTMENT FROM CAPITAL
OF PERIOD (DEFICIT) ON INVESTMENTS INCOME GAINS
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio C (For the year
ended 03/31/96)......... $14.44 $(0.21) $ 2.92 $(0.01) $(0.38)
Portfolio C (For the year
ended 03/31/95)......... 14.86 (0.15) (0.08) -- (0.19)
Portfolio C (For the
period ended
03/31/94)............... 12.50 (0.09) 2.45 -- --
INTERNATIONAL GROWTH
Portfolio C (For the year
ended 03/31/96)......... 11.32 0.01 1.72 -- --
Portfolio C (For the
period ended
03/31/95)............... 12.50 (0.04) (1.12) (0.02) --
EMERGING COUNTRIES
Portfolio C (For the year
ended 03/31/96)......... 10.79 (0.05) 2.97 -- --
Portfolio C (For the
period ended
03/31/95)............... 12.50 -- (1.70) (0.01) --
</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.
++ Includes expenses allocated from the Master Trust Funds. See Notes to Funds'
Financial Statements for amounts.
* The Portfolio's maximum sales charge is not included in the total return
computation.
** Annualized.

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

42
<PAGE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
RATIO OF EXPENSES TO INVESTMENT
EXPENSES TO AVERAGE NET (DEFICIT) TO
AVERAGE NET ASSETS, AVERAGE NET
NET ASSET ASSETS, AFTER BEFORE ASSETS, AFTER
VALUES AT END TOTAL NET ASSETS AT EXPENSE EXPENSE EXPENSE
OF PERIOD RETURN* END OF PERIOD REIMBURSEMENT++ REIMBURSEMENT++ REIMBURSEMENT++
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
WORLDWIDE GROWTH
Portfolio C (For the year
ended 03/31/96)......... $16.76 18.95% $ 71,155,027 2.50% 2.57% (0.99%)
Portfolio C (For the year
ended 03/31/95)......... 14.44 (1.49%) 71,200,715 2.50% 2.57% (1.06%)
Portfolio C (For the
period ended
03/31/94)............... 14.86 18.88% 66,576,743 2.44%** 2.44%** (1.24%)**
INTERNATIONAL GROWTH
Portfolio C (For the year
ended 03/31/96)......... 13.05 15.30% 933,422 2.60% 16.15% (1.02%)
Portfolio C (For the
period ended
03/31/95)............... 11.32 (9.25%) 24,066 2.61%** 75.37%** (0.76%)**
EMERGING COUNTRIES
Portfolio C (For the year
ended 03/31/96)......... 13.71 27.30% 4,344,744 2.90% 6.23% (1.06%)
Portfolio C (For the
period ended
03/31/95)............... 10.79 (13.64%) 59,366 2.90%** 242.59%** (0.04%)**

<CAPTION>
RATIO OF NET
(DEFICIT) TO
AVERAGE NET
ASSETS,
BEFORE
EXPENSE
REIMBURSEMENT++
<S> <C>
- ------------------------------
WORLDWIDE GROWTH
Portfolio C (For the year
ended 03/31/96)......... (1.00%)
Portfolio C (For the year
ended 03/31/95)......... (1.13%)
Portfolio C (For the
period ended
03/31/94)............... (1.24%)**
INTERNATIONAL GROWTH
Portfolio C (For the year
ended 03/31/96)......... (13.95%)
Portfolio C (For the
period ended
03/31/95)............... (73.52%)**
EMERGING COUNTRIES
Portfolio C (For the year
ended 03/31/96)......... (4.15%)
Portfolio C (For the
period ended
03/31/95)............... (239.73%)**
</TABLE>

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

43
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1996
- -------------------------------------------------------------------

SERIES A PORTFOLIOS

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
-------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Investments in Master Trust Fund, at value*............................ $ 23,483,936 $ 1,057,534 $ 4,736,241
Receivable for shares of beneficial interest sold...................... 43,260 -- 53,584
Receivable for investments sold in Master Trust Fund................... 54,962 -- 9,049
Due from advisor....................................................... 12,848 29,478 37,265
Deferred organization costs............................................ 13,801 -- 5,770
Prepaid expenses and other assets...................................... 366 -- 54
--------------------------------------------
Total assets......................................................... 23,609,173 1,087,012 4,841,963
--------------------------------------------
LIABILITIES
Payable for investments purchased in Master Trust Fund................. 43,260 -- 53,584
Payable for shares of beneficial interest repurchased.................. 54,962 -- 9,049
Accrued expenses....................................................... 30,365 31,203 61,563
--------------------------------------------
Total liabilities.................................................... 128,587 31,203 124,196
--------------------------------------------
NET ASSETS............................................................... $ 23,480,586 $ 1,055,809 $ 4,717,767
--------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital........................................................ $ 19,319,076 $ 951,736 $ 4,347,803
Accumulated deficit in net investment income........................... (453,310) (11,891) (8,787)
Accumulated undistributed net realized gain (loss) from security
transactions......................................................... 1,025,073 (1,046) 17,496
Accumulated undistributed net realized foreign exchange gain (loss).... 35,802 124 (7,058)
Net unrealized foreign exchange (loss)................................. (667) (98) (48)
Net unrealized appreciation of investments............................. 3,554,612 116,984 368,361
--------------------------------------------
Net assets........................................................... $ 23,480,586 $ 1,055,809 $ 4,717,767
--------------------------------------------
Shares of beneficial interest, no par value, issued and outstanding
(unlimited shares unauthorized)........................................ 1,416,819 80,298 336,371
--------------------------------------------
COMPUTATION OF
Net asset value per share of beneficial interest (Net assets/
Outstanding shares of beneficial interest)........................... $ 16.57 $ 13.15 $ 14.03
--------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
($16.57/94.75%, $13.15/94.75%, $14.03/94.75%, respectively)............ $ 17.49 $ 13.88 $ 14.81
--------------------------------------------
*Cost of investments in the Master Trust Fund............................ $ 17,433,825 $ 938,022 $ 4,331,389
--------------------------------------------
</TABLE>

