(ICON)
Nicholas-
Applegate
Growth
Equity
Fund
ANNUAL
REPORT
Dec. 31, 1995
(LOGO)
<PAGE>
Nicholas-Applegate Growth Equity Fund
Performance At A Glance.
In 1995, the combination of moderate economic growth with strong
corporate profits, declining interest rates, and low inflation contributed
to a persistent, bullish advance of U.S. stocks. Steady cash flows to
mutual funds, also contributed to the rally as strong demand pushed
stock prices higher. Within this enviroment, the continued application
of our investment philosophy resulted in solid returns.
<TABLE>
Cumulative Total Returns1 As of 12/31/95
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 31.2% 141.7% 176.2%
Class B 30.1 N/A 90.4
Class C 30.1 N/A 29.4
Lipper Growth Fund Avg3 30.8 113.4 157.9
<CAPTION>
Average Annual Total Returns1 As of 12/31/95
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 24.6% 18.1% 11.7%
Class B 25.1 N/A 15.1
Class C 29.1 N/A 20.1
</TABLE>
Past performance is not a guarantee of future results. Principal and
investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
1Source: Prudential Mutual Fund Management and Lipper Analytical
Services. The cumulative total returns do not take into account
sales charges. The average annual returns do take into account
applicable sales charges. The Fund charges a maximum front-end
sales load of 5% for Class A shares and a contingent deferred
sales charge of 5%, 4%, 3%, 2%, 1% and 1% for six years, for
Class B shares. Class C shares have a 1% CDSC for one year.
Class B shares automatically convert to Class A shares on a
quarterly basis, after approximately seven years.
2Inception dates: commencement of investment operations 4/20/87 for
Class A; 6/10/91 for Class B; and 8/1/94 for Class C.
3The Lipper Growth fund average includes 572 funds for one year and
163 funds since inception of the Class A shares on 4/20/87.
How Investments Compared.
(As of 12/31/95)
Source: Lipper Analytical Services. Financial markets change, so a mutual
fund's past performance should never be used to predict future results.
The risks to each of the investments listed above are different -- we
provide 12-month total return averages for several Lipper mutual fund
categories to show you that reaching for higher yields means tolerating
more risk. In general, the greater the risk, the larger the potential
reward or loss. In addition, we've added historical 20-year average
annual returns. These returns assume the reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Smaller capitalization
stocks offer greater potential for long-term growth but may be more
volatile than larger capitalization stocks. Investors have received
higher historical total returns from stocks than from most other
investments.
General Bond Funds provide more income than stock funds, which can
help smooth out their total returns year by year. But their prices
still fluctuate (sometimes significantly) and their returns have been
historically lower than those of stock funds.
General Municipal Debt Funds invest in bonds issued by state governments,
state agencies and/or municipalities. This investment provides income
that is usually exempt from federal and state income taxes.
Money Market Funds attempt to preserve a constant share value; they
don't fluctuate much in price but historically, their returns have
been generally among the lowest of the major investment categories.
*19 years for General Muni Debt Funds.
<PAGE>
Jack C. Marshall, Fund Manager (PICTURE)
Portfolio
Manager's Report
The Nicholas-Applegate Growth Equity Fund seeks to deliver capital
appreciation through investment in growth companies with market
capitalizations of $500 million to approximately $5 billion. Our
bottom-up, growth investment philosophy focuses on identifying and
investing in stocks meeting our investment criteria of sustainable,
accelerating earnings growth and market leadership.
Strategy Session.
Our Position
As a result of our bottom-up stock selection process, the Fund had a
large percentage of its assets in stocks within the technology, health
technology, and consumer non-durables sectors. A number of these
stocks such as LCI International and HFS Inc., registered double-digit
gains and boosted performance.
Strengthening Our Position:
Biotechnology Surge
Over the last six months of the year, we noted promising developments
among a number of biotechnology stocks and increased our exposure to
this industry. Examples of biotech holdings in the Fund which delivered
excellent performance include Amgen and Biochem Pharma. We do not
speculate on the potential attractiveness of any industry or sector.
Instead, we concentrate our efforts on identifying what we believe are
the best individual stocks. Because we remain fully invested, prior to
purchasing a new stock, we typically sell an existing holding. We
believe this strategy keeps the portfolio constantly evolving toward
increasing strength. Reflecting our fully-invested approach, 97.0% of
the Fund was allocated to stocks at year-end. The remaining 3.0% was
allocated to cash or cash equivalents for transactional purposes.
Sector Breakdown.*
Nicholas-Applegate Growth
Equity Fund as of 12/31/95
(PIE CHART)
Overview.
Nicholas-Applegate's disciplined investment philosophy reflects our
search for companies we believe are responding positively to change
and are poised for earnings growth and stock price appreciation.
<PAGE>
What Went Well.
Technology Gained.
