SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
INVESTMENT COMPANIES
Investment Company Act file number 811-21724
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Lawrence G. Altadonna - 1345 Avenue of the Americas, New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-739-3371
Date of fiscal year end: February 28, 2006
Date of reporting period: August 31, 2005
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e -1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
ITEM 1. REPORT TO SHAREHOLDERS
Nicholas-Applegate International & Premium Strategy Fund
S e m i - A n n u a l R e p o r t
A u g u s t 31 , 2 0 0 5
Contents | ||||
Letter to Shareholders | 1 | |||
Performance & Statistics | 2 | |||
Schedule of Investments | 3-9 | |||
Statement of Assets and Liabilities | 10 | |||
Statement of Operations | 11 | |||
Statement of Changes in Net Assets | 12 | |||
Notes to Financial Statements | 13-17 | |||
Financial Highlights | 18 |
Nicholas-Applegate International & Premium Strategy Fund Letter to Shareholders
October 18, 2005
Dear Shareholder:
We are pleased to provide you with the initial financial report of the Nicholas-Applegate International & Premium Strategy Fund (the “Fund”) for the period April 29, 2005 (commencement of operation) through August 31, 2005.
Please refer to the following page for specific Fund information. If you have any questions regarding the information provided, we encourage you to contact your financial advisor or call the Fund’s transfer agent at (800) 331-1710. Furthermore, note that a wide range of information and resources can be accessed through our Web site, www.allianzinvestors.com.
Together with Allianz Global Investors Fund Management LLC, the Fund’s investment manager and Nicholas Applegate Capital Management LLC and PEA Capital LLC, the Fund’s sub-advisers, we thank you for investing with us.
We remain dedicated to serving your investment needs.
Sincerely,
Robert E. Connor Chairman | Brian S. Shlissel President & Chief Executive Officer |
8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 1
August 31, 2005 (unaudited)
Symbol: | Primary Investments: | Inception Date: | ||
NAI | Equity securities of companies | April 29, 2005 | ||
located outside the United | ||||
Objective: | States, writing (selling) call | Net Assets: | ||
To seek total return comprised | options on equity indexes; may | $239.6 million | ||
of current income, current | also purchase put options on | |||
gains and long-term capital | such indexes in an attempt to | Portfolio Managers: | ||
appreciation. | generate current gains from | Stacey R. Nutt | ||
option premiums. | David Vaughn | |||
Greg Tournant |
Total Return(1) : | Market Price | Net Asset Value (“NAV”) | ||
Commencement of Operations (4/29/05) to 8/31/05 | (2.94 | )% | 6.77 | % |
Market Price/NAV Performance: Commencement of Operations (4/29/05) to 8/31/05 | Market Price/NAV: | ||
Market Price | $23.74 | ||
NAV | $24.95 | ||
Discount to NAV | (4.85 | )% | |
Market Price Yield(2) | 9.06 | % | |
(as a percentage of total investments before options written) |
(1) Past performance is no guarantee of future results. Total return is calculated by subtracting the value of an investment in the Fund at the begining of the specified period from the value at the end of the period and dividing the remainder by the value of the investment at the begining of the period and expressing the result as a percentage. The calculation assumes that all income dividends and capital gain distributions have been reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized.
An investment in the Fund involves risk, including the loss of principal. Total return, price, yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is total assets less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.
(2) Market Price Yield is determined by dividing the annualized current quarterly per share dividend to shareholders by the market price per common share at August 31, 2005.
2 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05
Nicholas-Applegate International & Premium Strategy Fund | Schedule of |
August 31, 2005 (unaudited) | Investments |
Shares | |||||
COMMON STOCK—100.7% | |||||
Australia—0.6% | |||||
Metals & Mining—0.6% | |||||
96,600 | BHP Billiton Ltd. | $ | 1,507,959 | ||
Austria—3.0% | |||||
Building/Construction—0.1% | |||||
7,100 | Wienerberger AG | 292,614 | |||
Metals & Mining—0.4% | |||||
13,200 | Voestalpine AG | 1,081,892 | |||
Oil & Gas—2.5% | |||||
108,360 | OMV AG | 5,909,243 | |||
7,283,749 | |||||
Belgium—3.8% | |||||
Banking—3.5% | |||||
152,700 | Fortis Group (Unit) | 4,368,087 | |||
48,200 | KBC Groep NV | 4,004,318 | |||
8,372,405 | |||||
Transportation—0.3% | |||||
19,547 | Compagnie Maritime Belge S.A. | 629,201 | |||
9,001,606 | |||||
Finland—1.7% | |||||
Metals & Mining—0.7% | |||||
77,600 | Rautaruukki Oyj | 1,564,451 | |||
Telecommunications—1.0% | |||||
155,300 | Nokia Oyj | 2,448,693 | |||
4,013,144 | |||||
France—12.5% | |||||
Automotive—2.7% | |||||
22,500 | Peugeot S.A. | 1,403,429 | |||
56,200 | Renault S.A. | 4,994,350 | |||
6,397,779 | |||||
Automotive Products—0.2% | |||||
6,400 | Compagnie Generale des Etablissements Michelin | 390,567 | |||
Banking—1.3% | |||||
30,000 | Societe Generale (a) | 3,251,762 | |||
Building/Construction—0.7% | |||||
6,300 | Eiffage | 596,407 | |||
12,900 | Vinci S.A. | 1,147,225 | |||
1,743,632 | |||||
Computer Software—0.1% | |||||
300,400 | Bull S.A. (b) | 237,811 | |||
Food & Beverage—2.0% | |||||
27,867 | Pernod-Ricard S.A. | 4,842,345 | |||
