<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
NICHOLAS-APPLEGATE FUND, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box:
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11-(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.: Schedule 14A
3) Filing Party: Registrant
4) Date Filed: [date]
<PAGE>
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
----------------
To the Shareholders:
You are cordially invited to a Special Meeting (the "Meeting") of
shareholders of the Nicholas-Applegate Growth Equity Fund series of Nicholas-
Applegate Fund, Inc. (the "Fund") which will be held on January 19, 2001 at
10:00 a.m., local time, at the offices of the Fund at Gateway Center Three,
100 Mulberry Street, Newark, New Jersey 07102.
As discussed in more detail in the enclosed Proxy Statement, the Fund's sub-
adviser Nicholas-Applegate Capital Management ("Nicholas-Applegate") has
entered into a Merger Agreement with Allianz of America, Inc. ("Allianz of
America") and certain other parties pursuant to which Allianz of America will
acquire substantially all of the outstanding interests in Nicholas-Applegate
(the "Transaction"). At the Meeting, you and the other shareholders of the
Fund will be asked to consider:
1. Approval of a proposed new Subadvisory Agreement between the Fund,
Prudential Investments Fund Management LLC (as the "Manager" of the Fund),
and Nicholas-Applegate Capital Management (as the "Subadvisor" of the
Fund). The proposed Subadvisory Agreement provides that following the
Transaction Nicholas-Applegate will continue to provide subadvisory
services to the Fund on the same terms and with the same compensation
structure as is currently in effect;
2. Election of up to eight directors;
3. Ratification of Ernst & Young LLP as the Fund's independent accountants
for the fiscal year ending December 31, 2001; and
4. Any other business that may properly come before the Meeting or any
adjournments thereof.
Shareholders of record at the close of business on December 1, 2000 are
entitled to notice of, and to vote at, the Meeting. The accompanying proxy
statement includes a detailed description of each of the proposals. Remember,
your vote is extremely important, no matter how large or small your holdings.
By voting now, you can help avoid additional costs that are incurred with
follow-up letters and calls.
TO VOTE, YOU MAY USE ANY OF THE FOLLOWING METHODS:
. BY MAIL: Please complete, date and sign your proxy card before mailing
it in the enclosed postage-paid envelope. If you do not plan to vote by
internet or telephone, and regardless of whether you plan to attend the
Meeting, PLEASE COMPLETE SIGN AND RETURN THE ENCLOSED PROXY CARD so that
a quorum will be present and a maximum number of shares may be voted.
. BY INTERNET: Have your proxy card available. Go to the website:
www.proxyvote.com. Enter your 12-digit control number from your proxy
card. Follow the simple instructions found on the website.
. BY TELEPHONE: Have your proxy card available. Call 1-800-690-6903. Enter
your 12-digit control number from your proxy card. Follow the simple
instructions.
<PAGE>
If you have any questions before you vote, please call us at 1-800-225-1852.
We're glad to help you understand the proposals and assist you in voting.
Thank you in advance for your participation in this important event.
By Order of the Board of Directors,
Arthur E. Nicholas
Chairman of the Board
San Diego, California
December , 2000
<PAGE>
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND AND VOTE ON THE PROPOSALS
Please read the enclosed proxy statement for a complete description of the
Proposals. The following questions and answers provide a brief overview of the
Proposals.
Q. WHAT PROPOSALS AM I BEING ASKED TO VOTE ON?
A. The purpose of the proxy is ask you to vote on three matters:
.to approve a new subadvisory agreement,
.to elect up to eight Board members, and
.to ratify the selection of the Fund's independent accountants for 2001.
Q. WILL THE PROPOSED NEW AGREEMENT RESULT IN HIGHER MANAGEMENT OR ADVISORY
FEES?
A. No. The management and advisory fees will remain the same.
Q. ARE YOU RECOMMENDING A NEW BOARD FOR THE FUND?
A. No. The Fund's Nominating Committee nominated the seven individuals who
currently serve on the Board. Four of these nominees are independent of
Nicholas-Applegate Capital Management and Prudential Investments Fund
Management. However if as a result of the Transaction the composition of
the current Board of Directors would not comply with the requirements of
the Investment Company Act of 1940, then one of the Directors affiliated
with Nicholas-Applegate Capital Management will resign, the Board will be
expanded to eight Directors, and the election of two new independent
Directors will become effective.
Q. WILL THE PROPOSED CHANGES RESULT IN HIGHER DIRECTORS' FEES?
A. No. Directors' fees will not be affected.
Q. HOW MANY VOTES DO YOU NEED TO APPROVE THE PROPOSALS?
A. For Proposal 1, we need more than 50% of the outstanding shares of the Fund
entitled to vote, or 67% or more of the shares present (if the owners of
more than 50% of the outstanding shares are present in person or by proxy),
whichever is less. For Proposal 2, the nominees receiving the highest
number of votes will be elected. For Proposal 3, we need a majority of the
votes cast.
Q. WHAT IF YOU DO NOT HAVE ENOUGH VOTES TO APPROVE THE PROPOSALS BY THE
SCHEDULED SHAREHOLDER MEETING DATE?
A. If we do not receive sufficient votes to hold the meeting, we or
Shareholder Communication Corporation, a proxy solicitation firm, may
contact you by mail or telephone to encourage you to vote. Please review
the proxy materials and cast your vote to avoid additional mailings or
telephone calls. If we do not have enough votes to approve the proposals by
the time of the shareholder meeting at 10 a.m. on January 19, 2001, the
meeting may be adjourned to permit further solicitation of proxy votes.
Q. HAS THE FUND'S BOARD APPROVED THE PROPOSALS?
A. Yes. Your Fund's Board has approved the Proposals and recommends that you
vote to approve them.
Q. HOW MANY VOTES AM I ENTITLED TO CAST?
A. As a shareholder, you are entitled to one vote on each Proposal for each
share you own on the record date, and fractional votes for each fractional
share. The record date is December 1, 2000.
<PAGE>
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by completing and signing the enclosed proxy card,
and mailing it in the enclosed postage paid envelope.
You may also vote via the internet. To do so, have your proxy card
available and go to the web site: www.proxyvote.com. Enter your 12-digit
control number from your proxy card and follow the instructions found on
the web site.
Finally, you can vote by telephone. Call 1-800-690-6903, enter your 12-
digit control number from your proxy card and follow the instructions
given.
Q. HOW DO I SIGN THE PROXY CARD?
A. INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names appear
on the account registration shown on the card.
JOINT ACCOUNTS: Both owners must sign and the signatures should conform
exactly to the names shown on the account registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her capacity.
For example, a trustee for a trust should include his or her title when he
or she signs, such as "Jane Doe, Trustee"; or an authorized officer of a
company should indicate his or her position with the company, such as "John
Smith, President."
Q. WHAT IF I HAVE QUESTIONS?
A. If you need any assistance, or have any questions regarding the proposal or
how to vote your shares, please call us at 1-800-225-1852.
The attached proxy statement contains more detailed information about each
of the Proposals. Please read it carefully.
<PAGE>
NICHOLAS-APPLEGATE GROWTH EQUITY FUND
----------------
PROXY STATEMENT
----------------
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 19, 2001
INTRODUCTION
THIS PROXY STATEMENT IS FURNISHED TO THE SHAREHOLDERS OF THE NICHOLAS-
APPLEGATE GROWTH EQUITY FUND SERIES OF NICHOLAS-APPLEGATE FUND, INC. (THE
"FUND"), ON BEHALF OF THE BOARD OF DIRECTORS in connection with the
solicitation of voting instructions for use at a Special Meeting of
Shareholders of the Fund (the "Meeting") to be held on January 19, 2001, at
10:00 a.m., local time, at the offices of Prudential Investment Fund
Management LLC, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey
07102, for the purposes set forth below and in the accompanying Notice of
Special Meeting of Shareholders. The approximate mailing date of this Proxy
Statement is December , 2000.