Technology stocks attracted a great deal of attention during 1995 as
reports of rising profits, mergers and acquisitions, and public offerings
received broad coverage in the financial press. For most of 1995,
investors' increasing interest in technology stocks was accompanied
by rising share prices. As a result of our bottom-up stock selection
process, we were buying technology stocks in early 1994. Recognizing
strong fundamental traits among a number of stocks in the sector, our
weighting in technology increased. The combination of our stock
selection, significant weighting, and the superior returns within
this sector boosted returns much of the year. However, concerns
regarding the sustainability of earnings growth among a number of
technology stocks surfaced during the last half of 1995 and prompted
us to reduce positions. Over the last six months of the year, we
reduced our exposure in the technology sector on a stock-by-stock
basis. We replaced the stocks we sold with stocks demonstrating
more compelling features, primarily in the consumer non-durables
and healthcare sectors. While many technology stocks retain fundamental
strength, selectivity within this sector has become increasingly
important. The Fund continues to hold only the stocks we believe
are poised for significant appreciation and meet each of our
investment criteria.
And Not So Well.
Retail Declined.
During October, prospects for weak consumer spending negatively
impacted retail-related stocks. Disappointing performance by
stocks such as Tandy Corp. and Federated Department Stores hindered
returns and prompted us to reduce or eliminate our holdings.
Looking Ahead.
Many analysts are suggesting sluggish corporate profit growth in
the months ahead. In this environment, we believe companies with
accelerating earnings growth, such as those we seek, may attract
increased investor recognition. We remain focused on finding such
companies, as we believe accelerating earnings growth helps drive
long-term appreciation. The Fund retains its high growth
characteristics. As of December 31, 1995, this year's median
earnings growth rate for stocks held in the Fund is 32.0% versus
13.5% for the S & P 500.
Five Largest Holdings.*
2.0% Mattel Inc.
Designs, manufactures and
distributes toys.
2.0% NIKE, Inc.
Designs, develops and
markets footware and
apparel.
1.9% AMGEN, Inc.
Develops, manufactures
and markets drugs.
1.9% HFS Incorporated
Franchisor of Hotels and
Inns.
1.9% Gucci Group
Designs, produces and
distributes accessories and
apparel.
*Expressed as a percentage of total net
assets as of 12/31/95.
1
<PAGE>
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
COMMON STOCKS--96.7%
CAPITAL GOODS--26.0%
Chemicals--1.5%
158,400 IMC Fertilizer Group,
Inc...................... $ 6,474,600
------------
Computers-Local Networks--6.5%
109,500 3 Com Corp.*............... 5,105,437
61,500 Cabletron Systems, Inc.*... 4,981,500
91,400 Cisco Systems Inc.*........ 6,820,725
90,000 Compaq Computer Corp.*..... 4,320,000
138,700 Solectron Corp.*........... 6,120,137
------------
27,347,799
------------
Retail Specialty Chain--2.1%
62,700 Tandy Corp................. 2,602,050
254,600 Staples Inc.*.............. 6,205,875
------------
8,807,925
------------
Computers-Services--2.7%
159,900 Ceridian Corp.*............ 6,595,875
69,400 Computer Sciences Corp.*... 4,875,350
------------
11,471,225
------------
Electronic Components--3.5%
94,300 Analog Devices, Inc.*...... 3,335,863
68,100 Glenayre Technologies*..... 4,239,225
100,000 Intel Corp................. 5,675,000
40,000 Maxim Integrated Products,
Inc.*.................... 1,540,000
------------
14,790,088
------------
Telecommunication--9.7%
147,000 ADC Telecommunications,
Inc.*.................... 5,365,500
320,000 LCI International, Inc.*... 6,560,000
41,400 MFS Communications Inc.*... 2,204,550
132,400 Mobile Telecommunication
Technologies Corp.*...... 2,830,050
102,500 Tele Communications, Inc.
Liberty Media Group*..... 2,754,688
258,900 Tele Communications, Inc.