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

44
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1996
- -------------------------------------------------------------------

SERIES B PORTFOLIOS

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Investments in Master Trust Fund, at value*.............................. $ 1,978,951 $ 1,490,307 $ 3,568,670
Receivable for shares of beneficial interest sold........................ 67,657 40,467 109,647
Receivable for investments sold in Master Trust Fund..................... 259 -- 2,202
Due from advisor......................................................... 8,974 9,942 7,735
Deferred organization costs.............................................. 836 836 848
Prepaid expenses and other assets........................................ 2,834 3,256 27
-------------------------------------------
Total assets........................................................... 2,059,511 1,544,808 3,689,129
-------------------------------------------
LIABILITIES
Payable for investments purchased in Master Trust Fund................... 67,657 40,531 109,647
Payable for shares of beneficial interest repurchased.................... 259 -- --
Due to advisor........................................................... 1,013 1,013 1,025
Accrued expenses......................................................... 18,340 16,470 21,377
-------------------------------------------
Total liabilities...................................................... 87,269 58,014 132,049
-------------------------------------------
NET ASSETS................................................................. $ 1,972,242 $ 1,486,794 $ 3,557,080
-------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital.......................................................... $ 1,876,709 $ 1,411,054 $ 3,437,531
Accumulated deficit in net investment income............................. (6,624) (1,795) (9,396)
Accumulated net realized loss from security transactions................. (33,558) (9,212) (42,752)
Accumulated undistributed net realized foreign exchange gain (loss)...... (1,169) 3 (2,898)
Net unrealized foreign exchange gain (loss).............................. (73) (152) 91
Net unrealized appreciation of investments............................... 136,957 86,896 174,504
-------------------------------------------
Net assets............................................................. $ 1,972,242 $ 1,486,794 $ 3,557,080
-------------------------------------------
Shares of beneficial interest, no par value, issued and outstanding
(unlimited shares unauthorized).......................................... 137,552 106,534 253,773
-------------------------------------------
COMPUTATION OF
Net asset value per share of beneficial interest (Net assets/ Outstanding
shares of beneficial interest)......................................... $ 14.34 $ 13.96 $ 14.02
-------------------------------------------
*Cost of investments in the Master Trust Fund.............................. $ 1,876,709 $ 1,411,054 $ 3,437,531
-------------------------------------------
</TABLE>

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

45
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AS OF MARCH 31, 1996
- -------------------------------------------------------------------

SERIES C PORTFOLIOS

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Investments in Master Trust Fund, at value*.............................. $ 71,267,778 $ 937,377 $ 4,364,075
Receivable for shares of beneficial interest sold........................ 77,881 4,109 31,307
Receivable for investments sold in Master Trust Fund..................... 206,334 -- --
Due from advisor......................................................... -- 14,125 14,009
Deferred organization costs.............................................. 14,908 -- 2,035
Prepaid expenses and other assets........................................ 1,098 -- 29
-------------------------------------------
Total assets........................................................... 71,567,999 955,611 4,411,455
-------------------------------------------
LIABILITIES
Payable for investments purchased in Master Trust Fund................... 77,881 4,109 33,557
Payable for shares of beneficial interest repurchased.................... 206,334 -- --
Due to advisor........................................................... 14,868 -- --
Accrued expenses......................................................... 113,889 18,080 33,154
-------------------------------------------
Total liabilities...................................................... 412,972 22,189 66,711
-------------------------------------------
NET ASSETS................................................................. $ 71,155,027 $ 933,422 $ 4,344,744
-------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital.......................................................... $ 58,988,664 $ 873,188 $ 4,144,157
Accumulated deficit in net investment income............................. (1,925,672) (3,710) (15,682)
Accumulated undistributed net realized gain (loss) from security
transactions........................................................... 2,601,868 (11,122) (48,962)
Accumulated undistributed net realized foreign exchange gain (loss)...... 625,510 705 (4,592)
Net unrealized foreign exchange gain (loss).............................. (2,005) (93) 41
Net unrealized appreciation of investments............................... 10,866,662 74,454 269,782
-------------------------------------------
Net assets............................................................. $ 71,155,027 $ 933,422 $ 4,344,744
-------------------------------------------
Shares of beneficial interest, no par value, issued and outstanding
(unlimited shares unauthorized).......................................... 4,244,437 71,526 316,899
-------------------------------------------
COMPUTATION OF
Net asset value per share of beneficial interest (Net assets/ Outstanding
shares of beneficial interest)......................................... $ 16.76 $ 13.05 $ 13.71
-------------------------------------------
*Cost of investments in the Master Trust Fund.............................. $ 54,125,133 $ 872,585 $ 4,144,156
-------------------------------------------
</TABLE>