Metal Fabricate/Hardware—1.2% | |||||
6,600 | Vallourec S.A. | 2,772,351 | |||
| 8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 3
Nicholas-Applegate International & Premium Strategy Fund | Schedule of |
August 31, 2005 (unaudited) | Investments |
Shares | Value | ||||
France—(continued) | |||||
Office Equipment—0.3% | |||||
9,000 | Neopost S.A. | $ | 833,923 | ||
Oil & Gas—2.8% | |||||
25,339 | Total S.A. (a) | 6,681,588 | |||
Pharmaceuticals—0.9% | |||||
26,200 | Sanofi-Aventis | 2,242,919 | |||
Telecommunications—0.3% | |||||
21,000 | France Telecom S.A. | 634,711 | |||
30,029,388 | |||||
Germany—5.5% | |||||
Automotive Products—0.4% | |||||
10,500 | Continental AG | 834,349 | |||
Banking—0.8% | |||||
12,900 | Deutsche Bank AG | 1,122,535 | |||
17,000 | Hypo Real Estate Holding AG | 837,315 | |||
1,959,850 | |||||
Insurance—1.1% | |||||
72,100 | Hannover Rueckversicherung AG | 2,602,927 | |||
Machinery—0.2% | |||||
9,700 | Rheinmetall AG | 579,060 | |||
Metals & Mining—0.9% | |||||
59,600 | Salzgitter AG | 2,226,032 | |||
Pharmaceuticals—1.2% | |||||
32,900 | Celesio AG | 2,877,226 | |||
Telecommunications—0.3% | |||||
37,500 | Deutsche Telekom AG | 715,787 | |||
Utilities—0.6% | |||||
22,000 | RWE AG | 1,477,387 | |||
13,272,618 | |||||
Greece—1.2% | |||||
Banking—1.2% | |||||
75,400 | National Bank of Greece S.A. | 2,816,926 | |||
Hong Kong—0.7% | |||||
Real Estate—0.3% | |||||
39,000 | Hang Lung Properties Ltd. | 61,097 | |||
237,000 | Hopewell Holdings Ltd. | 610,875 | |||
671,972 | |||||
Transportation—0.4% | |||||
249,000 | Orient Overseas International Ltd. | 996,565 | |||
1,668,537 | |||||
Ireland—0.3% | |||||
Food & Beverage—0.3% | |||||
202,000 | Fyffes plc | 632,781 | |||
4 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05 |
Nicholas-Applegate International & Premium Strategy Fund | Schedule of |
August 31, 2005 (unaudited) | Investments |
Shares | |||||
Italy—3.5% | |||||
Banking—3.2% | |||||
435,900 | Banca Intesa SpA | $ | 2,106,049 | ||
150,000 | Banche Popolari Unite S.c.r.l. | 3,063,284 | |||
413,000 | Capitalia SpA | 2,326,605 | |||
7,495,938 | |||||
Oil & Gas—0.3% | |||||
32,400 | ERG SpA. | 749,286 | |||
8,245,224 | |||||
Japan—27.6% | |||||
Automotive—4.3% | |||||
116,900 | Honda Motor Co. Ltd. (a) | 6,283,103 | |||
491,000 | Mazda Motor Corp. | 1,943,816 | |||
52,500 | Toyota Motor Corp. (a) | 2,146,935 | |||
10,373,854 | |||||
Automotive Products—1.4% | |||||
11,000 | Bridgestone Corp. | 217,900 | |||
206,000 | NGK Spark Plug Co. Ltd. | 2,865,095 | |||
79,000 | Toyo Tire & Rubber Co. Ltd. | 359,975 | |||
3,442,970 | |||||
Banking—0.3% | |||||
54,000 | Mitsui Trust Holdings, Inc. | 608,153 | |||
Electronics—2.9% | |||||
27,000 | Horiba Ltd. | 705,277 | |||
99,100 | Ibiden Co. Ltd. | 3,405,144 | |||
154,000 | Nippon Electric Glass Co. Ltd. | 2,763,544 | |||
6,873,965 | |||||
Financial Services—0.2% | |||||
5,500 | Sanyo Shinpan Finance Co. Ltd. | 389,919 | |||
Leisure—1.2% | |||||
159,000 | Yamaha Motor Co. Ltd. | 2,998,227 | |||
Metals & Mining—6.4% | |||||
190,000 | Daido Steel Co. Ltd. | 960,834 | |||
150,000 | Hitachi Metals Ltd. | 1,169,593 | |||
123,700 | JFE Holdings, Inc. | 3,604,852 | |||
1,416,000 | Nippon Steel Corp. (a) | 4,157,534 | |||
245,000 | Nisshin Steel Co. Ltd. | 710,913 | |||
1,996,000 | Sumitomo Metal Industries Ltd. | 4,614,586 | |||
15,218,312 | |||||
Office Equipment—1.9% | |||||
88,200 | Canon, Inc. (a) | 4,459,031 | |||
Pharmaceuticals—0.4% | |||||
19,800 | Takeda Pharmaceutical Co. Ltd. | 1,072,281 | |||
Semi-Conductors—1.5% | |||||
64,400 | Tokyo Electron Ltd. | 3,660,585 | |||
| 8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 5
Nicholas-Applegate International & Premium Strategy Fund | Schedule of |
August 31, 2005 (unaudited) | Investments |
Shares | |||||
Japan—(continued) | |||||
Tobacco—2.3% | |||||
387 | Japan Tobacco, Inc. | $ | 5,605,040 | ||
Transportation—2.9% | |||||
259,000 | Kawasaki Kisen Kaisha Ltd. | 1,708,345 | |||
371,000 | Mitsui OSK Lines Ltd. | 2,734,984 | |||
385,000 | Nippon Yusen KK | 2,439,299 | |||
6,882,628 | |||||
Wholesale—1.9% | |||||
63,000 | Itochu Corp. | 379,369 | |||
155,000 | Mitsubishi Corp. | 2,562,156 | |||
147,000 | Mitsui & Co. Ltd. | 1,553,934 | |||
4,495,459 | |||||
66,080,424 | |||||
Netherlands—1.4% | |||||
Insurance—0.3% | |||||
20,600 | ING Groep NV | 600,964 | |||
Oil & Gas—1.1% | |||||
81,000 | Royal Dutch Shell plc, Class B | 2,744,630 | |||
3,345,594 | |||||
Singapore—0.9% | |||||
Telecommunications—0.4% | |||||
741,000 | Starhub Ltd. | 869,674 | |||
Transportation—0.5% | |||||
884,000 | Cosco Corp. Singapore Ltd. | 1,242,535 | |||
2,112,209 | |||||
Spain—2.2% | |||||
Banking—1.2% | |||||
165,600 | Banco Bilbao Vizcaya Argentaria S.A. | 2,761,800 | |||
14,700 | Banco Santander Central Hispano S.A. | 180,438 | |||
2,942,238 | |||||
Oil & Gas—0.3% | |||||
23,700 | Repsol YPF S.A. | 702,342 | |||
Telecommunications—0.7% | |||||
97,360 | Telefonica S.A. | 1,614,762 | |||
5,259,342 | |||||
Sweden—7.7% | |||||
Automotive—2.2% | |||||
123,700 | Volvo AB, Class B | 5,308,796 | |||
Banking—0.7% | |||||
88,200 | Skandinaviska Enskilda Banken AB, Class B | 1,607,539 | |||
Building/Construction—0.4% | |||||
58,500 | NCC AB, Class B | 1,025,049 | |||
Healthcare & Hospitals—0.2% | |||||
11,400 | Elekta AB, Class B (b) | 515,442 | |||
6 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05 |
Nicholas-Applegate International & Premium Strategy Fund | Schedule of |
August 31, 2005 (unaudited) | Investments |
Shares | |||||