TCI Group Ser. A*........ $ 5,145,638
175,000 Tele Communications
International, Inc.*..... 3,981,250
234,500 Paging Network, Inc.*...... 5,715,938
172,500 WorldCom Inc.*............. 6,080,625
------------
40,638,239
------------
CONSUMER NON-DURABLES--29.4%
Casinos--1.1%
129,200 Mirage Resorts, Inc.*...... 4,457,400
------------
Drugs & Healthcare--12.5%
135,600 AMGEN Inc.*................ 8,051,250
131,700 Biochem Pharmaceuticals
Inc.*.................... 5,284,462
72,300 Biogen, Inc.*.............. 4,446,450
115,000 Columbia Healthcare
Corp..................... 5,836,250
35,500 Cordis Corp.*.............. 3,567,750
41,600 Genzyme Corp.*............. 2,594,800
160,000 Healthsource Inc.*......... 5,760,000
110,000 Idexx Laboratories,
Inc.*.................... 5,170,000
70,000 Nellcor Inc.*.............. 4,081,490
101,000 United Healthcare Corp.*... 6,615,500
26,100 Watson Pharmaceuticals
Inc.*.................... 1,278,900
------------
52,686,852
------------
Leisure And Recreation--4.2%
151,800 Infinity Broadcasting
Corp.*................... 5,654,550
112,100 Viacom, Inc.*.............. 5,310,737
------------
10,965,287
------------
Retail-Services--2.9%
224,400 CUC International Inc.*.... 7,657,650
85,300 Kohl's Corp.*.............. 4,478,250
------------
12,135,900
------------
Toys/Games/Hobbies--2.0%
270,175 Mattel, Inc................ 8,307,881
------------
</TABLE>
-2- See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Medical-Health Maintenance--3.1%
140,900 Boston Scientific Corp.*... $ 6,904,100
67,500 Medtronic, Inc............. 3,771,562
74,300 Vencor Inc.*............... 2,414,750
------------
13,090,412
------------
Hotels & Restaurants--4.2%
95,300 Hfs Incorporated*.......... 7,790,775
283,300 Host Marriott Corp.*....... 3,753,725
159,900 Lone Star Steakhouse &
Saloon, Inc.*............ 6,136,163
------------
17,680,663
------------
Paper--1.0%
91,800 Alco Standard Corp......... 4,188,375
------------
ENERGY--4.8%
Oil & Gas-Production/Pipeline--3.6%
170,000 Enron Oil & Gas Co......... 4,080,000
180,000 Pogo Producing Co.......... 5,085,000
101,300 Triton Energy Corp......... 5,812,088
------------
14,977,088
------------
Oil Services--1.2%
100,000 Western Atlas, Inc......... 5,050,000
------------
ENVIRONMENTAL SECTOR--0.8%
Pollution Control Equipment &
Service--0.8%
106,400 Sanifill Inc.*............. 3,551,100
------------
FINANCIAL SERVICES--10.7%
Financial/Business Services--8.1%
150,000 Allstate Corp.............. 6,168,750
159,900 Danka Business Systems PLC
(ADR).................... 5,916,300
150,000 Donaldson Lufkin & Jenrette
Inc.*.................... 4,687,500
260,000 Equifax, Inc............... 5,557,500
75,171 First Data Corp............ 5,027,061
71,300 Green Tree Financial
Corp..................... 1,880,537
86,200 MGIC Investment Corp....... 4,676,350
------------
33,913,998
------------
Insurance--2.6%
95,900 Berkley (W.R.) Corp........ $ 5,154,625
119,700 SunAmerica, Inc............ 5,685,750
------------
10,840,375
------------
GENERAL BUSINESS--11.5%
Business Services--2.5%
150,600 America Online Inc.*....... 5,647,500
100,000 Gartner Group, Inc.*....... 4,787,500
------------
10,435,000
------------
Apparel & Textiles--9.0%
87,800 Baby Superstore Inc.*...... 5,004,600
200,000 Gucci Group NV*............ 7,775,000
128,500 Jones Apparel Group,
Inc.*.................... 5,059,688
120,000 Nautica Enterprises,
Inc.*.................... 5,250,000
119,200 NIKE, Inc.................. 8,299,300
149,300 Tommy Hilfiger Corp.*...... 6,326,587
------------
37,715,175
------------
HOUSING--1.1%
Homebuilders--1.1%
139,000 Pulte Corp................. 4,673,875
------------
TECHNOLOGY SECTOR--12.4%
Computer Hardware--1.8%
72,397 Silicon Graphics Inc.*..... 1,990,917
120,000 Sun Microsystems, Inc.*.... 5,475,000
------------
7,465,917
------------
</TABLE>
-3- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Computers-Software--10.6%
75,000 Adobe Systems, Inc......... $ 4,650,000
180,000 Cadence Design Systems,
Inc.*.................... 7,560,000
239,900 Mentor Graphics Corp.*..... 4,378,175
112,999 Oracle Systems Corp.*...... 4,788,333
90,700 Parametric Technology
Corp.*................... 6,031,550
90,000 Sterling Software, Inc.*... 5,613,750
213,100 Symantec Corp.*............ 4,954,575
170,700 Synopsys, Inc.*............ 6,486,600
------------
44,462,983
------------
Total common stocks
(cost $313,012,274)...... 406,128,157
------------
<CAPTION>
Principal
Amount
(000)
- - ----------
<C> <S> <C>
SHORT-TERM INVESTMENTS--6.1%
Commercial Paper--6.1%
Philip Morris Capital Corp.
$ 21,086 5.80%, 1/2/96.............. 21,082,603
UBS Finance Delaware, Inc.
4,415 5.80%, 1/2/96.............. 4,414,288
------------
25,496,891
------------
Other
Seven Seas Money Market
Fund
65 5.38%...................... 65,241
------------
Total short-term
investments
(cost $25,562,132; Note
4)....................... 25,562,132
------------
Total Investments--102.8%
(cost $338,574,406)...... 431,690,289
Liabilities in excess of
other
assets--(2.8%)........... (11,702,005)
------------
Net Assets--100%........... $419,988,284
------------
------------
</TABLE>
- - ---------------
* Non-income producing security.
ADR--American Depository Receipt.
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
December 31, 1995
-----------------
<S>
<C>
Investments, at value (cost
$338,574,406)............................................. $ 431,690,289
Cash.........................................................................
......... 33,356
Receivable for investments
sold....................................................... 1,213,090
Receivable for Fund shares
sold....................................................... 915,008
Dividends and interest
receivable.....................................................
100,061
Deferred expenses and other
assets.................................................... 3,693
-----------------
Total
assets......................................................................
