-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wr/sQZpgpEr86mKHXV/fQCgxG27O2VumCK88M4fXUF4AP1ppXS/qOI0JPbHY/yRu iFKOir252mI+621aZuYKoA== 0000912057-02-041635.txt : 20021108 0000912057-02-041635.hdr.sgml : 20021108 20021108172548 ACCESSION NUMBER: 0000912057-02-041635 CONFORMED SUBMISSION TYPE: N-14 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20021108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NICHOLAS APPLEGATE INSTITUTIONAL FUNDS CENTRAL INDEX KEY: 0000895414 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-14 SEC ACT: 1933 Act SEC FILE NUMBER: 333-101118 FILM NUMBER: 02814789 BUSINESS ADDRESS: STREET 1: 600 W BROADWAY STREET 2: 29TH FL CITY: SAN DIEGO STATE: CA ZIP: 92101 BUSINESS PHONE: 8188521000 FORMER COMPANY: FORMER CONFORMED NAME: NICHOLAS APPLEGATE INVESTMENT TRUST DATE OF NAME CHANGE: 19930714 N-14 1 a2092707zn-14.txt N-14 As filed with the Securities and Exchange Commission on November 8, 2002 Registration No. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. __ [] Post-Effective Amendment No. _ NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS (Exact Name of Registrant as Specified in Charter) 600 West Broadway San Diego, California 92101 (Address of Principal Executive Offices) (818) 852-1000 (Registrant's Area Code and Telephone Number) Charles H. Field, Jr. C/O Nicholas-Applegate Capital Management 600 West Broadway, 32nd Floor San Diego, California 92101 (Name And Address Of Agent For Service) Copy To: Deborah A. Wussow C/O Nicholas-Applegate Capital Management 600 West Broadway, 32nd Floor San Diego, California 92101 R. Darrell Mounts, Esq. Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, N.W. Second Floor Washington, D.C. 20036-1800 Approximate Date of Proposed Public Offering: as soon as practicable after this Registration Statement becomes effective under the Securities Act of 1933. The title of securities being registered is common stock, par value $0.01 per share. It is proposed that this filing will go effective on December 8, 2002 pursuant to Rule 488. No filing fee is required because of Registrant's reliance on Section 24(f) under the Investment Company Act of 1940, as amended. ii NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS FORM N-14 CONTENTS OF REGISTRATION STATEMENT ON FORM N-14 This Registration Statement consists of the following papers and documents: Cover Sheet Contents of Registration Statement on Form N-14 Letter to Shareholders Notice of Special Meeting Part A - Combined Prospectus/Proxy Statement Part B - Statement of Additional Information Part C - Other Information Signature Page Exhibits iii NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS 600 WEST BROADWAY SAN DIEGO, CALIFORNIA 92101 NICHOLAS-APPLEGATE GLOBAL TECHNOLOGY FUND NICHOLAS-APPLEGATE GLOBAL HEALTH CARE FUND December 8, 2002 Dear Shareholder: The enclosed proxy materials describe a proposal that each of Nicholas-Applegate Global Technology Fund ("Global Technology Fund") and Nicholas-Applegate Global Health Care Fund ("Global Health Care Fund") (each a "Target") reorganize and become part of Nicholas-Applegate Global Select Fund ("Global Select Fund"). Each Target and Global Select Fund (each a "Fund") is a series of Nicholas-Applegate Institutional Funds ("Trust"). If the proposal is approved and implemented in its entirety, each shareholder of a Target will become a shareholder of Global Select Fund. You are cordially invited to attend a special meeting of the Targets' shareholders ("Meeting") to be held on January 22, 2003, at 10 a.m., Pacific time, at the Trust's offices, 600 West Broadway, 30th Floor, San Diego, California 92101. At the Meeting, each Target's shareholders will be asked to approve the reorganization involving their Target. THE TRUST'S BOARD OF TRUSTEES ("BOARD") BELIEVES THE PROPOSED REORGANIZATIONS WILL BE IN THE BEST INTEREST OF SHAREHOLDERS OF EACH TARGET. ACCORDINGLY, THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE REORGANIZATION INVOLVING YOUR TARGET. THE REORGANIZATION INVOLVING A TARGET WILL BE EFFECTED ONLY IF APPROVED BY A MAJORITY OF THAT TARGET'S OUTSTANDING SHARES VOTED IN PERSON OR REPRESENTED BY PROXY. YOUR VOTE IS EXTREMELY IMPORTANT. WE HOPE YOU WILL PARTICIPATE BY CASTING YOUR VOTE IN PERSON, OR BY PROXY IF YOU ARE UNABLE TO ATTEND THE MEETING. We thank you for your attention to this matter. We look forward to seeing you at the Meeting or receiving your proxy card(s) so your shares may be voted at the Meeting. If you have any questions on voting of proxies or the proposal to be considered at the Meeting, please call us toll-free at 1-800-551-8643. Very truly yours, E. Blake Moore, Jr. President & Chairman of the Board WHAT YOU SHOULD KNOW ABOUT THE PROPOSED REORGANIZATIONS Nicholas-Applegate Capital Management LLC ("Nicholas-Applegate") and the Board encourage you to read the enclosed Prospectus/Proxy Statement carefully. The following is designed to provide a brief overview of the proposal and answer some questions you may have about this shareholder vote. WHAT IS THE PURPOSE OF THE SHAREHOLDER VOTE? The vote is to determine whether each Target should be reorganized and become part of another fund managed by Nicholas-Applegate, Global Select Fund. If your Target's shareholders decide in favor of the proposal, you will become a shareholder of Global Select Fund, and that Target will cease to exist. WHAT IS THE RATIONALE FOR MERGING EACH TARGET WITH GLOBAL SELECT FUND? Since their inception, both Targets have had difficulty attracting a meaningful level of assets. The net assets of Global Technology Fund and Global Health Care Fund as of September 30, 2002, were $16,803,589 and $20,467,352, respectively. As a result, neither Target has achieved the operating efficiencies often associated with larger mutual funds. For years Nicholas-Applegate has contractually waived its fees and absorbed other operating expenses of the Targets so that total operating expenses, excluding certain expenses, do not exceed the percentages set forth in their prospectus. Nicholas-Applegate has indicated that it may not be able to continue to waive its fees and absorb excess operating expenses. By merging the Targets into Global Select Fund, the Targets' shareholders would have the benefit of combining assets with a fund having a similar investment objective and a similar yet broader investment strategy. WHAT ARE THE ADVANTAGES OF MERGING THESE FUNDS? There are three key potential advantages: - - By combining the Funds' assets, SHAREHOLDERS MAY ENJOY LOWER EXPENSE RATIOS over time. Larger funds tend to enjoy economies of scale not available to funds with fewer assets under management. - - These LOWER COSTS MAY LEAD TO STRONGER PERFORMANCE, since total return to a Fund's shareholders is net of Fund expenses. - - Global Select Fund will be managed by Catherine Somhegyi Nicholas and Pedro V. Marcal, Jr., seasoned portfolio managers. The potential benefits and possible disadvantages are explained in more detail in the enclosed proxy statement. HOW ARE THESE THREE FUNDS ALIKE? Each Fund seeks long-term capital appreciation by investing primarily in global equity securities. However, the Targets differ from Global Select Fund with regard to the types of companies in which they invest. Global Technology Fund primarily invests in U.S and foreign companies with business operations in technology and technology-related industries. Global Health Care Fund primarily invests in U.S. and foreign companies with business operations in the health care and health care-related industries. Global Select Fund invests in a broader range of U.S. and foreign companies in different industries that, in Nicholas-Applegate's opinion, represent the "best of the best" globally. HOW IS GLOBAL SELECT FUND MANAGED? Nicholas-Applegate emphasizes a team approach to portfolio management. Nicholas-Applegate's international/global equity management team, a group of seasoned portfolio managers and analysts, who currently manage both Targets and Global Select Fund, will continue managing Global Select Fund. Catherine Somhegyi Nicholas, lead portfolio manager for global equities and Pedro V. Marcal, Jr. , will be primarily responsible for the day-to-day investment management decisions. Catherine is a member of Nicholas-Applegate's Executive Committee and serves on the Allianz Dresdner Asset Management U.S. Equity Committee. Before joining Nicholas-Applegate in 1987, Catherine was a vice president with Professional Asset Securities, Inc., where she focused on savings and loans and banks. In addition, she was a research analyst for Pacific Century Advisors. She earned her B.S. in business administration, CUM LAUDE, and her M.B.A. in finance from the University of Southern California. Catherine had more than 17 years of investment experience. Pedro Marcal has responsibilities for portfolio management and research, focusing primarily on Global products. He was previously the lead on the firm's Emerging Countries team. Prior to joining the firm in 1994, Pedro spent five years as an economist at A. B. Laffer, V. A. Canto & Associates, a global economic consulting firm. Pedro was also a trader at A-Mark Precious Metals, a commodities firm. He earned his B.A. in economics from the University of California, San Diego. As part of his undergraduate degree, Pedro spent a year studying development economics at London University. He has 13 years of investment experience. WHAT HAPPENS IF SHAREHOLDERS DECIDE IN FAVOR OF A REORGANIZATION? Shareholders will receive full and fractional Class I shares of Global Select Fund equal in value to their shares of the relevant Target that they owned on the effective date of the reorganizations. The net asset value per share of Global Select Fund will not be affected by the transactions. That means the reorganizations will not result in a dilution of any shareholder's interest. IF THE FUNDS MERGE, WILL THERE BE TAX CONSEQUENCES FOR YOU? Unlike a transaction in which you direct Nicholas-Applegate to sell shares of one fund to buy shares of another, an exchange of shares pursuant to a reorganization IS NOT CONSIDERED A TAXABLE EVENT. The Funds themselves also will recognize no gains or losses as a result of a 2 reorganization, except with respect to a Target's assets that are sold in connection with its reorganization. Accordingly, you will not have to report any capital gains due to a reorganization, although a Target's shareholders may receive a distribution of ordinary income and/or capital gains immediately before its reorganization to the extent that Target has undistributed income and/or gains. You should consult your tax advisor regarding any possible effect a reorganization might have on your tax situation, given your personal circumstances - particularly regarding state and local taxes. WHO WILL PAY FOR THE REORGANIZATIONS? The expenses of the reorganizations, including legal expenses, printing, packaging, and postage, plus the costs of any supplementary solicitation, will be borne by Global Select Fund and each Target Fund in proportion to each Fund's respective net assets. WHAT DOES THE BOARD RECOMMEND? The Board believes you should vote in favor of the reorganizations. More importantly, however, the Board recommends that you study the issues involved, call us with any questions, and vote promptly to ensure that a quorum of each Target will be represented at the Meeting. WHERE CAN I GET MORE INFORMATION ABOUT GLOBAL SELECT FUND? We hope this Q&A has helped you better understand why we are making this proposal. If you have any questions, we encourage you to call us at 1-800-551-8643. NICHOLAS-APPLEGATE CAPITAL MANAGEMENT 3 NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS NICHOLAS-APPLEGATE GLOBAL TECHNOLOGY FUND NICHOLAS-APPLEGATE GLOBAL HEALTH CARE FUND 600 WEST BROADWAY SAN DIEGO, CALIFORNIA 92101 ---------------- NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 22, 2003 ---------------- To the Shareholders: A special meeting of shareholders ("Meeting") of Nicholas-Applegate Global Technology Fund and Nicholas-Applegate Global Health Care Fund (each a "Fund"), each a series of Nicholas-Applegate Institutional Funds ("Trust"), will be held on January 22, 2003, at 10:00 a.m., Pacific time, at the Trust's offices, 600 West Broadway, San Diego, California 92101, for the following purposes: (1) For the shareholders of each Fund voting separately, to approve a Plan of Reorganization and Termination under which Nicholas-Applegate Global Select Fund ("Global Select Fund"), another series of the Trust, would acquire all the assets of a Fund in exchange solely for Class I shares of equal value of Global Select Fund and Global Select Fund's assumption of the Fund's liabilities, followed by the distribution of those shares to the Fund's shareholders. (2) To transact other business that properly comes before the Meeting or any adjournment thereof. The reorganization proposal is described in the accompanying Prospectus/Proxy Statement. YOUR BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. You are entitled to vote at the Meeting and any adjournment thereof if you owned shares of a Fund at the close of business on November 27, 2002. EACH SHAREHOLDER IS REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD(S) WITHOUT DELAY, EVEN IF YOU PLAN TO ATTEND THE MEETING. A POSTAGE-PAID ENVELOPE IS ENCLOSED FOR THIS PURPOSE. ANY SHAREHOLDER PRESENT AT THE MEETING MAY VOTE PERSONALLY ON ALL MATTERS BROUGHT BEFORE IT. By order of the Board of Trustees, Charles H. Field, Jr., Secretary December 8, 2002 San Diego, California 2 NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS NICHOLAS-APPLEGATE GLOBAL TECHNOLOGY FUND NICHOLAS-APPLEGATE GLOBAL HEALTH CARE FUND 600 WEST BROADWAY SAN DIEGO, CALIFORNIA 92101 ----------- PROSPECTUS/PROXY STATEMENT DECEMBER 8, 2002 ----------- This Prospectus/Proxy Statement is being furnished to shareholders of Nicholas-Applegate Global Technology Fund ("Global Technology Fund") and Nicholas-Applegate Global Health Care Fund ("Global Health Care Fund") (each a "Target"), each a series of Nicholas-Applegate Institutional Funds ("Trust"), in connection with the solicitation of proxies by the Trust's Board of Trustees ("Board") for use at a special meeting of the Targets' shareholders to be held on January 22, 2003 ("Meeting"), at 10:00 a.m. Pacific time, and at any adjournment of the Meeting. As more fully described in this Prospectus/Proxy Statement, the purpose of the Meeting is to vote on two proposed reorganizations. In each reorganization, Nicholas-Applegate Global Select Fund ("Global Select Fund"), another series of the Trust, would acquire all the assets of a Target in exchange solely for Class I shares of Global Select Fund and Global Select Fund's assumption of all the Target's liabilities, followed by the distribution of those shares to the Target's shareholders (all such transactions involving Global Select Fund and a Target being referred to herein as a "Reorganization"). As a result, each Target shareholder would receive a number of full and fractional Global Select Fund Class I shares having an aggregate value that on the effective date of the Reorganization is equal to the aggregate value of the shareholder's Target shares. As soon as practicable following the distribution of a Target's shares, it will be terminated. This Prospectus/Proxy Statement sets forth concisely the information about the Reorganizations and Global Select Fund that a shareholder should know before voting on a Reorganization. Additional information is contained in the following: - A Statement of Additional Information, dated December 8, 2002, relating to the Reorganizations and including historical financial statements ("SAI"), has been filed with the Securities and Exchange Commission ("SEC") and is incorporated herein by this reference. - The Trust's Prospectus and Statement of Additional Information, each dated July 19, 2002, as supplemented October 2, 2002 ("Pro/SAI"), and its Annual Report to Shareholders for the fiscal year ended March 31, 2002 ("Annual Report"), have been 3 filed with the SEC and are incorporated herein by this reference with respect to each Target and Global Select Fund (each a "Fund"). Copies of the documents listed above may be obtained without charge, and further inquiries may be made, by writing to Nicholas-Applegate Institutional Funds, Attn: Mutual Fund Operations, 600 West Broadway, Suite 3200, San Diego, CA 92101, or by calling toll-free 1-800-551-8643. In addition, the SEC maintains a Website (http://www.sec.gov) that contains the Pro/SAI and other material incorporated herein by reference, together with other information regarding the Funds. Investors are advised to read and retain this Prospectus/Proxy Statement for future reference. Each Fund is a separate series of the Trust, a Delaware business trust registered as an open-end management investment company. Nicholas-Applegate Capital Management LLC, a Delaware limited liability company ("Nicholas-Applegate"), serves as the investment adviser to each Fund. Each Fund's investment objective is to seek maximum long-term capital appreciation. This Prospectus/Proxy Statement will first be mailed to shareholders on or about December 9, 2002. THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 4 TABLE OF CONTENTS
PAGE SYNOPSIS 1 The Proposed Reorganizations 1 Comparative Fee Table 1 Example of Effect of Fund Expenses 2 Comparison of Investment Objectives, Principal Investment Strategies, and Risks 3 Performance of the Funds 4 Form of Organization 6 Investment Adviser and Investment Advisory Fees 6 Expense Waivers 7 Operations of Global Select Fund Following the Reorganizations 7 Dividends and Other Distributions 8 Federal Income Tax Consequences of the Reorganizations 9 PRINCIPAL RISK FACTORS 9 THE PROPOSED TRANSACTIONS 10 Reorganization Plan 10 Reasons for the Reorganizations 12 Description of Securities to Be Issued 13 Federal Income Tax Considerations 13 Capitalization 14 VOTING INFORMATION 15 ADDITIONAL INFORMATION ABOUT THE FUNDS 16 INFORMATION CONCERNING ADVISER, DISTRIBUTOR, AND AFFILIATED COMPANIES 17 MISCELLANEOUS 17 OTHER BUSINESS 18 BOARD RECOMMENDATION 18 APPENDIX A - Form of Plan of Reorganization and Termination A-1
