(ICON)
Nicholas-
Applegate
Growth
Equity
Fund
ANNUAL
REPORT
Dec. 31, 1997
(LOGO)
<PAGE>
Nicholas-Applegate Growth Equity Fund
Performance At A Glance.
Large cap stocks were favored early in the
year, yet in the second and third
quarter, mid-cap stocks had their strongest two-
quarter period since 1991.
Investors returned to the safety of larger cap
stocks during the fourth
quarter following the stock market's largest
decline since 1987. The reactions
of investors fueled gains for defensive stock
issues -- those with low growth
rates, high dividends and high capitalizations,
all general characteristics of
blue chip stocks. Despite a tough year for mid-
cap stocks, the Fund returned
17.33% while its benchmark, the Lipper Growth
Fund Average, returned 19.63%.
Cumulative Total Returns1
As of 12/31/97
<TABLE>
<CAPTION>
One
Five Ten Since
Year
Years Years Inception2
<S> <C>
<C> <C> <C>
Class A 17.33%
95.03% 369.63% 277.34%
Class B 16.48
87.45 N/A 156.29
Class C 16.48
N/A N/A 74.20
Class Z N/A
N/A N/A 21.28
Lipper Growth Fund Avg3 19.63
105.11 371.28 ***
</TABLE>
Average Annual Total Returns1
As of 12/31/97
<TABLE>
<CAPTION>
One
Five Ten Since
Year
Years Years Inception2
<S> <C>
<C> <C> <C>
Class A 11.46%
13.13% 16.13% 12.64%
Class B 11.48
13.27 N/A 15.43
Class C 15.48
N/A N/A 17.64
</TABLE>
Past performance is not indicative 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.
1 Source: Prudential Investments 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
declining contingent deferred sales charge
(CDSC) 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 Z shares do not carry a sales charge or a
distribution fee. Since Class Z
shares have been in existence less than one
year, no average annual total
returns are presented. Class B shares will
automatically convert to Class A
shares on a quarterly basis, approximately
seven years after purchase.
2 Inception dates: Class A, 4/9/87; Class B,
6/10/91; Class C, 8/1/94; and
Class Z, 3/18/97.
3 These are Lipper Growth Fund average returns
for the one-, five-, and 10-year
categories for all funds in each share class.
*** Lipper Since Inception returns are: Class
A, 260.97%; Class B, 170.85%;
and Class C, 91.50% for all funds in each share
class.
How Investments Compared.
(As of 12/31/96)
(GRAPH)
U.S. General General U.S.
Growth Bond Muni Debt Taxable
Funds Funds Funds Money
Funds
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 returns for several Lipper mutual
fund categories to show you that
reaching for higher yields means tolerating
more risk. The greater the risk,
the larger the potential reward or loss. In
addition, we've included historical
20-year average annual returns. These returns
assume the reinvestment of
dividends.
U.S. Growth Funds will fluctuate a great deal.
Investors have received higher
historical total returns from stocks than from
most other investments. Smaller
capitalization stocks offer greater potential
for long-term growth but may be
more volatile than larger capitalization
stocks.
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
historically have been 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.
U.S. Taxable Money 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.
<PAGE>
Arthur E. Nicholas, Fund Manager
(PHOTO)
Portfolio
Manager's Report
The Nicholas-Applegate Growth Equity Fund seeks
to provide capital
appreciation through investment in growth
companies with market capitalizations
predominantly between $500 million and $5
billion. Our bottom-up growth
philosophy focuses on identifying and investing
in stocks meeting our criteria
of sustainable, accelerating earnings growth,
and market leadership. There can
be no assurance that the Fund will achieve its
investment objective.
Strategy Session.
Our mid-cap growth equity team adhered to its
strategy of using a bottom-up
method of selecting stocks. This method is
based upon selecting stocks for
individual merit, rather than a top down method
of choosing stocks that
considers market, monetary, political, fiscal,
or economic trends. We use
three strict criteria in our selection process:
positive change,
sustainability, and timeliness. Holdings that
no longer meet these conditions
are replaced with more appropriate selections.
We use a disciplined, consistent method of
investing for the Nicholas-
Applegate Growth Equity Fund. This means we
hold to stated investment
objectives rather than chasing the latest fads
or trends. For example,
although the overall market may have favored
the stocks of larger companies in
the first and fourth quarters of 1997, the Fund
remained invested in mid-sized
stocks that met our criteria.
Throughout the year and most particularly the
latter part of the year, we
focused on stocks of companies with little to
no exposure to Southeast Asia.
Many small cap stocks, specifically in the
technology sector, which supply
larger companies with significant exposure in
Asia, did not fare well in light
of the economic crisis there. Our outlook for
domestic growth stocks remains
positive as we expect demand in the Asian
markets to decline, resulting in a
catalyst toward a resurgence of smaller, faster
growing stock issues.
Fundamentals of the portfolio remain strong
with P/E ratios in line with the
market, and projected earnings growth rates
averaging 20% higher than the
market. We believe the solid fundamentals of
the mid-cap issues selected for
the Fund warrant continued optimism for 1998.
Portfolio Composition.