433,955,497
-----------------
Liabilities
Payable for investments
purchased..................................................... 11,921,117
Payable for Fund shares
reacquired.................................................... 1,117,930
Accrued expenses and other
liabilities................................................ 312,604
Due to
Manager........................................................................
329,358
Due to
Distributor....................................................................
262,706
Directors fees'
payable...............................................................
23,498
-----------------
Total
liabilities.................................................................
13,967,213
-----------------
Net
Assets.......................................................................
..... $ 419,988,284
-----------------
-----------------
Net assets were comprised of:
Common stock, at
par................................................................ $
285,885
Paid-in capital in excess of
par.................................................... 313,327,241
-----------------
313,613,126
Accumulated net investment loss (comprised of equalization debits of
$25,587)....... (25,587)
Accumulated net realized gain on
investments........................................ 13,284,862
Net unrealized appreciation on
investments.......................................... 93,115,883
-----------------
Net assets, December 31,
1995....................................................... $ 419,988,284
-----------------
-----------------
Class A:
Net asset value and redemption price per share
($124,339,879 / 8,191,064 shares of common stock issued and
outstanding).......... $15.18
Maximum sales charge (5% of offering
price)......................................... .80
-----------------
Maximum offering price to
public.................................................... $15.98
-----------------
-----------------
Class B:
Net asset value, offering price and redemption price per share
($290,751,349 / 20,059,552 shares of common stock issued and
outstanding)......... $14.49
-----------------
-----------------
Class C:
Net asset value, offering price and redemption price per share
($4,897,056 / 337,868 shares of common stock issued and
outstanding).............. $14.49
-----------------
-----------------
</TABLE>
See Notes to Financial Statements.
-5-
<PAGE>
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
December 31,
Net Investment Loss 1995
------------
<S> <C>
Income
Dividends (net of foreign
withholding taxes
of $26,671)....................... $ 1,033,010
Interest............................ 1,275,674
------------
Total investment income........... 2,308,684
------------
Expenses
Management fees..................... 3,593,831
Distribution fee--Class A........... 189,732
Distribution fee--Class B........... 2,655,967
Distribution fee--Class C........... 29,607
Transfer agent's fees and
expenses............................ 667,000
Custodian's fees and expenses....... 139,000
Reports to shareholders............. 119,000
Registration fees................... 97,000
Directors' fees and expenses........ 80,000
Audit fees and expenses............. 32,000
Legal fees and expenses............. 25,000
Miscellaneous....................... 35,056
------------
Total expenses.................... 7,663,193
------------
Net investment loss................... (5,354,509 )
------------
Realized and Unrealized
Gain on Investments
Net realized gain on investment
transactions........................ 37,652,628
Net increase in unrealized
appreciation of
investments......................... 68,899,944
------------
Net gain on investments............... 106,552,572
------------
Net Increase in Net Assets
Resulting from Operations............. $101,198,063
------------
------------
</TABLE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended,
December 31,
Increase (Decrease) ------------------------------
in Net Assets 1995 1994
------------- -------------
<S> <C> <C>
Operations
Net investment loss... $ (5,354,509) $ (4,194,662)
Net realized gain
(loss) on
investment
transactions........ 37,652,628 (10,112,242)
Net change in
unrealized
appreciation/depreciation
on investments...... 68,899,944 (23,327,641)
------------- -------------
Net increase
(decrease) in
net assets resulting
from operations..... 101,198,063 (37,634,545)
------------- -------------
Net equalization
debits................ (25,587) --
------------- -------------
Distributions to
shareholders from net
realized gains on
investments
Class A............. (3,870,372) (2,241,607)
Class B............. (9,969,062) (6,139,536)
Class C............. (145,786) --
------------- -------------
(13,985,220) (8,381,143)
------------- -------------
Fund share transactions
(Note 5)
(Net of share
conversions)
Net proceeds from
shares subscribed... 497,447,785 272,635,593
Net asset value of
shares
issued to
shareholders in
reinvestment of
distributions....... 12,582,750 7,514,870
Cost of shares
reacquired.......... (523,457,280) (238,413,707)
------------- -------------
Net increase
(decrease) in net
assets from Fund
share
transactions........ (13,426,745) 41,736,756
------------- -------------
Total increase
(decrease)............ 73,760,511 (4,278,932)
Net Assets
Beginning of year....... 346,227,773 350,506,705
------------- -------------
End of year............. $ 419,988,284 $ 346,227,773
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-6-
<PAGE>
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Notes to Financial Statements
Nicholas-Applegate Growth Equity Fund (the ``Fund'') is currently the only
series of Nicholas-Applegate Fund, Inc. The Fund commenced operations as a
closed-end, diversified management investment company on April 9, 1987. On June
7, 1991, the Fund ceased operations as a closed-end investment company.
Effective June 10, 1991, trading in the Fund's shares was discontinued on the
New York Stock Exchange and the Fund commenced operations as an open-end,
diversified management investment company.