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

46
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1996
- -------------------------------------------------------------------

SERIES A PORTFOLIOS

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
------------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Net investment income from Master Trust Fund............................... $ 68,294 $ 2,749 $ 7,585
---------------------------------------
EXPENSES
Accounting fees.......................................................... 31,200 19,500 23,920
Administration fees...................................................... 7,008 1,356 9,640
Audit & tax services..................................................... 7,500 7,503 7,501
Distribution fees........................................................ 56,962 2,087 6,256
Insurance................................................................ 1,996 34 40
Legal fees............................................................... 2,307 288 846
Miscellaneous............................................................ 604 22 2,524
Organization costs....................................................... 6,741 -- 966
Registration fees........................................................ 7,505 7,197 1,613
Shareholder reporting fees............................................... 13,091 1,657 1,038
Shareholder servicing fees............................................... 22,785 835 2,502
Transfer agent fees...................................................... 49,676 26,950 29,596
Trustees' fee............................................................ 904 33 97
---------------------------------------
Total expenses......................................................... 208,279 67,462 86,539
Less: Reimbursement from advisor......................................... (60,177) (62,453 ) (70,273)
---------------------------------------
Net expenses........................................................... 148,102 5,009 16,266
---------------------------------------
Net investment deficit............................................... (79,808) (2,260 ) (8,681)
---------------------------------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from security transactions............................. 1,986,079 2,128 75,094
Net realized foreign exchange gain (loss)................................ 186,789 8,121 (7,219)
Change in net unrealized appreciation of investments and foreign
currency............................................................... 2,024,229 113,582 445,582
---------------------------------------
Net gain on investments................................................ 4,197,097 123,831 513,457
---------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......................... $ 4,117,289 $ 121,571 $ 504,776
---------------------------------------
</TABLE>

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

47
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 1996
- -------------------------------------------------------------------

SERIES B PORTFOLIOS*

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
---------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Net investment income from Master Trust Fund................................... $ 85 $ 1,718 $ 2,194
------------------------------------
EXPENSES
Accounting fees.............................................................. 9,360 9,360 9,360
Administration fees.......................................................... 167 421 2,422
Audit & tax services......................................................... 6,494 6,585 6,582
Distribution fees............................................................ 3,870 2,108 6,687
Insurance.................................................................... 10 6 17
Legal fees................................................................... 160 107 269
Miscellaneous................................................................ 457 235 840
Organization costs........................................................... 177 177 177
Registration fees............................................................ 13,223 12,793 13,610
Shareholder reporting fees................................................... 68 92 1,095
Shareholder servicing fees................................................... 1,290 703 2,229
Transfer agent fees.......................................................... 5,320 5,152 5,980
Trustees' fee................................................................ 1,803 1,803 1,803
------------------------------------
Total expenses............................................................. 42,399 39,542 51,071
Less: Reimbursement from advisor............................................. (35,690) (36,029 ) (39,481)
------------------------------------
Net expenses............................................................... 6,709 3,513 11,590
------------------------------------
Net investment deficit................................................... (6,624) (1,795 ) (9,396)
------------------------------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized (loss) from security transactions............................... (33,558) (9,212 ) (42,752)
Net realized foreign exchange gain (loss).................................... (1,169) 3 (2,898)
Change in net unrealized appreciation of investments and foreign currency.... 136,884 86,744 174,595
------------------------------------
Net gain on investments.................................................... 102,157 77,535 128,945
------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. $ 95,533 $ 75,740 $ 119,549
------------------------------------
</TABLE>

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

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

48
<PAGE>
NICHOLAS-APPLEGATE MUTUAL FUNDS
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1996
- -------------------------------------------------------------------