The Fund's subadvisor is Nicholas-Applegate Capital Management ("Nicholas-
Applegate" or the "Subadvisor"), 600 West Broadway, San Diego, California
92101. Nicholas Applegate has entered into a Merger Agreement with Allianz of
America, Inc. ("Allianz of America") and certain other parties which will
result in an "assignment" and automatic termination of the Fund's current
Subadvisory Agreement with Nicholas-Applegate under the Investment Company Act
of 1940 (the "1940 Act"). Additionally, the Fund's Nominating Committee has
nominated the Fund's current Directors for re-election to the Board, and the
Fund's Audit Committee has selected Ernst & Young LLP as the Fund's
independent accountants for the fiscal year ending December 31, 2001.
Accordingly, at the Meeting the shareholders of the Fund will be asked to
consider:
1. Approval of a proposed new Subadvisory Agreement (the "Proposed
Subadvisory Agreement") among the Fund, Prudential Investments Fund
Management LLC (as the Manager of the Fund), and Nicholas-Applegate Capital
Management (as the Subadvisor of the Fund), on the same terms as the Fund's
current Subadvisory Agreement (the "Existing Subadvisory Agreement");
2. Election of up to eight directors;
3. Ratification of Ernst & Young LLP as the Fund's independent accountants
for the fiscal year ending December 31, 2001; and
4. Any other business that may properly come before the Meeting or any
adjournments thereof.
The Fund's manager and share distributor is Prudential Investments Fund
Management LLC ("PIFM" or the "Manager"), Gateway Center Three, 100 Mulberry
Street, Newark, New Jersey 07102. PIFM also serves as manager to all of the
other investment companies that, together with the Fund, comprise the
"Prudential Mutual Funds."
1
<PAGE>
SUMMARY OF PROPOSALS AND VOTING PROCEDURES
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS
NUMBER PROPOSAL DESCRIPTION ENTITLED TO VOTE VOTE REQUIRED FOR APPROVAL
-------- ----------------------- -------------------- -------------------------------
<C> <C> <S> <C>
1. Approval of Proposed Class A Shareholders A "majority of the outstanding
Subadvisory Agreement Class B Shareholders voting securities" of the
with Nicholas-Applegate Class C Shareholders Fund.*
Class Z Shareholders
2. Election of directors Class A Shareholders The nominees receiving the
Class B Shareholders highest number of votes will be
Class C Shareholders elected, provided a quorum is
Class Z Shareholders present.
3. Ratification of Class A Shareholders A majority of the votes cast,
Ernst & Young LLP Class B Shareholders provided a quorum is present.
as independent auditors Class C Shareholders
Class Z Shareholders
</TABLE>
--------
* Under the 1940 Act, approval of the Proposed Subadvisory Agreement will
require the affirmative vote of a majority of the outstanding voting
securities of the Fund. In accordance with the 1940 Act and as used in
Proposal 1, a "majority of the outstanding voting securities" of the Fund
means the lesser of (1) 67% or more of the shares of the Fund present at
the Meeting if the owners of more than 50% of the shares of the Fund then
outstanding are present in person or by proxy, or (2) more than 50% of the
outstanding shares of the Fund entitled to vote at the Meeting.
The Fund will request broker-dealer firms, custodians, nominees and
fiduciaries to forward proxy materials to the beneficial owners of the shares
of the Fund held of record by such persons. In addition to the solicitation of
proxies by mail, officers and employees of the Fund may solicit proxies in
person or by telephone without additional compensation. The Fund has also
retained Shareholder Communications Corporation to assist in the solicitation
of proxies. The costs associated with such solicitation and the Meeting will
be borne by Nicholas-Applegate Capital Management.
Shareholders of each of the Fund's Class A, Class B, Class C and Class Z
common stock (collectively, the "Common Stock") of record as of the close of
business on December 1, 2000 (the "Record Date") are entitled to vote on all
of the business at the Meeting and any adjournments thereof. Each share of
Common Stock is entitled to one vote, and fractional votes for fractional
shares held, on each Proposal without regard to class.
As of December 1, 2000, there were outstanding shares of Common Stock.
The presence in person or by proxy of more than 50% of the outstanding shares
entitled to vote at the Meeting will constitute a quorum. If a quorum is not
present, and sufficient votes are not received by the date of the Meeting, or
the holders of shares present in person or by proxy determine to adjourn the
Meeting for any other reason, a person named as proxy may propose one or more
adjournments from time to time to permit further solicitation of proxies.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining whether a quorum is present and for purposes of voting
on the Proposals but will not be counted for or against any adjournment.
Accordingly, abstentions and broker non-votes effectively will be a vote
against adjournment and the Proposals. Broker non-votes are shares held in
street name for which the broker indicates that instructions have not been
received from the beneficial owners or other persons entitled to vote and for
which the broker does not have discretionary voting authority. The persons
named as proxies will vote in favor of adjournment those shares which they
represent if adjournment is necessary to obtain a quorum or to obtain a
favorable vote on any proposal.
You may revoke a proxy by a written instrument received by the Secretary of
the Fund at any time before it is exercised, by delivering a later dated
proxy, or by attending the meeting and voting in person.
2
<PAGE>
Each valid proxy will be voted in accordance with your instructions and as
the persons named in the proxy determine on any other business that may come
before the Meeting. IF NO INSTRUCTIONS ARE GIVEN ON THE PROXY, THE PROXY WILL
BE VOTED TO APPROVE EACH OF THE PROPOSALS.
PROPOSAL 1: APPROVAL OF PROPOSED SUBADVISORY AGREEMENT
INFORMATION ABOUT NICHOLAS-APPLEGATE
Nicholas-Applegate serves as Subadvisor to the Fund pursuant to a
subadvisory agreement with the Fund and PIFM, the Manager of the Fund (the
"Existing Subadvisory Agreement"). Nicholas-Applegate is a California limited
partnership organized in 1984 which provides investment advisory services to
private accounts of institutional and individual clients, private investment
companies, and other mutual funds. As of October 31, 2000, Nicholas-Applegate
managed client assets of approximately $40 billion. NACM Holdings, LP, a
California limited partnership ("NACM Holdings LP"), Nicholas-Applegate's
general partner, is owned by Arthur E. Nicholas. Nicholas-Applegate Capital
Management Global Holding LP ("Global Holding LP"), Nicholas-Applegate's
limited partner, is owned by 34 employees of Nicholas-Applegate. Subject to
the general partner's discretion and control, Nicholas-Applegate is managed by
an Executive Committee, which serves as the functional equivalent of a board
of directors. The members of the Executive Committee are Arthur E. Nicholas,
Managing Partner, John J.P. McDonnell, Chief Operating Officer, Catherine
Somhegyi, Chief Investment Officer, Eric S. Sagerman, Head of Global Marketing
and Jill Jordon, Head of Global Client Services and Sales.
The offices of Nicholas-Applegate, NACM Holdings LP and the members of the
Executive Committee are at 600 West Broadway, San Diego California 92101.
DESCRIPTION OF THE TRANSACTION
On October 17, 2000, Nicholas-Applegate, NACM Holdings LP and Global
Holdings LP, and certain of their affiliates entered into a Merger Agreement
(the "Merger Agreement") with Allianz of America and certain of its affiliates
pursuant to which Allianz of America will acquire substantially all of the
assets of Nicholas-Applegate. The Merger Agreement provides for the
acquisition of NACM Holdings LP and Global Holding LP by Allianz of America
through their merger into a subsidiary of Allianz of America, MacIntosh LLC.
As a result of the merger, Nicholas-Applegate will become an indirect wholly
owned subsidiary of Allianz of America. The total consideration consists of an
initial payment of $980 million and contingent payments of up to approximately
$1.5 billion based upon achievement of certain revenue growth targets. The
parties expect to complete the Transaction by the end of the first quarter of
2001, although there is no assurance that it will be completed.