Sweden—(continued) | |||||
Metals & Mining—1.1% | |||||
96,600 | SSAB Svenskt Stal AB, Ser. A | $ | 2,662,247 | ||
Oil & Gas—0.9% | |||||
173,000 | Lundin Petroleum AB (b) | 2,134,994 | |||
Telecommunications—2.2% | |||||
422,600 | Telefonaktiebolaget LM Ericsson, Class B | 1,474,084 | |||
749,800 | TeliaSonera AB | 3,739,852 | |||
5,213,936 | |||||
18,468,003 | |||||
Switzerland—7.9% | |||||
Banking—4.7% | |||||
138,000 | Credit Suisse Group | 6,012,765 | |||
65,700 | UBS AG | 5,386,901 | |||
11,399,666 | |||||
Chemicals—0.9% | |||||
20,400 | Syngenta AG (b) | 2,173,316 | |||
Food & Beverage—0.2% | |||||
1,806 | Nestle S.A. | 507,530 | |||
Insurance—0.7% | |||||
10,600 | Swiss Reinsurance Co. | 684,521 | |||
5,814 | Zurich Financial Services AG (b) | 1,031,361 | |||
1,715,882 | |||||
Manufacturing—0.4% | |||||
1,900 | Sulzer AG | 903,593 | |||
Pharmaceuticals—1.0% | |||||
47,600 | Novartis AG | 2,313,451 | |||
19,013,438 | |||||
United Kingdom—20.2% | |||||
Aerospace—0.2% | |||||
83,400 | Rolls-Royce Group plc (b) | 508,556 | |||
Banking—2.1% | |||||
44,300 | Barclays plc | 442,992 | |||
133,200 | HBOS plc | 2,093,325 | |||
84,000 | Royal Bank of Scotland Group plc | 2,460,920 | |||
4,997,237 | |||||
Building/Construction—3.3% | |||||
240,400 | Barratt Developments plc | 3,064,587 | |||
171,500 | Persimmon plc | 2,568,800 | |||
15,400 | Wilson Bowden plc (b) | 317,576 | |||
274,500 | Wimpey George plc (b) | 2,033,979 | |||
7,984,942 | |||||
Food & Beverage—0.2% | |||||
21,300 | SABMiller plc | 376,289 | |||
| 8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 7
Nicholas-Applegate International & Premium Strategy Fund | Schedule of |
August 31, 2005 (unaudited) | Investments |
Shares | |||||
United Kingdom—(continued) | |||||
Insurance—1.4% | |||||
20,200 | Aviva plc | $ | 223,683 | ||
1,221,800 | Old Mutual plc (b) | 3,117,808 | |||
3,341,491 | |||||
Metals & Mining—3.1% | |||||
314,500 | BHP Billiton plc (a) (b) | 4,693,611 | |||
78,600 | Rio Tinto plc | 2,790,843 | |||
7,484,454 | |||||
Oil & Gas—1.2% | |||||
252,400 | BP plc | 2,883,035 | |||
Pharmaceuticals—2.7% | |||||
48,100 | AstraZeneca plc | 2,207,151 | |||
173,200 | GlaxoSmithKline plc | 4,195,417 | |||
6,402,568 | |||||
Retail—1.8% | |||||
293,300 | Enterprise Inns plc | 4,373,466 | |||
Telecommunications—3.7% | |||||
3,250,500 | Vodafone Group plc | 8,893,372 | |||
Tobacco—0.2% | |||||
20,000 | Imperial Tobacco Group plc | 555,930 | |||
Utilities—0.1% | |||||
18,400 | Scottish & Southern Energy plc | 327,633 | |||
Wholesale—0.2% | |||||
9,200 | Inchcape plc | 344,166 | |||
48,473,139 | |||||
Total Common Stock (cost—$233,652,228) | 241,224,081 | ||||
REPURCHASE AGREEMENTS—1.6% | |||||
$3,909 | State Street Bank & Trust Co., | ||||
dated 8/31/05, 3.15%, due 9/1/05, proceeds | |||||
$3,909,342; collateralized by Fannie Mae, 4.25%, | |||||
5/15/09 and Federal Home Loan Bank, 5.80%, | |||||
9/2/08, valued at $3,989,845 with accrued | |||||
interest (cost—$3,909,000) | 3,909,000 | ||||
Total Investments before options written | |||||
(cost—$237,561,228)—102.3% | 245,133,081 | ||||
8 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05 |
Nicholas-Applegate International & Premium Strategy Fund | Schedule of |
August 31, 2005 (unaudited) | Investments |
Contracts | Value | |||||
OPTIONS WRITTEN (b)—(1.2)% | ||||||
Call Options—(1.2)% | ||||||
CAC 40 Index, Over the Counter, | ||||||
1,860 | strike price $4,442, expires 10/28/05 | $ | (150,000 | ) | ||
DAX Index, Over the Counter, | ||||||
1,756 | strike price $4,757, expires 9/09/05 | (209,974 | ) | |||
869 | strike price $4,846, expires 9/09/05 | (40,682 | ) | |||
855 | strike price $4,899, expires 9/16/05 | (29,317 | ) | |||
853 | strike price $4,911, expires 9/16/05 | (24,927 | ) | |||
859 | strike price $4,914, expires 9/16/05 | (24,125 | ) | |||
Dow Jones € STOXX Index, | ||||||
1,261 | strike price $3,294, expires 10/21/05 | (85,999 | ) | |||
2,518 | strike price $3,299, expires 10/28/05 | (149,381 | ) | |||
1,256 | strike price $3,330, expires 9/16/05 | (18,896 | ) | |||
1,228 | strike price $3,340, expires 9/30/05 | (31,459 | ) | |||
1,239 | strike price $3,361, expires 9/23/05 | (16,195 | ) | |||
972 | strike price $3,382, expires 10/07/05 | (52,264 | ) | |||
FTSE Index, Over the Counter, | ||||||
554 | strike price $5,229, expires 9/09/05 | (81,801 | ) | |||
539 | strike price $5,300, expires 9/09/05 | (29,448 | ) | |||
NIKKEI Index, Over the Counter, | ||||||
47,021 | strike price $11,869, expires 9/16/05 | (239,647 | ) | |||
95,879 | strike price $11,883, expires 9/09/05 | (470,367 | ) | |||
47,445 | strike price $11,908, expires 9/16/05 | (226,591 | ) | |||
95,431 | strike price $11,939, expires 9/16/05 | (431,963 | ) | |||
47,525 | strike price $11,958, expires 9/30/05 | (208,105 | ) | |||
46,923 | strike price $12,105, expires 9/22/05 | (157,192 | ) | |||
89,621 | strike price $12,616, expires 10/21/05 | (139,002 | ) | |||
OMX Stockholm 30 Index, Over the Counter, | ||||||
45,015 | strike price $855, expires 10/21/05 | (73,501 | ) | |||
32,364 | strike price $859, expires 9/09/05 | (19,894 | ) | |||
Swiss Market Index, Over the Counter, | ||||||
1,001 | strike price $6,496, expires 9/09/05 | (42,574 | ) | |||
1,001 | strike price $6,534, expires 9/09/05 | (26,940 | ) | |||
Total Options Written (premiums received—$2,033,728) | (2,980,244 | ) | ||||
Total Investments, net of options written | ||||||
(cost—$235,527,500)—101.1% | 242,152,837 | |||||
Liabilities in excess of other assets—(1.1)% | (2,570,464 | ) | ||||
Net Assets—100.0% | $ | 239,582,373 | ||||