Expressed as a percentage of
total net assets as of 12/31/97.
(PIE CHART)
Overview.
We focus on discovering companies that are
adapting successfully to changes
around them and increasing their earnings at a
rate we believe will exceed
expectations. We look for positive change that
will lead to strong earnings
growth in a company.
<PAGE>
What Went Well.
Our relatively overweighted position in oil
services stocks helped the Fund
toward the end of the year. As the stock market
fell in October, oil services
stocks held strong. However, these stocks came
under pressure later in the
quarter.
Holdings in the transportation sector,
specifically airlines and trucking,
continue to benefit the portfolio. The earnings
of many transportation
companies are currently exceeding expectations,
and analysts have been
revising their estimates upward. Their strong
growth can be attributed to
lower energy costs, rising rates, and very full
flights.
And Not So Well.
Technology stocks, which had helped us earlier
in the year, came under
pressure as the economic crisis in Southeast
Asia unfolded. We significantly
reduced our exposure to technology stocks in
the fourth quarter. Many mid-
sized technology companies that are suppliers
to large multinational companies
recorded disappointing performance in light of
the economic crisis.
Energy stocks also did not perform well for the
Fund during the year, as the
cost of oil gradually decreased due to an
increase in supply and a lessening
in demand from Asia. We have decreased our
weighting significantly in both oil
and gas companies.
Five Largest Holdings.
2.8% Clear Channel Comm.
Media
2.7% Health Mgmt. Assoc.
Drugs & Healthcare
2.6% Carnival
Leisure & Recreation
2.5% Chancellor Media
Media
2.4% Borders Group
Retail/Wholesale Specialty
Expressed as a percentage of net assetsas of
12/31/97.
Looking Ahead.
Our outlook is positive, based on the prospects
for a favorable environment
for mid-sized companies. We base our opinion on
several factors, including
the low inflation environment as well as the
probability that weakness in
Asian markets will result in a resurgence of
smaller, faster growing stock
issues. We believe the Nicholas-Applegate
Growth Equity Fund is well-
positioned going forward.
- -----------------------------------------------
- --------------------------------
1
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
Portfolio of Investments
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
December 31, 1997
<TABLE>
<CAPTION>
Value
Shares Description
(Note 1)
<C> <S> <C>
COMMON STOCKS--98.8%
CAPITAL GOODS--25.9%
Construction--1.5%
101,400 Centex Corp................ $
6,381,863
----
- --------
Drugs & Healthcare--1.6%
145,000 Sybron International
Corp.*...................
6,805,937
----
- --------
Retail/Wholesale Specialty
Chain--18.5%
330,200 Borders Group, Inc.*.......
10,339,388
95,675 Consolidated Stores
Corp.*...................
4,203,720
211,000 Costco Companies, Inc.*....
9,415,875
204,950 Dollar Tree Stores Inc.*...
8,479,806
191,500 General Nutrition Cos.*....
6,511,000
121,200 Kohl's Corp.*..............
8,256,750
258,600 Meyer, (Fred), Inc.*.......
9,406,575
157,400 NBTY, Inc.*................
5,253,225
173,200 TJX Companies, Inc.........
5,953,750
292,200 U.S. Office Products
Co.*.....................
5,734,425
97,800 Whole Foods Market,
Inc.*....................
5,000,025
----
- --------
78,554,539
----
- --------
Telecommunication--4.3%
245,100 LCI International, Inc.*...
7,536,825
97,700 Pacific Gateway Exchange,
Inc.*....................
5,257,481
103,100 Teleport Communications
Group Inc.*..............
5,657,613
----
- --------
18,451,919
----
- --------
CONSUMER NON-DURABLES--21.1%
Airlines--1.1%
183,000 Southwest Airlines Co......
4,506,375
----
- --------
Business Services--1.4%
150,000 Robert Half International
Inc.*....................
6,000,000
----
- --------
Drugs & Healthcare--12.0%
110,300 Centocor, Inc.*............
3,667,475
161,900 Concentra Managed Care,
Inc.*....................
5,464,125
200,000 Elan Corp. PLC (ADR)*...... $
10,237,500
450,000 Health Management Assoc.,
Inc.*....................
11,362,500
191,500 HEALTHSOUTH Corp.*.........
5,323,030
58,150 McKesson Corporation.......
6,291,103
150,000 Millenium Pharmaceuticals,
Inc.*....................
2,850,000
186,400 Watson Pharmaceuticals,
Inc.*....................
6,046,350
----
- --------
51,242,083
----
- --------
Hotels & Restaurants--4.0%
190,000 CKE Restaurants, Inc.......
8,003,750
463,100 Host Marriott Corp.*.......
9,088,337
----
- --------
17,092,087
----
- --------
Leisure And Recreation--2.6%
200,000 Carnival Corp..............
11,075,000
----
- --------
ENERGY--8.8%
Electrical Utilities--1.4%
126,000 AES Corp.*.................
5,874,750
----
- --------
Oil & Gas-Production/Pipeline--
4.4%
147,500 Devon Energy Corp..........
5,678,750
206,900 Precision Drilling
Corp.*...................