i APPENDIX B - Additional Information Regarding Global Select Fund B-1 APPENDIX C - Management Discussion and Analysis of the Funds C-1 APPENDIX D - Principal Shareholders D-1
ii SYNOPSIS The following is a summary of certain information contained elsewhere (1) in this Prospectus/Proxy Statement, (2) in the SAI, the Pro/SAI with respect to each Fund, and the Annual Report with respect to each Fund (each of which is incorporated herein by reference and thus is legally part of this Prospectus/Proxy Statement), and (3) in the Plan of Reorganization and Termination ("Reorganization Plan") (the form of which is attached as Appendix A to this Prospectus/Proxy Statement). As discussed more fully below, the Board believes that the Reorganizations will benefit shareholders of each Target. The Funds have the same investment objective and have similar investment policies and strategies, although the Targets differ from Global Select Fund with regard to the types of companies in which they invest. THE PROPOSED REORGANIZATIONS The Board considered and approved the terms of the Reorganizations at a meeting held on October 7, 2002. The Board also considered and adopted the Reorganization Plan at a meeting held on November 8, 2002. The Reorganization Plan provides for Global Select Fund's acquisition of all the assets of each Target in exchange solely for Class I shares of beneficial interest in Global Select Fund and Global Select Fund's assumption of all the liabilities of each Target, all as of the close of business on January 31, 2003, or a later date when the Reorganization Plan is approved and all contingencies have been met ("Effective Time"). Under the terms of the Reorganization Plan, each Target then would distribute those Global Select Fund shares to its shareholders of record determined as of the Effective Time ("Shareholders"), so that each Shareholder would receive the number of full and fractional Global Select Fund Class I shares that is equal in value to the Shareholder's Target shares as of the Effective Time. Each Target would be terminated as soon as practicable thereafter. For the reasons set forth below under "The Proposed Transaction - Reasons for the Reorganization," the Board, including the trustees who are not "interested persons" (as that term is defined in section 2(a)(19) of the Investment Company Act of 1940, as amended ("1940 Act")) of the Trust ("Independent Trustees"), has determined that each Reorganization is in the best interests of both Funds participating therein, that the terms of each Reorganization are fair and reasonable, and that the interests of each Fund's shareholders will not be diluted as a result of the Reorganizations. Accordingly, the Board recommends approval of the Reorganization Plan. COMPARATIVE FEE TABLE Like all mutual funds, the Funds incur certain expenses in their operations, and as a shareholder you pay these expenses indirectly. The tables below compare annual operating expenses for each Target's shares and Global Select Fund's Class I shares for the fiscal year ended March 31, 2002, and PRO FORMA expenses, based on those annual operating expenses for Global Select Fund's Class I shares assuming the Reorganization Plan is approved and effected with respect to both Targets. (Global Select Fund also offers Class R shares, which are not involved in the proposed Reorganizations.) ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets) (as a percentage of average net assets)
GLOBAL SELECT FUND GLOBAL TECHNOLOGY GLOBAL HEALTH CARE COMBINED FUND (CLASS I) FUND FUND (CLASS I) (PRO FORMA) ------------------ ----------------- ------------------- ------------- Management Fees .80% 1.00% 1.00% 0.80% Distribution (12b-1) Fees None None None None Other Expenses 0.57% 0.46% 0.36% 0.57% (3) Total Annual Fund Operating 1.37% 1.46% 1.36% 1.37% (2) Expenses Waiver of Fund Expenses (1) (0.14%) (0.02%) -- (0.14%) Net expenses 1.23% 1.44% 1.36% 1.23%
(1) Nicholas-Applegate has agreed to waive its fees and absorb other operating expenses of the Funds so that total operating expenses, excluding taxes, interest, brokerage, the expenses incurred from the creation and operation of the Mauritius entity, if any, and extraordinary expenses, do not exceed the percentages set forth in "Expense Waivers" below for the Targets' shares and Global Select Fund's Class I shares through March 31, 2003. In subsequent years, overall operating expenses for each Fund will not fall below the applicable percentage limitation until Nicholas-Applegate has been fully reimbursed for fees waived and expenses paid under the expense limitation agreement, as each Fund will reimburse Nicholas-Applegate in subsequent years when operating expenses (before reimbursement) are less than the applicable percentage limitation. Such waived fees and paid expenses are subject to possible later reimbursement by the Funds to Nicholas-Applegate over certain periods. Nicholas-Applegate may not amend the fee waiver and its obligation to pay excess expenses without the Trust's consent. Each Fund's actual Other Expenses and Total Annual Fund Operating Expenses were lower than the figures shown. For additional information, see "Expense Waivers" below. (2) Nicholas-Applegate has agreed to reduce its management fee to an annual rate of 0.65% and its administrative services fee to 0.07% from 0.10% of average daily net assets effective February 1, 2003. In addition, the Board of Trustees has approved the adoption of a Shareholder Service Plan under which the combined Fund will pay a shareholder services fee at an annual rate of .08% of the Fund's average daily net assets effective February 1, 2003. The net effect of these fee changes will result in a reduction of fees paid to the Fund's investment adviser and distributor of 0.10%. (3) Nicholas-Applegate expects that a portion of the brokerage commissions that the combined Fund will pay will be used to reduce the Fund's expenses. Nicholas-Applegate also expects the combined Fund to enter into an expense offset arrangement with its custodian and other agents that will reduce its custodian fee based on the amount of securities the Fund loans to third parties. In addition, Nichoals-Applegate expects that the Fund's custodian will reduce its custodian fees based upon the amount of cash that the Fund will maintain with its custodian. "Other Expenses" do not take into account these expected expense reductions, and are therefore higher than the actual expenses of the combined Fund. If these estimated expense reductions were taken into account, the estimated "Total Annual Fund Operating Expenses" for the combined Fund would be 1.04%. EXAMPLE OF EFFECT ON FUND EXPENSES The following Example is intended to help you compare the cost of investing in each Target's shares with the cost of investing in Global Select Fund Class I shares assuming the Reorganization Plan has been approved and effected with respect to both Targets. The Example assumes that you invest $10,000 in shares of the specified Fund (Class I in the case of Global Select Fund) for the time periods indicated and then redeem all those shares at the end of those periods. The Example also assumes that your investment has a 5% return each year, that all dividends and other distributions are reinvested, and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: 2
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS -------- ----------- ---------- --------- Global Select Fund $110 $439 $780 $1,795 (Class I) Global Technology Fund $151 $481 $845 $1,926 Global Health Care Fund $143 $450 $789 $1,796 Combined Fund* (Class I) $110 $439 $780 $1,795
* The example for the combined Fund does not take into account any offset arrangements that the combined Fund will enter into with its brokers, custodians and third party service providers. If the offset credits described were to be applied to the above example, your cost for the 1,3,5 and 10 year periods would be $109, $344, $603, $1,374, respectively. COMPARISON OF INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RISKS Each Fund's investment objective is long-term capital appreciation. Global Select Fund invests in equity securities of companies that in Nicholas-Applegate's opinion represent the "best of the best" globally. Global Technology Fund invests in the equity securities of U.S. and foreign companies with business operations in technology and technology-related industries. Global Health Care Fund, a non-diversified fund, invests in equity securities of U.S. and foreign companies with business operations in the health care and health care-related industries. The Funds have similar investment strategies. In analyzing specific companies for possible investment, each Fund ordinarily looks for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. Each Fund considers whether to sell a particular security when any of those factors materially changes. Each Fund invests in securities of issuers in countries that are expected to provide the best opportunities to achieve the Fund's investment objective. Each Fund normally invests at least 80% of its assets in the securities of companies located in at least three different countries, one of which may be the United States. The Funds differ in the types of companies in which they invest. Global Select Fund normally invests at least 75% of its assets in equity securities. Global Technology Fund normally invests at least 80% of its assets in technology-related equity securities. Global Health Care Fund normally invests at least 80% of its assets in health care sector securities and may invest a significant portion of its assets in the securities of U.S. issuers. Each Fund also may invest in companies located in countries with emerging securities markets. 3 Each Fund is subject to the risks of stock market volatility, foreign securities, securities lending, and active portfolio trading. The foreign securities risks are further affected by other factors such as currency exchange rates, political and economic conditions in the foreign countries, foreign regulations, liquidity of foreign securities markets, and stability of foreign governments. Each Target is subject to the additional risks of investing in a specific sector and smaller issuers. Unlike Global Select Fund and Global Technology Fund, Global Health Care Fund, as a non-diversified fund, is more susceptible to a single economic, political, or regulatory event affecting the issuers in which it invests than is a diversified fund. In addition to the risks discussed above, the Funds are subject to other principal risks. See "Comparison of Investment Objectives, Principal Investment Strategies, and Risks" below. OTHER POLICIES OF THE FUNDS. Each Fund may invest in illiquid securities, including securities that are subject to restrictions on resale and securities that are not readily marketable, and in restricted securities that may be resold to institutional investors. Each Fund also may enter into repurchase agreements with member banks of the Federal Reserve System, registered broker-dealers, and registered U.S. government securities dealers. In addition, each Fund may seek to earn additional income by lending its portfolio securities to qualified brokers, dealers, banks, or other financial institutions, on a fully collateralized basis. Each Fund also may invest in corporate debt securities, zero coupon securities, commercial paper, bank instruments, demand instruments, government obligations, variable and floating rate instruments, asset-backed securities, futures contracts and options thereon, put and call options on securities and securities indices, foreign government securities, Eurodollar convertible securities, Eurodollar and Yankee dollar instruments, foreign currency transactions, options on foreign currencies, forward currency contracts, interest rate or financial futures contracts, preferred stock, swap options, swap agreements, and securities of other investment companies. Each Fund also may enter into reverse repurchase agreements and when-issued transactions. In response to adverse market, economic, political, or other conditions, each Fund may temporarily depart from its principal investment strategies by investing its assets in cash, cash items, and short-term, higher quality debt securities. Each Fund may do this to minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market conditions. A Fund's defensive posture may result in its failing to achieve its investment objective. PERFORMANCE OF THE FUNDS The following tables show how each Fund has performed in the past. PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS. YEAR-BY-YEAR TOTAL RETURN AS OF 12/31 EACH YEAR (%) The table below shows the percentage gain or loss for each Fund's shares (Class I shares in the case of Global Select Fund) in each calendar year since those shares' inception. (Global Select Fund Class R shares are not included because they are not involved in the Reorganizations.) The table provides some indication of the risks of investing in each Fund by showing how each Fund's return has varied from year-to-year. 4
GLOBAL SELECT FUND GLOBAL TECHNOLOGY FUND GLOBAL HEALTH CARE FUND (CLASS I) ------------------ ---------------------- ----------------------- 1998 46.18 -- -- 1999 129.35 493.76 -- 2000 -15.15 -36.91 96.17 2001 -20.37 -49.26 -9.53 Best Quarter Q4 '99 Q4 '99 Q1 '01 +63.08% +97.59% 60.37% Worst Quarter Q1 '00 Q1' 01 Q1 01 -21.17% -43.08% -22.65%
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/01 (%) (1)
GLOBAL SELECT FUND (CLASS I) 1 YEAR SINCE INCEPTION (9/30/97) Before Taxes -20.37% 20.86% After Taxes on Distributions -20.37 14.11 After Taxes on Distributions and Sale of -12.40 14.85 Fund Shares (2) MSCI All Country World Index Free -15.91 1.89
GLOBAL TECHNOLOGY FUND 1 YEAR SINCE INCEPTION (7/31/98) Before Taxes -49.26% 44.04% After Taxes on Distributions -49.26 33.48 After Taxes on Distributions and Sale of -30.00 35.91 Fund Shares (2) Merrill Lynch 100 Technology -32.55 8.88
5
GLOBAL HEALTH CARE FUND 1 YEAR SINCE INCEPTION (8/31/99) Before Taxes -9.53% 53.98% After Taxes on Distributions -9.53 48.22 After Taxes on Distributions and Sale of -5.80 42.35 Fund Shares (2) Russell 3000 Healthcare Index -11.83 6.02
(1) The returns in these tables would have been lower if Nicholas-Applegate had not waived a portion of its management fees and absorbed a portion of each Fund's expenses. See "Expense Waivers" below. (2) After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor's tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. In some cases the return after taxes may exceed the return before taxes due to an assumed tax benefit from any losses on a sale of Fund shares at the end of the measurement period. FORM OF ORGANIZATION The Trust is an open-end management investment company currently offering several separate portfolios. It was organized in December 1992 as a business trust under the laws of Delaware. On July 24, 1998, the Nicholas-Applegate Mutual Funds complex changed from a "master-feeder" investment structure (under which those funds invested all their assets in portfolios of the Trust) to a multi-class structure, and the Trust was liquidated. In May 1999 the Trust was reactivated, and substantially all the institutional assets of the Nicholas-Applegate Mutual Funds were transferred to it in a tax-free exchange for Class I shares of the Trust's series, which for accounting purposes is treated as a continuation of the Trust's former portfolios. INVESTMENT ADVISER AND INVESTMENT ADVISORY FEES Nicholas-Applegate is each Fund's investment adviser. In this capacity, Nicholas-Applegate supervises all aspects of each Fund's operations and makes and implements all investment decisions for the Funds. Nicholas-Applegate is currently paid the following: (1) by Global Select Fund, a monthly management fee computed at the annual rate of 0.80% of its average daily net assets; and (2) by each Target, a monthly management fee computed at the annual rate of 1.00% of its average daily net assets. Effective February 2003, Nicholas-Applegate has agreed to reduce its management fee to an annual rate of 0.65% and its administrative services fee to 0.07% from 0.10% of average daily net assets effective February 1, 2003. In addition, the Board of Trustees has approved the adoption of a Shareholder Service Plan under which the combined Fund will pay a shareholder services fee at an annual rate of .08% of the Fund's average daily net assets effective February 1, 2003. The net effect of these fee changes will result in a reduction of fees paid to the Fund's investment adviser and distributor of 0.10%. 