Nicholas-Applegate serves as Subadvisor to the Fund. Nicholas-Applegate will
undergo a change of control as a result of the consummation of the
Transaction, resulting in an "assignment" (as defined in the 1940 Act) of the
Fund's Existing Subadvisory Agreement with the Manager and Nicholas-Applegate.
As required by the 1940 Act, the Existing Subadvisory Agreement provides for
its automatic termination in the event of an assignment, and it will terminate
upon the consummation of the Transaction. Therefore, in connection with the
Transaction shareholders of the Fund are being asked to approve the Proposed
Subadvisory Agreement among the Fund, the Manager and Nicholas-Applegate that
is substantially identical to the Existing Subadvisory Agreement to enable
Nicholas-Applegate to continue to manage the Fund. If the Transaction is not
completed for any reason, the Existing Subadvisory Agreement will remain in
effect.
Completion of the Transaction is subject to a number of conditions,
including (i) obtaining by Nicholas-Applegate of consents from clients
responsible for at least 80% of its revenue run rate as of October 14, 2000;
and (ii) the receipt of certain regulatory approvals.
Nicholas-Applegate has agreed to use its reasonable best efforts to obtain
the approval of the Proposed Subadvisory Agreement by the shareholders of the
Fund before the Transaction is completed. If the shareholders
3
<PAGE>
of the Fund do not approve the Proposed Subadvisory Agreement before the
Transaction is completed, the Board has approved continuation of Nicholas-
Applegate's subadvisory services under an interim management agreement pending
approval of the Proposed Subadvisory Agreement by shareholders of the Fund.
Compensation earned by Nicholas-Applegate under the interim management
agreement will be held in an interest bearing escrow account pending
shareholder approval of the Proposed Subadvisory Agreement for a period of up
to 150 days from the termination of the Existing Subadvisory Agreement. If
shareholders approve the Proposed Subadvisory Agreement, the amount held in
the escrow account, plus interest, will be paid to Nicholas-Applegate. If
shareholders do not approve the Proposed Subadvisory Agreement, Nicholas-
Applegate will be paid the lesser of the costs incurred in performing its
services under the interim management agreement or the total amount in the
escrow account, plus interest earned.
Arthur E. Nicholas, a director of the Fund, is a partner of Nicholas-
Applegate and owns its General Partner. He will receive a portion of the
merger consideration in exchange for his units of Global Holdings LP and NACM
Holdings LP. As a result of his direct and indirect interests in the
Transaction and in Nicholas-Applegate and its affiliates, as well as his
employment arrangements with Nicholas-Applegate, he has a substantial interest
in shareholder approval of the Proposed Subadvisory Agreement.
The form of the Proposed Subadvisory Agreement is attached to this proxy
statement as Exhibit A. THE PROPOSED SUBADVISORY AGREEMENT WILL BE IDENTICAL
IN ALL MATERIAL RESPECTS TO THE EXISTING SUBADVISORY AGREEMENT. THE FUND'S
ADVISORY FEE RATE WILL NOT BE CHANGED.
SECTION 15(F) OF THE 1940 ACT
Section 15(f) of the 1940 Act permits the receipt by an investment adviser
to a registered investment company (or any affiliated persons of the
investment adviser) of any amount or benefit in connection with a change in
control of the investment adviser, as long as two conditions are satisfied.
First, an "unfair burden" may not be imposed on the investment company as a
result of the sale, or any express or implied terms, conditions or
understandings applicable to the sale. The term "unfair burden," as defined in
the 1940 Act, includes any arrangement during the two-year period after the
transaction whereby the investment adviser (or predecessor or successor
adviser), or any "interested person" of the adviser (as defined in the 1940
Act), receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its security holders (other than
fees for bona fide investment advisory or other services), or from any person
in connection with the purchase or sale of securities or other property to,
from or on behalf of the investment company (other than ordinary fees for bona
fide principal underwriting services).
Second, during the three-year period after the transaction, at least 75% of
the members of the investment company's board of directors cannot be
"interested persons" (as defined in the 1940 Act) of the new investment
adviser or its predecessor.
The Board of Directors has not been advised by Nicholas-Applegate and the
Allianz Group of any circumstances arising from the Transaction that might
result in the imposition of an "unfair burden" on the Fund. Moreover, the
Allianz Group has agreed in the Merger Agreement that (i) for a period of
three years after the consummation of the Transaction, the Allianz Group will
use reasonable efforts to assure that no more than 25% of the Fund's Board of
Directors are "interested persons" (as defined in the 1940 Act) of the Allianz
Group or Nicholas-Applegate, and (ii) for two years after the consummation of
the Transaction, the Allianz Group will refrain from imposing, or agreeing to
impose, an unfair burden on the Fund.
The 1940 Act defines the term "interested person" of Nicholas-Applegate to
include three of the seven current Directors of the Fund--Messrs. Nicholas,
Gunia and Laffer. Nicholas-Applegate has applied to the Securities and
Exchange Commission for an order exempting Messrs. Nicholas and Laffer from
the definition of "interested person" for purposes of Section 15(f) of the
1940 Act in connection with the Transaction. If an exemption order has not
been obtained by the time the Transaction closes, Mr. Laffer intends to resign
from the
4
<PAGE>
Board, and the election of Ms. DeRemer and Mr. Keane will be become effective,
so that no more than 25% of the Directors are "interested persons" of
Nicholas-Applegate. (See Proposal 2--Election of Directors.)
POST-TRANSACTION STRUCTURE AND OPERATIONS
Upon completion of the Transaction, Allianz of America will control
Nicholas-Applegate and its affiliates through its controlling interest in
MacIntosh, LLC, an entity into which Nicholas-Applegate and all of its
affiliates will merge. Allianz of America is a holding company that owns
several insurance and financial service companies and is a subsidiary of
Allianz AG. Operationally, Nicholas-Applegate expects to become a unit of
Allianz Asset Management ("AAM"), the division of Allianz AG that coordinates
global Allianz AG asset management activities. Nicholas-Applegate and its
affiliates currently expect to continue to operate under their existing names.
Arthur E. Nicholas, a Director and Chairman of the Board of the Fund, and
the Managing Partner of Nicholas-Applegate, John J.P. McDonnell, Chief
Operating Officer of Nicholas-Applegate, and Catherine Somhegyi, Chief
Investment Officer of Nicholas-Applegate, will continue with Nicholas-
Applegate in their respective current managerial roles. As part of the
Transaction, Messrs. Nicholas and McDonnell and Ms. Somhegyi will enter into
employment agreements with terms of five years following the Transaction.
Nicholas-Applegate will also enter into employment, retention and incentive
arrangements with other current key employees of Nicholas-Applegate, vesting
over a term of years. Messrs. Nicholas and McDonnell and Ms. Somhegyi also
will have roles with AAM through service on various AAM executive committees.
Nicholas-Applegate does not anticipate any change in any of the Fund's
portfolio managers or its portfolio management team in connection with the
Transaction. Nicholas-Applegate has agreed to provide bonus payments and other
benefits to certain Nicholas-Applegate personnel to ensure that there will be
no disruption in the quality of services provided to shareholders of the Fund
and other clients in connection with the Transaction. However, there can be no
assurance that any particular Nicholas-Applegate employee will choose to
remain employed by Nicholas-Applegate after the Transaction.
ALLIANZ AND ITS AFFILIATES
Allianz AG, the parent of Allianz of America, is a publicly traded German
Aktiengesellschaft (a German publicly traded company) which, together with its
subsidiaries, comprise one of the world's leading financial services companies
(the "Allianz Group"). Allianz AG is a leading provider of financial services,
particularly in Europe, and is represented in 68 countries worldwide through
subsidiaries, branch and representative offices, and other affiliated
entities. The Allianz Group currently has assets under management of
approximately $690 billion, and in its last fiscal year wrote approximately
$50 billion in gross insurance premiums. Allianz AG's address is
Koniginstrasse 28, D-80802, Munich, Germany.