5,043,187
450,000 Santa Fe Energy Resources,
Inc.*....................
5,062,500
98,100 Valero Energy Corp.........
3,084,019
----
- --------
18,868,456
----
- --------
Oil Services--3.0%
46,200 Camco International,
Inc......................
2,942,363
297,800 Global Industries, Ltd.*...
5,062,600
73,200 Smith International,
Inc.*....................
4,492,650
----
- --------
12,497,613
----
- --------
ENVIRONMENTAL--2.2%
Pollution Control Equipment &
Service--2.2%
407,500 Allied Waste Industries,
Inc.*....................
9,499,844
----
- --------
</TABLE>
See Notes to Financial Statements. 2
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
Portfolio of Investments
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
December 31, 1997
<TABLE>
<CAPTION>
Value
Shares Description
(Note 1)
<C> <S> <C>
FINANCIAL SERVICES--6.2%
Financial/Business Services--4.7%
213,000 CIT Group*................. $
6,869,250
85,000 FINOVA Group, Inc..........
4,223,438
135,200 MGIC Investment Corp.......
8,990,800
----
- --------
20,083,488
----
- --------
Insurance--1.5%
160,000 Provident Cos., Inc........
6,180,000
----
- --------
GENERAL BUSINESS--11.9%
Advertising--1.8%
200,000 Outdoor Systems, Inc.*.....
7,675,000
----
- --------
Apparel & Textiles--0.5%
49,700 Jones Apparel Group,
Inc.*....................
2,137,100
----
- --------
Beverages--1.7%
130,000 Canandaigua Brands,
Inc.*....................
7,198,750
----
- --------
Media--5.3%
142,600 Chancellor Media Corp.*....
10,641,525
149,400 Clear Channel
Communications, Inc.*....
11,867,962
----
- --------
22,509,487
----
- --------
Office Furnishings--0.8%
110,000 Knoll, Inc.*...............
3,533,750
----
- --------
Printing & Publishing--1.8%
210,000 Valassis Communications,
Inc.*....................
7,770,000
----
- --------
TECHNOLOGY--22.7%
Computer-Networks--1.5%
180,000 Network Appliance, Inc.*...
6,390,000
----
- --------
Computers-Services--2.0%
208,300 Saville Systems Ireland PLC
(ADR)*...................
8,644,450
----
- --------
Computer Software--11.3%
230,200 Bay Networks, Inc.*........
5,884,487
88,100 BMC Software Inc.*.........
5,781,563
302,000 Compuware Corp.*...........
9,664,000
267,800 Industri-Matematik Int'l.
Corp.*...................
7,900,100
125,800 Peoplesoft Inc.*...........
4,906,200
252,800 Platinum Technology,
Inc.*.................... $
7,141,600
128,900 VERITAS Software Corp.*....
6,573,900
----
- --------
47,851,850
----
- --------
Electronic Components--4.3%
141,000 Level One Communications,
Inc.*....................
3,983,250
108,500 Sanmina Corp.*.............
7,350,875
168,000 Uniphase Corp.*............
6,951,000
----
- --------
18,285,125
----
- --------
Telecommunications Equipment--
3.6%
142,500 Advanced Fibre
Communications*..........
4,150,313
116,900 CIENA Corp.*...............
7,145,512
204,600 PairGain Technologies,
Inc.*....................
3,964,125
----
- --------
15,259,950
----
- --------
Total common stocks
(cost $345,948,203)......
420,369,416
----
- --------
<CAPTION>
Principal
Amount
(000)
- ----------
SHORT-TERM INVESTMENTS--4.2%
Commercial Paper--4.2%
$ 17,725 American Express Co.
6.65%, 1/2/98............
17,721,726
----
- --------
Other
11 Seven Seas Money Market
Fund.....................
11,173
----
- --------
Total short-term
investments
(cost $17,732,899).......
17,732,899
----
- --------
Total Investments--103.0%
(cost $363,681,102; Note
4).......................
438,102,315
----
- --------
Liabilities in excess of
other assets--(3.0)%.....
(12,554,981)
----
- --------
Net Assets--100%...........
$425,547,334
----
- --------
----
- --------
</TABLE>
- ---------------
* Non-income producing.
ADR--American Depository Receipt.
See Notes to Financial Statements. 3
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
December 31, 1997
- -----------------
<S>
<C>
Investments, at value (cost
$363,681,102)..................................
........... $ 438,102,315
Cash...........................................
.......................................
25,341
Receivable for investments
sold...........................................
............ 1,226,691
Receivable for Fund shares
sold...........................................
............ 235,560
Dividends and interest
receivable.....................................
................ 43,089
Other
assets.........................................
.................................
8,414
- -----------------
Total
assets.........................................
............................. 439,641,410
- -----------------
Liabilities
Payable for investments
purchased......................................
............... 11,420,023
Payable for Fund shares
reacquired.....................................
............... 1,852,808
Management fee
payable........................................
........................ 330,884
Distribution fee
payable........................................
...................... 259,354
Accrued
expenses.......................................
...............................
223,335
Directors' fees
payable........................................
....................... 7,672
- -----------------
Total
liabilities....................................