Notes to Schedule of Investments:
(a) | All or partial amount segregated as collateral for call options written. |
(b) | Non-income producing. |
Unit — More than one class of securities traded together.
See accompanying Notes to Financial Statements | 8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 9
Nicholas-Applegate International & Premium Strategy Fund | Statement of Assets |
August 31, 2005 (unaudited) | and Liabilities |
Assets: | |||
Investments, at value (cost—$237,561,228) | $ | 245,133,081 | |
Cash (including foreign currency of $63,358 with a cost of $63,324) | 63,977 | ||
Receivable for premiums on options written | 634,148 | ||
Dividend and Interest receivable | 340,472 | ||
Tax Reclaim receivable | 94,274 | ||
Prepaid expenses | 14,862 | ||
Total Assets | 246,280,814 | ||
Liabilities: | |||
Options written, at value (premiums received—$2,033,728) | 2,980,244 | ||
Dividends payable to shareholders | 1,981,942 | ||
Payable for premiums on options written | 1,391,784 | ||
Investment management fees payable | 200,970 | ||
Accrued expenses | 143,501 | ||
Total Liabilities | 6,698,441 | ||
Net Assets | $ | 239,582,373 | |
Composition of Net Assets | |||
Common Stock: | |||
Par value ($0.00001 per share, applicable to 9,604,189 shares issued and outstanding) | $ | 96 | |
Paid-in-capital in excess of par | 228,819,916 | ||
Net realized gain on investments | 4,138,865 | ||
Net unrealized appreciation of investments, options written and foreign currency transactions | 6,623,496 | ||
Net Assets | $ | 239,582,373 | |
Net Asset Value Per Share | $24.95 | ||
10 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05 | See accompanying Notes to Financial Statements
Nicholas-Applegate International & Premium Strategy Fund | Statement of |
For the period April 29, 2005* through August 31, 2005 (unaudited) | Operations |
Investment Income: | ||||
Dividends (net of foreign withholding taxes of $245,404) | $ | 2,187,483 | ||
Interest | 157,470 | |||
Total Investment Income | 2,344,953 | |||
Expenses: | ||||
Investment management fees | 771,438 | |||
Custodian and accounting agent fees | 84,175 | |||
Audit and tax services | 25,957 | |||
Reports and notices to shareholders | 19,425 | |||
Transfer agent fees | 11,237 | |||
New York Stock Exchange listing fees | 6,827 | |||
Trustees’ fees and expenses | 6,265 | |||
Legal fees | 3,141 | |||
Investor relations | 1,883 | |||
Insurance expense | 337 | |||
Miscellaneous | 952 | |||
Total expenses | 931,637 | |||
Net Investment Income | 1,413,316 | |||
Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 15,827,727 | |||
Options written | (7,642,472 | ) | ||
Foreign currency transactions | (297,454 | ) | ||
Net unrealized appreciation (depreciation) of: | ||||
Investments | 7,571,853 | |||
Options written | (946,516 | ) | ||
Foreign currency transactions | (1,841 | ) | ||
Net realized and unrealized gain on investments, options written | ||||
and foreign currency transactions | 14,511,297 | |||
Net Increase in Net Assets Resulting from Investment Operations | $ | 15,924,613 | ||
* Commencement of operations
See accompanying Notes to Financial Statements | 8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 11
Nicholas-Applegate International & Premium Strategy Fund | Statement of |
Changes in Net | |
For the period April 29, 2005* through August 31, 2005 (unaudited) | Assets |
Investment Operations: | ||||
Net investment income | $ | 1,413,316 | ||
Net realized gain on investments, options written and foreign currency transactions | 7,887,801 | |||
Net unrealized appreciation of investments, options written and foreign currency transactions | 6,623,496 | |||
Net increase in net assets resulting from investment operations | 15,924,613 | |||
Dividends and Distributions to Shareholders from: | ||||
Net investment income | (1,413,316 | ) | ||
Net realized gains | (3,748,936 | ) | ||
Total dividends and distributions to shareholders | (5,162,252 | ) | ||
Capital Share Transactions: | ||||
Net proceeds from the sale of common stock | 229,200,000 | |||
Offering costs charged to paid-in capital in excess of par | (480,000 | ) | ||
Net increase from capital transactions | 228,720,000 | |||
Total increase in net assets | 239,482,361 | |||
Net Assets: | ||||
Beginning of period | 100,012 | |||
End of period | $ | 239,582,373 | ||
Shares Issued: | 9,600,000 | |||
* Commencement of operations
12 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05 | See accompanying Notes to Financial Statements
Nicholas-Applegate International & Premium Strategy Fund | Notes to Financial |
August 31, 2005 (unaudited) | Statements |
1. Organization and Significant Accounting Policies
Nicholas-Applegate International & Premium Strategy Fund (the “Fund”) was organized as a Massachusetts business trust on February 24, 2005. Prior to commencing operations on April 29, 2005, the Fund had no operations other than matters relating to its organization and registration as a diversified, closed-end management investment company registered under the Investment Company Act of 1940 as amended, and the sale and issuance of 4,189 shares of beneficial interest at an aggregate price of $100,012 to Allianz Global Investors of America, L.P. (“Allianz Global”). Allianz Global Investors Fund Management LLC (the “Investment Manager”), is an indirect wholly-owned subsidiary of Allianz Global. Allianz Global is an indirect, majority-owned subsidiary of Allianz AG. The Fund has unlimited amount of $0.00001 par value common stock authorized.