Significant institutional shareholders of Allianz AG currently include,
among others, Dresdner Bank AG, Deutsche Bank AG, Munich Re, and
HypoVereinsbank. Once the Transaction is completed, these entities, as well as
certain broker-dealers that might be deemed to be affiliated with these
entities (such as Bankers Trust Company, BT Alex Brown Incorporated, Deutsche
Bank Securities, Inc. and Dresdner Kleinwort Benson North America LLC), may be
considered "affiliated brokers," of Nicholas-Applegate under the 1940 Act.
Once the Transaction is completed, without an SEC exemption or other relief
the Fund would generally be precluded from effecting principal transactions
with any such affiliated brokers, and its ability to purchase securities from
underwriting syndicates including an affiliated broker or to use any
affiliated brokers for agency transactions would be subject to restrictions.
Nicholas-Applegate does not believe that applicable restrictions on
transactions with the affiliated brokers described above will materially
adversely affect its ability to provide services to the Fund, the Fund's
ability to take advantage of market opportunities, or the Fund's overall
performance.
5
<PAGE>
ANTICIPATED BENEFITS OF THE TRANSACTION
Nicholas-Applegate anticipates that the Transaction and its affiliation with
the Allianz Group will benefit Nicholas-Applegate and the Fund in a number of
ways, including the following:
. Solidifying Nicholas-Applegate's position as a global company in an
increasingly global industry.
. Expansion of product offerings.
. Greater access to information resources.
. Additional opportunities for Nicholas-Applegate's employees and the
benefits of being part of a larger, financially stronger company.
. The Allianz Group has made the growth of its asset management operations
a key component of its business plans, a commitment which should assist
Nicholas-Applegate in continuing to expand its business, attract more
assets to the Fund and maintain the high level of services it provides
to the Fund.
TERMS OF PROPOSED AND EXISTING SUBADVISORY AGREEMENTS
The Fund entered into the Existing Subadvisory Agreement with Nicholas-
Applegate and the Manager on June 10, 1991. The Agreement was approved by the
shareholders of the Fund on April 22, 1991, and was last approved by the Board
of Directors of the Fund on May 19, 2000. The terms of the Fund's Proposed
Subadvisory Agreement are substantially identical to the terms of the Fund's
Existing Subadvisory Agreement, except for the dates of execution,
effectiveness and termination. The investment advisory fees to be paid by the
Fund are identical under the Proposed Subadvisory Agreement and the Existing
Subadvisory Agreement. The following summary of the Proposed Subadvisory
Agreement is qualified by reference to the form of Proposed Subadvisory
Agreement attached to this Proxy Statement as Exhibit A.
Under the terms of the Proposed Subadvisory Agreement, the Manager retains
Nicholas-Applegate to manage the Fund's investment portfolio, subject to the
direction of the Company's Board of Directors and the Manager. Nicholas-
Applegate is authorized to determine which securities are to be bought or sold
by the Fund and in what amounts. In addition to providing management and
investment advisory services, Nicholas-Applegate compensates all Directors and
officers of the Fund who are "interested persons" of Nicholas-Applegate, as
such term is defined in the 1940 Act.
The Proposed Subadvisory Agreement provides that Nicholas-Applegate will not
be liable for any error of judgment or for any loss suffered by the Fund or
the Manager in connection with the matters to which the Proposed Subadvisory
Agreement relates, except for liability resulting from willful malfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its duties and obligations or a breach of its
fiduciary duty under the Proposed Subadvisory Agreement. The Fund has agreed
to indemnify Nicholas-Applegate against liabilities, costs and expenses that
Nicholas-Applegate may incur in connection with any action, suit,
investigation or other proceeding arising out of or otherwise based on any
action actually or allegedly taken or omitted to be taken by Nicholas-
Applegate in connection with the performance of its duties or obligations
under the Proposed Subadvisory Agreement or otherwise as an investment adviser
of the Fund. Nicholas-Applegate is not entitled to indemnification with
respect to any liability to the Fund or its shareholders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties,
or of its reckless disregard of its duties and obligations or of a breach of
its fiduciary duty under the Proposed Subadvisory Agreement.
The Proposed Subadvisory Agreement provides that it will terminate in the
event of its assignment (as defined in the 1940 Act) or upon the termination
of the Management Agreement. The Proposed Subadvisory Agreement may be
terminated by the Fund (by the Board of Directors or vote of a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act), the
Manager or Nicholas-Applegate upon not more than 60 days' nor less than 30
days' written notice, without payment of any penalty. The Proposed Subadvisory
Agreement provides that it will continue in effect for a period of more than
two years from its execution only so long as such continuance is specifically
approved at least annually in conformity with the 1940 Act.
6
<PAGE>
For its services, Nicholas-Applegate is entitled to an annual advisory fee
from the Manager at the rate of .75% of the Fund's average daily net assets.
The method and rate for calculating the advisory fee will be the same under
the Proposed Subadvisory Agreement as under the Existing Subadvisory
Agreement. THERE WILL BE NO INCREASE IN THE SUBADVISORY FEE RATE IN CONNECTION
WITH THE TRANSACTION.
OTHER FUNDS
Nicholas-Applegate acts as investment adviser or subadviser to the other
funds listed below, each of which has a similar investment objective and
policies as the Fund.
<TABLE>
<CAPTION>
FUND WITH SIMILAR SIZE OF FUND ANNUAL INVESTMENT ADVISORY
INVESTMENT AS OF FEE AS A PERCENTAGE OF
OBJECTIVES 11/27/00 AVERAGE DAILY NET ASSETS
----------------- ------------ --------------------------
<S> <C> <C>
Nicholas-Applegate
MidCap Growth Fund $175,900,000 0.75%
</TABLE>
FACTORS CONSIDERED BY THE DIRECTORS
The Directors have determined that the terms of the Proposed Subadvisory
Agreement are fair and reasonable and that approval of the Proposed
Subadvisory Agreement is in the best interests of the Fund and its
shareholders. The Directors believe that the Proposed Subadvisory Agreement
will enable the Fund to continue to enjoy the high quality investment advisory
services it has received in the past from Nicholas-Applegate, at costs that
they deem appropriate, reasonable and in the best interests of the Fund and
its shareholders.
In evaluating the Proposed Subadvisory Agreement, the Directors reviewed
materials furnished by Nicholas-Applegate and the Allianz Group regarding
their personnel, operations and financial condition. The Directors also
reviewed the terms of the Transaction and its possible effects on the Fund and
its shareholders. Representatives of Nicholas-Applegate and the Allianz Group
discussed with the Directors the anticipated effects of the Transaction and
indicated their belief that as a consequence of the proposed transaction, the
operations of the Fund and the capabilities of Nicholas-Applegate to provide
advisory and other services to the Fund would not be adversely affected and
should be enhanced by the resources of the Allianz Group, although there could
be no assurance as to any particular benefits that may result.
The Directors also specifically considered the following factors, among
others, which they believe are relevant to their recommendation: (1) that the
terms of the Proposed Subadvisory Agreement are substantially identical to
those of the Existing Subadvisory Agreement, except for different execution,
effective, and termination dates; (2) the favorable history, reputation,
qualification and background of Nicholas-Applegate and the Allianz Group, as
well as the qualifications of their personnel and their respective financial
conditions; (3) that the fee and expense ratios of the Fund are reasonable
given the quality of services expected to be provided and are comparable to
the fee and expense ratios of similar mutual funds; (4) the relative
performance of the Fund since commencement of operations and comparable mutual
funds and unmanaged indices; (5) the commitment of Nicholas-Applegate to pay
the expenses of the Fund in connection with the Transaction so that
shareholders of the Fund would not have to bear such expenses; (6) the
possible benefits that may be realized by the Fund as a result of Nicholas-
Applegate's affiliation with the Allianz Group, including the resources of the
Allianz Group that would be available to Nicholas-Applegate; (7) that the
Transaction ensures continuity of management of the Fund and reduces
vulnerability to changes in control of Nicholas-Applegate that may be adverse
to the Fund's interests; and (8) assurances by a representative of AAM that
Nicholas-Applegate will maintain operational autonomy and continuity of
management.