6 EXPENSE WAIVERS Nicholas-Applegate has agreed to waive its fees and absorb other operating expenses of the Funds so that total operating expenses, excluding taxes, interest, brokerage, expenses paid under any off set arrangements with brokers, custodians and third party service providers, if any, the expenses incurred from the creation and operation of the Mauritius entity, if any, and extraordinary expenses, do not exceed the percentages set forth below for the Targets' shares and Global Select Fund's Class I shares through March 31, 2003. In subsequent years, overall operating expenses for each Fund will not fall below the applicable percentage limitation until Nicholas-Applegate has been fully reimbursed for fees waived and expenses paid under the expense limitation agreement (collectively "reimbursable amounts"), as each Fund will reimburse Nicholas-Applegate in subsequent years when operating expenses (before reimbursement) are less than the applicable percentage limitation. Reimbursable amounts waived or absorbed prior to July 24, 1998, may be reimbursed by the Funds within five years of that date; reimbursable amounts waived or absorbed from July 25, 1998, through May 7, 1999, may be reimbursed by the Funds within five years after the year in which they are waived or absorbed; and reimbursable amounts waived or absorbed after May 7, 1999, may be reimbursed by the Funds within three years after the year in which they are waived or absorbed. Nicholas-Applegate may not amend the fee waiver and its obligation to pay excess expenses without the Trust's consent. Global Technology 1.40% Global Health Care 1.40% Global Select 1.05% (prior to February 1, 2003) 1.10% (after January 31, 2003) OPERATIONS OF GLOBAL SELECT FUND FOLLOWING THE REORGANIZATIONS As indicated above, the Funds' investment objectives and policies are substantially similar, although each Target concentrates in companies of certain sectors. Based on its review of each Fund's investment portfolio, Nicholas-Applegate believes that most of the assets each Target holds will be consistent with Global Select Fund's investment policies and thus can be transferred to and held by Global Select Fund if the Reorganization Plan is approved for both Targets. If, however, either Target has any assets that Global Select Fund may not hold, those assets will be sold prior to the Reorganizations. The proceeds of those sales will be held in temporary investments or reinvested in assets that Global Select Fund may hold. The possible need for either Target to dispose of assets prior to the Reorganizations could result in selling securities at a disadvantageous time and could result in a Target's realizing losses that would not otherwise have been realized. Alternatively, these sales could result in a Target's realizing gains that would not otherwise have been realized, the net proceeds of which would be included in a distribution to its shareholders prior to the Reorganizations. 7 PURCHASES. Effective October 2, 2002, the Targets ceased accepting investment subscriptions. Global Select Fund's shares may be purchased by wire transfer, telephone exchange, or check by mail. They are sold on a continuous basis at the net asset value ("NAV") per share next calculated after receipt of a purchase order in good form. Global Select Fund's NAV per share is computed separately and is determined once each day that the New York Stock Exchange is open ("Business Day") as of the close of regular trading on the Exchange but may also be computed at other times. For a more complete discussion of Global Select Fund's share purchase policies, see "Purchases and Redemptions" in Appendix B. REDEMPTIONS. Procedures to redeem shares in each Fund are identical. Each Fund's shares may be redeemed by wire transfer, telephone exchange, or check by mail. Redemptions are made at the NAV per share next determined after a request in proper form is received at the Trust's office. If shares were purchased with a check that has not yet cleared, payment will be delayed until after the check has cleared, which can take up to 15 calendar days. The maximum amount that may be redeemed by telephone, regardless of account size, is $50,000. Redemptions by a corporation, trust, or fiduciary may have special requirements. Each Fund reserves the right to make payment wholly or partly in shares of readily marketable investment securities. For a more complete discussion of each Fund's share redemption policies, see "Purchases and Redemptions" in Appendix B. Redemptions of a Target's shares may be effected through the Effective Time. EXCHANGES. Each Fund's shares may be exchanged for shares of the same class of another Nicholas-Applegate mutual fund on the basis of their respective NAVs at the time of the exchange. An exchange is the sale of shares from one fund immediately followed by the purchase of shares in another fund. After the Reorganizations, Global Select Fund Class I shares will continue to be exchangeable for Class I shares of any other Nicholas-Applegate mutual fund. For a more complete discussion of Global Select Fund's exchange policies, see "Exchanges" in Appendix B. DIVIDENDS AND OTHER DISTRIBUTIONS Each Fund earns investment income in the form of dividends and interest on investments. Dividends each Fund pays are based solely on its investment income. Each Fund's policy is to annually distribute most or all of its net earnings in the form of dividends to its shareholders, at the discretion of the Board. Dividends are automatically reinvested in additional shares of the distributing Fund at the NAV per share on the payable date unless otherwise requested. Each Fund also realizes capital gains and losses when it sells securities for more or less than it paid. If a Fund's total gains on these sales exceed total losses thereon (including losses carried forward from previous years), the Fund has net capital gains. Net realized capital gains, if any, are distributed to each Fund's shareholders at least annually, usually in November or December. Capital gain distributions are automatically reinvested in additional shares of the distributing Fund on the payable date unless otherwise requested. At or before the Effective Time, each Target will declare as a distribution substantially all of its previously undistributed net investment income and net realized capital gains, if any, and 8 will distribute that amount to continue to maintain its tax status as a regulated investment company. FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS The Trust will receive an opinion of its counsel, Kirkpatrick & Lockhart LLP, to the effect that each Reorganization will constitute a tax-free reorganization within the meaning of section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended ("Code"). Accordingly, neither any Fund nor their shareholders will recognize any gain or loss as a direct result of the Reorganizations. See "The Proposed Transaction - Federal Income Tax Considerations," below. To the extent a Target sells securities prior to the Effective Time, it may recognize net gains or losses. Any net gains recognized on those sales would increase the amount of any distribution that Target must make to its shareholders before the Effective Time. PRINCIPAL RISK FACTORS Because the Funds have the same investment objective and substantially similar investment policies, an investment in Global Select Fund is subject to many of the same specific risks as an investment in either Target, as well as the general risks arising from investing in any mutual fund. There is no guarantee that a Fund will achieve its investment objective or that it will not lose principal value. The principal specific risks associated with investing in the Funds include the following: MARKET RISK. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity. Stock prices are unpredictable, may fall suddenly, and may continue to fall for extended periods. FOREIGN SECURITIES RISKS. The prices of foreign securities may be further affected by other factors, including: CURRENCY EXCHANGE RATES--the dollar value of a Fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. POLITICAL AND ECONOMIC CONDITIONS--the value of a Fund's foreign investments may be adversely affected by political and social instability in their issuers' home countries and by changes in economic or fiscal policies in those countries. REGULATION--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. MARKETS--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and their prices may be more volatile than U.S. securities. 9 EMERGING SECURITIES MARKETS--To the extent a Fund invests in countries with emerging markets, the foreign securities risks are magnified because these countries may have unstable governments and less established markets. SECURITIES LENDING RISK. There is the risk that when lending portfolio securities, the securities may not be available to a Fund on a timely basis, and a Fund may therefore lose the opportunity to sell the securities at a desirable price. ACTIVE PORTFOLIO TRADING. A high portfolio turnover rate has the potential to generate more taxable short-term gains for shareholders and may have an adverse effect on a Fund's after tax performance. SECTOR RISK. Unlike Global Select Fund, each Target also is subject to sector risk. Sector risk for Global Technology Fund entails the possibility that the technology sector may perform differently than other sectors or the market as a whole, and its performance will be more susceptible to any economic, business, or other developments that generally affect the technology sector. The value of Global Health Care Fund shares is particularly vulnerable to factors affecting the health care industry, such as substantial government regulation, which may impact the demand for products and services offered by health care companies. Also, the products and services offered by the health care companies may be subject to rapid obsolescence caused by scientific advances and technology innovations. Because Global Health Care Fund focuses its investments in the health care industry, the value of its shares may rise and fall more than the value of shares of a fund that invests more broadly. SMALLER ISSUERS RISK. Global Technology Fund may be subject to the additional risk of investing in smaller issuers. Investments in small-capitalization companies entail greater risk because these companies may have unproven track records, limited product or service base, and limited access to capital and may be more likely to fail than larger, more established companies. Information regarding smaller companies may be less available, incomplete, or inaccurate, and their securities may trade less frequently than those of larger companies. Because Global Health Care Fund is a NON-DIVERSIFIED investment company, it is more susceptible to any single economic, political, or regulatory event affecting the issuers in which it invests than is a diversified fund. THE PROPOSED TRANSACTIONS REORGANIZATION PLAN The terms and conditions under which the proposed Reorganizations will be consummated are set forth in the Reorganization Plan. Significant provisions of the Reorganization Plan are summarized below; however, this summary is qualified in its entirety by reference to the Reorganization Plan, the form of which is attached as Appendix A to this Prospectus/Proxy Statement. The Reorganization Plan provides for (a) Global Select Fund's acquisition as of the Effective Time of all the assets of each Target in exchange solely for Global Select Fund Class I 10 shares and Global Select Fund's assumption of all liabilities of each Target and (b) the distribution of those shares to each Target's Shareholders. A Target's assets to be acquired by Global Select Fund include all cash, cash equivalents, securities, receivables, claims and rights of action, rights to register shares under applicable securities laws, books and records, deferred and prepaid expenses shown as assets on the Target's books, and other property owned by the Target at the Effective Time. Global Select Fund will assume from each Target all its liabilities, debts, obligations, and duties of whatever kind or nature; provided, however, that each Target will use its best efforts to discharge all its known liabilities before the Effective Time. The value of each Target's assets to be acquired by Global Select Fund and the NAV per share of Global Select Fund shares to be exchanged for those assets will be determined as of the close of regular trading on the New York Stock Exchange on the date of the Effective Time, using the valuation procedures described in the Pro/SAI. Each Target's net value will be the value of its assets to be acquired by Global Select Fund, less the amount of its liabilities, as of that close. At, or as soon as practicable after, the Effective Time, each Target will distribute the Global Select Fund shares it receives PRO RATA to its Shareholders, so that each Shareholder will receive a number of full and fractional Global Select Fund Class I shares equal in aggregate value to the Shareholder's Target shares as of the Effective Time. The shares will be distributed by opening accounts on Global Select Fund's books in the names of the Shareholders and by transferring to those accounts the shares previously credited to the Target's account on those books. Fractional Global Select Fund shares will be rounded to the third decimal place. Each Target will be terminated as soon as practicable after the share distribution. Because Global Select Fund shares will be issued at their NAV in exchange for the net assets of each Target, the aggregate value of Global Select Fund shares issued to Shareholders will equal the aggregate value of their Target shares. The NAV per share of Global Select Fund will be unchanged by the transactions. Thus, the Reorganizations will not result in a dilution of any shareholder's interest. Any transfer taxes payable on the issuance of Global Select Fund shares in a name other than that of the registered Shareholder will be paid by the person to whom those shares are to be issued as a condition of the transfer. Any reporting responsibility of a Target to a public authority will continue to be its responsibility until it is dissolved. The entire cost of the Reorganizations, including professional fees and the cost of soliciting proxies for the Meeting, consisting principally of printing and mailing expenses, together with the cost of any supplementary solicitation, will be borne by the Funds. In approving each Reorganization, the Board considered the fact that each Target may benefit from the operating efficiencies often associated with larger mutual funds, and the alternative to the Reorganizations (which is to liquidate each Target) and the consequences of such a liquidation to each Target's shareholder. After such consideration, the Board found that each Reorganization is in the best interests of both Funds participating therein. 11 The consummation of each Reorganization is subject to a number of conditions set forth in the Reorganization Plan (not including consummation of the other Reorganization), some of which may be waived by either Fund. In addition, the Trust may amend the Reorganization Plan in any manner, except that no amendment may be made subsequent to the Meeting that has a material adverse effect on the interests of a Target's shareholders. REASONS FOR THE REORGANIZATIONS The Board, including a majority of the Independent Trustees, has determined that each Reorganization is in the best interests of both Funds participating therein, that the terms of each Reorganization are fair and reasonable, and that the interests of each Fund's shareholders will not be diluted as a result of the Reorganizations. In approving the Reorganizations, the Board, including a majority of the Independent Trustees, considered a number of factors, including the following: (1) the compatibility of the Funds' investment objectives, policies, and restrictions; (2) each Fund's relative investment performance; (3) each Fund's relative asset size; (4) the investment experience and expertise of each Fund's portfolio managers; (5) the effect of the Reorganizations on the Funds' expected investment performance; (6) the effect of the Reorganizations on each Fund's expense ratio relative to its current expense ratio; (7) the tax consequences of the Reorganizations; (8) the effect of the Reorganizations on each Fund's shareholders' rights; (9) the potential benefits of the Reorganizations to Nicholas-Applegate and other persons; and (10) the alternatives to the Reorganizations. Nicholas-Applegate recommended the Reorganizations to the Board at meetings thereof held on October 7, 2002 and November 8, 2002. In recommending the Reorganizations, Nicholas-Applegate advised the Board that the investment advisory and administration fee schedule applicable to Global Select Fund is less than that currently in effect for each Target and it is likely that Nicholas-Applegate would not be able to continue to waive its fees and absorb the Targets' excess operating expenses. The Board considered the fact that Global Select Fund has a better performance record, that Catherine Somhegyi Nicholas is its portfolio manager, that it has a lower overall expense ratio, and that the Targets have had difficulty in attracting sufficient assets to become economically viable. The Board also considered that the Funds have an identical investment objective and similar investment strategies. Further, Nicholas-Applegate advised the Board that, because Global Select Fund has greater net assets than either Target, combining the three Funds could reduce the expenses Global Select Fund bears as a percentage 12 of net assets. Nicholas-Applegate also advised the Board that any reduction in the Funds' expense ratios as a result of the Reorganizations could benefit Nicholas-Applegate by reducing or eliminating any reimbursements or waivers of expenses resulting from its obligation to limit each Fund's expenses. DESCRIPTION OF SECURITIES TO BE ISSUED The Trust is registered with the SEC as an open-end management investment company. Fund shares entitle their holders to one vote per full share and fractional votes for fractional shares held. Each Target currently has only Class I shares outstanding. Global Select Fund has outstanding Class I and Class R shares, but only the Class I shares are involved in the Reorganizations. If the Reorganization Plan is approved with respect to a Target, each Shareholder thereof will receive Global Select Fund Class I shares. The Funds do not hold annual meetings of shareholders. There normally will be no meetings of shareholders for the purpose of electing trustees unless fewer than a majority of the trustees holding office have been elected by shareholders, at which time the trustees