............................. 14,094,076
- -----------------
Net
Assets.........................................
................................... $
425,547,334
- -----------------
- -----------------
Net assets were comprised of:
Common stock, at
par............................................
.................... $ 312,478
Paid-in capital in excess of
par............................................
........ 327,085,175
- -----------------
327,397,653
Accumulated net realized gain on
investments....................................
.... 23,728,468
Net unrealized appreciation on
investments....................................
...... 74,421,213
- -----------------
Net assets, December 31,
1997...........................................
.............. $ 425,547,334
- -----------------
- -----------------
Class A:
Net asset value and redemption price per
share
($133,973,481 / 9,256,311 shares of common
stock issued and outstanding)..........
$14.47
Maximum sales charge (5% of offering
price).........................................
.76
- -----------------
Maximum offering price to
public.........................................
........... $15.23
- -----------------
- -----------------
Class B:
Net asset value, offering price and
redemption price per share
($284,190,969 / 21,438,752 shares of common
stock issued and outstanding).........
$13.26
- -----------------
- -----------------
Class C:
Net asset value, offering price and
redemption price per share
($6,749,676 / 509,191 shares of common
stock issued and outstanding)..............
$13.26
- -----------------
- -----------------
Class Z:
Net asset value, offering price and
redemption price per share
($633,208 / 43,584 shares of common stock
issued and outstanding).................
$14.53
- -----------------
- -----------------
</TABLE>
- -----------------------------------------------
- ---------------------------------
See Notes to Financial Statements. 4
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
December
31,
Net Investment Loss 1997
--------
- -----
<S> <C>
Income
Dividends (net of foreign
withholding taxes
of $12,889)...................... $
1,300,064
Interest...........................
1,148,848
--------
- -----
Total income.....................
2,448,912
--------
- -----
Expenses
Management fees....................
4,250,016
Distribution fee--Class A..........
251,879
Distribution fee--Class B..........
3,005,201
Distribution fee--Class C..........
67,962
Transfer agent's fees and
expenses...........................
643,000
Custodian's fees and expenses......
110,000
Reports to shareholders............
100,000
Directors' fees....................
77,000
Registration fees..................
50,000
Audit fees and expense.............
33,000
Insurance expense..................
28,000
Legal fees and expenses............
25,000
Miscellaneous......................
2,284
--------
- -----
Total expenses...................
8,643,342
--------
- -----
Net investment loss..................
(6,194,430)
--------
- -----
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain on investment
transactions.......................
94,942,716
Net change in unrealized appreciation
of
investments........................
(18,521,412)
--------
- -----
Net gain on investments..............
76,421,304
--------
- -----
Net Increase in Net Assets
Resulting from Operations............ $
70,226,874
--------
- -----
--------
- -----
</TABLE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended
Year Ended
Increase (Decrease) December 31,
December 31,
in Net Assets 1997
1996
------------------
- -------------
<S> <C>
<C>
Operations
Net investment loss... $ (6,194,430)
$ (6,716,644)
Net realized gain on
investment
transactions........ 94,942,716
72,328,335
Net change in
unrealized
appreciation on
investments......... (18,521,412)
(173,258)
------------------
- -------------
Net increase in net
assets resulting
from operations..... 70,226,874
65,438,433
------------------
- -------------
Distributions to
shareholders from net
realized gains on
investments
Class A............. (27,098,267)
(18,962,078)
Class B............. (63,813,523)
(44,527,983)
Class C............. (1,442,170)
(917,000)
Class Z............. (66,424)
- --
------------------
- -------------
(92,420,384)
(64,407,061)
------------------
- -------------
Fund share transactions
(Note 5)
(net of share
conversions)
Net proceeds from
shares subscribed... 543,622,835
899,616,382
Net asset value of
shares issued to
shareholders in
reinvestment of
distributions....... 84,714,423
58,287,125
Cost of shares
reacquired.......... (650,219,421)
(909,300,156)
------------------
- -------------
Net increase
(decrease) in net
assets from Fund
share
transactions........ (21,882,163)
48,603,351
------------------
- -------------
Total increase
(decrease)............ (44,075,673)
49,634,723
Net Assets
Beginning of year....... 469,623,007
419,988,284
------------------
- -------------
End of year............. $ 425,547,334
$ 469,623,007
------------------
- -------------
------------------
- -------------
</TABLE>
- -----------------------------------------------
- ---------------------------------
See Notes to Financial Statements. 5
<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 excercisable 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 poli-
cies 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. Real-
ized 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.
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, 1997 the Fund decreased
accumulated net investment loss by
$6,194,430 and decreased paid-in capital by
$6,194,430 due to the Fund
experiencing a net investment loss during the
year. Net realized gains and net
assets were not affected by this change.
Note 2. Agreements The Fund has a
management
agreement with
Prudential Investments Fund
Management LLC ('PIFM'). Pursuant to the
management agreement, PIFM has
responsibility for all
- -----------------------------------------------
- ---------------------------------
6
<PAGE>
investment advisory services and supervises the
subadviser's performance of such
services. PIFM 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.