SERIES C PORTFOLIOS

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Net investment income from Master Trust Fund............................. $ 217,421 $ 783 $ 3,581
---------------------------------------------
EXPENSES
Accounting fees........................................................ 31,200 19,500 23,920
Administration fees.................................................... 21,758 542 4,296
Audit & tax services................................................... 9,762 7,500 7,501
Distribution fees...................................................... 531,203 2,574 11,112
Insurance.............................................................. 1,107 26 31
Legal fees............................................................. 7,113 112 477
Miscellaneous.......................................................... 3,328 1,653 2,443
Organization costs..................................................... 7,282 0 342
Registration fees...................................................... 9,417 6,062 1,708
Shareholder reporting fees............................................. 40,532 4 1,288
Shareholder servicing fees............................................. 177,068 858 3,704
Transfer agent fees.................................................... 82,469 9,796 8,125
Trustees' fee.......................................................... 2,813 13 55
---------------------------------------------
Total expenses....................................................... 925,052 48,640 65,002
Less: Reimbursement from advisor....................................... (4,300) (44,351) (45,742)
---------------------------------------------
Net expenses......................................................... 920,752 4,289 19,260
---------------------------------------------
Net investment deficit............................................. (703,331) (3,506) (15,679)
---------------------------------------------
NET REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from security transactions.................... 5,902,488 (10,145) (48,875)
Net realized foreign exchange gain (loss).............................. 571,253 660 (4,594)
Change in net unrealized appreciation of investments and foreign
currency............................................................. 6,582,211 74,223 268,676
---------------------------------------------
Net gain on investments.............................................. 13,055,952 64,738 215,207
---------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 12,352,621 $ 61,232 $ 199,528
---------------------------------------------
</TABLE>

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

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

SERIES A PORTFOLIOS

<TABLE>
<CAPTION>
INTERNATIONAL GROWTH EMERGING COUNTRIES
WORLDWIDE GROWTH ------------------------- -------------------------
------------------------- FOR THE FOR THE
FOR THE FOR THE FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995+ 1996 1995++
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS OPERATIONS
Net investment income (deficit)........ $ (79,808) $ (93,101) $ (2,260) $ (106) $ (8,681) $ 3,718
Net realized gain (loss) from security
transactions......................... 1,986,079 (194,764) 2,128 (12,533) 75,094 (45,007)
Net realized foreign exchange gain
(loss)............................... 186,789 62,076 8,121 1,362 (7,219) 161
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency..................... 2,024,229 (85,130) 113,582 3,304 445,582 (77,269)
---------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations.......... 4,117,289 (310,919) 121,571 (7,973) 504,776 (118,397)
---------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*................. (164,263) (28,122) (9,359) (166) (3,691) (132)
Capital gain*.......................... (548,948) (771,570) -- -- (12,591) --
---------------------------------------------------------------------------------
Total distributions.................. (713,211) (799,692) (9,359) (166) (16,282) (132)
---------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold.............. 2,695,773 7,644,658 462,321 633,855 3,534,443 1,335,363
Proceeds from shares issued for
distribution reinvestment............ 89,275 66,649 4,744 56 2,935 66
Cost of shares repurchased............. (4,916,315) (4,587,026) (133,644) (16,596) (505,466) (20,539)
---------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in shares
of beneficial interest............. (2,131,267) 3,124,281 333,421 617,315 3,031,912 1,314,890
---------------------------------------------------------------------------------
Total increase in net assets......... 1,272,811 2,013,670 445,633 609,176 3,520,406 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............................ $23,480,586 $22,207,775 $ 1,055,809 $ 610,176 $ 4,717,767 $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.............................. 172,676 514,119 37,660 54,404 264,950 110,666
Shares issued for distributions
reinvested............................. 5,816 4,784 392 5 237 5
Shares repurchased....................... (315,214) (316,738) (10,745) (1,498) (37,701) (1,866)
---------------------------------------------------------------------------------
Ending balance........................... 1,416,819 1,553,541 80,298 52,991 336,371 108,885
---------------------------------------------------------------------------------
</TABLE>