then in office will call a shareholders' meeting for the election of trustees. The trustees will call annual or special meetings of shareholders for action by shareholder vote as required by the 1940 Act or the Trust's Declaration of Trust or at their discretion. FEDERAL INCOME TAX CONSIDERATIONS The exchange of a Target's assets for Global Select Fund Class I shares and Global Select Fund's assumption of that Target's liabilities is intended to qualify for federal income tax purposes as a tax-free reorganization under section 368(a)(1)(C) of the Code. The Trust will receive an opinion of its counsel, Kirkpatrick & Lockhart LLP, substantially to the effect that, with respect to each Reorganization -- (1) Global Select Fund's acquisition of the Target's assets in exchange solely for Global Select Fund shares and Global Select Fund's assumption of the Target's liabilities, followed by the Target's distribution of those shares PRO RATA to its Shareholders constructively in exchange for their Target shares, will qualify as a "reorganization" as defined in section 368(a)(1)(C) of the Code, and each Fund will be "a party to a reorganization" within the meaning of section 368(b) of the Code; (2) The Target will recognize no gain or loss on the transfer of its assets to Global Select Fund in exchange solely for Global Select Fund shares and Global Select Fund's assumption of the Target's liabilities or on the subsequent distribution of those shares to the Target's Shareholders in constructive exchange for their Target shares: (3) Global Select Fund will recognize no gain or loss on its receipt of the transferred assets in exchange solely for Global Select Fund shares and its assumption of the Target's liabilities; (4) Global Select Fund's basis in the transferred assets will be the same as the Target's basis therein immediately before the Reorganization, and Global Select Fund's holding period for those assets will include the Target's holding period therefor; 13 (5) A Shareholder will recognize no gain or loss on the constructive exchange of all its Target shares solely for Global Select Fund shares pursuant to the Reorganization; and (6) A Shareholder's aggregate basis in the Global Select Fund shares it receives in the Reorganization will be the same as the aggregate basis in its Target shares it constructively surrenders in exchange for those Global Select Fund shares, and its holding period for those Global Select Fund shares will include its holding period for those Target shares, provided the shareholder holds them as capital assets at the Effective Time. The tax opinion will state that no opinion is expressed as to the effect of a Reorganization on the Funds participating therein or any Shareholder with respect to any asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting. Target shareholders should consult their tax advisers regarding the effect, if any, of the Reorganizations in light of their individual circumstances. Because the foregoing discussion only relates to the federal income tax consequences of the Reorganizations, those shareholders also should consult their tax advisers about state and local tax consequences, if any, of the Reorganizations. CAPITALIZATION The following table shows each Fund's capitalization as of September 30, 2002 (unaudited), and on a PRO FORMA combined basis (unaudited) as of September 30, 2002, giving effect to the Reorganizations:
GLOBAL TECHNOLOGY GLOBAL HEALTH CARE GLOBAL SELECT FUND GLOBAL SELECT FUND FUND FUND (CLASS I) (CLASS I) (PRO FORMA) NET ASSETS $16, 803,589 $20,467,352 $49,280,794 $86,905,413 NET ASSET VALUE PER $9.95 $17.59 $10.14 $10.18 SHARE SHARES OUTSTANDING 1,689,248 1,163,721 4,861,760 823,976
The foregoing table should not be relied on to reflect the number of shares to be issued in the Reorganization; the actual number of shares to be issued will depend upon the Funds' respective NAVs per share and number of shares outstanding at the Effective Time. 14 -------------------------------------- VOTING INFORMATION The Trust is furnishing this Prospectus/Proxy Statement in connection with the solicitation of proxies for use at the Meeting. Shareholders of record at the close of business on December 8, 2002 ("Record Date"), are entitled to vote at the Meeting or any adjournment thereof. These proxy materials will first be mailed to shareholders on or about November 27, 2002. Each shareholder of a Target is entitled to one vote for each full share and a fractional vote for each fractional share of that Target outstanding on the Trust's books in the name of the shareholder or his or her nominee on the Record Date. If a shareholder specifies how to vote on the proposal, it will be voted accordingly. If a shareholder gives no such direction, the proxy will be voted FOR the proposal described in this Prospectus/Proxy Statement. The proxy confers discretionary authority on the persons designated therein to vote on other business not currently contemplated that may properly come before the Meeting. A shareholder may revoke a proxy at any time prior to use by revoking the proxy with the Secretary of the Trust, by submitting a proxy bearing a later date, or by attending and voting at the Meeting. The presence in person or by proxy of more than one-third of the outstanding shares of beneficial interest in a Target entitled to vote at the Meeting will constitute a quorum for the Target. For purposes of determining the presence of a quorum, shares represented by abstentions and "broker non-votes" will be counted as present and have the effect of a "No" vote at the Meeting. If a quorum is not present at the Meeting, sufficient votes in favor of the proposal set forth in the Notice of Meeting are not received by the time scheduled for the Meeting, or the holders of shares present in person or by proxy determine to adjourn the Meeting for any reason, the shareholders present in person or by proxy may adjourn the Meeting from time to time, without notice other than announcement at the Meeting or any adjournment thereof. Any adjournment will require the affirmative vote of shareholders holding a majority of the shares present in person or by proxy at the Meeting. The persons named on the proxy card will vote in favor of adjournment those favorable shares that they represent if adjournment is necessary to obtain a quorum or to obtain a favorable vote on the proposal or for any other reason they determine is appropriate. Business may be conducted once a quorum is present and may continue until adjournment of the Meeting, notwithstanding the withdrawal or temporary absence of sufficient shares to reduce the number present to less than a quorum. In addition to solicitations by mail, proxies may be solicited by officers and employees of Nicholas-Applegate by personal interview, by telephone, or by facsimile. The Funds will bear the cost of solicitation of proxies, including the cost of printing, preparing, assembling, and mailing the Notice of Meeting, this Prospectus/Proxy Statement, and the form of proxy. OUTSTANDING SHARES Except as set forth in Appendix D, Nicholas-Applegate does not know of any person who owns of record or beneficially 5% or more the shares of each Target and Global Select Fund. The Trust's officers and Trustees as a group owned less than one percent of the outstanding shares of each Target on October 31, 2002. 15 ADDITIONAL INFORMATION ABOUT THE FUNDS Information about Global Select Fund is included in Appendices B and C, which include management's discussion and analysis for the fiscal year ended March 31, 2002. Information about each Fund is contained in the Pro/SAI and the Annual Report, which are incorporated by reference herein. Copies of the Pro/SAI and the Annual Report, which have been filed with the SEC, may be obtained upon request and without charge by contacting the Distributor by calling toll free 1-800-551-8643 or by writing to Nicholas-Applegate Institutional Funds, Attn: Mutual Fund Operations, 600 West Broadway, Suite 3200, San Diego, CA 92101. This Prospectus/Proxy Statement and the related Statement of Additional Information do not contain all the information set forth in the registration statements and the exhibits relating 16 thereto that the Trust has filed with the SEC under the Securities Act of 1933, as amended, and the 1940 Act, to which reference is hereby made. Each Fund is subject to the information requirements of the Securities Exchange Act of 1934, as amended, and the 1940 Act and in accordance with those requirements files reports, proxy material, and other information with the SEC. These reports, proxy material, and other information can be inspected and copied at the Public Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, the SEC's Midwest Regional office, 175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604, and the SEC's Northeast Regional Office, 233 Broadway, New York, New York 10279. Copies of such reports, materials, and other information can also be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20459, at prescribed rates. INFORMATION CONCERNING ADVISER, DISTRIBUTOR, AND AFFILIATED COMPANIES The Trust's investment adviser is Nicholas-Applegate, a limited liability company organized under the laws of Delaware, with offices at 600 West Broadway, 30th Floor, San Diego, California 92101. Nicholas-Applegate was organized in August 1984 to manage discretionary accounts primarily in publicly traded equity securities and securities convertible or exercisable for publicly traded equity securities, with the goal of capital appreciation. On January 31, 2001, Nicholas-Applegate was acquired by Allianz of America, Inc. ("AZOA"). Allianz AG, the parent of AZOA, is a publicly traded German Aktiengesellschaft (a German publicly traded company), which, together with its subsidiaries, comprise one of the world's largest insurance group ("Allianz Group"). Allianz Group currently has assets under management of approximately $690 billion. Allianz AG's address is: Koeniginstrasses 28, D-80802, Munich, Germany. Nicholas-Applegate Securities ("Distributor"), 600 West Broadway, 30th Floor, San Diego, CA 92101, is the principal underwriter and distributor for the Trust and, in such capacity, is responsible for distributing shares of the Funds. The Distributor is a limited liability company organized under the laws of Delaware to distribute shares of registered investment companies. Its managing member is Nicholas-Applegate Holdings, LLC, the managing member of Nicholas-Applegate. MISCELLANEOUS LEGAL MATTERS Certain legal matters in connection with the issuance of Global Select Fund shares as part of the Reorganizations will be passed on by the Trust's counsel, Kirkpatrick & Lockhart LLP, 4 Embarcadero Center, 10th Floor, San Francisco, CA 94111. 17 EXPERTS Each Fund's audited financial statements, incorporated herein by this reference, have been audited by Ernst & Young LLP, the Funds' independent auditors, whose report thereon is included in the Annual Report. Those financial statements have been incorporated herein by reference in reliance on Ernst & Young LLP's report given on their authority as experts in auditing and accounting matters. OTHER BUSINESS The Board knows of no other business to be brought before the Meeting. If, however, any other matters properly come before the Meeting, it is the intention that proxies that do not contain specific instructions to the contrary will be voted on such matters in accordance with the judgment of the persons designated in the proxies. BOARD RECOMMENDATION REQUIRED VOTE. Approval of the Reorganization Plan with respect to a Target requires the affirmative vote of a majority of its outstanding voting securities. THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE REORGANIZATION INVOLVING THEIR TARGET. 18 APPENDIX A FORM OF PLAN OF REORGANIZATION AND TERMINATION THIS PLAN OF REORGANIZATION AND TERMINATION ("Plan"), is adopted by Nicholas-Applegate Institutional Funds, a Delaware business trust ("Trust"), on behalf of Nicholas-Applegate Global Technology Fund and Nicholas-Applegate Global Health Care Fund (each a "Target") and Nicholas-Applegate Global Select Fund ("Acquiring Fund"), each a segregated portfolio of assets ("series") thereof. Trust wishes to effect two separate reorganizations, each described in section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended ("Code"), and intends this Plan to be, and adopts it as, a "plan of reorganization" within the meaning of the regulations under section 368 of the Code ("Regulations"). Each reorganization will involve the transfer of a Target's assets to Acquiring Fund in exchange solely for voting shares of beneficial interest in Acquiring Fund and Acquiring Fund's assumption of that Target's liabilities, followed by the constructive distribution of those shares PRO RATA to the holders of shares of beneficial interest in that Target in exchange therefor, all on the terms and conditions set forth herein. (All such transactions involving a Target and Acquiring Fund, sometimes referred to herein individually as a "Fund" and collectively as "Funds," are referred to herein as a "Reorganization.") For convenience, the balance of this Plan refers only to a single Reorganization and one Target, but the terms and conditions hereof apply separately to each Reorganization. The consummation of one Reorganization is not contingent on the consummation of the other Reorganization. Trust is a business trust that is duly organized, validly existing, and in good standing under the laws of the State of Delaware. Trust is duly registered as an open-end management investment company under the Investment Company Act of 1940, as amended ("1940 Act"). Before January 1, 1997, Trust "claimed" classification for federal tax purposes as an association taxable as a corporation, and it has never elected otherwise. Each Fund is a duly established and designated series of Trust. Target has a single class of shares, designated Class I shares ("Target Shares"). Acquiring Fund's shares are divided into multiple classes, including Class I shares. Only Acquiring Fund's Class I shares ("Acquiring Fund Shares"), which are substantially similar to the Target Shares, are involved in the Reorganization. 1. PLAN OF REORGANIZATION AND TERMINATION 1.1. At the Closing (as defined in paragraph 3.1), Target shall assign, sell, convey, transfer, and deliver all of its assets described in paragraph 1.2 ("Assets") to Acquiring Fund. In exchange therefor, Acquiring Fund shall -- (a) issue and deliver to Target the number of full and fractional (rounded to the third decimal place) Acquiring Fund Shares determined by dividing the net value of Target (computed as set forth in paragraph 2.1) by the net asset value ("NAV") of an Acquiring Fund Share (computed as set forth in paragraph 2.2), and (b) assume all of Target's liabilities described in paragraph 1.3 ("Liabilities"). A-1 1.2. The Assets shall consist of all cash, cash equivalents, securities, receivables (including interest and dividends receivable), claims and rights of action, rights to register shares under applicable securities laws, books and records, deferred and prepaid expenses shown as assets on Target's books, and other property owned by Target at the Effective Time (as defined in paragraph 3.1). 1.3. The Liabilities shall consist of all of Target's liabilities, debts, obligations, and duties of whatever kind or nature, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, whether or not determinable at the Effective Time, and whether or not specifically referred to in this Plan. Notwithstanding the foregoing, Target agrees to use its best efforts to discharge all its known Liabilities before the Effective Time. 1.4. At or immediately before the Effective Time, Target shall declare and pay to its shareholders a dividend and/or other distribution in an amount large enough so that it will have distributed substantially all (and in any event not less than 90%) of its "investment company taxable income" and substantially all of its "net capital gain," if any (as such terms are defined in sections 852(b)(2) and 1222(11), respectively, of the Code, both computed without regard to any deduction for dividends paid) for the current taxable year through the Effective Time. 1.5. At the Effective Time (or as soon thereafter as is reasonably practicable), Target shall distribute the Acquiring Fund Shares it receives pursuant to paragraph 1.1 to its shareholders of record, determined as of the Effective Time (each a "Shareholder" and collectively "Shareholders"), in constructive exchange for their Target Shares. That distribution shall be accomplished by Trust's transfer agent's opening accounts on Acquiring Fund's share transfer books in the Shareholders' names and transferring those Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with the respective PRO RATA number of full and fractional (rounded to the third decimal place) Acquiring Fund Shares due that Shareholder. All outstanding Target Shares, including any represented by certificates, shall simultaneously be canceled on Target's share transfer books. Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares issued in connection with the Reorganization. 1.6. As soon as reasonably practicable after distribution of the Acquiring Fund Shares pursuant to paragraph 1.5, but in all events within six months after the Effective Time, Target shall be terminated as a series of Trust and any further actions shall be taken in connection therewith as required by applicable law. 1.7. Any reporting responsibility of Target to a public authority is and shall remain its responsibility up to and including the date on which it is terminated. A-2 1.8. Any transfer taxes payable on issuance of Acquiring Fund Shares in a name other than that of the registered holder on Target's books of the Target Shares constructively exchanged therefor shall be paid by the person to whom those Acquiring Fund Shares are to be issued, as a condition of that transfer. 