RECOMMENDATION OF THE DIRECTORS
The Directors who are not affiliated with Nicholas-Applegate or the Manager
(the "Independent Directors") held meetings to consider the Proposed
Subadvisory Agreement and the Transaction on October 18 and November 17, 2000
and the entire Board of Directors considered the proposal at a meeting held on
November 17, 2000. Based on their evaluation of the materials presented and
assisted by the advice of independent counsel, the Directors, including all
the Directors who are not "interested persons" of the Fund, Nicholas-Applegate
or the
7
<PAGE>
Allianz Group (as defined in the 1940 Act), unanimously concluded that the
terms of the Proposed Subadvisory Agreement are reasonable, fair and in the
best interests of the Fund and its shareholders, and that the fees provided
therein are fair and reasonable in light of the usual and customary charges
made by others for services of the same nature and quality. The Directors
unanimously voted to approve and recommend to the shareholders of the Fund
that they approve the Proposed Subadvisory Agreement.
If the shareholders do not approve the Proposed Subadvisory Agreement and
the Transaction is consummated, the Directors will consider what further
action to take consistent with their fiduciary duties to the Fund. Such
actions may include obtaining for the Fund interim investment advisory
services at cost or at the existing fee rate either from Nicholas-Applegate or
from another advisory organization. Thereafter, the Directors would either
negotiate a new investment advisory agreement with an advisory organization
selected by the Directors or make other appropriate arrangements. In the event
the Transaction is not consummated, Nicholas-Applegate will continue to serve
as investment advisor of the Fund pursuant to the terms of the Existing
Subadvisory Agreement.
REQUIRED VOTE
Approval of Proposed Subadvisory Agreement will require the vote of a
"majority of the outstanding voting securities of the Fund" as defined in the
1940 Act. This means the lesser of (1) 67% or more of the shares of the Fund
present at the Meeting if the owners of more than 50% of the shares of the
Fund then outstanding are present in person or by proxy, or (2) more than 50%
of the outstanding shares of the Fund entitled to vote at the Meeting.
PROPOSAL 2: ELECTION OF DIRECTORS
The Board of Directors has nominated each person listed below to hold office
until the Fund's next meeting of shareholders and until his successor is duly
elected and qualified. Each of the nominees, all of whom are currently
Directors of the Fund, has indicated a willingness to serve if elected. All of
the Directors have previously been elected by shareholders.
8
<PAGE>
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
POSITION WITH THE PRINCIPAL OCCUPATIONS DURING PAST
NAME, AGE AND ADDRESS FUND FIVE YEARS
--------------------- -------------------- ---------------------------------
<S> <C> <C>
*Arthur E. Nicholas (53) Director, Managing Partner and Chief
600 West Broadway Chairman and Investment Officer, Nicholas-
29th Floor President Applegate Capital Management
San Diego, California (since 1987) (since August 1984); Trustee and
Chairman of the Board of
Trustees, Nicholas-Applegate
Institutional Funds (since
1998); Chairman/President of
Nicholas-Applegate Securities.
Fred C. Applegate (54) Director Private Investor. Formerly
885 La Jolla Corona (since 1987) President, Nicholas-Applegate
Court Capital Management (August 1984-
La Jolla, California December 1991). Trustee, Miami
University (since 2000); Board
of Governors, The San Diego
Foundation (since 1998); Vice
Chair of Investment Committee,
The San Diego Foundation (since
1997).
Dann V. Angeloff (64) Director President, The Angeloff Company
727 West Seventh Street (since 1987) (corporate financial advisors)
Los Angeles, California (since 1976); Trustee (1979-
1987) and University Counselor
to the President (since 1987),
University of Southern
California; Director, Aremis
Soft Corporation (since 1999)
(technology); Top Jobs.Net
(since 1999) (technology);
Public Storage, Inc. (since
1980) (real estate investment
trust).
Theodore J. Coburn (46) Director Partner, Brown, Coburn & Co.
17 Cotswold Road (since 1987) (investment banking firm) (since
Brookline, 1991); research associate,
Massachusetts Harvard Graduate School of
Education (since September
1996); formerly Managing
Director of Global Equity
Transactions Group and Member of
Board of Directors, Prudential
Securities (September 1986-June
1991) (registered investment
company); Director, Dresdner RCM
Europe Fund (since 1991)
(registered investment company),
Moovies, Inc. (since 1995)
( ).
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS POSITION WITH THE FUND PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
--------------------- ---------------------- --------------------------------------------
<S> <C> <C>
*Robert F. Gunia (53) Director and Executive Vice President and
Gateway Center Three Vice President Chief Administrative Officer
100 Mulberry Street (since 1992) (since June 1999), Prudential
Newark, New Jersey Investments; Executive Vice
President and Treasurer (since
December 1996), Prudential
Investment Fund Management LLC
(PIFM); President (since April
1999) Prudential Investment
Management Services LLC (PIMS);
Corporate Vice President (since
September 1997), The Prudential
Insurance Company of America
(Prudential); formerly Senior
Vice President (March 1987-May
1999), Prudential Securities
Incorporated (Prudential
Securities); former Chief
Administrative Officer (July
1990-September 1996), Director
(January 1989-September 1996)
and Executive Vice President,
Treasurer and Chief Financial
Officer (June 1987-December
1996), Prudential Mutual Fund
Management, Inc. (PMF); Vice
President and Director (since
May 1989), The Asia Pacific
Fund, Inc.
*+Arthur B. Laffer (59) Director Chairman, Laffer Associates
5405 Morehouse Drive (since 1987) (formerly A.B. Laffer, V.A.
#340 Canto & Associates) (economic
San Diego, California consulting) (since 1979);
Chairman, Laffer Advisors
Incorporated (economic
consulting) (since 1981);
Director, U.S. Filter
Corporation (since March 1991)
( ), Coinmach Laundry
Corporation (since September
1996) ( ), Oxigene Inc. (since
1998) ( ), and MasTec, Inc.
(construction) (since 1994);
Chairman, Calport Asset
Management, Inc. (since 1992)
(asset management);
Distinguished University
Professor and Director,
Pepperdine University (September
1985-May 1988), Professor of
Business Economics, University
of Southern California (1978-
1984).
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS POSITION WITH THE FUND PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
--------------------- ---------------------- --------------------------------------------
<S> <C> <C>
Charles E. Young (68) Director Interim President, University of
10920 Wilshire Blvd. (since 1992) Florida (since October 1999);
Suite 1835 Chancellor Emeritus (July 1999-
Los Angeles, present), Chancellor (from
California September 1968 to July 1997),
University of California at Los
Angeles; Director, Intel Corp.
(since April 1974) ( ), Academy
of Television Arts and Sciences
Foundation (since October 1988),
Los Angeles World Affairs
Council (since October 1977),
Town Hall of California (since
1982).
</TABLE>
--------
* An "interested" Director of the Fund as defined in the 1940 Act.
+ Mr. Laffer is considered to be an "interested person" of the Fund because
Laffer Associates (formerly A.B. Laffer, V. A. Canto & Associates) or its
affiliates received material compensation from Nicholas-Applegate for
consulting services provided from time to time to Nicholas-Applegate.
As indicated under Proposal 1 above, Section 15(f) of the 1940 Act requires,
among other things, that for three years after the Transaction no more than
25% of the Fund's Directors may be "interested persons" of Nicholas-Applegate.
The 1940 Act defines the term "interested person" of Nicholas-Applegate to
include three of the seven nominees listed above--Messrs. Nicholas, Gunia and
Laffer. Nicholas-Applegate has applied to the Securities and Exchange
Commission for an order exempting Messrs. Nicholas and Laffer from the
definition of "interested person" for purposes of Section 15(f) of the 1940
Act in connection with the Transaction. To ensure that the composition of the
Fund's Board complies with Section 15(f), the Board of Directors has approved
an increase in the number of Directors to eight if an exemption order has not
been obtained by the time the Transaction closes. In that event, Mr. Laffer
intends to resign from the Board, and the election of two additional Board
members who are not "interested persons" of Nicholas-Applegate will become
effective. The Board of Directors has nominated each person listed below to
take office upon the closing of the Transaction, unless an exemption order has
been obtained.