The Fund's investment objective is capital appreciation. It seeks to achieve
this objective by investing primarily in common stocks and in securities
convertible into or exercisable for common stocks (such as convertible preferred
stocks, convertible debentures and warrants), the earnings and securities prices
of which the investment adviser expects to grow at a rate above that of the S&P
500.
Note 1. Accounting The following is a summary
Policies of significant accounting
policies followed by the
Fund in
the preparation of its financial statements.
Security Valuation: Investments are stated at value. Investments for which
market quotations are readily available are valued at the last reported sales
price. If there are no sales on the date of valuation, then investments are
valued at the mean between the most recently quoted bid and asked prices
provided by principal market makers. Securities for which market quotations are
not readily available are valued at fair value as determined in good faith by
or
under the direction of the Fund's Board of Directors. Short-term securities are
valued at amortized cost.
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian or designated subcustodians, as the case may be under
triparty repurchase agreements, take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. If the seller defaults and the value
of
the collateral declines or if bankruptcy proceedings are commenced with respect
to the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized and unrealized gains and losses from
security transactions are calculated on the identified cost basis. Dividend
income is recorded on the ex-dividend date and interest income is recorded on
an
accrual basis. Expenses are recorded on the accrual basis which may require the
use of certain estimates by management.
Net investment income (other than distribution fees) and unrealized and
realized gains or losses are allocated daily to each class of shares based upon
the relative proportion of net assets of each class at the beginning of the day.
Equalization: The Fund follows the accounting practice known as equalization by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
shares, equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited to undistributed
net investment income or loss. As a result, undistributed net investment income
per share is unaffected by sales or reacquisitions of the Fund's shares.
Dividends and Distributions: Dividends from net investment income and
distributions of net capital gains in excess of capital loss carryforwards, if
any, are declared and paid annually. Dividends and distributions are recorded
on
the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Federal Income Taxes: It is the Fund's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to shareholders.
Therefore, no tax provision is required.
Withholding taxes on foreign dividends have been provided for in accordance
with the Fund's understanding of the applicable country's tax rules and rates.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountant's Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income Capital Gain, and
Return of Capital Distributions by Investment Companies. For the year ended
December 31, 1995 the fund decreased accumulated net investment loss by
$5,354,509, and decreased paid-in capital $5,354,509 due to the Fund
experiencing a net investment loss during the year. Net realized gains and net
assets were not affected by this change.
-7-
<PAGE>
<PAGE>
Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``PMF''). Pursuant to the management agreement, PMF has responsibility for
all investment advisory services and supervises the subadviser's performance of
such services. PMF has entered into a subadvisory agreement with
Nicholas-Applegate Capital Management (``NACM''); NACM furnishes investment
advisory services in connection with the management of the Fund. PMF pays for
the services of the subadviser, the compensation of officers of the Fund who are
employees of PMF, occupancy and certain clerical and bookkeeping costs of the
Fund. The Fund bears all other costs and expenses.
The management fee paid PMF is computed daily and payable monthly at an
annual rate of .95% of the average daily net assets of the Fund. PMF pays NACM,
as compensation for its services pursuant to the subadvisory agreement, a fee
at
the rate of .75% of the average daily net assets of the Fund. During the year
ended December 31, 1995 PMF earned $3,593,831, in management fees of which it
paid $2,839,126 to NACM under the foregoing agreements.
The Fund had a distribution agreement with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acted as the distributor of the Class A
shares of the Fund through January 1, 1996. Prudential Securities Incorporated
(``PSI'') is distributor of the Class B shares and Class C shares of the Fund.
The Fund compensated PMFD and PSI for distributing and servicing the Fund's
Class A, Class B and Class C shares, pursuant to plans of distribution (the
``Class A, B and C Plans''), regardless of expenses actually incurred by them.
The distribution fees are accrued daily and payable monthly. Effective January
2, 1996, PSI became the distributor of the Class A shares of the Fund and is
serving the Fund under the same terms and conditions as under the arrangement
with PMFD.
Pursuant to the Class A, B and C Plans, the Fund compensates PSI, and PMFD
for the year ended December 31, 1995 with respect to Class A shares, for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%,
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the Class A, B and C Plans were .17 of 1% of average daily
net assets of Class A shares and 1% of the average daily net assets of both the
Class B and Class C shares, respectively, for the year ended December 31, 1995.
PMFD has advised the Fund that it has received approximately $301,000 in
front-end sales charges resulting from sales of Class A shares for the year
ended December 31, 1995. From these fees, PMFD paid such sales charges to PSI
and PRUCO Securities Corporation, affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.
PSI advised the Fund that for the year ended December 31, 1995, it received
approximately $979,200 in contingent deferred sales charges imposed upon certain
redemptions by Class B and C shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and (``Prusec'') are
(indirect) wholly-owned subsidiaries of The Prudential Insurance Company of
America. (``Prudential'')
Note 3. Other Prudential Mutual Fund Ser-
Transactions vices, Inc. (``PMFS''), a
with Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During
the year ended December 31, 1995, the Fund incurred fees of approximately
$538,000 for the services of PMFS, of which approximately $46,000 was owed as
of
December 31, 1995. Transfer agent fees and expenses in the Statement of
Operations also include certain out of pocket expenses paid to non-affiliates.