PIFM pays for the services of the
subadviser, the compensation of officers of the
Fund who are employees of PIFM,
occupancy and certain clerical and bookkeeping
costs of the Fund. The Fund bears
all other costs and expenses.
The management fee paid PIFM is computed
daily and payable monthly at an
annual rate of .95% of the average daily net
assets of the Fund. PIFM 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, 1997, PIFM earned $4,250,016
in management fees of which it
paid $3,357,513 to NACM under the foregoing
agreements.
The Fund has a distribution agreement with
Prudential Securities Incorporated
('PSI'), which acts as the distributor of the
Class A, Class B, Class C and
Class Z shares of the Fund. The Fund
compensates 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 for
Class A, B and C shares are accrued
daily and payable monthly. No distribution or
service fees are paid to PSI as
distributor for the Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the
Fund compensates PSI 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 Plans were .18 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, 1997.
PSI has advised the Fund that it has
received approximately $139,800 in
front-end sales charges resulting from sales of
Class A shares during the year
ended December 31, 1997. From these fees, PSI
paid such sales charges to PRUCO
Securities Corporation ('PRUSEC'), an
affiliated broker-dealer, which in turn
paid commissions to salespersons and incurred
other distribution costs.
PSI advised the Fund that for the year ended
December 31, 1997, it received
approximately $543,600 in contingent deferred
sales charges imposed upon certain
redemptions by Class B and C shareholders.
PSI, PIFM and PRUSEC are (indirect) wholly
owned subsidiaries of The
Prudential Insurance Company of America.
('Prudential')
The Fund, along with other affiliated
registered investment companies (the
'Funds'), had a credit agreement (the
'Agreement') with an unaffiliated lender.
The maximum commitment under the Agreement is
$200,000,000. Interest on any such
borrowings outstanding will be at market rates.
The purposes of the Agreement is
to serve as an alternative source of funding
for capital share redemptions. The
Fund has not borrowed any amounts pursuant to
the Agreement during the year
ended December 31, 1997. The Funds pay a
commitment fee at an annual rate of
.055 of 1% on the unused portion of the credit
facility. The commitment fee is
accrued and paid quarterly on a pro rata basis
by the Funds. The Agreement
expired on December 30, 1997 and has been
extended through December 29, 1998
under the same terms.
Note 3. Other Prudential Mutual
Fund Ser-
Transactions vices LLC
('PMFS'), a
with Affiliates wholly owned
subsidiary of
PIFM, serves as
the Fund's transfer agent. During
the year ended December 31, 1997, the Fund
incurred fees of approximately
$624,000 for the services of PMFS. As of
December 31, 1997, approximately
$49,500 of such fees were due to PMFS. Transfer
agent fees and expenses in the
Statement of Operations also include certain
out of pocket expenses paid to
nonaffiliates.
Note 4. Portfolio Purchases and
sales of invest-
Securities ment securities,
other than
short-term
investments, for the year ended
December 31, 1997 aggregated $787,375,857 and
$883,568,917, respectively.
The cost basis of investments for federal
income tax purposes at December 31,
1997 was $363,758,696 and, accordingly, net
unrealized appreciation of
investments for federal income tax purposes was
$74,343,619 (gross unrealized
appreciation--$83,583,627; gross unrealized
depreciation--$9,240,008).
Note 5. Capital The Fund offers
Class A,
Class B, Class C
and Class Z 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
- -----------------------------------------------
- ---------------------------------
7
<PAGE>
quarterly basis approximately seven years after
purchase. A special exchange
privilege is also available for shareholders
who qualified to purchase Class A
shares at net asset value. Effective March 18,
1997, the Fund commenced offering
Class Z shares. Class Z shares are not subject
to any sales or redemption charge
and are offered exclusively for sale to a
limited group of investors.