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS POSITION WITH THE FUND PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
--------------------- ---------------------- --------------------------------------------
<S> <C> <C>
Darlene DeRemer (44) Director Managing Director, of NewRiver
155 South Street (since 2000) Internet Advisory Services
Wrentham, Division (since March
Massachusetts 2000)( ); President and
Founder, DeRemer Associates
(since 1987) (financial services
consulting firm); formerly, Vice
President and Director, Asset
Management Division, State
Street Bank and Trust Company
(from 1982-1987), and Vice
President, T Rowe Price &
Associates (1979-1982);
Director, Jurika & Voyles Fund
Group (since 1994); formerly,
Trustee, Nicholas-Applegate
Mutual Funds (until 1999).
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND
ADDRESS POSITION WITH THE FUND PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
------------- ---------------------- --------------------------------------------
<S> <C> <C>
George F. Keane (71) None President (1971 to 1992) and
7408 Eaton Court President Emeritus (since 1993),
University Park, Common Fund Group (investment
Florida management for educational
institutions); Member of
Investment Advisory Committee,
New York State Common Retirement
Fund (since 1982); Director,
Northern Trust of Connecticut
(since 1991); Member of Finance
Committee, Fairfield University
(since 1993) and University of
South Florida Foundation (since
1998); Director, The Bramwell
Funds, Inc. (since 1994) and The
Universal Bond Fund (since 1994)
(registered investment
companies), Universal Stainless
& Alloy Products, Inc. ( )
(since 1994), Longview Oil & Gas
(since 2000). Trustee, Nicholas-
Applegate Institutional Funds
(registered investment company)
(since 1998); formerly
President, Endowment Advisers,
Inc. (August 1987 to December
1992) and Trustee, Nicholas-
Applegate Investment Trust
(registered investment company)
(19 to 1998).
</TABLE>
MEETINGS AND DIRECTOR COMPENSATION
During the fiscal year ended December 31, 1999, there were four meetings of
the Board of Directors. All of the Directors participated in at least 75% of
such meetings.
The Fund pays to each of its Directors who is not an affiliated person of
the Manager or the Subadviser annual compensation of $10,000 and $1,000 per
Board meeting attended. In addition, the Fund pays certain out-of-pocket
expenses to all of its Directors. The Chairman of the Audit Committee receives
an additional $1,500 and each member of the Audit Committee receives an
additional $1,000 per meeting attended.
Directors may receive their fees pursuant to a deferred fee agreement with
the Fund. Under the terms of the agreement, the Fund accrues daily the amount
of such Director's fees, which accrue interest at a rate equivalent to the
prevailing rate applicable to 90-day U.S. Treasury Bills at the beginning of
each calendar quarter or, pursuant to an SEC exemptive order, at the daily
rate of return of the Fund. Payment of the interest so accrued is also
deferred and accruals become payable at the option of the Director. The Fund's
obligation to make payments of deferred Director's fees, together with
interest thereon, is a general obligation of the Fund.
Pursuant to the terms of the Management Agreement with the Fund, the Manager
or Subadvisor, as appropriate, pays all compensation of officers and employees
of the Fund as well as the fees and expenses of all Directors of the Fund who
are affiliated persons of the Manager or Subadvisor.
The following table sets forth the aggregate compensation paid by the Fund
for the fiscal year ended December 31, 1999 to the Directors who are not
affiliated with the Manager or the Subadviser and the compensation paid to
such Directors for service on the Fund's Board for the calendar year ended
December 31, 1999. [None of these Directors served on the board of directors
of any other fund managed by the Manager or the Subadviser.]
12
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT TOTAL
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL COMPENSATION
COMPENSATION AS PART OF FUND BENEFITS UPON FROM FUND PAID
NAME OF PERSON, POSITION FROM FUND EXPENSES RETIREMENT TO DIRECTORS
------------------------ ------------ ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Fred C. Applegate, Di-
rector................. $14,000 None N/A $14,000
Dann V. Angeloff, Direc-
tor.................... $17,000 None N/A $17,000
Theodore J. Coburn, Di-
rector................. $16,000 None N/A $16,000
Arthur B. Laffer, Direc-
tor.................... $14,000 None N/A $14,000
Charles E. Young, Direc-
tor.................... $16,000 None N/A $16,000
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Fund has an Audit Committee and a Nominating
Committee.
Messrs. Angeloff, Coburn and Young are the current members of the Audit
Committee. The Audit Committee is responsible for monitoring and reviewing
accounting methods, internal accounting procedures and controls, and audit
plans adopted by the Fund. The Audit Committee recommends to the Board of
Directors the engagement of the Fund's independent auditors and monitors the
scope and results of the Fund's audits, the internal accounting controls of
the Fund, and the audit practices and professional services furnished by the
Fund's independent auditors. The Audit Committee held two meetings during the
fiscal year ended December 31, 1999.
Messrs. Applegate, Angeloff and Young are the current members of the
Nominating Committee. The Nominating Committee is responsible for nominating
directors to serve on the Board and the various committees of the Board. The
Nominating Committee will not consider nominees recommended by shareholders.
The Nominating Committee held no meetings during the fiscal year ended
December 31, 1999.
RECOMMENDATION OF THE DIRECTORS
The Directors recommend that the shareholders re-elect all current
Directors. The Directors further recommend that the shareholders elect Ms.
DeRemer and Mr. Keane, contingent upon the resignation of Mr. Laffer for the
reasons described above.
REQUIRED VOTE
The seven nominees receiving the highest number of the votes cast will be
elected, provided a quorum is present. If Mr. Laffer is elected and
subsequently resigns for the reasons described above, the board will be
expanded to eight and the two other nominees receiving the next highest number
of votes cast will be elected, provided that they are not "interested persons"
of Nicholas-Applegate (as defined in the 1940 Act).
PROPOSAL 3: RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors of
the Fund has appointed Ernst & Young LLP as the Fund's independent public
accountants and auditors for the fiscal year ending December 31, 2001. This
appointment is subject to shareholder ratification. No representative of Ernst
& Young LLP will be present at the Meeting.
RECOMMENDATION OF THE DIRECTORS
The Directors recommend that the shareholders ratify the selection of Ernst
& Young LLP.
REQUIRED VOTE
The affirmative vote of a majority of the votes cast is required to ratify
the Board's selection, provided a quorum is present.
13
<PAGE>
GENERAL INFORMATION
SECURITY OWNERSHIP OF 5% HOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
The Class A, Class B, Class C and Class Z Common Stock are the Fund's only
outstanding classes of voting securities. The following table sets forth, as
of December 1, 2000, the number and percentage of shares of Common Stock
beneficially owned by (i) each person known to the Fund to be the beneficial
owner of more than 5% of the outstanding shares of Common Stock, (ii) each
director of the Fund, and (iii) all directors and executive officers of the
Fund as a group. Unless otherwise indicated by footnote, each person listed
below possesses sole voting and investment power with respect to the shares
indicated as beneficially owned by him, subject to community property laws
where applicable.
<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE
NUMBER AND CLASS OF OF EACH CLASS OF STOCK
NAME SHARES BENEFICIALLY OWNED (3) OUTSTANDING
---- ----------------------------- ----------------------
<S> <C> <C>
Prudential Securities
Incorporated (1)........
Arthur E. Nicholas (2)...
Fred C. Applegate (2)....
Dann V. Angeloff (2).....
Theodore J. Coburn (2)...
Robert F. Gunia (2)......
Arthur B. Laffer (2).....
Charles E. Young (2).....
All Directors and
Executive Officers
as a group (8 persons)..