Note 4. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments, for the year ended
December 31, 1995 aggregated $382,497,020 and $418,766,840 respectively.
The Federal income tax basis of the Fund's investments at December 31, 1995
was substantially the same as the basis for financial reporting, and,
accordingly, net unrealized appreciation for federal income tax purposes was
$93,115,883 (gross unrealized appreciation--$96,387,729; gross unrealized
depreciation--$3,271,846).
The Fund utilized its capital loss carryforward of approximately $6,662,100
to offset the Fund's net taxable gains realized and recognized in the fiscal
year ended December 31, 1995.
Note 5. Capital The Fund offers Class A,
Class B and Class C shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending upon
the period of time the shares are held. Class C shares are sold with a
contingent deferred sales charge of 1% during the first year. Class B shares
will automatically convert to Class A shares on a quarterly basis appproximately
seven years after purchase. A special exchange privilege is also available for
shareholders who qualified to purchase Class A shares at net asset value.
-8-
<PAGE>
<PAGE>
The Fund has authorized 100 million shares of common stock at $.01 par value
per share equally divided into three classes, designated Class A, Class B and
Class C shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- - ------------------------------ ----------- -------------
<S> <C> <C>
Year ended
December 31, 1995:
Shares sold................... 24,651,915 $ 348,256,276
Shares issued in reinvestment
of distributions............ 215,625 3,115,781
Shares reacquired............. (25,323,931) (359,037,322)
----------- -------------
Net decrease in shares
outstanding before
conversion.................. (456,391) (7,665,265)
Shares issued upon conversion
from Class B................ 1,302,983 16,471,726
----------- -------------
Net increase in shares
outstanding................. 846,592 $ 8,806,461
----------- -------------
----------- -------------
Year ended December 31, 1994:
Shares sold................... 9,749,098 $ 119,625,967
Shares issued in reinvestment
of distributions............ 123,315 1,648,716
Shares reacquired............. (9,727,612) (119,377,898)
----------- -------------
Net increase in shares
outstanding................. 144,801 $ 1,896,785
----------- -------------
----------- -------------
<CAPTION>
Class B
- - ------------------------------
<S> <C> <C>
Year ended
December 31, 1995:
Shares sold................... 10,704,150 $ 145,320,817
Shares issued in reinvestment
of distributions............ 675,282 9,325,642
Shares reacquired............. (12,198,113) (163,546,779)
----------- -------------
Net decrease in shares
outstanding before
conversion.................. (818,681) (8,900,320)
Shares reacquired upon
conversion into Class A..... (1,354,574) (16,471,726)
----------- -------------
Net decrease in shares
outstanding................. (2,173,255) $ (25,372,046)
----------- -------------
----------- -------------
Year ended December 31, 1994:
Shares sold................... 12,516,034 $ 151,864,589
Shares issued in reinvestment
of distributions............ 451,938 5,866,154
Shares reacquired............. (9,919,867) (119,007,485)
----------- -------------
Net increase in shares
outstanding................. 3,048,105 $ 38,723,258
----------- -------------
----------- -------------
<CAPTION>
Class C Shares Amount
- - ------------------------------ ----------- -------------
<S> <C> <C>
Year ended
December 31, 1995:
Shares sold................... 297,211 $ 3,870,692
Shares issued in reinvestment
of distributions............ 10,241 141,327
Shares reacquired............. (64,764) (873,179)
----------- -------------
Net increase in shares
outstanding................. 242,688 $ 3,138,840
----------- -------------
----------- -------------
August 1, 1994* through
December 31, 1994:
Shares sold................... 97,636 $ 1,145,037
Shares reacquired............. (2,456) (28,324)
----------- -------------
Net increase in shares
outstanding................. 95,180 $ 1,116,713
----------- -------------
----------- -------------
</TABLE>
- - ---------------
* Commencement of offering of Class C shares.
-9-
<PAGE>
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Financial Highlights
<TABLE>
<CAPTION>
Class A(a)
- - ---------------------------------------------------------
<S> <C> <C> <C> <C>
<C>
Year Ended December 31,
- - ---------------------------------------------------------
1995 1994 1993 1992
1991
-------- ------- -------
- - ------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period........................... $ 11.99 $ 13.56 $ 12.77 $
11.73 $ 10.19
-------- ------- -------
- - ------- --------
Income from investment
operations(b):
Net investment loss................ (0.11) (0.07) (0.07)
(0.07) (0.10)
Net realized and unrealized gain
(loss) on investment
transactions..................... 3.82 (1.19) 2.63
1.11 5.50
-------- ------- -------
- - ------- --------
Total from investment
operations....................... 3.71 (1.26) 2.56
1.04 5.40
-------- ------- -------
- - ------- --------
Less distributions:
Distributions from net realized
gains from investment
transactions..................... (0.52) (0.31) (1.77)
- - -- (3.86)
-------- ------- -------
- - ------- --------
Total distributions.............. (0.52) (0.31) (1.77)
- - -- (3.86)
-------- ------- -------
- - ------- --------
Net asset value, end of period..... $ 15.18 $ 11.99 $ 13.56 $
12.77 $ 11.73
-------- ------- -------
- - ------- --------
-------- ------- -------
- - ------- --------
TOTAL RETURN(d):................... 31.20% (9.53)% 20.26%
8.87% 55.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).... $124,340 $88,069 $97,596
$84,169 $ 63,028
Average net assets (000)........... $109,740 $93,620 $90,332
$74,005 $104,819
Ratios to average net assets:
Expenses, including distribution
fee............................ 1.44% 1.49%(f) 1.42%(f)
1.54%(f) 1.94%(e)(f)
Expenses, excluding distribution
fee.............................. 1.27% 1.32%(f) 1.30%(f)
1.44%(f) 1.90%(f)
Net investment loss.............. (0.83)% (0.59)% (0.53)%
(0.63)% (0.83)%
For Class A, B and C shares:
Portfolio turnover rate(c)......... 106% 110% 112%
107% 115%
Average commission rate paid per
share $.0592 N/A N/A
N/A N/A
</TABLE>
- - ---------------
(a) Prior to June 10, 1991, the Fund was organized as a closed-end fund. On
June 10, 1991, the Fund was re-organized as an open-end Fund and
commenced offering of Class A and B shares.