The Fund issued 9,000,000 shares of common stock in its initial public offering. An additional 600,000 shares were issued in connection with the underwriter’s over-allotment option. These shares were all issued as $25.00 per share before an underwriting discount of $1.125 per share. Offering costs of $480,000 (representing $0.05 per share) were offset against the proceeds of the offering and over-allotment option and have been charged to paid-in capital in excess of par.
The Fund’s investment objective is to seek total return comprised of current income, current gains and long-term capital appreciation. The Fund will pursue its investment objectives by investing in a diversified portfolio of equity securities located outside the United States. The Fund will also employ a strategy of writing (selling) call options on equity indexes and may also purchase put options on such indexes in an attempt to generate current gains from options premiums.
The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.
In the normal course of business, the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet been asserted. However, the Fund expects the risk of any loss to be remote.
The following is a summary of significant accounting policies followed by the Fund:
(a) Valuation of Investments
Portfolio securities and other financial instruments for which such securities market quotations are readily available are stated at market value. Portfolio securities and other financial instruments for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to guidelines established by the Board of Trustees. The Fund’s investments are valued daily by an independent pricing service, dealer quotations (such in the case for the Fund’s investments in over-the-counter written call options), or are valued at the last sale price on the exchange that is the primary market for such securities, or the last quoted bid price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales. Independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Short-term investments maturing in 60 days or less are valued at amortized cost, if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days. The prices used by the Fund to value securities may differ from the value that would be realized if the securities were sold and the differences could be material to the financial statements. The Fund’s net asset value is determined daily at the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange (“NYSE”).
The prices of certain portfolio securities or other financial instruments may be determined at a time prior to the close of regular trading on the NYSE. When fair valuing securities, the Fund may, among other things, consider significant events (which may be considered to include changes in the value of U.S. securities or securities indices) that occur after the close of the relevant market and before the time a Fund’s net asset value is calculated. With respect to certain foreign securities, the Fund may fair value securities using modeling tools provided by third-party vendors. The Fund has retained a statistical research service to assist in determining the fair value of foreign securities. This service utilizes statistics and programs based on historical performance of markets and other economic data to assist in making fair value estimates. Fair value estimates used by the Fund for foreign securities may differ from the value realized from the sale of those securities and the difference could be material to the financial statements.
| 8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 13
Nicholas-Applegate International & Premium Strategy Fund | Notes to Financial |
August 31, 2005 (unaudited) | Statements |
1. Organization and Significant Accounting Policies (continued)
(b) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Realized gains and losses on investments are determined on the identified cost basis. Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date except for certain dividends from foreign securities which are recorded as soon after the ex-dividend date as the Fund, using reasonable diligence, becomes aware of such dividends.
(c) Federal Income Taxes
The Fund intends to distribute all of its taxable income and to comply with the other requirements of the U.S. Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, no provision for U.S. federal income taxes is required. In addition, by distributing substantially all of its ordinary income and long-term capital gains, if any, during each calendar year the Fund intends not to be subject to U.S. federal excise tax.
(d) Dividends and Distributions
The Fund declares quarterly dividends and distributions from net investment income and from gains from index option premiums and the sale of portfolio securities. The Fund records dividends and distributions to its shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These “book-tax” differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal income tax treatment; temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes, they are reported as dividends and/or distributions of paid-in capital in excess of par.
(e) Foreign Currency Translation
The Fund’s accounting records are maintained in U.S. dollars as follows: (1) the foreign currency market value of investments and other assets and liabilities denominated in foreign currency are translated at the prevailing exchange rate at the end of the period; and (2) purchases and sales, income and expenses are translated at the prevailing exchange rate on the respective dates of such transactions. The resulting net foreign currency gain or loss is included in the Statement of Operations.
The Fund does not generally isolate that portion of the results of operations arising as a result of changes in the foreign currency exchange rates from the fluctuations arising from changes in the market prices of securities. Accordingly, such foreign currency gain (loss) is included in net realized and unrealized gain (loss) on investments. However, the Fund does isolate the effect of fluctuations in foreign currency exchange rates when determining the gain or loss upon the sale or maturity of foreign currency denominated debt obligations pursuant to U.S. federal income tax regulations; such amount is categorized as foreign currency gain or loss for both financial reporting and income tax reporting purposes.
(f) Option Transactions
The Fund employs a strategy of writing (selling) call options on equity indexes in an attempt to generate current gains from option premiums. When an option is written, the premium received is recorded as an asset with an equal liability, which is subsequently adjusted to the current market value of the option. Premiums received from writing options, which expire unexercised, are recorded on the expiration date as a realized gain. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transactions, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether there has been a realized gain or loss. These liabilities are reflected as options written on the Statement of Assets and Liabilities.
The Fund, as writer of a call option, may have no control over whether the underlying securities may be sold (called). As a result, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written call option.