The Fund has authorized 200 million shares
of common stock at $.01 par value
per share equally divided into four classes,
designated Class A, Class B, Class
C and Class Z shares.Transactions in shares of
common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares
Amount
- ------------------------------ -----------
- -------------
<S> <C>
<C>
Year ended
December 31, 1997:
Shares sold................... 26,028,147
$ 403,257,239
Shares issued in reinvestment
of dividends and
distributions............... 1,629,888
23,021,141
Shares reacquired............. (28,489,469)
(443,979,190)
-----------
- -------------
Net decrease in shares
outstanding before
conversion.................. (831,434)
(17,700,810)
Shares issued upon conversion
from Class B................ 670,378
10,138,513
-----------
- -------------
Net decrease in shares
outstanding................. (161,056)
$ (7,562,297)
-----------
- -------------
-----------
- -------------
Year ended
December 31, 1996:
Shares sold................... 45,256,796
$ 735,771,997
Shares issued in reinvestment
of distributions............ 983,300
15,498,673
Shares reacquired............. (45,642,294)
(743,356,355)
-----------
- -------------
Net increase in shares
outstanding before
conversion.................. 597,802
7,914,315
Shares issued upon conversion
from Class B................ 628,501
10,055,961
-----------
- -------------
Net increase in shares
outstanding................. 1,226,303
$ 17,970,276
-----------
- -------------
-----------
- -------------
<CAPTION>
Class B
- ------------------------------
Year ended
December 31, 1997:
Shares sold................... 9,457,319
$ 135,337,537
Shares issued in reinvestment
of distributions............ 4,638,652
60,246,458
Shares reacquired............. (13,888,004)
(200,836,623)
-----------
- -------------
Net increase in shares
outstanding before
conversion.................. 207,967
(5,252,628)
Shares reacquired upon
conversion into Class A..... (721,300)
(10,138,513)
-----------
- -------------
Net decrease in shares
outstanding................. (513,333)
$ (15,391,141)
-----------
- -------------
-----------
- -------------
<CAPTION>
Class B Shares
Amount
- ------------------------------ -----------
- -------------
<S> <C>
<C>
Year ended
December 31, 1996:
Shares sold................... 10,219,707
$ 155,199,983
Shares issued in reinvestment
of distributions............ 2,823,157
41,917,160
Shares reacquired............. (10,486,306)
(158,450,669)
-----------
- -------------
Net increase in shares
outstanding before
conversion.................. 2,556,558
38,666,474
Shares reacquired upon
conversion into Class A..... (664,025)
(10,055,961)
-----------
- -------------
Net increase in shares
outstanding................. 1,892,533
$ 28,610,513
-----------
- -------------
-----------
- -------------
<CAPTION>
Class C
- ------------------------------
Year ended
December 31, 1997:
Shares sold................... 297,583
$ 4,319,397
Shares issued in reinvestment
of distributions............ 106,388
1,380,420
Shares reacquired............. (360,051)
(5,302,665)
-----------
- -------------
Net increase in shares
outstanding................. 43,920
$ 397,152
-----------
- -------------
-----------
- -------------
Year ended
December 31, 1996:
Shares sold................... 564,965
$ 8,644,402
Shares issued in reinvestment
of distributions............ 58,630
871,292
Shares reacquired............. (496,192)
(7,493,132)
-----------
- -------------
Net increase in shares
outstanding................. 127,403
$ 2,022,562
-----------
- -------------
-----------
- -------------
<CAPTION>
Class Z
- ------------------------------
March 18, 1997(a) through
December 31, 1997:
Shares sold................... 45,102
$ 708,662
Shares issued in reinvestment
of distributions 4,760
66,404
Shares reacquired (6,278)
(100,943)
-----------
- -------------
Net increase in shares
outstanding 43,584
$ 674,123
-----------
- -------------
-----------
- -------------
</TABLE>
- ---------------
(a) Commencement of offering of Class Z shares.
- -----------------------------------------------
- ---------------------------------
8
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Financial Highlights
<TABLE>
<CAPTION>
Class A
- -----------------------------------------------
- ----------------------
Year Ended December 31,
- -----------------------------------------------
- ----------------------
1997 1996 1995(a)
1994(a) 1993(a)
- ----------- -------- --------
- ------- -------
<S>
<C> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year..........
$ 15.41 $ 15.18 $ 11.99
$ 13.56 $ 12.77
- ----------- -------- --------
- ------- -------
Income from investment operations:
Net investment loss.........................
(.12) (.14) (.11)
(.07) (.07)
Net realized and unrealized gain (loss) on
investment transactions...................
2.60 2.64 3.82
(1.19) 2.63
- ----------- -------- --------
- ------- -------
Total from investment operations..........
2.48 2.50 3.71
(1.26) 2.56
- ----------- -------- --------
- ------- -------
Less distributions:
Distributions from net realized gains from
investment transactions...................
(3.42) (2.27) (.52)
(.31) (1.77)
- ----------- -------- --------
- ------- -------
Total distributions.......................
(3.42) (2.27) (.52)
(.31) (1.77)
- ----------- -------- --------
- ------- -------
Net asset value, end of year................
$ 14.47 $ 15.41 $ 15.18
$ 11.99 $ 13.56
- ----------- -------- --------
- ------- -------
- ----------- -------- --------
- ------- -------
TOTAL RETURN(b):............................
17.33% 16.45% 31.20%
(9.53)% 20.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...............
$ 133,973 $145,120 $124,340
$88,069 $97,596
Average net assets (000)....................
$ 139,933 $136,482 $109,740
$93,620 $90,332
Ratios to average net assets:
Expenses, including distribution fee......
1.37% 1.41% 1.44%
1.49%(d) 1.42%(d)
Expenses, excluding distribution fee......
1.19% 1.23% 1.27%
1.32%(d) 1.30%(d)
Net investment loss.......................
(.82)% (.93)% (.83)%
(.59)% (.53)%
For Class A, B, C and Z shares:
Portfolio turnover rate(c)..................
182% 113% 106%
110% 112%
Average commission rate paid per share
$.0590 $.0588 $.0592
N/A N/A
</TABLE>
- ---------------
(a) 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.
(b) Total return does not consider the effects
of sales loads. Total return
is calculated assuming a purchase of
shares on the first day and a sale
on the last day of each period reported
and includes reinvestment of
dividends and distributions.
(c) Portfolio turnover is calculated on the
basis of the Fund as a whole
without distinguishing between the classes
of shares issued.
(d) Current year amounts have been restated
from prior periods presentation.