(b) Calculated based upon weighted average shares outstanding during the
periods due to effects of open-ending, Fund share sales and the resulting
share issuance from the stock rights offering.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(d) Total return includes reinvestment of dividends and does not consider
the effects of sales loads.
(e) Ratios of expenses, before loan interest, commitment fees and
nonrecurring expenses were 1.71% and 3.46% for Class A and
Class B shares, repectively.
(f) Current year amounts have been restated from prior periods presentation.
See Notes to Financial Statements.
-10-
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Financial Highlights
<TABLE>
<CAPTION>
Class B(b)
Class C
- - ----------------------------------------------------------------
- - -----------------------------
<S> <C> <C> <C> <C>
<C> <C> <C>
June 10, August 1,
1991 1994(d)
Year Ended December 31,
Through Year Ended Through
-----------------------------------------------
December 31, December 31, December 31,
1995 1994 1993 1992
1991 1995 1994
-------- -------- -------- --------
------------ ------------ ------------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period..................... $ 11.56 $ 13.18 $ 12.56 $ 11.65
$ 12.43 $ 11.56 $ 11.62
-------- -------- -------- --------
------------ ------------ ------------
Income from investment
operations(c):
Net investment loss.......... (0.22) (0.17) (0.18) (0.16)
(0.08) (0.22) (0.05)
Net realized and unrealized
gain (loss) on investment
transactions............... 3.67 (1.14) 2.57 1.07
3.16 3.67 (0.01)
-------- -------- -------- --------
------------ ------------ ------------
Total from investment
operations................. 3.45 (1.31) 2.39 0.91
3.08 3.45 (0.06)
-------- -------- -------- --------
------------ ------------ ------------
Less distributions:
Distributions from net
realized gains from
investment transactions.... (0.52) (0.31) (1.77) --
(3.86) (0.52) --
-------- -------- -------- --------
------------ ------------ ------------
Total distributions........ (0.52) (0.31) (1.77) --
(3.86) (0.52) --
-------- -------- -------- --------
------------ ------------ ------------
Net asset value, end of
period..................... $ 14.49 $ 11.56 $ 13.18 $ 12.56
$ 11.65 $ 14.49 $ 11.56
-------- -------- -------- --------
------------ ------------ ------------
-------- -------- -------- --------
------------ ------------ ------------
TOTAL RETURN(e):............. 30.11% (10.20)% 19.21% 7.81%
26.82% 30.11% (0.52)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)...................... $290,751 $257,059 $252,911 $123,306
$ 12,877 $ 4,897 $ 1,100
Average net assets (000)..... $265,597 $261,285 $179,456 $ 80,531
$ 1,922 $ 2,961 $ 225
Ratios to average net assets:
Expenses, including
distribution fee......... 2.27% 2.32%(g) 2.30%(g)
2.44%(g) 3.77%(a)(f)(g) 2.27% 6.23%(a)(g)
Expenses, excluding
distribution fee........... 1.27% 1.32%(g) 1.30%(g)
1.44%(g) 2.77%(a)(g) 1.27% 5.23%(a)(g)
Net investment loss........ (1.66)% (1.39)% (1.40)% (1.56)%
(3.17)%(a) (1.63)% (3.36)%(a)
- - ---------------
(a) Annualized.
(b) Prior to June 10, 1991, the Fund was organized as a closed-end fund.
On June 10, 1991, the Fund was re-organized as an open-end Fund and
commenced offering of Class A and B shares.
(c) Calculated based upon weighted average shares outstanding during the
periods due to effects of open-ending, Fund share sales and the
resulting share issuance from the stock rights offering except 1994
for Class C shares.
(d) Commencement of offering Class C shares.
(e) Total return includes reinvestment of dividends and does not consider
the effects of sales loads. Total returns for periods of less than
one year are not annualized.
(f) Ratios of expenses, before loan interest, commitment fees and
nonrecurring expenses were 1.71% and 3.46% for Class A and Class
B shares, respectively.