The Fund may also purchase put options on equity indexes. The risk associated with purchasing an option is that the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of premium and change in market value should the counterparty not perform under the contract. Purchased options are accounted for in the same
14 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05 |
Nicholas-Applegate International & Premium Strategy Fund | Notes to Financial |
August 31, 2005 (unaudited) | Statements |
1. Organization and Significant Accounting Policies (continued)
manner as portfolio securities. The proceeds from securities sold through the exercise of put options is decreased by the premiums paid.
(g) Repurchase Agreements
The Fund enters into transactions with its custodian bank or securities brokerage firms whereby it purchases securities under agreements to resell at an agreed upon price and date (“repurchase agreements”). Such agreements are carried at the contract amount in the financial statements. Collateral pledged (the securities received), which consists primarily of U.S. government obligations and asset-backed securities, are held by the custodian bank until maturity of the repurchase agreement. Provisions of the repurchase agreements and the procedures adopted by the Fund require that the market value of the collateral, including accrued interest thereon, is sufficient in the event of default by the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an insolvency proceeding, realization of the collateral by the Fund may be delayed or limited.
(h) Concentration of Risk
The Fund may have elements of risk, not typically associated with investments in the U.S., due to concentrated investments in specific industries or investments in foreign issuers located in a specific country or region. Such concentrations may subject the Fund to additional risks resulting from future political or economic conditions in such country or region and the possible imposition of adverse governmental laws of currency exchange restrictions affecting such country or region, which could cause the securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies.
2. Investment Manager/Sub-Advisers
The Fund has entered into an Investment Management Agreement (the “Agreement”) with the Investment Manager. Subject to the supervision of the Fund’s Board of Trustees, the Investment Manager is responsible for managing, either directly or through others selected by it, the Fund’s investment activities, business affairs and administrative matters. Pursuant to the Agreement, the Investment Manager receives an annual fee, payable monthly, at an annual rate of 1.00% of the Fund’s average daily total managed assets. Total managed assets refer to the total assets of the Fund (including assets attributable to any preferred shares other forms of leverage that maybe outstanding) minus accrued liabilities (other than liabilities representing leverage). The Investment Manager has retained its affiliates, Nicholas-Applegate Capital Management LLC (“NACM”) and PEA Capital LLC (“PEA”) (the “Sub-Advisers”), to manage the Fund’s international equity portfolio and index option strategy, respectively. Subject to the supervision of the Investment Manager, the Sub-Advisers make all the Fund’s investment decisions in connection with their respective components of the Fund’s investments. For their services, pursuant to Sub-Advisory agreements, the Investment Manager and not the Fund pays the Sub-Advisers a monthly fee.
3. Investment in Securities
For the period April 29, 2005 (commencement of operations) through August 31, 2005, purchases and sales of investments, other than short-term securities and U.S. government obligations, were $414,753,319 and $196,975,841 respectively.
(a) Transactions in options written for the period April 29, 2005 (commencement of operations) through August 31, 2005 were:
Options outstanding, April 29, 2005 | — | $ | — | ||||
Options written | 1,586,381 | 5,975,226 | |||||
Options terminated in closing purchase transactions | (917,421 | ) | (3,420,738 | ) | |||
Options expired | (103,115 | ) | (520,760 | ) | |||
Options outstanding, August 31, 2005 | 565,845 | $ | 2,033,728 | ||||
4. Income Tax Information
The cost basis of portfolio securities for federal income tax purposes is $237,561,228. Aggregated gross unrealized appreciation for securities in which there is an excess value over tax cost is $9,834,787; aggregate gross unrealized depreciation for securities in which there is an excess of tax cost over value is $2,262,934; net unrealized appreciation for federal income tax purposes is $7,571,853.
| 8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 15
Nicholas-Applegate International & Premium Strategy Fund | Notes to Financial |
August 31, 2005 (unaudited) | Statements |
5. Legal Proceedings
On September 13, 2004, the Securities and Exchange Commission (the “Commission”) announced that the Investment Manager and certain of its affiliates (together with the Investment Manager, the “Affiliates”) had agreed to a settlement of charges that they and certain of their officers had, among other things, violated various antifraud provisions of the federal securities laws in connection with an alleged market-timing arrangement involving trading of shares of certain open-end investment companies (‘‘open-end funds’’) advised or distributed by these certain affiliates. In their settlement with the Commission, the Affiliates consented to the entry of an order by the Commission and, without admitting or denying the findings contained in the order, agreed to implement certain compliance and governance changes and consented to cease-and-desist orders and censures. In addition, the Affiliates agreed to pay civil money penalties in the aggregate amount of $40 million and to pay disgorgement in the amount of $10 million, for an aggregate payment of $50 million. In connection with the settlement, the Affiliates have been dismissed from the related complaint the Commission filed on May 6, 2004 in the U.S. District Court in the Southern District of New York. Neither the complaint nor the order alleges any inappropriate activity took place with respect to the Fund.
In a related action on June 1, 2004, the Attorney General of the State of New Jersey (‘‘NJAG’’) announced that it had entered into a settlement agreement with Allianz Global and the Affiliates, in connection with a complaint filed by the NJAG on February 17, 2004. In the settlement, Allianz Global and other named affiliates neither admitted nor denied the allegations or conclusions of law, but did agree to pay New Jersey a civil fine of $15 million and $3 million for investigative costs and further potential enforcement initiatives against unrelated parties. They also undertook to implement certain governance changes. The complaint relating to the settlement contained allegations arising out of the same matters that were the subject of the Commission order regarding market-timing described above and does not allege any inappropriate activity took place with respect to the Fund.