- -----------------------------------------------
- ---------------------------------
See Notes to Financial Statements. 9
<PAGE>
NICHOLAS-APPLEGATE FUND, INC.
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
Financial Highlights
<TABLE>
<CAPTION>
Class B
- -----------------------------------------------
- -----------------
Year Ended December 31,
- -----------------------------------------------
- -----------------
1997 1996 1995(a) 1994(a)
1993(a)
- -------- -------- -------- -----
- --- --------
<S>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............
$ 14.48 $ 14.49 $ 11.56 $
13.18 $ 12.56
- -------- -------- -------- -----
- --- --------
Income from investment operations:
Net investment loss...........................
(.23) (.24) (.22)
(.17) (.18)
Net realized and unrealized gain (loss) on
investment transactions.....................
2.43 2.50 3.67 (1.14)
2.57
- -------- -------- -------- -----
- --- --------
Total from investment operations............
2.20 2.26 3.45 (1.31)
2.39
- -------- -------- -------- -----
- --- --------
Less distributions:
Distributions from net realized gains from
investment transactions.....................
(3.42) (2.27) (.52)
(.31) (1.77)
- -------- -------- -------- -----
- --- --------
Total distributions.........................
(3.42) (2.27) (.52)
(.31) (1.77)
- -------- -------- -------- -----
- --- --------
Net asset value, end of year..................
$ 13.26 $ 14.48 $ 14.49 $
11.56 $ 13.18
- -------- -------- -------- -----
- --- --------
- -------- -------- -------- -----
- --- --------
TOTAL RETURN(b):..............................
16.48% 15.54% 30.11%
(10.20)% 19.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).................
$284,191 $317,768 $290,751
$257,059 $252,911
Average net assets (000)......................
$300,520 $304,841 $265,597
$261,285 $179,456
Ratios to average net assets:
Expenses, including distribution fee........
2.19% 2.23% 2.27%
2.32%(c) 2.30%(c)
Expenses, excluding distribution fee........
1.19% 1.23% 1.27%
1.32%(c) 1.30%(c)
Net investment loss.........................
(1.64)% (1.75)% (1.66)%
(1.39)% (1.40)%
</TABLE>
- ---------------
(a) 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.
(b) Total return does not consider the effects
of sales loads. Total return
is calculated assuming a purchase of
shares on the first day and a sale
on the last day of each period reported
and includes reinvestment of
dividends and distributions.
(c) 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 C
Class Z
---
- -----------------------------------------------
- ------- -------------
August 1, March 18,
1994(c) 1997(f)
Year Ended December 31, Through
Through
---
- ------------------------------------
December 31, December 31,
1997 1996 1995(a)
1994(a) 1997
---
- ---- -------- ------------ -----
- ------- -------------
<S> <C>
<C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $
14.48 $ 14.49 $ 11.56 $
11.62 $ 14.48
---
- ---- -------- ------------ -----
- ------- -------------
Income from investment operations:
Net investment loss.....................
(.22) (.22) (.22)
(.05) (.22)
Net realized and unrealized gain (loss)
on investment transactions............
2.42 2.48 3.67
(.01) 3.18
---
- ---- -------- ------------ -----
- ------- -------------
Total from investment operations......
2.20 2.26 3.45
(.06) 2.96
---
- ---- -------- ------------ -----
- ------- -------------
Less distributions:
Distributions from net realized gains
from investment transactions..........
(3.42) (2.27) (.52)
- -- (2.91)
---
- ---- -------- ------------ -----
- ------- -------------
Total distributions...................
(3.42) (2.27) (.52)
- -- (2.91)
---
- ---- -------- ------------ -----
- ------- -------------
Net asset value, end of period.......... $
13.26 $ 14.48 $ 14.49 $
11.56 $ 14.53
---
- ---- -------- ------------ -----
- ------- -------------
---
- ---- -------- ------------ -----
- ------- -------------
TOTAL RETURN(b):........................
16.48% 15.54% 30.11%
(.52)% 21.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $
6,750 $ 6,735 $ 4,897 $
1,100 $ 633
Average net assets (000)................ $
6,796 $ 5,862 $ 2,961 $
225 $ 121
Ratios to average net assets:
Expenses, including distribution
fee.................................
2.19% 2.23% 2.27%
6.23%(d)(e) 1.19%(d)
Expenses, excluding distribution
fee...................................
1.19% 1.23% 1.27%
5.23%(d)(e) 1.19%(d)
Net investment loss...................
(1.64)% (1.75)% (1.63)%
(3.36)%(d) (.85)%(d)
</TABLE>
- ---------------
(a) 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.
(b) Total return does not consider the effects
of sales loads. Total return
is calculated assuming a purchase of
shares on the first day and a sale
on the last day of each period reported
and includes reinvestment of
dividends and distributions. Total returns
for periods less than a full
year are not annualized.
(c) Commencement of offering Class C shares.
(d) Annualized.
(e) Current year amounts have been restated
from prior periods presentation.
(f) Commencement of offering Class Z shares.