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

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
MARCH 31, MARCH 31, MARCH 31,
1996 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS OPERATIONS
Net investment deficit............................................... $ (6,624) $ (1,795) $ (9,396)
Net realized loss from security transactions......................... (33,558) (9,212) (42,752)
Net realized foreign exchange gain (loss)............................ (1,169) 3 (2,898)
Change in net unrealized appreciation of investments and foreign
currency........................................................... 136,884 86,744 174,595
------------------------------------------
Net increase in net assets resulting from operations............... 95,533 75,740 119,549
------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from shares sold............................................ 1,875,734 1,436,777 3,604,854
Cost of shares repurchased........................................... (25) (26,723) (168,323)
------------------------------------------
Increase in net assets derived from transactions in shares of
beneficial interest.............................................. 1,875,709 1,410,054 3,436,531
------------------------------------------
Total increase in net assets....................................... 1,971,242 1,485,794 3,556,080
NET ASSETS:
BEGINNING OF PERIOD.................................................... 1,000 1,000 1,000
------------------------------------------
END OF PERIOD.......................................................... $ 1,972,242 $ 1,486,794 $ 3,557,080
------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance...................................................... 80 80 80
Shares sold............................................................ 137,474 108,479 265,757
Shares repurchased..................................................... (2) (2,025) (12,064)
------------------------------------------
Ending balance......................................................... 137,552 106,534 253,773
------------------------------------------
</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>
INTERNATIONAL GROWTH EMERGING COUNTRIES
WORLDWIDE GROWTH ------------------------- -------------------------
--------------------------- FOR THE FOR THE
FOR THE FOR THE FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995+ 1996 1995++
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment deficit................. $ (703,331) $ (775,701) $ (3,506) $ (100) $ (15,679) $ (2)
Net realized gain (loss) from security
transactions......................... 5,902,488 (1,433,986) (10,145) (1,052) (48,875) (87)
Net realized foreign exchange gain
(loss)............................... 571,253 207,276 660 120 (4,594) 2
Change in net unrealized appreciation
of investments and foreign
currency............................. 6,582,211 309,263 74,223 138 268,676 1,147
-----------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations.......... 12,352,621 (1,693,148) 61,232 (894) 199,528 1,060
-----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHARES OF BENEFICIAL
INTEREST
Net investment income*................. (38,714) -- (75) (29) -- (1)
Capital gain*.......................... (1,617,540) (1,027,462) -- -- -- --
-----------------------------------------------------------------------------------
Total distributions.................. (1,656,254) (1,027,462) (75) (29) -- (1)
-----------------------------------------------------------------------------------
TRANSACTIONS IN SHARES OF BENEFICIAL
INTEREST
Proceeds from shares sold.............. 9,990,990 27,726,843 894,986 35,163 4,602,574 76,983
Proceeds from shares issued for
distribution reinvestment............ 248,301 131,345 53 29 -- 1
Cost of shares repurchased............. (20,981,346) (20,513,606) (46,840) (11,203) (516,724) (19,677)
-----------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from transactions in shares
of beneficial interest............. (10,742,055) 7,344,582 848,199 23,989 4,085,850 57,307
-----------------------------------------------------------------------------------
Total increase (decrease) in net
assets............................. (45,688) 4,623,972 909,356 23,066 4,285,378 58,366
NET ASSETS:
BEGINNING OF PERIOD...................... 71,200,715 66,576,743 24,066 1,000 59,366 1,000
-----------------------------------------------------------------------------------
END OF PERIOD............................ $ 71,155,027 $ 71,200,715 $ 933,422 $ 24,066 $ 4,344,744 $ 59,366
-----------------------------------------------------------------------------------
CHANGES IN SHARES OF BENEFICIAL INTEREST
Beginning balance........................ 4,932,460 4,480,436 2,126 80 5,503 80
Shares sold.............................. 627,728 1,864,921 73,086 3,107 350,179 7,179
Shares issued for distributions
reinvested............................. 15,968 9,315 5 2 -- --
Shares repurchased....................... (1,331,719) (1,422,212) (3,691) (1,027) (38,783) (1,756)
-----------------------------------------------------------------------------------
Ending balance........................... 4,244,437 4,932,460 71,526 2,162 316,899 5,503
-----------------------------------------------------------------------------------
</TABLE>

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

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

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Nicholas-Applegate Mutual Funds (the "Trust") is organized as a diversified,
open-end management investment company which offers 43 separate series comprised
of Portfolios A, with an initial sales charge, B, with a back-end sales charge,
C, with a level asset-based sales charge, Institutional, with no load, and
Qualified, with no load (each a "Portfolio" and collectively the "Portfolios").
The Portfolios of the Trust seek to achieve their respective investment
objectives by investing all of their assets in corresponding series of
Nicholas-Applegate Investment Trust (the "Master Trust"), a diversified,
open-end management investment company offering twelve investment vehicles (the
"Funds"). For a description of the investment objectives of each Fund, see Note
A to the accompanying Funds' financial statements.

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

INVESTMENT INCOME

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

FEDERAL INCOME TAXES

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

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

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

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

DEFERRED ORGANIZATION COSTS

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

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

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and

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

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

the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

2. TRANSACTIONS WITH AFFILIATES

ADVISORY AGREEMENTS

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

DISTRIBUTION AND SHAREHOLDER SERVICE PLAN

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

Under a distribution agreement, the Distributor who is the principal
underwriter for the sale of shares of the Portfolios, retains a portion of any
contingent deferred sales load on redemptions for the Portfolios, and retains a
portion of the initial sales load imposed on purchases of shares of the Series A
Portfolios. This agreement may be terminated by either party upon 60 days'
written notice. For the fiscal year ended March 31, 1996, the Distributor earned
$221,965 from sales loads.

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

EXPENSE LIMITATIONS

Nicholas-Applegate and the Trust have undertaken to limit the Portfolios'
expenses to the following annual levels through March 31, 1997. In subsequent
years, overall operating expenses for each Portfolio will not fall below the
applicable percentage limitation until the Investment Adviser has been fully
reimbursed for fees foregone or expenses paid by the Investment Adviser under
this agreement, as each Portfolio will reimburse the Investment Adviser in
subsequent years when operating expenses (before reimbursement) are less than
the applicable percentage limitation.