2. VALUATION 2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a) the value of the Assets computed as of the close of regular trading on the New York Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"), using the valuation procedures set forth in Trust's then-current prospectus regarding Class I shares and statement of additional information (collectively, "P/SAI"), less (b) the amount of the Liabilities as of the Valuation Time. 2.2. For purposes of paragraph 1.1(a), the NAV of an Acquiring Fund Share shall be computed as of the Valuation Time, using the valuation procedures set forth in the P/SAI. 2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by or under the direction of Brown Brothers Harriman & Co., Private Bankers ("Custodian"). 3. CLOSING AND EFFECTIVE TIME 3.1. The Reorganization, together with related acts necessary to consummate the same ("Closing"), shall occur at Trust's principal office on or about January 31, 2003, or at such other place and/or on such other date Trust determines. All acts taking place at the Closing shall be deemed to take place simultaneously as of the close of business on the date thereof or at such other time Trust determines ("Effective Time"). If, immediately before the Valuation Time, (a) the NYSE is closed to trading or trading thereon is restricted or (b) trading or the reporting of trading on the NYSE or elsewhere is disrupted, so that accurate appraisal of Target's net value and/or the NAV of an Acquiring Fund Share is impracticable, the Effective Time shall be postponed until the first business day after the day when that trading has been fully resumed and that reporting has been restored. 3.2. Trust's fund accounting and pricing agent shall deliver at the Closing a certificate of an authorized officer verifying that the information (including adjusted basis and holding period, by lot) concerning the Assets, including all portfolio securities, transferred by Target to Acquiring Fund, as reflected on Acquiring Fund's books immediately after the Closing, does or will conform to that information on Target's books immediately before the Closing. Custodian shall deliver at the Closing a certificate of an authorized officer stating that (a) the Assets it holds will be transferred to Acquiring Fund at the Effective Time and (b) all necessary taxes in conjunction with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, A-3 have been paid or provision for payment has been made. Trust's transfer agent shall deliver at the Closing a certificate as to the opening of accounts in the Shareholders' names on Acquiring Fund's share transfer books and a confirmation, or other evidence satisfactory to Trust, that the Acquiring Fund Shares to be credited to Target at the Effective Time have been credited to Target's account on Acquiring Fund's books. 4. CONDITIONS PRECEDENT 4.1. Trust's obligation to implement this Plan on Acquiring Fund's behalf shall be subject to satisfaction of the following conditions at or before the Effective Time: 4.1.1. At the Closing, Target will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer, and deliver the Assets free of any liens or other encumbrances (except securities that are subject to "securities loans" as referred to in section 851(b)(2) of the Code); and on delivery and payment for the Assets, Acquiring Fund will acquire good and marketable title thereto; 4.1.2. Target is not in violation of, and the adoption of this Plan and consummation of the transactions contemplated hereby will not conflict with or violate, Delaware law or any provision of Trust's Amended and Restated Declaration of Trust dated February 19, 1999, or By-Laws (collectively "Declaration of Trust") or of any agreement, instrument, lease, or other undertaking to which Target is a party or by which it is bound or result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, judgment, or decree to which Target is a party or by which it is bound; 4.1.3. All material contracts and other commitments of or applicable to Target (other than this Plan and investment contracts, including options, futures, and forward contracts) will be terminated, or provision for discharge of any liabilities of Target thereunder will be made, at or prior to the Effective Time, without either Fund's incurring any liability or penalty with respect thereto and without diminishing or releasing any rights Target may have had with respect to actions taken or omitted or to be taken by any other party thereto prior to the Closing; 4.1.4. No litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or (to Trust's knowledge) threatened against Trust with respect to Target or any of its properties or assets that, if adversely determined, would materially and adversely affect Target's financial condition or the conduct of its business; and Trust knows of no facts that might form the basis for the institution of any such litigation, proceeding, or investigation and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially or adversely affects its business or its ability to consummate the transactions contemplated hereby; 4.1.5. Target incurred the Liabilities in the ordinary course of its business; A-4 4.1.6. Target is a "fund" as defined in section 851(g)(2) of the Code; it qualified for treatment as a regulated investment company under Subchapter M of the Code ("RIC") for each past taxable year since it commenced operations and will continue to meet all the requirements for that qualification for its current taxable year; the Assets will be invested at all times through the Effective Time in a manner that ensures compliance with the foregoing; and Target has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M did not apply to it; 4.1.7. Target is not under the jurisdiction of a court in a "title 11 or similar case" (as defined in section 368(a)(3)(A) of the Code); 4.1.8. During the five-year period ending at the Effective Time, (a) neither Target nor any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to it will have acquired Target Shares, either directly or through any transaction, agreement, or arrangement with any other person, with consideration other than Acquiring Fund Shares or Target Shares, except for shares redeemed in the ordinary course of Target's business as a series of an open-end investment company as required by section 22(e) of the 1940 Act, and (b) no distributions will have been made with respect to Target Shares, other than normal, regular dividend distributions made pursuant to Target's historic dividend-paying practice and other distributions that qualify for the deduction for dividends paid (within the meaning of section 561 of the Code) referred to in sections 852(a)(1) and 4982(c)(1)(A) of the Code; 4.1.9. From the date it commenced operations through the Effective Time, Target will conduct its "historic business" (within the meaning of section 1.368-1(d)(2) of the Regulations) in a substantially unchanged manner; and before the Effective Time Target will not (a) dispose of and/or acquire any assets (i) for the purpose of satisfying Acquiring Fund's investment objective or policies or (ii) for any other reason except in the ordinary course of its business as a RIC, or (b) otherwise change its historic investment policies; and 4.1.10. Not more than 25% of the value of Target's total assets (excluding cash, cash items, and U.S. government securities) is invested in the stock and securities of any one issuer, and not more than 50% of the value of such assets is invested in the stock and securities of five or fewer issuers. 4.2. Trust's obligation to implement this Plan on Target's behalf shall be subject to satisfaction of the following conditions at or before the Effective Time: 4.2.1. No consideration other than Acquiring Fund Shares (and Acquiring Fund's assumption of the Liabilities) will be issued in exchange for the Assets in the Reorganization; 4.2.2. The Acquiring Fund Shares to be issued and delivered to Target hereunder (a) at the Effective Time, will have been duly authorized and duly registered under the federal securities laws (and appropriate notices respecting them will have been duly filed under applicable state securities laws) and (b) when issued and delivered as provided herein, A-5 will be duly and validly issued and outstanding shares of Acquiring Fund, fully paid and non-assessable by Trust; 4.2.3. Acquiring Fund is not in violation of, and the adoption of this Plan and consummation of the transactions contemplated hereby will not conflict with or violate, Delaware law or any provision of the Declaration of Trust or of any agreement, instrument, lease, or other undertaking to which Acquiring Fund is a party or by which it is bound or result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, judgment, or decree to which Acquiring Fund is a party or by which it is bound; 4.2.4. No litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or (to Trust's knowledge) threatened against Trust with respect to Acquiring Fund or any of its properties or assets that, if adversely determined, would materially and adversely affect Acquiring Fund's financial condition or the conduct of its business; and Trust knows of no facts that might form the basis for the institution of any such litigation, proceeding, or investigation and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially or adversely affects its business or its ability to consummate the transactions contemplated hereby; 4.2.5. Acquiring Fund is a "fund" as defined in section 851(g)(2) of the Code; it qualified for treatment as a RIC for each past taxable year since it commenced operations and will continue to meet all the requirements for such qualification for its current taxable year; it intends to continue to meet all such requirements for the next taxable year; and it has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M of the Code did not apply to it; 4.2.6. Acquiring Fund has no plan or intention to issue additional Acquiring Fund Shares following the Reorganization except for shares issued in the ordinary course of its business as a series of an open-end investment company; nor does Acquiring Fund, or any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to it, have any plan or intention to acquire -- during the five-year period beginning at the Effective Time, either directly or through any transaction, agreement, or arrangement with any other person -- with consideration other than Acquiring Fund Shares, any Acquiring Fund Shares issued to the Shareholders pursuant to the Reorganization, except for redemptions in the ordinary course of such business as required by section 22(e) of the 1940 Act; 4.2.7. Following the Reorganization, Acquiring Fund (a) will continue Target's "historic business" (within the meaning of section 1.368-1(d)(2) of the Regulations) and (b) will use a significant portion of Target's "historic business assets" (within the meaning of section 1.368-1(d)(3) of the Regulations) in a business; in addition, (c) Acquiring Fund has no plan or intention to sell or otherwise dispose of any of the Assets, except for dispositions made in the ordinary course of that business and dispositions necessary to maintain its status as a RIC, and (d) expects to retain substantially all the Assets in the same form as it receives them in the Reorganization, unless and until subsequent investment circumstances suggest the desirability of change or it becomes necessary to make dispositions thereof to maintain such status; A-6 4.2.8. There is no plan or intention for Acquiring Fund to be dissolved or merged into another business trust or a corporation or any "fund" thereof (as defined in section 851(g)(2) of the Code) following the Reorganization; 4.2.9. Acquiring Fund does not directly or indirectly own, nor at the Effective Time will it directly or indirectly own, nor has it directly or indirectly owned at any time during the past five years, any shares of Target; 4.2.10. During the five-year period ending at the Effective Time, neither Acquiring Fund nor any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to it will have acquired Target Shares with consideration other than Acquiring Fund Shares; and 4.2.11. Immediately after the Reorganization, (a) not more than 25% of the value of Acquiring Fund's total assets (excluding cash, cash items, and U.S. government securities) will be invested in the stock and securities of any one issuer and (b) not more than 50% of the value of such assets will be invested in the stock and securities of five or fewer issuers. 4.3. Trust's obligation to implement this Plan on each Fund's behalf shall be subject to satisfaction of the following conditions at or before the Effective Time: 4.3.1. The fair market value of the Acquiring Fund Shares each Shareholder receives will be approximately equal to the fair market value of its Target Shares it constructively surrenders in exchange therefor; 4.3.2. Its management (a) is unaware of any plan or intention of Shareholders to redeem, sell, or otherwise dispose of (i) any portion of their Target Shares before the Reorganization to any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to either Fund or (ii) any portion of the Acquiring Fund Shares they receive in the Reorganization to any person "related" (within such meaning) to Acquiring Fund, (b) does not anticipate dispositions of those Acquiring Fund Shares at the time of or soon after the Reorganization to exceed the usual rate and frequency of dispositions of shares of Target as a series of an open-end investment company, (c) expects that the percentage of Shareholder interests, if any, that will be disposed of as a result of or at the time of the Reorganization will be DE MINIMIS, and (d) does not anticipate that there will be extraordinary redemptions of Acquiring Fund Shares immediately following the Reorganization; 4.3.3. The Shareholders will pay their own expenses, if any, incurred in connection with the Reorganization; 4.3.4. The fair market value of the Assets on a going concern basis will equal or exceed the Liabilities to be assumed by Acquiring Fund and those to which the Assets are subject; 4.3.5. There is no intercompany indebtedness between the Funds that was issued or acquired, or will be settled, at a discount; A-7 4.3.6. Pursuant to the Reorganization, Target will transfer to Acquiring Fund, and Acquiring Fund will acquire, at least 90% of the fair market value of the net assets, and at least 70% of the fair market value of the gross assets, Target held immediately before the Reorganization. For the purposes of the foregoing, any amounts Target uses to pay its Reorganization expenses and to make redemptions and distributions immediately before the Reorganization (except (a) redemptions in the ordinary course of its business required by section 22(e) of the 1940 Act and (b) regular, normal dividend distributions made to conform to its policy of distributing all or substantially all of its income and gains to avoid the obligation to pay federal income tax and/or the excise tax under section 4982 of the Code) will be included as assets held thereby immediately before the Reorganization; 4.3.7. None of the compensation received by any Shareholder who is an employee of or service provider to Target will be separate consideration for, or allocable to, any of the Target Shares that Shareholder held; none of the Acquiring Fund Shares any such Shareholder receives will be separate consideration for, or allocable to, any employment agreement, investment advisory agreement, or other service agreement; and the consideration paid to any such Shareholder will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm's-length for similar services; 4.3.8. Immediately after the Reorganization, the Shareholders will not own shares constituting "control" (within the meaning of section 304(c) of the Code) of Acquiring Fund; 4.3.9. Neither Fund will be reimbursed for any expenses incurred by it or on its behalf in connection with the Reorganization unless those expenses are solely and directly related to the Reorganization (determined in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187) ("Reorganization Expenses"); 4.3.10. The aggregate value of the acquisitions, redemptions, and distributions limited by paragraphs 4.1.8, 4.2.6, and 4.2.10 will not exceed 50% of the value (without giving effect to such acquisitions, redemptions, and distributions) of the proprietary interest in Target at the Effective Time; 4.3.11. Trust has called a special meeting of Target's shareholders ("Meeting") to consider and act on this Plan and to take all other action necessary to obtain their approval, to the extent same is required, of the transactions contemplated herein; and such approval has been obtained; 4.3.12. This Plan has been duly authorized by all necessary action on the part of Trust's board of trustees ("Board"), which has made the determinations required by Rule 17a-8(a) under the 1940 Act; and, subject to Target's shareholders' approval in accordance with the Declaration of Trust and applicable law, this Plan constitutes a valid and legally binding obligation of each Fund, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws relating to or affecting creditors' rights and by general principles of equity; A-8 4.3.13. No governmental consents, approvals, authorizations, or filings are required under the 1933 Act, the Securities Exchange Act of 1934, as amended ("1934 Act"), or the 1940 Act for Trust's adoption of this Plan, except for (a) the filing with the Securities and Exchange Commission ("SEC") of a registration statement by Trust on Form N-14 relating to the Acquiring Fund Shares issuable hereunder, and any supplement or amendment thereto ("Registration Statement"), including therein a prospectus/proxy