- -----------------------------------------------
- ---------------------------------
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, 1997, and
the related statement of operations for the
year then ended, the statements of
changes in net assets for each of the two years
in the period then ended, and
the financial highlights for each of the three
years in the period then ended
for Class A, B, C shares, and for the period
from March 18, 1997 (commencement
of operations) to December 31, 1997 for Z
shares. These financial statements and
financial highlights are the responsibility of
the Fund's management. Our
responsibility is to express an opinion on
these financial statements and
financial highlights based on our audits. The
financial highlights of
Nicholas-Applegate Growth Equity Fund for each
of the two years in the period
ended December 31, 1994 for Class A and 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 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. Our procedures included
confirmation of securities owned as of
December 31, 1997 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 audits
provide a reasonable basis for our
opinion.
In our opinion, the financial statements and
financial highlights referred to
above present fairly, in all material respects,
the financial position of
Nicholas-Applegate Growth Equity Fund as of
December 31, 1997, the results of
its operations for the year then ended, and the
changes in its net assets for
each of the two years in the period then ended,
and the financial highlights for
each of the three years in the period then
ended for Class A, B, C shares, and
for the period from March 18, 1997
(commencement of operations) to December 31,
1997 for Z shares in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Los Angeles, California
February 10, 1998
TAX
INFORMATION
We are required by the Internal Revenue Code
to advise you within 60 days of
the Fund's fiscal year end (December 31, 1997)
as to the federal income tax
status of dividends and distributions paid by
the Fund during such fiscal year.
Accordingly, we are advising you that in the
fiscal year ended December 31,
1997, the Fund paid distributions for Class A,
Class B, Class C and Class Z
shares totaling $1.20 per share, comprised of
short-term capital gains which are
taxable as ordinary income. The Fund paid
distributions for Class A, Class B and
Class C shares totaling $2.22 per share,
comprised of long-term capital gains,
of which, $1.85 was taxable at 28% rate gain
and $0.37 was taxable at 20% rate
gain. The Fund paid distributions for Class Z
shares totaling $1.71 per share,
comprised of long-term capital gains, of which,
$1.34 was taxable at 28% rate
gain and $0.37 was taxable at 20% rate gain.
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
you should report the amounts reflected on the
appropriate Form 1099-DIV or
substitute 1099.
- -----------------------------------------------
- ---------------------------------
12
<PAGE>
Comparing A $10,000 Investment.
Nicholas-Applegate Growth Equity Fund vs.
the S&P 500 Index.
// Nicholas-Applegate Growth Equity Fund
- -- S&P 500 Index
Class A
Average Annual Total
(CHART)
Returns - Class A
With Sales Load
12.64% Since Inception
16.13% for 10 Years
13.13% for 5 Years
11.46% for 1 Year
Without Sales Load
13.18% Since Inception
16.73% for 10 Years
14.30% for 5 Years
17.33% for 1 Year
Class B
Average Annual Total
(CHART)
Returns - Class B
With Sales Load
15.43% Since Inception
13.27% for 5 Years
11.48% for 1 Year
Without Sales Load
15.43% Since Inception
13.39% for 5 Years
16.48% for 1 Year
Class C
Average Annual Total
(CHART)
Returns - Class C
With Sales Load
17.64% Since Inception
15.48% for 1 Year
Without Sales Load
17.64% Since Inception
16.48% for 1 Year
Class Z
(CHART)
Past performance is not indicative of future
results. Investment return and
principal value will fluctuate so an investor's
shares, when redeemed, may be
worth more or less than their original cost.
The boxes on top of the charts
are designed to give you an idea how much the
Fund's returns can fluctuate
from year to year by measuring the best and
worst calendar years in terms of
total annual return since inception of each
share class.
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, Class C, and Class Z) 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 this reporting period (December 31,
1997), as measured on a quarterly
basis, beginning in 1987 for Class A shares, in
1991 for Class B shares, in
1994 for Class C shares, and in 1997 for Class
Z 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, 1997; (c) all recurring fees (including
management fees) were deducted;
and (d) all dividends and distributions were
reinvested. Class Z shares do not
carry a sales charge or a distribution fee.
Since Class Z shares have been in
existence less than a year, no average annual
total returns are presented.
Class B shares will automatically convert to
Class A shares, on a quarterly
basis, beginning 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 in the S&P 500 may differ
substantially from the securities in the
Fund. The S&P 500 is not the only index that
may be used to characterize
performance of stock funds and other indexes
may portray different comparative
performance.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Arthur E. Nicholas, Chairman
Dann V. Angeloff
Fred C. Applegate
Theodore J. Coburn
Robert F. Gunia
Arthur B. Laffer
Charles E. Young
Officers
Arthur E. Nicholas, Chairman,
President, and Chief Executive Officer
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Robert E. Carlson, Assistant Secretary
Deborah A. Docs, Assistant Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
Nicholas-Applegate Capital Management
600 West Broadway
San Diego, CA 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 LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Ernst & Young LLP
515 South Flower Street
Los Angeles, California 90071
Legal Counsel
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90017
The views expressed in this report and
information about the Fund's portfolio
holdings are for the period covered by this
report and are subject to change
thereafter.
This report is not authorized for distribution
to prospective investors
unless preceded or accompanied by a current
prospectus.
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