</TABLE>
--------
(1) The address for Prudential Securities Incorporated is One Seaport Plaza,
155 Waterstreet, New York, NY 10292.
(2) The address of each Trustee and Executive Officer is c/o Prudential
Investments Fund Management LLC, Gateway Center Three, 100 Mulberry
Street, Newark, NJ 07l02.
(3) Beneficial ownership is determined in accordance with SEC rules and
generally includes sole or shared voting investment power with respect to
securities. Except as otherwise noted, and subject to community property
laws where applicable, each person named reportedly has sole voting and
dispositive power with respect to all shares of Common Stock shown as
beneficially owned by such person.
OFFICERS OF THE FUND
The current officers of the Fund other than Arthur E. Nicholas and Robert F.
Gunia (who are described under "Nominees for Election" above) are as follows:
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS POSITION WITH THE FUND PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
--------------------- ----------------------- --------------------------------------------
<C> <C> <S>
Grace Torres (40) Treasurer and First Vice President (since December 1996), PIFM;
Gateway Center Three Principal Financial formerly First Vice President, Prudential
100 Mulberry Street and Accounting Securities (March 1994-September 1996); Vice
Newark, New Jersey 07102 Officer (since 1995) President, Bankers Trust Corporation (July 1989-
March 1994).
Deborah A. Docs (42) Secretary (since 1998) Vice President and Associate General Counsel
Gateway Center Three and Assistant Secretary (since December 1996), PIFM; Vice President and
100 Mulberry Street (from 1991-1998) Associate General Counsel (June 1991-September
Newark, New Jersey 07102 1996), Prudential Mutual Fund Management, Inc.
Robert E. Carlson (69) Assistant Secretary Partner, Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street (since 1991) (law firm).
Los Angeles, California 90071
</TABLE>
14
<PAGE>
Some Directors and officers of the Fund are also trustees, directors and
officers of some or all of the other investment companies distributed by
Prudential Securities Incorporated.
OTHER MATTERS TO COME BEFORE THE MEETING
The Fund's management does not know of any matters to be presented at the
Meeting other than those described in this Proxy Statement. If other business
should properly come before the Meeting, the proxy holders will vote on it in
accordance with their best judgment.
PAYMENT OF EXPENSES
Nicholas-Applegate will pay the expenses of the preparation, printing and
mailing of this Proxy Statement and its enclosures and of all solicitations.
The Fund has engaged Shareholder Communications Corporation, a professional
proxy solicitation firm, to assist in the solicitation of proxies. The Fund's
management estimates the costs of retaining Shareholder Communications
Corporation and other expenses incurred with the solicitation of proxies will
be approximately [$ .]
SHAREHOLDER PROPOSALS
The Fund is not required to hold an annual meeting of shareholders and does
not currently intend to hold a meeting of shareholders in 2002. Shareholder
proposals to be presented at the next meeting of shareholders, whenever held,
must be received at the Fund's offices, Gateway Center Three, 100 Mulberry
Street, Newark, New Jersey 07102, at a reasonable time prior to the Directors'
solicitation of proxies for the meeting. The submission by a shareholder of a
proposal for inclusion in a proxy statement does not guarantee that it will be
included. Shareholder proposals are subject to certain regulations under
federal and state securities laws.
REPORTS TO SHAREHOLDERS
The Fund will furnish without charge a copy of its most recent annual report
and any more recent semiannual reports to any shareholder upon request.
Shareholders who want to obtain a copy of the Fund's reports should direct all
written request to the attention of the Fund, at its address listed above, or
Prudential Mutual Fund Services LLC, the Fund's Transfer Agent, at 1-800-225-
1852.
To assure the presence of a quorum at the meeting, please promptly execute
and return the enclosed proxy. A self-addressed, postage-paid envelope is
enclosed for your convenience.
Arthur E. Nicholas
Chairman of the Board
San Diego, California
December , 2000
15
<PAGE>
PRUDENTIAL INVESTMENTS
GATEWAY CENTER THREE
100 MULBERRY STREET, 4TH FLOOR
NEWARK, NJ 07102-4077
NICHOLAS-APPLEGATE FUNDS, INC.
Gateway Center Three
Newark, New Jersey 07102
PROXY
Special Meeting of Shareholders (Meeting) -
January 19, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Grace C. Torres and Deborah A. Docs as Proxies, each with the
power of substitution, and hereby authorizes each of them to represent and to
vote, as designated below, all the shares of Common Stock of the Fund held of
record by the undersigned on December 1, 2000 at the Meeting to be held on
January 19, 2001 or any adjournment thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS.
IF VOTING BY MAIL, PLEASE MARK, SIGN AND DATE THIS PROXY CARD WHERE INDICATED
AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the Meeting or any adjournment thereof.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<PAGE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
NICHOLAS-APPLEGATE FUNDS, INC.
The Board of Directors recommends a vote FOR the proposal.
For Withhold For All
All All Except
Vote on Proposal [ ] [ ] [ ]
1. To elect nine Directors. Nominees:
01) Arthur E. Nicholas 06) Robert F. Gunia
02) Fred C. Applegate 07) George F. Keane
03) Dann V. Angeloff 08) Arthur B. Laffer
04) Theodore J. Coburn 09) Charles E. Young
05) Darlene DeRemer
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
--------------------------------------------------------------------------------
2. To approve a proposed subadvisory For Against Abstain
agreement among Nicholas-Applegate
Fund, Inc., Prudential Investments [ ] [ ] [ ]
Fund Management LLC, and Nicholas-Applegate
Capital Management. This Agreement
will take effect only if the proposed
acquisition of Nicholas-Applegate
Capital Management by Allianz of
America, Inc. is consummated.
2
<PAGE>
3. To ratify the selection of Ernst [ ] [ ] [ ]
& Young LLP as the Fund's
independent auditors for the
fiscal year ending December 31, 2001.
Note: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Please be sure to sign and date this Proxy.
----------------------------------------
---------------------------------------- ----------------------
Signature (PLEASE SIGN WITHIN BOX) Date
----------------------------------------
---------------------------------------- ----------------------
Signature (Joint Owners) Date
3
<PAGE>
EXHIBIT A
NICHOLAS-APPLEGATE FUND, INC.
SUBADVISORY AGREEMENT
Agreement made as of this day of , 2001 by and among Prudential
Investments Fund Management LLC., a corporation (PIFM or the Manager),
Nicholas-Applegate Capital Management, a New York limited liability company
(the Subadviser), and Nicholas-Applegate Fund, Inc., a Maryland corporation
(the Fund).
WHEREAS, the Manager has entered into a Management Agreement, dated June 10,
1991 (the Management Agreement), with the Fund, a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the 1940 Act), pursuant to which PIFM will act as Manager of
the Fund.
WHEREAS, PIFM desires to retain the Subadviser to provide investment
advisory services to the Fund in connection with the management of the Fund
and the Subadviser is willing to render such investment advisory services.
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and of the Board of
Directors of the Fund, the Subadviser shall manage the investment operations
of the Fund and the composition of the Fund's portfolio, including the
purchase, retention and disposition thereof, in accordance with the Fund's
investment objectives, policies and restrictions as stated in the Prospectus
(such Prospectus and Statement of Additional Information as currently in
effect and as amended or supplemented from time to time, being herein called
the "Prospectus"), and subject to the following understandings:
(i) The Subadviser shall provide supervision of the Fund's investments
and determine from time to time what investments and securities will be
purchased, retained, sold or loaned by the Fund, and what portion of the
assets will be invested or held uninvested as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the Charter, By-laws
and Prospectus of the Fund and with the instructions and directions of the
Manager and of the Board of Directors of the Fund and shall conform to and
comply with the requirements of the 1940 Act, the Internal Revenue Code of
1986, as amended, and all other applicable federal and state laws and
regulations.