statement ("Prospectus/Proxy Statement"), and (b) such consents, approvals, authorizations, and filings as have been made or received or as may be required subsequent to the Effective Time; 4.3.14. On the effective date of the Registration Statement, at the time of the Meeting, and at the Effective Time, the Prospectus/Proxy Statement will (a) comply in all material respects with the applicable provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the rules and regulations thereunder and (b) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 4.3.15. All necessary filings will have been made with the SEC and state securities authorities, and no order or directive will have been received that any other or further action is required to permit the parties to carry out the transactions contemplated hereby; the Registration Statement will have become effective under the 1933 Act, no stop orders suspending the effectiveness thereof will have been issued, and the SEC will not have issued an unfavorable report with respect to the Reorganization under section 25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin consummation of the transactions contemplated hereby under section 25(c) of the 1940 Act; and all consents, orders, and permits of federal, state, and local regulatory authorities (including the SEC and state securities authorities) Trust deems necessary to permit consummation, in all material respects, of the transactions contemplated hereby will have been obtained, except where failure to obtain same would not involve a risk of a material adverse effect on the assets or properties of either Fund; 4.3.16. At the Effective Time, no action, suit, or other proceeding will be pending before any court or governmental agency in which it is sought to restrain or prohibit, or to obtain damages or other relief in connection with, the transactions contemplated hereby; and 4.3.17. Trust will have received an opinion of Kirkpatrick & Lockhart LLP ("Counsel"), addressed to and in form and substance reasonably satisfactory to it, as to the federal income tax consequences mentioned below ("Tax Opinion"). In rendering the Tax Opinion, Counsel may assume satisfaction of all the conditions set forth in this paragraph 4, may treat them as representations and warranties Trust made to Counsel, and may rely as to factual matters, exclusively and without independent verification, on such representations and warranties. The Tax Opinion shall be substantially to the effect that, based on the facts and assumptions stated therein and conditioned on consummation of the Reorganization in accordance with this Plan, for federal income tax purposes: (a) Acquiring Fund's acquisition of the Assets in exchange solely for Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities, followed A-9 by Target's distribution of those shares PRO RATA to the Shareholders constructively in exchange for their Target Shares, will qualify as a "reorganization" as defined in section 368(a)(1)(C) of the Code, and each Fund will be "a party to a reorganization" within the meaning of section 368(b) of the Code; (b) Target will recognize no gain or loss on the transfer of the Assets to Acquiring Fund in exchange solely for Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities or on the subsequent distribution of those shares to the Shareholders in constructive exchange for their Target Shares; (c) Acquiring Fund will recognize no gain or loss on its receipt of the Assets in exchange solely for Acquiring Fund Shares and its assumption of the Liabilities; (d) Acquiring Fund's basis in the Assets will be the same as Target's basis therein immediately before the Reorganization, and Acquiring Fund's holding period for the Assets will include Target's holding period therefor; (e) A Shareholder will recognize no gain or loss on the constructive exchange of all its Target Shares solely for Acquiring Fund Shares pursuant to the Reorganization; and (f) A Shareholder's aggregate basis in the Acquiring Fund Shares it receives in the Reorganization will be the same as the aggregate basis in its Target Shares it constructively surrenders in exchange for those Acquiring Fund Shares, and its holding period for those Acquiring Fund Shares will include its holding period for those Target Shares, provided the Shareholder holds them as capital assets at the Effective Time. Notwithstanding subparagraphs (b) and (d), the Tax Opinion may state that no opinion is expressed as to the effect of the Reorganization on the Funds or any Shareholder with respect to any Asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting. 4.4. At any time before the Effective Time, Trust may waive any of the conditions set forth in this paragraph 4 if, in the judgment of the Board, such a waiver will not have a material adverse effect on either Fund's shareholders' interests. 5. TERMINATION AND AMENDMENT OF PLAN 5.1. The Board may terminate this Plan and abandon the Reorganization at any time before the Effective Time if circumstances develop that, in its judgment, make proceeding with the Reorganization inadvisable for either Fund. 5.2. The Board may amend, modify, or supplement this Plan at any time in any manner, notwithstanding Target's shareholders' approval thereof; A-10 provided that, following such approval no such amendment, modification, or supplement shall have a material adverse effect on the Shareholders' interests. 6. MISCELLANEOUS 6.1. This Plan shall be construed and interpreted in accordance with the internal laws of the State of Delaware, provided that, in the case of any conflict between those laws and the federal securities laws, the latter shall govern. 6.2. The Funds shall bear all the Reorganization Expenses in proportion to their respective net assets as of the Effective Time. 6.3. Nothing expressed or implied herein is intended or shall be construed to confer on or give any person, firm, trust, or corporation other than the Funds and their respective successors and assigns any rights or remedies under or by reason of this Plan. 6.4. Notice is hereby given that this instrument is adopted on behalf of Trust's trustees solely in their capacities as trustees, and not individually, and that Trust's obligations under this instrument are not binding on or enforceable against any of its trustees, officers, or shareholders or any series of Trust other than the Funds but are only binding on and enforceable against the respective Funds' property. Each Fund, in asserting any rights or claims under this Plan, shall look only to the other Fund's property in settlement of such rights or claims and not to such trustees, officers, or shareholders. A-11 APPENDIX B ADDITIONAL INFORMATION REGARDING GLOBAL SELECT FUND INVESTMENT ADVISER Investment decisions for Global Select Fund are made by its investment adviser, Nicholas-Applegate, subject to direction by the Board. Nicholas-Applegate continually conducts investment research and supervision for each Fund and is responsible for the purchase or sale of portfolio instruments, for which it receives an annual fee from Global Select Fund. Founded in 1984, Nicholas-Applegate currently manages approximately $17 billion in discretionary assets for numerous clients, including employee benefit plans, corporations, public retirement systems and unions, university endowments, foundations, and other institutional investors and individuals. Nicholas-Applegate's address is 600 West Broadway, Suite 2900, San Diego, California 92101. SHARE PRICE The NAV per Global Select Fund Class I share is determined each business day at the close of regular trading on the New York Sock Exchange (usually 4 p.m. Eastern time) by dividing the value of the net assets (I.E., the value of the securities it holds, plus any cash or other assets, minus its liabilities, including accrued estimated expenses) attributable to that class by the number of its shares outstanding. Securities traded in foreign countries may not take place on all business days of the New York Stock Exchange and may occur in various foreign markets on days that are not business days of the New York Stock Exchange. Accordingly, Global Select Fund's NAV per share may change on days when the U.S. markets are closed and a shareholder will not be able to sell his or her shares. PURCHASES AND REDEMPTIONS Shares are offered at their NAV without a sales charge. Your financial institution may charge you a fee to execute orders on your behalf. Buy and sell requests are executed at the NAV per share next calculated after your request is received in good order by the transfer agent or another agent designated by the Trust. Global Select Fund reserves the right to refuse any purchase order. The minimum initial investment for opening account is $250,000, and the minimum subsequent investment is $10,000. The minimum investment may be waived for purchases of shares made by current or retired trustees, members, officers, and employees of the Trust, the Distributor, Nicholas-Applegate, and its managing member, certain family members of the above persons, and trusts or plans primarily for such persons or former employees employed by one of its affiliates, or at the Distributor's discretion. Global Select Fund may only accept orders for shares in states where it is legally able to offer shares. Global Select Fund provides for telephone, mail, or wire redemption of shares. It reserves the right to redeem in-kind, under certain circumstances, by paying you the proceeds of a redemption in securities rather than in cash. Additional information concerning purchases and redemption of shares, including how Global Select Fund's NAV per share is calculated, is contained in the Pro/SAI. B-1 EXCHANGES On any business day you may exchange all or a portion of your shares for shares of any other available Nicholas-Applegate mutual fund of the same share class. To protect the interest of other investors in Global Select Fund, the Trust may cancel the exchange privileges of any parties that, in Nicholas-Applegate's opinion, are using market-timing strategies that adversely affect Global Select Fund. Guidelines for exchanges are available from the Distributor upon request. The Trust may also refuse any exchange order. DIVIDENDS AND OTHER DISTRIBUTIONS Global Select Fund generally distributes most or all of its net earnings in the form of dividends and distributes any net capital gains annually to shareholders of record on the distribution record date. Annual dividends and net capital gains are normally distributed in the last calendar quarter. Dividends and other distributions are reinvested in additional shares of the same class of Global Select Fund, or paid in cash, as a shareholder has elected. See the Pro/SAI for further information concerning dividends and other distributions. After a Reorganization, shareholders of the applicable Target who have elected to reinvest their dividends and/or other distributions therefrom will have dividends and/or other distributions they receive from Global Select Fund reinvested in that Fund's shares. Shareholders of a Target who have elected to have their dividends and/or other distributions therefrom in cash will receive dividends and/or other distributions from Global Select Fund in cash after that Target's Reorganization, although they may thereafter elect to have those dividends and/or other distributions reinvested in additional Global Select Fund shares. Global Select Fund has qualified and intends to continue to qualify to be treated as a regulated investment company under the Code, which requires, among other things, that it distribute at least 90% of its taxable income. So long as it does so, it will not be required to pay any federal income tax on the amounts it distributes to its shareholders. A 4% nondeductible federal excise tax will be imposed on undistributed amounts if Global Select Fund does not meet certain other distribution requirements by the end of each calendar year. Global Select Fund anticipates meeting such distribution requirements. YOUR ACCOUNT TRANSACTION POLICIES PURCHASE OF SHARES. Shares are offered at their NAV without a sales charge. The minimum initial investment for opening account is $250,000, and the minimum subsequent investment is $10,000. The minimum investment may be waived for purchases of shares made by current or retired trustees, members, officers, and employees of the Trust, the Distributor, Nicholas-Applegate, and its managing member, certain family members of the above persons, and trusts or plans primarily for such persons or former employees employed by one of its affiliates, or at the Distributor's discretion. Global Select Fund may only accept orders for shares in states where it is legally able to offer shares. B-2 PRICING OF SHARES. The NAV per share of the Fund is determined each business day at the close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern time) by dividing the value of the Funds' net assets by the number of its shares outstanding. Securities traded in foreign countries may not take place on all business days of the New York Stock Exchange, and may occur in various foreign markets on days which are not business days of the New York Stock Exchange. Accordingly, a Fund's NAV may change on days when the U.S. markets are closed whereby a shareholder of the Fund will not be able to sell their shares. NAV is based on the market value of the securities in a Fund's portfolio. If the methods utilized by the Investment Adviser to value the Fund's portfolio securities do not accurately reflect current market value, portfolio securities are valued at fair value as determined in good faith by or under policies established by the Trust's Board of Trustees. BUY AND SELL PRICES. When you buy shares, you pay the NAV, as described earlier. When you sell shares, you receive the NAV. Your financial institution may charge you a fee to execute orders on your behalf. EXECUTION OF REQUESTS. Each Fund is open on the days the New York Stock Exchange is open, usually Monday-Friday. Buy and sell requests are executed at the NAV next calculated after your request is received in good order by the transfer agent or another agent designated by the Trust. The Fund reserves the right to refuse any purchase order. Each Fund reserves the right to reject any purchase or to suspend or modify the continuous offering of its shares. Your financial representative is responsible for forwarding payment promptly to the transfer agent. The Trust reserves the right to cancel any buy request if payment is not received within three days. In unusual circumstances, any Fund may temporarily suspend the processing of sell requests, or may postpone payment of proceeds for up to seven business days or longer, as allowed by federal securities laws. PURCHASE OF SHARES JUST BEFORE RECORD DATE. If you buy shares of the Funds just before the record date for a distribution (the date that determines who receives the distribution), we will pay that distribution to you. When a distribution is paid out of the value of each share of the Fund decreases by the amount of the distribution to reflect the payout. The distribution you receive makes up the decrease in share value. As explained under the Taxability of Dividends section, the distribution may be subject to income or capital gains taxes. The timing of your purchase means that part of your investment came back to you as taxable income. EXCHANGES. On any business day you may exchange all or a portion of your shares for shares of any other available Fund of the same share class. To protect the interest of other investors in a Fund, the Trust may cancel the exchange privileges of any parties that, in the opinion of the Investment Adviser, are using market-timing strategies that adversely affect the Fund. Guidelines for exchanges are available from the Distributor upon request. The Trust may also refuse any exchange order. B-3 REDEMPTIONS IN KIND. When a Fund elects to satisfy a redemption request with securities, the shareholder assumes the responsibility of selling the securities as well as a market risk of an unfavorable market movement during the time required to convert the securities to cash. TELEPHONE TRANSACTIONS. For your protection, telephone requests may be recorded in order to verify their accuracy. In addition the Trust will take measures to verify the identity of the caller, such as asking for name, account number, Social Security or taxpayer ID number and other relevant information. If these measures are not taken, your Fund may be responsible for any losses that may occur in your account due to an unauthorized telephone call. At times of peak activity, it may be difficult to place requests by phone. During these times, consider sending your request in writing. CERTIFICATED SHARES. Shares of the Trust are electronically recorded. The Trust does not normally issue certificated shares. SALES IN ADVANCE OF PURCHASE PAYMENTS. When you place a request to sell shares for which the purchase money has not yet been collected, the request will be executed in a timely fashion, but the Fund will not release the proceeds to you until your purchase payment clears. This may take up to fifteen calendar days after the purchase. FEATURES AND ACCOUNT POLICIES The services referred to in this section may be terminated or modified at any time upon 60 days' written notice to shareholders. Shareholders seeking to add to, change or cancel their selection of available services should contact the transfer agent. RETIREMENT PLANS. You may invest in each Fund through various retirement plans, including IRAs, Roth IRAs, Simplified Employee Plan (SEP) IRAs, 403(b) plans, 457 plans, and all qualified retirement plans. For further information about any of the plans, agreements, applications and annual fees, contact the Distributor, your financial representative or plan sponsor. To determine which retirement