(g) Current year amounts have been restated from prior periods presentation.
See Notes to Financial Statements.
-11-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of
Nicholas-Applegate Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
Nicholas-Applegate Growth Equity Fund, the only series of Nicholas-Applegate
Fund, Inc., including the portfolio of investments, as of December 31, 1995, and
the related statement of operations, the statements of changes in net assets and
the financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
of Nicholas-Applegate Growth Equity Fund for the year ended December 31, 1994,
and the financial highlights for each of the four years in the period then ended
for Class A shares, and for each of the three years in the period then ended and
for the period from June 10, 1991 (commencement of investment operations) to
December 31, 1991 for Class B shares, and for the period from August 1, 1994
(commencement of investment operations) to December 31, 1994 for Class C shares,
were audited by other auditors whose report dated February 8, 1995 expressed an
unqualified opinion on those financial statements and financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to
above present fairly, in all material respects, the financial position of
Nicholas-Applegate Growth Equity Fund as of December 31, 1995, the results of
its operations the changes in its net assets and the financial highlights for
the year then ended, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Los Angeles, California
February 5, 1996
TAX INFORMATION
As required by the Internal Revenue Code, we are to advise you within 60 days
of the Fund's fiscal year end (December 31, 1995) as to the federal tax status
of dividends and distributions paid by the Fund.
During the year ended December 31, 1995, the Fund paid a long-term capital
gains distribution for Class A, Class B and Class C Shares of $.515 per share
(taxable as capital gains income). We wish to advise you that the corporate
dividends received deduction for the Fund is zero.
For the purpose of preparing your annual federal income tax return, however,
you should report the amounts as reflected on the appropriate Form 1099-DIV or
substitute 1099-DIV.
-12-
<PAGE>
- - --Nicholas-Applegate Growth Equity Fund ==Standard & Poor's 500 Index
Nicholas-Applegate Growth Equity Fund and the
S & P 500 Index: Comparing a $10,000 Investment.
Average Annual
Total Returns
- - ---------------
With Sales Load*
11.7% Since Inception
18.1% for 5 Years
24.6% for 1 Year
Class A
(GRAPH)
Without Sales Load*
12.4% Since Inception
19.3% for 5 Years
31.2% for 1 Year
Average Annual
Total Returns
- - ----------------
With Sales Load*
15.1% Since Inception
25.1% for 1 Year
Class B
(GRAPH)
Without Sales Load*
15.2% Since Inception
30.1% for 1 Year
Average Annual
Total Returns
- - ---------------
With Sales Load*
20.1% Since Inception
29.1% for 1 Year
Class C
(GRAPH)
Without Sales Load*
20.1% Since Inception
30.1% for 1 Year
Past performance is no guarantee of future results. Investment return
and principal value will fluctuate so an investor's shares, when
redeemed, will be worth more or less than their original cost.
These graphs are furnished to you in accordance with SEC regulations.
They compare a $10,000 investment in the Nicholas-Applegate Growth
Equity Fund (Class A, Class B and Class C) with a similar investment
in the Standard & Poor's 500 Index by portraying the initial account
values at the commencement of operations of each class, and subsequent
account values at the end of the most recent reporting period (December
31), as measured on a quarterly basis, beginning in 1987 for Class A
shares, 1991 for Class B shares and 1994 for Class C shares. For
purposes of the graphs, and unless otherwise indicated, in the
accompanying tables it has been assumed (a) that the maximum
applicable front-end sales charge was deducted from the initial
$10,000 investment in Class A shares; (b) the maximum applicable
contingent deferred sales charge was deducted from the value of
the investment in Class B and Class C shares, assuming full redemption
on December 31, 1995; (c) all recurring fees (including management fees)
were deducted; and (d) all dividends and distributions were reinvested.
Class B shares automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. This conversion feature
is not reflected in the graph.
The S & P 500 is a capital-weighted index, representing the aggregate
market value of the common equity of 500 stocks primarily traded on the
New York Stock Exchange. The S & P 500 is an unmanaged index and includes
the reinvestment of all dividends, but does not reflect the payment of
transaction costs and advisory fees associated with an investment in
the Fund. The securities which comprise the S & P 500 may differ
substantially from the securities in the Fund's portfolio. The S & P
500 is not the only index which may be used to characterize performance
of growth equity funds and other indexes may portray different
comparative performance.
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852
Directors
Arthur E. Nicholas, Chairman
Dann V. Angeloff
Fred C. Applegate
Theodore J. Coburn
Robert F. Gunia
Arthur B. Laffer
Charles E. Young
Officers
Jack C. Marshall, President
Robert F. Gunia, Vice President
Grace Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Robert E. Carlson, Assistant Secretary
Deborah A. Docs, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
Nicholas-Applegate Capital Management
600 West Broadway
San Diego, California 92101
Distributor
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Auditors
Ernst & Young LLP
515 South Flower Street
Los Angeles, California 90071
Legal Counsel
Paul, Hastings, Janofsky & Walker
555 South Flower Street
Los Angeles, California 90017
This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current prospectus.
653698209 MF151E
653698308 Cat. #4443715
653698407
</TABLE>