On September 15, 2004, the Commission announced that the Affiliates had agreed to settle an enforcement action in connection with charges that they violated various antifraud and other provisions of federal securities laws as a result of, among other things, their failure to disclose to the board of trustees and shareholders of various open-end funds advised or distributed by the Affiliates material facts and conflicts of interest that arose from their use of brokerage commissions on portfolio transactions to pay for so-called ‘‘shelf space’’ arrangements with certain broker-dealers. In their settlement with the Commission, the Affiliates consented to the entry of an order by the Commission without admitting or denying the findings contained in the order. In connection with the settlement, the Affiliates agreed to undertake certain compliance and disclosure reforms and consented to cease-and-desist orders and censures. In addition, the Affiliates agreed to pay a civil money penalty of $5 million and to pay disgorgement of approximately $6.6 million based upon the aggregate amount of brokerage commissions alleged to have been paid by such open-end funds in connection with these shelf-space arrangements (and related interest). In a related action, the California Attorney General announced on September 15, 2004 that it had entered into an agreement with an affiliate of the Investment Manager in resolution of an investigation into matters that are similar to those discussed in the Commission order. The settlement agreement resolves matters described in a complaint filed contemporaneously by the California Attorney General in the Superior Court of the State of California alleging, among other things, that this affiliate violated certain antifraud provisions of California law by failing to disclose matters related to the shelf-space arrangements described above. In the settlement agreement, the affiliate did not admit to any liability but agreed to pay $5 million in civil penalties and $4 million in recognition of the California Attorney General’s fees and costs associated with the investigation and related matters. Neither the Commission order nor the California Attorney General’s complaint alleges any inappropriate activity took place with respect to the Fund.
On April 11, 2005, the Attorney General of the State of West Virginia filed a complaint in the Circuit Court of Marshall County, West Virginia (the “West Virginia Complaint”) against the Investment Manager and certain of its Affiliates based on the same circumstances as those cited in the 2004 settlements with the Commission and NJAG involving alleged “market timing” activities described above. The West Virginia Complaint alleges, among other things, that the Investment Manager and certain of its Affiliates improperly allowed broker-dealers, hedge funds and investment advisers to engage in frequent trading of various open-end funds advised or distributed by the Affiliates in violation of the funds’ stated restrictions on “market timing.” As of the date of this report, the West Virginia Complaint has not been formally served upon the Investment Manager or the Affiliates. The West Virginia Complaint also names numerous other defendants unaffiliated with the Affiliates in separate claims alleging improper market timing and/or late trading of open-end investment companies advised or distributed by such other defendants. The West Virginia Complaint seeks injunctive relief, civil monetary penalties, investigative costs and attorney’s fees. The West Virginia Complaint does not allege that any inappropriate activity took place with respect to the Fund.
16 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05 |
Nicholas-Applegate International & Premium Strategy Fund | Notes to Financial |
August 31, 2005 (unaudited) | Statements |
5. Legal Proceedings (continued)
Since February 2004, certain of the Affiliates and their employees have been named as defendants in a total of 14 lawsuits filed in one of the following: U.S. District Court in the Southern District of New York, the Central District of California and the Districts of New Jersey and Connecticut. Ten of those lawsuits concern ‘‘market timing,’’ and they have been transferred to and consolidated for pre-trial proceedings in the U.S. District Court for the District of Maryland; the remaining four lawsuits concern ‘‘revenue sharing’’ with brokers offering ‘‘shelf space’’ and have been consolidated into a single action in the U.S. District Court for the District of Connecticut. The lawsuits have been commenced as putative class actions on behalf of investors who purchased, held or redeemed shares of affiliated funds during specified periods or as derivative actions on behalf of the funds.
The lawsuits generally relate to the same facts that are the subject of the regulatory proceedings discussed above. The lawsuits seek, among other things, unspecified compensatory damages plus interest and, in some cases, punitive damages, the rescission of investment advisory contracts, the return of fees paid under those contracts and restitution. The Investment Manager believes that other similar lawsuits may be filed in federal or state courts naming as defendants the Investment Adviser, the Affiliates, Allianz Global, the Fund, other open- and closed-end funds advised or distributed by the Investment Manager and/or its affiliates, the boards of directors or trustees of those funds, and/or other affiliates and their employees. Under Section 9(a) of the 1940 Act, if any of the various regulatory proceedings or lawsuits were to result in a court injunction against the Investment Manager, Allianz Global/or their affiliates, they and their affiliates would, in the absence of exemptive relief granted by the Commission, be barred from serving as an investment manager/sub-adviser or principal underwriter for any registered investment company, including the Fund. In connection with an inquiry from the Commission concerning the status of the New Jersey settlement described above under Section 9(a), the Investment Manager and certain of its affiliates (together, the ‘‘Applicants’’) have sought exemptive relief from the Commission under Section 9(c) of the 1940 Act.
The Commission has granted the Applicants a temporary exemption from the provisions of Section 9(a) with respect to the New Jersey settlement until the earlier of (i) September 13, 2006 and (ii) the date on which the Commission takes final action on their application for a permanent order. There is no assurance that the Commission will issue a permanent order. If the West Virginia Attorney General were to obtain a court injunction against the Investment Manager or the Affiliates, the Investment Manager or the Affiliates would, in turn, seek exemptive relief under Section 9(c) with respect to that matter, although there is no assurance that such exemptive relief would be granted.
A putative class action lawsuit captioned Charles Mutchka et al. v. Brent R. Harris, et al., filed in January 2005 by and on behalf of individual shareholders of certain open-end funds that hold equity securities and that are sponsored by the Investment Manager and the Affiliates, is currently pending in the federal district court for the Central District of California. The plaintiff alleges that fund trustees, investment advisers and affiliates breached fiduciary duties and duties of care by failing to ensure that the open-end funds participated in securities class action settlements for which those funds were eligible. The plaintiff has claimed as damages disgorgement of fees paid to the investment advisers, compensatory damages and punitive damages.
The Investment Manager believes that the claims made in the lawsuit against the Investment Manager and the Affiliates are baseless, and the Investment Manager and the Affiliates intend to vigorously defend the lawsuit. As of the date hereof, the Investment Manager believes a decision, if any, against the defendants would have no material adverse effect on the Fund or the ability of the Investment Manager or the Sub-Advisers to perform their duties under the investment management or portfolio management agreements, as the case may be. It is possible that these matters and/or other developments resulting from these matters could lead to a decrease in the market price of the Fund’s shares or other adverse consequences to the Fund and its shareholders. However, the Investment Manager and the Sub-Advisers believe that these matters are not likely to have a material adverse effect on the Fund or on the Investment Manager’s or the Sub-Advisers’ abilities to perform their respective investment advisory services related to the Fund.