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

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

The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Portfolios, during the period from inception (respectively) to March 31,
1996 are as follows:

<TABLE>
<CAPTION>
A B C
----------- --------- ---------
<S> <C> <C> <C>
Worldwide Growth
Portfolios.............. $ 182,495 $ 35,690 $ 58,769
International Growth
Portfolios.............. 82,769 36,029 60,818
Emerging Countries
Portfolios.............. 120,951 39,481 84,309
</TABLE>

Nicholas-Applegate advanced certain organization costs discussed in Note 1. As
of March 31, 1996,

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

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

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........ 1,025
</TABLE>

RELATED PARTIES

Certain officers of the Trust and the Master Trust are also officers of the
Investment Adviser and the Distributor.

3. INVESTMENT TRANSACTIONS

Additions and reductions in the investments in the respective Master Trust
Funds for the fiscal year ended March 31, 1996 were as follows:

<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
(000S) (000S)
--------- -----------
<S> <C> <C>
Worldwide Growth Portfolio A...................... $ 2,764 $ 5,766
Worldwide Growth Portfolio B...................... 1,877 --
Worldwide Growth Portfolio C...................... 10,069 23,312
International Growth Portfolio A.................. 454 138
International Growth Portfolio B.................. 1,438 27
International Growth Portfolio C.................. 887 45
Emerging Countries Portfolio A.................... 3,534 519
Emerging Countries Portfolio B.................... 3,606 168
Emerging Countries Portfolio C.................... 4,603 517
</TABLE>

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

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

STATEMENTS OF ASSETS AND LIABILITIES FOR NICHOLAS-APPLEGATE INVESTMENT TRUST
AS OF MARCH 31, 1996

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
FUND FUND FUND
--------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Investments, at value*............................................. $ 98,325,840 $ 23,764,098 $ 20,452,408
Foreign currencies, at value**..................................... 1,820,893 739,804 40,833
Cash............................................................... 110,721 3,917 12,396
Receivable for investment securities sold.......................... 2,328,956 860,105 371,163
Receivable for interests sold...................................... 188,918 44,576 194,538
Dividends and interest receivable.................................. 282,917 66,818 19,845
Due from advisor................................................... -- 27,007 29,500
Deferred organization costs........................................ 12,927 829 --
Other assets....................................................... 663 191 2,806
-----------------------------------------------
Total assets..................................................... 103,071,835 25,507,345 21,123,489
-----------------------------------------------
LIABILITIES
Payable for investment securities purchased........................ 2,277,497 1,649,877 1,159,097
Payable for interests repurchased.................................. 261,296 -- 9,049
Accrued expenses................................................... 190,016 51,840 56,357
-----------------------------------------------
Total liabilities................................................ 2,728,809 1,701,717 1,224,503
-----------------------------------------------
NET ASSETS........................................................... $ 100,343,026 $ 23,805,628 $ 19,898,986
-----------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital.................................................... $ 76,264,978 $ 21,186,125 $ 18,753,381
Accumulated net investment income.................................. 545,343 110,388 48,405
Accumulated net realized gain (loss)............................... 7,494,440 (189,498) (256,470)
Accumulated net realized foreign exchange gain (loss).............. 907,863 165,204 (24,857)
Net unrealized foreign exchange gain (loss)........................ (2,849) (2,216) 6
Net unrealized appreciation of investments and foreign currency.... 15,133,251 2,535,625 1,378,521
-----------------------------------------------
Net assets....................................................... $ 100,343,026 $ 23,805,628 $ 19,898,986
-----------------------------------------------
*Investments, at cost................................................ $ 83,192,589 $ 21,228,473 $ 19,073,887
-----------------------------------------------
**Foreign currencies, at cost........................................ $ 1,820,308 $ 738,051 $ 42,545
-----------------------------------------------
</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 YEAR ENDED MARCH 31, 1996