(iii) The Subadviser shall determine the securities to be purchased or
sold by the Fund and shall place orders with or through such persons,
brokers or dealers (including but not limited to Prudential Securities
Incorporated) as may be necessary or desirable to carry out the policy with
respect to brokerage as set forth in the Fund's Registration Statement and
Prospectus or as the Board of Directors may direct from time to time. In
providing the Fund with investment supervision, it is recognized that the
Subadviser will give primary consideration to securing the most favorable
price and efficient execution. Within the framework of this policy, the
Subadviser may consider the financial responsibility, research and
investment information and other research services and products provided by
brokers or dealers who may effect or be a party to any such transaction or
other transactions to which the Subadviser's other clients may be a party.
It is understood that Prudential Securities Incorporated may be used as
principal broker for securities transactions but that no formula has been
adopted for allocation of the Fund's investment transaction business. It is
also understood that it is desirable for the Fund that the Subadviser have
access to supplemental investment and market research services and products
and security and economic analysis provided by brokers who may execute
brokerage transactions at a higher cost to the Fund than may result when
allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Subadviser is
authorized to place orders for the purchase and sale of securities for the
Fund with such brokers, subject to review by the Fund's Board of Directors
from time to time with respect to the extent and continuation of this
practice. It is understood that the information, services and products
provided by such brokers may be useful to the Subadviser in connection with
the Subadviser's services to other clients.
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On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients of the
Subadviser, the Subadviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be sold or purchased in order to obtain the most favorable
price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, shall be made by the Subadviser in
the manner the Subadviser considers to be the most equitable and consistent
with its fiduciary obligations to the Fund and to such other clients.
(iv) The Subadviser shall maintain all books and records with respect to
the Fund's portfolio transactions required by subparagraphs (b) (5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act
and shall render to the Fund's Board of Directors such periodic and special
reports as the Board may reasonably request.
(v) The Subadviser shall provide the Fund's Custodian on each business
day with information relating to all transactions concerning the Fund's
assets and shall provide the Manager with such information upon request of
the Manager.
(vi) The investment management services provided by the Subadviser
hereunder are not to be deemed exclusive, and the Subadviser shall be free
to render similar services to others.
(b) The Subadviser shall authorize and permit any of its officers who are
officers of the Fund to serve in the capacities in which they are elected.
Services to be furnished by the Subadviser under this Agreement may be
furnished through the medium of any of such officers or employees.
(c) The Subadviser shall keep the Fund's books and records required to be
maintained by the Subadviser pursuant to paragraph 1(a) hereof and shall
timely furnish to the Manager all information relating to the Subadviser's
services hereunder needed by the Manager to keep the other books and records
of the Fund required by Rule 31a-1 under the 1940 Act. The Subadviser agrees
that all records which it maintains for the Fund are the property of the Fund
and the Subadviser shall surrender promptly to the Fund any of such records
upon the Fund's request, provided however that the Subadviser may retain a
copy of such records. The Subadviser further agrees to preserve for the
periods prescribed by Rule 31a-2 of the Securities and Exchange Commission
(the Commission) under the 1940 Act any such records as are required to be
maintained by it pursuant to paragraph 1(a) hereof.
2. The Manager shall continue to have responsibility for all services to be
provided to the Fund pursuant to the Management Agreement and shall oversee
and review the Subadviser's performance of its duties under this Agreement.
3. The Manager shall pay the Subadviser, as compensation for the services
provided and the expenses assumed pursuant to this Subadvisory Agreement, a
fee at an annual rate of .75 of 1% of the Fund's average daily net assets.
4. In the event the expenses of the Fund for any fiscal year (including the
fees payable to the Manager but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) exceed the lowest applicable annual expense limitation established
and enforced pursuant to the statute or regulations of any jurisdiction in
which shares of the Fund are then qualified for offer and sale, the
compensation due the Subadviser shall be reduced by 60% of the amount of such
excess. Any such reduction in the fee payable to the Subadviser shall be made
monthly and shall be subject to readjustment during the year.
5. The Subadviser shall not be liable for any error of judgment or for any
loss suffered by the Fund or the Manager in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Subadviser's part in the
performance of its duties or from its reckless disregard of its obligations
and duties under this Agreement. The Fund shall indemnify the Subadviser and
hold it harmless from and against all damages, liabilities, costs and expenses
(including reasonable attorneys' fees and amounts reasonably paid in
settlement) incurred by the Subadviser in or by reason of any pending,
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threatened or completed action, suit, investigation or other proceeding
(including an action or suit by or in the right of the Fund or its security
holders) arising out of or otherwise based upon any action actually or
allegedly taken or omitted to be taken by the Subadviser in connection with
the performance of any of its duties or obligations under this Agreement or
otherwise as an investment adviser of the Fund. Determinations of whether and
the extent to which the Subadviser is entitled to indemnification hereunder
shall be made by reasonable and fair means, including (a) a final decision on
the merits by a court or other body before whom the action, suit or other
proceeding was brought that the Subadviser was or was not liable by reason of
willful misfeasance, bad faith, gross negligence, reckless disregard of its
duties or breach of its fiduciary duty or (b) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that
the Subadviser was or was not liable by reason of such misconduct by (i) the
vote of a majority of a quorum of the directors of the Fund who are neither
"interested persons" of the Fund (as defined in Section 2(a)(19) of the 1940
Act) nor parties to the action, suit or other proceeding or (ii) an
independent legal counsel in a written opinion.
If any person who is a director, officer or employee of the Subadviser is or
becomes a director, officer or employee of the Fund and acts as such in any
business of the Fund pursuant to this Agreement, then such director, officer
or employee of the Subadviser shall be deemed to be acting in such capacity
solely for the Fund, and not as a director, officer or employee of the
Subadviser or under the control or direction of the Subadviser, although paid
by the Subadviser.
6. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940
Act; provided, however, that this Agreement may be terminated by the Fund at
any time, without the payment of any penalty, by the Board of Directors of the
Fund or by vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Fund, or by the Manager or the Subadviser at any time,
without the payment of any penalty, on not more than 60 days' nor less than 30
days' written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the 1940 Act) or
upon the termination of the Management Agreement.
7. Nothing in this Agreement shall limit or restrict the right of any of the
Subadviser's partners, officers or employees who may also be a director,
officer or employee of the Fund to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of
any business, whether of a similar or a dissimilar nature, nor limit or
restrict the Subadviser's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association.
8. During the term of this Agreement, the Manager agrees to furnish to
Subadviser at its principal office all prospectuses, proxy statements, reports
to stockholders, sales literature or other material prepared for distribution
to stockholders of the Fund or the public, which refer to the Subadviser in
any way, prior to use thereof and not to use material if the Subadviser
reasonably objects in writing five business days (or such other time as may be
mutually agreed) after receipt thereof. Sales literature may be furnished to
the Subadviser hereunder by first-class or overnight mail, facsimile
transmission equipment or hand delivery.
9. During the term of this Agreement the Subadviser shall notify the Manager
of any change in the membership of the Subadviser's partnership within a
reasonable time after such change.
10. The Subadviser agrees that the Fund may, so long as this Agreement
remains in effect, use "Nicholas-Applegate" as part of its name. The manager
hereby acknowledges that the name "Nicholas-Applegate" is a property right of
the Subadviser. The Subadviser, Arthur E. Nicholas or Fred C. Applegate may,
upon termination of this Agreement, require the Fund to refrain from using the
name "Nicholas-Applegate" in any form or combination in its name or in its
business, and the Fund shall, as soon as practicable following its receipt of
any such request from the Subadviser, Arthur E. Nicholas or Fred C. Applegate,
so refrain from using such name.
11. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.
12. This Agreement shall be governed by the laws of the State of New York.
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IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
Prudential Investments Fund
Management, LLC
By: _________________________________
ROBERT F. GUNIA
EXECUTIVE VICE PRESIDENT
Nicholas-Applegate Capital
Management
By: _________________________________
ARTHUR E. NICHOLAS
CHAIRMAN
Nicholas-Applegate Fund, Inc.
By: _________________________________
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