plan is appropriate for you, consult your tax adviser. ACCOUNT STATEMENTS. Shareholders will receive periodic statements reporting all account activity, including systematic transactions, dividends and capital gains paid. DIVIDENDS. The Funds generally distribute most or all of their net earnings in the form of dividends. Each Fund pays dividends of net investment income as follows: Any net capital gains are distributed annually. * Annual dividends and net capital gains are normally distributed in the last calendar quarter. DIVIDEND REINVESTMENTS. If you choose this option, or if you do not indicate any choice, your dividends will be reinvested on the ex-dividend date. Alternatively, you can choose to have a check for your dividends mailed to you. Interest will not accrue or be paid on uncashed dividend checks. B-4 TAXABILITY OF DIVIDENDS. Dividends you receive from a Fund, whether reinvested or taken as cash, are generally taxable. Dividends from a Fund's long-term capital gains are taxable as capital gains; dividends from other sources are generally taxable as ordinary income. Some dividends paid in January may be taxable as if they had been paid the previous December. Corporations may be entitled to take a dividends-received deduction for a portion of certain dividends they receive. The tax information statement that is mailed to you details your dividends and their federal tax category, although you should verify your tax liability with your tax professional. TAXABILITY OF TRANSACTIONS. Any time you sell or exchange shares, it is considered a taxable event for you. Depending on the purchase price and the sale price of the shares you sell or exchange, you may have a gain or a loss on the transaction. You are responsible for any tax liabilities generated by your transactions. Federal tax law requires you to provide the Fund with your taxpayer identification number and certifications as to your tax status. If you fail to do this, or if you are otherwise subject to backup withholding, the Fund will withhold and pay to the U.S. Treasury 31% of your distributions and sale proceeds. Dividends of net investment income and short-term capital gains paid to a nonresident foreign shareholder generally will be subject to a U.S. withholding tax of up to 30%. This rate may be lower, depending on any tax treaty the U.S. may have with the shareholder's country. SMALL ACCOUNTS. If you draw down a non-retirement account so that its total value is less than $250,000, you may be asked to purchase more shares within 60 days. If you do not take action, the Fund may close out your account and mail you the proceeds. Your account will not be closed if its drop in value is due to Fund performance. AUTOMATIC INVESTMENT PLAN. You may make regular monthly or quarterly investments in each Fund through automatic withdrawals of specified amounts from your bank account once an automatic investment plan is established. See the account application for further details about this service or call the Transfer Agent at 1-800-551-8043. CROSS-REINVESTMENT. You may cross-reinvest dividends or dividends and capital gains distributions paid by one Fund into another Fund, subject to conditions outlined in the Statement of Additional Information and the applicable provisions of the qualified retirement plan. FINANCIAL HIGHLIGHTS The financial highlights tables are intended to help you understand the Funds' financial performance for the period since commencement of operations. Certain information reflects financial results for a share of the predecessor Institutional Portfolio outstanding throughout each period indicated. The total returns in the table represent the rate that an investor would have earned [or lost] on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Ernst & Young LLP with respect to the fiscal year ended March 31, 2002 and the prior four fiscal years, if any. Please read in conjunction with the Trust's 2002 Annual Report, which is available upon request. B-5
GLOBAL SELECT FOR THE FOR THE FOR THE FOR THE FOR THE 9/30/97 PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED (COMMENCED) 09/30/02 03/31/02 03/31/01 3/31/00 3/31/99 TO 3/31/98 UNAUDITED - -------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning $13.67 12.86 31.91 20.48 14.81 12.50 Net Investment Income (Loss)(1) $0.00 (0.06) (0.06) (0.21) (0.05) - Net Realized and Unrealized Gains (Loss) $(3.53) 0.87 (10.00) 19.90 5.86 2.31 Total From Investment Operations $(3.53) 0.81 (10.06) 19.69 5.81 2.31 DISTRIBUTIONS FROM: Net Investment Income - - - - - - Net Realized Capital Gains - - (8.99) (8.26) (0.14) - Net Asset Value, Ending $10.14 13.67 12.86 31.91 20.48 14.81 Total Return(2) (25.82%) 6.30% (36.33%) 110.64% 39.55% 18.48% RATIOS TO AVERAGE NET ASSETS(3) Net Investment Income (Loss) (0.05%) (0.43%) (0.21%) (0.81%) (0.31%) (0.06%) Total Expenses 1.37% 1.37% 1.78% 1.82% 3.14% 2.14% Expense (Reimbursements)/ Recoupment (0.19%) (0.14%) (0.48%) (0.49%) (1.81%) (0.94%) Net Expenses(4) 1.18%(5) 1.23% 1.30% 1.33% 1.33% 1.20% Fund's Portfolio Turnover Rate 129% 401% 440% 348% 419% 238% Net Assets, Ending (in 000's) $49,281 41,219 15,023 24,742 10,414 7,320
GLOBAL TECHNOLOGY FOR THE FOR THE FOR THE FOR THE 7/31/98 PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED (COMMENCED) 09/30/02 03/31/02 03/31/01 3/31/00 TO 3/31/99 UNAUDITED - ----------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning $19.69 22.27 138.95 44.64 12.50 Net Investment Income (Loss)(1) ($0.09) (0.09) (0.78) (1.09) (0.05) Net Realized and Unrealized Gains (Loss) $(9.65) (2.49) (80.32) 108.81 32.19 Total From Investment Operations $(9.74) (2.58) (81.10) 107.72 32.14 DISTRIBUTIONS FROM: Net Investment Income - - - - - Net Realized Capital Gains - - (35.58) (13.41) - Net Asset Value, Ending $9.95 19.69 22.27 138.95 44.64 Total Return(2) (49.49%) (11.59%) (69.62%) 259.92% 257.20% RATIOS TO AVERAGE NET ASSETS(3) Net Investment Income (Loss) 0.23% (0.43%) (0.93%) (1.06%) (0.84%) Total Expenses 1.84% 1.46% 1.36% 1.42% 4.12% Expense (Reimbursements)/ Recoupment (0.33%) (0.02%) 0.04% - (2.69%) Net Expenses(4) 1.51% 1.44% 1.40% 1.42% 1.43% Fund's Portfolio Turnover Rate 96% 504% 416% 357% 254% Net Assets, Ending (in 000's) $16,804 57,794 75,622 405,318 24,094
GLOBAL HEALTHCARE FOR THE FOR THE FOR THE 9/1/99 PERIOD ENDED YEAR ENDED YEAR ENDED (COMMENCED) 09/30/02 03/31/02 03/31/01 TO 3/31/00 UNAUDITED - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning $24.93 22.98 30.91 12.50 Net Investment Income (Loss)(1) ($0.12) (0.21) (0.16) (0.10) Net Realized and Unrealized Gains (Loss) $(7.22) 2.16 0.03 18.52 Total From Investment Operations $(7.34) 1.95 (0.13) 18.42 DISTRIBUTIONS FROM: Net Investment Income - - (0.10) (0.01) Net Realized Capital Gains - - (7.70) - Net Asset Value, Ending $17.59 24.93 22.98 30.91 Total Return(2) (29.44%) 8.49% (5.36%) 147.42% RATIOS TO AVERAGE NET ASSETS(3) Net Investment Income (Loss) 0.34% (0.80%) (0.52%) (0.69%) Total Expenses 1.60% 1.36% 1.37% 1.45% Expense (Reimbursements)/ Recoupment (0.19%) 0.00% 0.01% (0.04%) Net Expenses(4) 1.41% 1.36% 1.38% 1.41% Fund's Portfolio Turnover Rate 207% 396% 717% 327% Net Assets, Ending (in 000's) $20,467 93,177 88,104 125,355
(1) Prior to April 1, 1999, net investment income per share was calculated by taking the difference in undistributed net investment income per share at the beginning and end of the period, adjusted for per share distributions. Beginning April 1 , 1999, net investment income per share is calculated by dividing net investment income for the period by the average shares outstanding during the period. (2) Total returns are not annualized for periods less than one year. (3) Ratios are annualized for periods of less than one year. Expense reimbursements reflect voluntary reductions to total expenses, as discussed in the notes to financial statements. Such amounts would decrease net investment income (loss) ratios had such reductions not occurred. (4) Net expenses include certain items not subject to expense reimbursement. (5) On May 17, 2002 the Board of Trustees approved an amendment to the Expense Limitation Agreement whereby overall operating expenses of the Global Select, excluding taxes, interest, brokerage and extraordinary expenses, do not exceed 1.05%, representing a 0.15% decrease in the Fund's expense cap, respectively. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. B-6 APPENDIX C THE FUNDS' REVIEW, OUTLOOK AND PERFORMANCE GLOBAL SELECT FUND INSTITUTIONAL SHARES MANAGEMENT TEAM: CATHERINE SOMHEGYI NICHOLAS, Lead Portfolio Manager; PEDRO V. MARCAL, JR., Portfolio Manager; LORETTA J. MORRIS, Portfolio Manager; STEVEN ROSS, Portfolio Manager; ANDREW BEAL, Portfolio Manager;; LAWRENCE S. SPEIDELL, CFA, Director of Global & Systematic Management & Research GOAL: The Global Select Fund seeks to maximize long-term capital appreciation by investing in companies that, in the opinion of the Investment Adviser, represent the "best of the best" globally. MARKET OVERVIEW: During the fiscal year ended March 31, 2002, global equity markets posted mixed results. The investment climate was characterized by a slowdown in global GDP, led by the United States. As world economies weakened, so did corporate profit growth and stock prices. Technology and telecommunications companies suffered the brunt of the decline, as capital spending remained soft. Difficult economic and investment conditions were accentuated by the terrorist attacks. Monetary policy was highly accommodative as central banks worldwide lowered interest rates in an effort to stimulate growth. Near the end of the period, investors were encouraged by positive economic news emanating from around the globe. During the period, broad US indices were flat to slightly higher, concealing underlying month-to-month volatility. Overseas, stock prices in developed countries fell, led by weakness in Japan. On a positive note, emerging markets registered double-digit gains. Emerging market equities generally respond favorably to easy monetary policy and are most leveraged to an economic recovery. Small-cap stocks, which also tend to do well during easing cycles, outperformed large caps this period. C-1 PERFORMANCE: During the 12 months ended March 31, 2002, the Fund gained 6.3%, outperforming the MSCI All Country Word Index Free, which was down 3.1%. On an annualized basis, the Fund rose 12.6% during the three years ended March 31, 2002, versus the MSCI All Country World Index Free, which fell 3.8%. PORTFOLIO SPECIFICS: The Fund's strong performance versus its benchmark this period was largely attributable to stock selection in the United States and Taiwan and among retail and technology companies. Examples of some of the Fund's best-performing holdings were US-based Ticketmaster, an online ticketing service and United Microelectronics, a global semiconductor manufacturer located in Taiwan. Based on our company-by-company analysis, at March 31, 2002, the Fund was underweight in financial services stocks and overweight in the transportation sector. The Fund was also overweight in consumer services as we expect select companies in the broadcasting, publishing and hotel industries to perform well as the economy recovers. MARKET OUTLOOK: We remain optimistic in our outlook for the global equity markets due to: - Ongoing benefits of low interest rates - Expectations economies will continue to improve - Likelihood that corporate earnings have bottomed and are poised for a rebound Recently, the market has become more sensitive to earnings reports, rewarding stocks that are beating expectations - and punishing those that are not. This type of environment is especially conducive to our research-intensive, bottom-up investment process. COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN GLOBAL SELECT FUND INSTITUTIONAL SHARES WITH THE MSCI ALL COUNTRY WORLD INDEX FREE. C-2 ANNUALIZED TOTAL RETURNS As of 3/31/02 1 Year Since Inception 6.30% 21.00% Line Graph: Global Select Fund Institutional Shares Growth of $250,000
GLOBAL MSCI ALL SELECT FUND COUNTRY WORLD INSTITUTIONAL SHARES FREE INDEX 9/30/97 $250,000 $250,000 10/97 $235,000 $235,125 11/97 $236,200 $238,722 12/97 $247,000 $241,850 1/98 $255,800 $247,170 2/98 $275,000 $264,077 3/98 $296,200 $275,353 4/98 $310,400 $277,941 5/98 $311,200 $272,660 6/98 $325,800 $277,568 7/98 $334,000 $277,651 8/98 $277,000 $238,753 9/98 $286,800 $243,504 10/98 $298,200 $265,736 C-3 11/98 $319,687 $281,866 12/98 $361,061 $294,944 1/99 $397,187 $300,961 2/99 $377,610 $293,407 3/99 $413,333 $306,610 4/99 $428,469 $319,856 5/99 $414,745 $308,565 6/99 $463,385 $323,932 7/99 $473,678 $322,603 8/99 $491,842 $322,216 9/99 $507,786 $318,736 10/99 $557,636 $334,864 11/99 $652,092 $345,279 12/99 $828,075 $374,040 1/00 $772,143 $353,880 2/00 $903,653 $355,083 3/00 $870,639 $378,412 4/00 $805,975 $361,421 5/00 $766,140 $352,024 6/00 $816,070 $363,958 7/00 $792,060 $353,257 8/00 $854,814 $364,244 9/00 $789,332 $344,247 10/00 $724,941 $337,499 11/00 $659,497 $316,575 C-4 12/00 $702,601 $321,861 1/01 $693,118 $330,004 2/01 $596,133 $302,251 3/01 $554,322 $281,910 4/01 $615,099 $302,433 5/01 $601,737 $299,076 6/01 $594,840 $289,924 7/01 $578,030 $285,343 8/01 $533,201 $272,217 9/01 $472,855 $247,364 10/01 $489,235 $252,608 11/01 $536,218 $268,143 12/01 $559,495 $270,664 1/02 $553,891 $263,248 2/02 $552,598 $261,326 3/31/02 $589,237 $273,138
The graph above shows the value of a hypothetical $250,000 investment in the Fund's Class I shares compared with the Morgan Stanley Capital International All Country World Free Index ("MSCI ACW Free") over the periods indicated. The Fund's Class I shares calculate their performance based upon the historical performance of their corresponding series of Nicholas-Applegate Mutual Funds (renamed Pilgrim Mutual Funds). The Nicholas-Applegate Institutional Funds' Class I shares were first available on May 7, 1999. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Absent expense limitations, total returns would have been slightly lower. The total returns shown above do not show the effects of income taxes on an individual's investment. In most cases, taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. Past performance cannot guarantee future results. C-5 The MSCI ACW Free Index is a market capitalization weighted index composed of 1,784 companies with average market capitalizations of US $5.9 billion. The index is representative of the market structure of 22 developed countries in North America, Europe, and the Pacific Rim. The index is calculated without dividends or with gross dividends invested, in both US dollars and local currencies. The unmanaged Index differs from the Fund in composition, does not pay management fees or expenses and includes reinvested dividends. One cannot invest directly in an index. Since markets can go down as well as up, investment return and principal value will fluctuate with market conditions, currency volatility and the social, economic and political climates of countries where the Fund invests. You may have a gain or loss when you sell your shares. GLOBAL TECHNOLOGY FUND INSTITUTIONAL SHARES MANAGEMENT TEAM: CATHERINE SOMHEGYI NICHOLAS, Lead Portfolio Manager; CHRISTOPHER ANGIOLETTI, Portfolio Manager; JASON CAMPBELL, Portfolio Manager; JOHN MAZUR, Investment Analyst; KARL RICHTENBURG, Investment Analyst GOAL: The Global Technology Fund seeks to maximize long-term capital appreciation by investing primarily in the equity securities of companies with business operations in technology and technology-related industries worldwide. MARKET OVERVIEW: After peaking in March 2000, prices of technology stocks continued to slide during the fiscal year ended March 31, 2002. Losses were not nearly as severe as those of the prior 12 months, however. This period's decline was largely due to: C-6 - Overcapacity stemming from unusually high levels of technology-related spending in the late 1990s - Cyclical downturn in global economic activity resulting in soft end-market demand The terrorist strikes worsened an already difficult climate, sending stock prices lower and prompting companies to make deep cuts to profit forecasts. In the months that followed, investors realized business had not come to a standstill, and that technology companies were still receiving orders. As investor confidence rose, the sector recouped its post-September 11 losses. Later in the fiscal year, selling pressure resumed as technology spending remained weak, despite signs of a pickup in global economic activity. In the past, technology recoveries have typically trailed the rest of the economy by one or two quarters. PERFORMANCE: The Fund lost 11.6% during the fiscal year ended March 31, 2002 versus a 6.5% drop in the Merrill Lynch Global Technology 100 Index. Since its July 31, 1998 inception, the Fund gained 40.2%, annualized, versus the Merrill Lynch Global Technology 100 Index, which rose 7.4%. PORTFOLIO SPECIFICS: The Fund's underperformance was concentrated in the first half of the fiscal year and was mainly due to holdings in the software and telecommunications equipment industries. In the difficult environment, corporations cut information technology and capital spending more severely than we had anticipated. The Fund outperformed its benchmark during the second half of the fiscal year. Several of the Fund's holdings posted strong price gains this period, most notably in the semiconductor industry. For example, shares of United Microelectronics, a Taiwan-based semiconductor foundry climbed higher. The company saw an increase in orders across its major product lines, including the PC and digital consumer markets. We selectively added to holdings in South Korea and Taiwan this period. Companies in these countries are major suppliers of components to US technology firms and should be early beneficiaries of a recovery in technology-related spending. MARKET OUTLOOK: We believe technology is poised for a rebound. Companies are shedding excess inventories. The upturn in global economic activity should translate into increased technology-related spending over the next few months. Because many technology companies have cut costs in response to difficult conditions, more robust demand should lead to C-7 wider operating margins. As the economy and margins improve, earnings should be revised upward and earnings multiples should expand. Against this positive backdrop, we are confident our research-intensive approach and global perspective will lead us to technology stocks with exceptional price appreciation potential. COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN GLOBAL TECHNOLOGY FUND INSTITUTIONAL SHARES WITH THE MERRILL LYNCH GLOBAL TECHNOLOGY 100 INDEX. ANNUALIZED TOTAL RETURNS As of 3/31/02 1 year Since Inception -11.59% 40.22%