The foregoing speaks only as of the date hereof. There may be additional litigation or regulatory developments in connection with the matters discussed above.
| 8.31.05 | Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report 17
Nicholas-Applegate International & Premium Strategy Fund | Financial |
Highlights | |
For a share of common stock outstanding for the period April 29, 2005* through August 31, 2005 (unaudited)
Net asset value, beginning of period | $ | 23.88 | ** | |
Income from Investment Operations: | ||||
Net investment income | 0.15 | |||
Net realized and unrealized gain on investments, options written | ||||
and foreign currency transactions | 1.51 | |||
Total from investment operations | 1.66 | |||
Dividends and Distributions to Shareholders from: | ||||
Net investment income | (0.15 | ) | ||
Net realized gains | (0.39 | ) | ||
Total dividends and distributions to shareholders | (0.54 | ) | ||
Capital Share Transactions: | ||||
Offering costs charged to paid-in capital in excess of par | (0.05 | ) | ||
Net asset value, end of period | $ | 24.95 | ||
Market price, end of period | $ | 23.74 | ||
Total Investment Return (1) | (2.94 | )% | ||
RATIOS/SUPPLEMENTAL DATA: | ||||
Net Assets, applicable end of period (000) | $ | 239,582 | ||
Ratio of expenses to average net assets | 1.21 | %(2) | ||
Ratio of net investment income to average net assets | 1.83 | %(2) | ||
Portfolio turnover | 86 | % | ||
* | Commencement of operations. |
** | Initial public offering price of $25.00 per share less underwriting discount of $1.125 per share. |
(1) | Total investment return is calculated assuming a purchase of a share at the current market price on the first day of the period and a sale of a share at the current market price on the last day of the period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized. |
(2) | Annualized. |
18 Nicholas-Applegate International & Premium Strategy Fund Semi-Annual Report | 8.31.05 | See accompanying Notes to Financial Statements
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Trustees and Principal Officers | |
Robert E. Connor | Greg Tournant |
Trustee, Chairman of the Board of Trustees | Vice President |
Paul Belica | Newton B. Schott, Jr. |
Trustee | Vice President |
John J. Dalessandro II | Lawrence G. Altadonna |
Trustee | Treasurer, Principal Financial & Accounting Officer |
Hans W. Kertess | Thomas J. Fuccillo |
Trustee | Secretary |
Brian S. Shlissel | Youse Guia |
President & Chief Executive Officer | Chief Compliance Officer |
Stacey R. Nutt | Jennifer A. Patula |
Vice President | Assistant Secretary |
Investment Manager
Allianz Global Investors Fund Management LLC
1345 Avenue of the Americas
New York, NY 10105
Sub-Advisers
Nicholas Applegate Capital Management Company LLC
600 West Broadway
San Diego, CA 92101
PEA Capital LLC
1345 Avenue of the Americas
New York, NY 10105
Custodian & Accounting Agent
State Street Bank & Trust Co.
225 Franklin Street
Boston, MA 02110
Transfer Agent, Dividend Paying Agent and Registrar
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
Legal Counsel
Ropes & Gray LLP
One International Place
Boston, MA 02210-2624
This report, including the financial information herein, is transmitted to the shareholders of Nicholas-Applegate International & Premium Strategy Fund for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report.
The financial information included herein is taken from the records of the Fund without examination by an independent registered public accounting firm, who did not express an opinion hereon.
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Fund may purchase shares of its common stock in the open market.
The Portfolio files its complete schedule of portfolio holdings with the Securities and Exchange Commission, (“SEC”) for the first and third quarters of its fiscal year on Form N-Q. The Fund’s form N-Q is available on the SEC website www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The information on Form N-Q is also available on the Fund’s website at www.allianzinvestors.com.
A description of the policies and procedures that the Fund has adopted to determine how to vote proxies relating to portfolio securities and information about how the Fund voted proxies relating to portfolio securities held during period April 29, 2005 (commencement of operations) through June 30, 2005 is available (i) without charge, upon request by calling the Fund’s transfer agent at (800) 331-1710; (ii) on the Fund’s website at www.allianzinvestors.com; and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.
Information on the Fund is available at www.allianzinvestors.com or by calling the Fund’s transfer agent at (800) 331-1710.
ITEM 2. CODE OF ETHICS
Not required in this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Not required in this filing
Not required in this filing
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not required in this filing
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT
Not required in this filing
ITEM 6. SCHEDULE OF INVESTMENTS Schedule of Investments is included as part of the report to shareholders filed under item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not required in this filing
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not effective at the time of this filing
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED COMPANIES.
NONE
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant's Board of Trustees adopted a Nominating Committee Charter governing the affairs of the Nominating Committee of the Board, which is posted on the Allianz Global Investors website at www.allianzglobalinvestors.com. Appendix B to the Nominating Committee Charter includes "Procedures for Shareholders to Submit Nominee Candidates," which sets forth the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees. The Registrant has not yet held its first annual shareholders' meeting, so these procedures have yet to be disclosed in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A, and this is the first Form N-CSR filing made by the Registrant. Among other requirements, the procedures provide that the recommending shareholder must submit any recommendation in writing to the Registrant to the attention of the Registrant's Secretary, at the address of the principal executive offices of the Registrant and that
such submission must be received at such offices not less than 45 days nor more than 75 days prior to the date of the Board or shareholder meeting at which the nominee would be elected. Any recommendation must include certain biographical and other information regarding the candidate and the recommending shareholder, and must include a written and signed consent of the candidate to be named as a nominee and to serve as a Trustee if elected. The foregoing description of the requirements is only a summary and is qualified in its entirety by reference to Appendix B of the Nominating Committee Charter.
ITEM 11. CONTROLS AND PROCEDURES
(a) The registrant's President and Chief Executive Officer and Principal Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no significant changes in the registrant's internal controls or in factors that could affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
ITEM 12. EXHIBITS
(a)(2) | Exhibit 99 Cert. - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
(b) | Exhibit 99.906 Cert. - Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Nicholas-Applegate International & Premium Strategy Fund
By /s/ Brian S. Shlissel------------------------
Brian S. Shlissel, President & Chief Executive Officer
Date: November 2, 2005
By /s/ Lawrence G. Altadonna----------------------------
Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer
Date: November 2, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/ Brian S. Shlissel------------------------
Brian S. Shlissel, President & Chief Executive Officer
Date: November 2, 2005
By /s/ Lawrence G. Altadonna----------------------------
Lawrence G. Altadonna, Treasurer, Principal Financial & Accounting Officer
Date: November 2, 2005