<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL EMERGING
GROWTH GROWTH COUNTRIES
FUND FUND FUND
-------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends........................................................... $ 1,303,881 $ 291,589 $ 115,314
Interest............................................................ 171,883 34,048 48,637
--------------------------------------------
Total income...................................................... 1,475,764 325,637 163,951
--------------------------------------------
EXPENSES
Advisory fee........................................................ 980,556 187,128 107,680
Accounting fee...................................................... 75,052 75,000 69,519
Administration fee.................................................. 34,149 6,507 2,940
Audit & tax services................................................ 27,488 4,777 2,331
Custodian fee....................................................... 65,994 57,911 34,923
Insurance........................................................... 2,381 458 233
Legal fee........................................................... 1,731 514 179
Miscellaneous....................................................... 32,555 28,856 15,349
Organization costs.................................................. 6,313 300 --
Trustees' fee....................................................... 8,411 8,450 8,450
--------------------------------------------
Total expenses.................................................... 1,234,630 369,901 241,604
Less: Reimbursement from advisor.................................... (58,228) (117,279) (103,775)
--------------------------------------------
Net expenses...................................................... 1,176,402 252,622 137,829
--------------------------------------------
Net investment income........................................... 299,362 73,015 26,122
--------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from:
Security transactions............................................... 8,223,209 61,956 (35,846)
Foreign exchanges................................................... 792,348 197,499 (25,318)
Change in net unrealized appreciation of investments and foreign
currency............................................................ 9,091,917 2,584,830 1,751,439
--------------------------------------------
Net gain on investments............................................. 18,107,474 2,844,285 1,690,275
--------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $ 18,406,836 $ 2,917,300 $ 1,716,397
--------------------------------------------
</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 COUNTRIES FUND
WORLDWIDE GROWTH FUND INTERNATIONAL GROWTH FUND -------------------------
------------------------- ------------------------- FOR THE
FOR THE FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995 1996 1995*
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net investment income.................. $ 299,362 $ 240,302 $ 73,015 $ 33,806 $ 26,122 $ 22,283
Net realized gain (loss) from security
transactions and foreign exchange.... 9,015,557 (1,521,055) 259,455 (323,554) (61,164) (220,163)
Change in net unrealized appreciation
(depreciation) of investments and
foreign currency..................... 9,091,917 277,524 2,584,830 (270,042) 1,751,439 (372,912)
---------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations.................... 18,406,836 (1,003,229) 2,917,300 (559,790) 1,716,397 (570,792)
---------------------------------------------------------------------------------
TRANSACTIONS IN INTERESTS
Contributions by partners.............. 17,650,729 39,169,871 6,044,445 15,092,291 16,175,253 5,244,412
Withdrawals by partners................ (33,276,911) (30,285,996) (2,768,514) (609,534) (1,272,742) (1,393,542)
---------------------------------------------------------------------------------
Net increase (decrease) in net assets
from transactions in interests..... (15,626,182) 8,883,875 3,275,931 14,482,757 14,902,511 3,850,870
---------------------------------------------------------------------------------
Total increase in net assets......... 2,780,654 7,880,646 6,193,231 13,922,967 16,618,908 3,280,078
NET ASSETS:
BEGINNING OF PERIOD...................... 97,562,372 89,681,726 17,612,397 3,689,430 3,280,078 --
---------------------------------------------------------------------------------
END OF PERIOD............................ $100,343,026 $97,562,372 $23,805,628 $17,612,397 $19,898,986 $3,280,078
---------------------------------------------------------------------------------
</TABLE>

- ---------------
*Commenced operations on November 28, 1994.

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

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

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Nicholas-Applegate Investment Trust (the "Master Trust"), a diversified,
open-end management investment company organized as a Delaware business trust,
is comprised of twelve investment vehicles (each a "Fund" and collectively the
"Funds") as of March 31, 1996. Each Fund has up to five Portfolios which have
invested in the respective series of the Master Trust to achieve their
investment objective.

The investment objectives of the Funds are as follows:

Worldwide Growth Fund seeks to maximize long-term capital appreciation through
investment primarily in growth stocks of U.S. and foreign companies.

International Growth Fund seeks to maximize long-term capital appreciation
through investment primarily in equity securities of non-U.S. companies.

Emerging Countries Fund seeks to maximize long-term capital appreciation
through investment primarily in equity securities of companies in developing
countries of the world.

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.

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.

USE OF ESTIMATES

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

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

the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

B. TRANSACTIONS WITH AFFILIATES

ADVISORY AGREEMENTS

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

<TABLE>
<CAPTION>
FIRST $500 NEXT $500 EXCESS OF
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>

EXPENSE LIMITATIONS

Nicholas-Applegate and the Master Trust have undertaken to limit the Funds'
expenses to certain annual levels through March 31, 1997. In subsequent years,
overall operating expenses for each Fund will not fall below the percentage
limitation until the Investment Adviser has been fully reimbursed for fees
foregone or expenses paid by the Investment Adviser under this agreement, as
each Fund will reimburse the Investment Advisor in subsequent years when
operating expenses (before reimbursement) are less than the applicable
percentage limitation.

The cumulative unreimbursed amounts paid by Nicholas-Applegate on behalf of
the Funds, during the period from inception (respectively) to March 31, 1996 are
as follows:

<TABLE>
<S> <C>
Worldwide Growth Fund............... $ 233,923
International Growth Fund........... 195,657
Emerging Countries Fund............. 111,773
</TABLE>

C. INVESTMENT TRANSACTIONS

The aggregate purchases and sales of investment securities, other than
short-term obligations, for the fiscal year ended March 31, 1996, were as
follows (in 000's):

<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Worldwide Growth Fund........... $ 123,233 $ 138,719
International Growth Fund....... 27,950 25,118
Emerging Countries Fund......... 23,411 9,294
</TABLE>

At March 31, 1996, the net unrealized appreciation (depreciation) based on the
cost of investments for Federal income tax purposes was as follows (in 000's):

<TABLE>
<CAPTION>
TAX GROSS GROSS NET
COST OF UNREALIZED UNREALIZED UNREALIZED
INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Worldwide Growth
Fund............ $ 83,201 $ 16,965 $ 1,840 $ 15,125
International
Growth Fund..... 21,238 2,765 236 2,529
Emerging
Countries Fund.. 19,074 1,905 527 1,378
</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 -- Continued
- --------------------------------------------------------------------------------

E. SELECTED RATIO DATA
<TABLE>
<CAPTION>
RATIO OF RATIO OF
RATIO OF RATIO OF NET INVESTMENT NET INVESTMENT
EXPENSES TO EXPENSES TO INCOME TO INCOME (DEFICIT)
AVERAGE AVERAGE AVERAGE TO AVERAGE
NET ASSETS, NET ASSETS, NET ASSETS, NET ASSETS, PORTFOLIO
AFTER EXPENSE BEFORE EXPENSE AFTER EXPENSE BEFORE EXPENSE TURNOVER
REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS RATE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WORLDWIDE GROWTH FUND*
For the year ended 03/31/96..... 1.20% 1.26% 0.31% 0.25% 132.20%
For the year ended 03/31/95..... 1.20% 1.30% 0.24% 0.14% 98.54%
For the period ended
03/31/94+..................... 1.20% 1.36% 0.01% (0.15)% 95.09%
INTERNATIONAL GROWTH FUND*
For the year ended 03/31/96..... 1.35% 1.98% 0.39% (0.24)% 141.02%
For the year ended 03/31/95..... 1.35% 1.85% 0.24% (0.26%) 74.85%
For the period ended
03/31/94+..................... 1.35% 2.28% 0.41% (0.52%) 23.71%
EMERGING COUNTRIES FUND*
For the year ended 03/31/96..... 1.60% 2.80% 0.30% (0.90%) 118.21%
For the period ended
03/31/95+..................... 1.60% 1.81% 1.73% 1.52% 60.79%

BROKERAGE
COMMISSIONS
PER SHARE
- ----------------------------------
<S> <C>
WORLDWIDE GROWTH FUND*
For the year ended 03/31/96..... $ 0.0187
For the year ended 03/31/95..... --
For the period ended
03/31/94+..................... --
INTERNATIONAL GROWTH FUND*
For the year ended 03/31/96..... $ 0.0128
For the year ended 03/31/95..... --
For the period ended
03/31/94+..................... --
EMERGING COUNTRIES FUND*
For the year ended 03/31/96..... $ 0.0022
For the period ended
03/31/95+..................... --
</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

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

61
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- -------------------------------------------------------------------
ERNST & YOUNG LLP
515 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
PHONE: 213 977 3200

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
NICHOLAS-APPLEGATE MUTUAL FUNDS

We have audited the accompanying statements of assets and liabilities of the
following portfolios of Nicholas-Applegate Mutual Funds: Worldwide Growth A, B &
C Portfolios, International Growth A, B & C Portfolios, and Emerging Countries
A, B & C Portfolios (hereinafter the "Portfolios"), as of March 31, 1996, and
the related statements of operations and changes in net assets and the financial
highlights for the fiscal year then ended. These financial statements and
financial highlights are the responsibility of the Portfolios' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statements of changes in net
assets and the financial highlights of the A & C Portfolios for the fiscal year
ended March 31, 1995 and the financial highlights of Worldwide Growth A & C
Portfolios for the fiscal year ended March 31, 1994 were audited by other
auditors whose report dated May 12, 1995 expressed an unqualified opinion on
those financial statements and financial highlights.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the 1996 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial positions of
the Portfolios as of March 31, 1996, and the results of their operations,
changes in their net assets and the financial highlights for the fiscal year
then ended, in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

May 10, 1996

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

62
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- -------------------------------------------------------------------
ERNST & YOUNG LLP
515 SOUTH FLOWER STREET
LOS ANGELES, CALIFORNIA 90071
PHONE: 213 977 3200

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
NICHOLAS-APPLEGATE INVESTMENT TRUST

We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the following series of Nicholas-Applegate
Investment Trust: Worldwide Growth Fund, International Growth Fund, and Emerging
Countries Fund (hereinafter the "Funds"), as of March 31, 1996, and the related
statements of operations and changes in net assets for the fiscal year then
ended. These financial statements are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The statement of changes in net assets of the
Funds for the fiscal year ended March 31, 1995 were audited by other auditors
whose report dated May 12, 1995 expressed an unqualified opinion on those
financial statements.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of March 31, 1996, by correspondence with
the custodians. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the 1996 financial statements referred to above present fairly,
in all material respects, the financial positions of the Funds as of March 31,
1996, and the results of their operations and changes in their net assets for
the fiscal year then ended, in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

May 10, 1996

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

63
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
NICHOLAS=APPLEGATE-Registered Trademark- MUTUAL FUNDS
- -------------------------------------------------------------------------------
600 West Broadway
BULK RATE
San Diego, California 92101
U.S. POSTAGE
800 551-8043
PAID
MERRILL/MAY, INC.

AN396GLOABC