GLOBAL TECHNOLOGY FUND MERRILL LYNCH GLOBAL INSTITUTIONAL SHARES TECHNOLOGY 100 INDEX 7/31/98 $250,000 $250,000 8/98 $250,800 $193,370 9/98 $236,000 $225,062 10/98 $244,000 $248,156 11/98 $361,400 $281,810 12/98 $454,200 $333,723 1/99 $638,200 $379,246 C-8 2/99 $668,000 $335,469 3/99 $839,000 $371,289 4/99 $980,800 $387,993 5/99 $940,000 $396,688 6/99 $1,097,800 $450,380 7/99 $1,154,200 $439,980 8/99 $1,292,000 $463,921 9/99 $1,364,800 $476,776 10/99 $1,609,600 $523,735 1/99 $2,008,791 $631,687 12/99 $2,696,740 $776,543 1/00 $2,702,523 $763,613 2/00 $3,705,299 $994,453 3/00 $3,232,817 $947,998 4/00 $2,759,196 $853,160 5/00 $2,429,795 $745,602 6/00 $2,953,275 $848,269 7/00 $2,789,731 $789,623 8/00 $3,227,159 $929,343 9/00 $2,917,651 $816,298 10/00 $2,419,617 $730,562 11/00 $1,706,756 $524,668 12/00 $1,715,963 $495,763 1/01 $1,828,197 $581,105 2/01 $1,191,616 $413,026 C-9 3/01 $976,354 $347,103 4/01 $1,202,577 $242,050 5/01 $1,104,371 $399,134 6/01 $1,061,845 $400,763 7/01 $966,270 $364,322 8/01 $839,568 $319,692 9/01 $609,399 $236,828 10/01 $727,772 $281,683 11/01 $832,115 $334,978 12/01 $870,695 $334,375 01/02 $837,188 $336,214 2/02 $761,968 $290,589 3/31/02 $863,242 $324,385
The graph above shows the value of a hypothetical $250,000 investment in the Fund's Class I shares compared with the Merrill Lynch Global Technology 100 Index over the periods indicated. The Fund's Class I shares calculate their performance based upon the historical performance of their corresponding series of Nicholas-Applegate Mutual Funds (renamed Pilgrim Mutual Funds). The Nicholas-Applegate Institutional Funds' Class I shares were first available on May 7, 1999. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Absent expense limitations, total returns would have been slightly lower. The total returns shown above do not show the effects of income taxes on an individual's investment. In most cases, taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. Past performance cannot guarantee future results. The unmanaged Merrill Lynch Global Technology Index tracks the performance of the 100th largest securities in the global technology sector. The index differs from the Fund in composition, does not pay management fees or expenses and includes reinvested dividends. One cannot invest directly in an index. C-10 The Fund's historical performance was affected by special market factors, including the Fund's investments in IPOs, which had a material impact on performance. As the assets of the fund increase, gains attributable to hot IPOs will have a decreasing effect on overall fund performance. Accordingly, there is no guarantee that, as the Fund's assets grow, it will continue to experience substantially similar performance. Since markets can go down as well as up, investment return and principal value will fluctuate with market conditions, currency volatility and the social economic and political climates of countries where the Fund invests. You may have a gain or loss when you sell your shares. GLOBAL HEALTH CARE FUND INSTITUTIONAL SHARES MANAGEMENT TEAM:Catherine Somhegyi Nicholas; Montie L.Weisenberger, Investment Analyst; Peter S. Moon, Investment Analyst. GOAL: The Global Health Care Fund seeks to maximize long-term capital appreciation by investing primarily in the equity securities of companies with business operations in healthcare and healthcare-related industries worldwide. MARKET OVERVIEW: Global healthcare stocks delivered mixed returns during the fiscal year ended March 31, 2002. Biotech returns were flat, masking the industry's underlying volatility. Early in the period, biotech stocks rose as impressive earnings and the spring medical meeting season captured investor attention. The group lost ground after the terrorist attacks, only to recoup losses as investors rotated back into high-growth industries in anticipation of economic recovery. Finally, negative news about pending drug approvals sent stocks lower in early 2002. C-11 The large pharmaceutical companies delivered modest gains this period. Major drug stocks held up well in the post-September 11 selloff. However, pricing pressures, patent expirations and pipeline deficiencies dampened investor enthusiasm. Healthcare service companies, managed care providers and medical device firms posted solid gains this fiscal year. Healthcare services did well due to favorable volume and pricing trends and lack of imminent changes to the Medicare reimbursement system. Managed care providers enjoyed strong premium increases and enrollment growth, while medical cost inflation remained under control. Favorable demographics and strong new product cycles boosted shares of medical device companies. PERFORMANCE: During the 12 months ended March 31, 2002, the Fund gained 8.5%. The Nasdaq Biotechnology Index, which tracks more than 200 global biotech stocks, rose 0.8%. The Russell 3000 Healthcare Index, a barometer of a few, very large US pharmaceutical firms, advanced 3.6%. Since its September 1, 1999 inception through March 31, 2002, the Fund appreciated 43.5%, annualized, compared to a 4.8% gain in the Russell 3000 Healthcare Index. PORTFOLIO SPECIFICS: Stock selection across the full spectrum of healthcare industries drove the Fund's strong performance this period. Among the best-performing holdings were Gilead Sciences, Forest Laboratories and Anthem, all US companies. Gilead Sciences, a biotechnology firm, benefited from the successful launch of Viread, its new HIV drug. Shares of Forest Laboratories, a pharmaceutical company, climbed higher due to robust sales of Celexa, which treats depression, and a solid product pipeline. At Anthem, a managed care provider that went public last fall, strong membership enrollment drove impressive revenue gains. MARKET OUTLOOK: We remain excited about the investment potential of the healthcare sector. Near term, biotech stock prices should rise due to positive news flow emanating from numerous spring medical conferences. Farther out in 2002, biotech should continue to do well amid expectations for many FDA drug approvals. Upcoming patent expirations bode well for generic drug companies. Managed care and healthcare service providers are exhibiting attractive fundamentals. Finally, life science firms supporting R&D efforts should benefit from increasing R&D expenditures. C-12 Throughout the remainder of this year and beyond, we remain focused on identifying healthcare stocks displaying the strongest fundamentals and earnings visibility. COMPARISON OF CHANGE IN VALUE OF A $250,000 INVESTMENT IN GLOBAL HEALTH CARE FUND INSTITUTIONAL SHARES WITH THE RUSSELL 3000 HEALTHCARE INDEX. ANNUALIZED TOTAL RETURNS As of 3/31/02 1 Year Since Inception 8.49% 43.46%
GLOBAL HEALTH CARE FUND RUSSELL 3000 HEALTHCARE INSTITUTIONAL SHARES INDEX 9/30/99 $246,000 $230,546 10/99 $253,400 $253,222 1/99 $275,000 $257,444 12/99 $385,808 $241,881 1/00 $473,855 $258,101 2/00 $791,826 $245,682 3/00 $618,733 $247,226 4/00 $583,114 $261,279 5/00 $592,119 $273,740 6/00 $686,769 $297,183 C-13 7/00 $684,969 $279,703 8/00 $782,421 $289,572 9/00 $853,859 $302,201 10/00 $814,638 $308,075 11/00 $715,071 $241,268 12/00 $756,850 $324,974 1/01 $688,323 $298,298 2/01 $660,556 $296,528 3/01 $858,406 $272,348 4/01 $649,602 $284,577 5/01 $677,114 $289,897 6/01 $693,418 $281,058 7/01 $659,282 $289,189 8/01 $659,282 $280,224 9/01 $626,165 $278,963 10/01 $657,499 $279,967 11/01 $689,851 $294,050 12/01 $684,757 $286,522 1/02 $637,119 $281,021 2/02 $607,569 $279,644 3/31/02 $635,081 $282,161
The graph above shows the value of a hypothetical $250,000 investment in the Fund's Class I shares compared with the Russell 3000 Healthcare Index over the periods indicated. Average annual total return figures include changes in principal value, reinvested dividends, and capital gain distributions. Absent expense limitations, total returns would have been slightly lower. The total returns shown above do not show the effects of income taxes on an individual's investment. In most cases, taxes may reduce your actual investment returns on income or gains C-14 paid by the Fund or any gains you may realize if you sell your shares. Past performance cannot guarantee future results. The unmanaged Russell 3000 Healthcare Index tracks the performance of companies involved in medical services or healthcare in the Russell 3000 Index. The healthcare sector is composed of biotechnology research and productions, drugs, hospital supplies, medical services and miscellaneous healthcare industries. The unmanaged index differs from the Fund in composition, does not pay management fees or expenses and includes reinvestment dividends. One cannot invest directly in an index. The Fund's historical performance was affected by special market factors, including the Fund's investment in IPOs, which had a material impact on performance. As the assets of the Fund increase, gains attributable to hot IPOs will have a decreasing effect on overall Fund performance. Accordingly, there is no guarantee that, as the Fund's assets grow, it will continue to experience substantially similar performance. Since markets can go down as well as up, investment return and principal value will fluctuate with market conditions, currency volatility and the social, economic and political climates of countries where the Fund invests. You may have a gain or loss when you sell your shares. C-15 APPENDIX D PRINCIPAL SHAREHOLDERS As of October 31, 2002, the following shareholders owned of record or beneficially 5% or more of Global Select Fund, Global Technology Fund and Global Healthcare Fund. CLASS I SHARES
NAME & ADDRESS NUMBER OF SHARES PERCENTAGE OF CLASS WAKE FOREST UNIVERSITY PO Box 7354 Winston-Salem, NC 27109-7354 1,599,166.096 30.62 % NIC LLC PO Box 2169 1,762,986.562 33.75 % Del Mar Ca 92014-1469 BUSS QUEENSLAND PTY LTD TTEE BUSS QUEENSLAND POOLED SUPERANNUATION TRUST 797,689.464 15.27 % PO BOX 902 Spring Hill Queensland 4004, Australia
CLASS R SHARES
NAME & ADDRESS NUMBER OF SHARES PERCENTAGE OF CLASS Boston Financial Data Corp Actions Audit Acct #1 Nicholas-Applegate Institutional N-A Global Select Fund-Class R 2 Heritage Drive 9th Floor North Quincy MA 02171-2144 3.84 33.33% GLOBAL TECHNOLOGY FUND CLASS I SHARES NAME & ADDRESS NUMBER OF SHARES PERCENTAGE OF CLASS City National Bank 113,124.2850 6.95 % FBO Nicholas-Applegate 401K PSP 225 Broadway Fl 5 San Diego CA 92101-5029 GLOBAL HEALTH CARE FUND CLASS I SHARES SHAREHOLDER NAME SHARES OWNED PERCENTAGE OF CLASS City National Bank TTEE 56,113.8290 5.14 % FBO Nicholas Applegate Money PPP 225 Broadway Fl 5 San Diego Ca 92101-5029 City National Bank TTEE 90,525.9420 8.29 % FBO Nicholas-Applegate 401K PSP 225 Broadway Fl 5 San Diego, CA 92101-5029
D-1 Boston Financial Data Services Nicholas Applegate Institutional N-A Global Select Fund-Class R 3.84 33.75% 2 Heritage Drive 9th Floor North Quincy MA 02171-2144 Boston Financial Data Services Nicholas Applegate Institutional N-A Global Select Fund-Class R 3.84 33.33% 2 Heritage Drive 9th Floor North Quincy, MA 02171-2144
D-2 NICHOLAS-APPLEGATE INSITUTIONAL FUNDS NICHOLAS-APPLEGATE GLOBAL SELECT FUND NICHOLAS-APPLEGATE GLOBAL TECHNOLOGY FUND NICHOLAS-APPLEGATE GLOBAL HEALTH CARE FUND 600 WEST BROADWAY SAN DIEGO, CALIFORNIA 92101 STATEMENT OF ADDITIONAL INFORMATION DECEMBER 8, 2002 This Statement of Additional Information ("SAI") relates specifically to the proposed reorganizations whereby Nicholas-Applegate Global Select Fund ("Global Select Fund") would acquire all the assets of Nicholas-Applegate Global Technology Fund and Nicholas-Applegate Global Health Care Fund (each a "Target") in exchange solely for Class I shares of Global Select Fund and the assumption by Global Select Fund of all the Target's liabilities, followed by the distribution of those shares to the Target's shareholders (all such transactions involving Global Select Fund and a Target being referred to herein as a "Reorganization"). This SAI consists of the information set forth herein and the following described documents, each of which is incorporated by reference herein (legally forms a part of the SAI): (1) The audited financial statements of Global Select Fund and each Target (each, a series of Nicholas-Applegate Institutional Funds) included in the Annual Report to Shareholders of Nicholas-Applegate Institutional Funds (the "Trust") for the fiscal year ended March 31, 2002, previously filed on EDGAR, Accession Number 0000912057-02-022437. (2) The Statement of Additional Information of the Trust, dated July 19, 2002, as supplemented October 2, 2002, previously filed on EDGAR, Accession Number 0000912057-02-028022 and 0000912057-02-037491, respectively, except for the information contained herein, which has been updated as of December 6, 2002. This SAI is not a prospectus and should be read only in conjunction with the Prospectus/Proxy Statement dated December 6, 2002 relating to the above-referenced matter. A copy of the Prospectus/Proxy Statement may be obtained by calling toll-free 1-800-551-8643. PERFORMANCE Average annual total return performance for Global Select Fund Class I shares for the one-, five-, and ten-year periods (or since inception) ended September 30, 2002 are indicated in the chart below. Average annual return performance is not provided for Class R shares, as that class is not involved in the proposed Reorganizations.
ANNUALIZED TOTAL RETURNS (AS OF 9/30) ONE YEAR SINCE INCEPTION (9/30/97) BEFORE TAXES -7.57% 11.82% AFTER TAXES ON DISTRIBUTIONS -7.57% 6.49% AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES -4.65% 8.37%
PRO FORMA FINANCIAL STATEMENTS Shown below are financial statements for each Fund and pro forma financial statements for the combined Fund, assuming the Reorganization is consummated, as of March 31, 2002 and September 30, 2002. The first table presents Statements of Assets and Liabilities (unaudited) for each Fund and estimated pro forma figures for the combined Fund. The second table presents Statements of Operations (unaudited) for each Fund and estimated pro forma figures for the combined Fund. The third table presents Portfolio of Investments (unaudited) for each Fund and estimated pro forma figures for the combined Fund. The tables are followed by the Notes to the Pro Forma Financial Statements (unaudited). PRO-FORMA COMBINING THE STATEMENT OF ASSETS & LIABILITIES
GLOBAL SELECT GLOBAL TECHNOLOGY GLOBAL HEALTHCARE PERIOD ENDED PERIOD ENDED PERIOD ENDED SEPTEMBER 30, 2002 SEPTEMBER 30, 2002 SEPTEMBER 30, 2002 unaudited unaudited unaudited ------------------ ------------------ ------------------ ASSETS Investments, at value* $ 47,999,416 $ 16,857,115 $ 20,518,725 Foreign currencies, at value** 444,027 -- -- Cash 440,355 -- -- Cash collateral received for securities loaned 1,378,040 2,550,380 -- Receivables: Investment securities sold 4,439,115 139,554 198,266 Capital shares sold -- 405 471 Dividends 43,620 -- 8,820 Foreign taxes receivable 5,386 -- 6,812 Interest -- -- -- From investment advisor -- -- -- Other assets 2,134 10,511 12,203 ------------- ----------- -------------- Total assets 54,752,093 19,557,965 20,745,297 ------------- ----------- -------------- LIABILITIES Payables: Bank overdraft $ -- $ 107,492 $ 198,089 Investments purchased 3,837,772 -- -- Capital shares redeemed 185,512 14,430 5,445 Collateral on securities loaned 1,378,040 2,550,380 -- Dividends -- -- -- To investment advisor 22,110 8,266 15,462 Unrealized loss on forward currency contracts -- -- -- Other Liabilites 47,865 73,808 58,949 ------------- ------------- -------------- Total Liabilities 5,471,299 2,754,376 277,945 ------------- ------------- -------------- NET ASSETS 49,280,794 16,803,589 20,467,352 ------------- ------------- -------------- * Investments, at cost 51,175,232 22,222,364 19,270,646 ------------- ------------- -------------- ** Foreign currencies, at cost 451,790 -- -- ------------- ------------- -------------- NET ASSETS CONSIST OF: Paid-in capital $ 65,837,274 $ 224,687,722 $ 55,139,731 Undistributed net investment income (loss) (34,429) (245,698) (222,446) Accumulated net realized gain (loss) on investments and foreign currencies (13,343,582) (202,273,555) (35,698,851) Net unrealized appreciation (depreciation) of investments and of other assets and liabilities denominated in foreign currencies (3,178,469) (5,364,880) 1,248,918 ------------- ------------- -------------- Net Assets applicable to all shares outstanding $ 49,280,794 $ 16,803,589 $ 20,467,352 ------------- ------------- -------------- Net Assets of Institutional Shares 49,280,677 16,803,589 20,467,352 Net Assets of Retirement shares $ 117 $ -- $ -- ------------- ------------- -------------- Institutional Shares outstanding 4,861,760 1,689,248 1,163,721 Retirement Shares outstanding 12 -- -- ------------- ------------- -------------- Net Asset Value - Institutional Share $ 10.14 $ 9.95 $ 17.59 Net Asset Value - Retirement Share $ 10.12 $ -- $ -- ------------- ------------- -------------- Share conversion ratio 0.9813533126 1.7351198924 PRO-FORMA COMBINED STATEMENT OF ASSETS & LIABILITIES ADJUSTMENTS (UNAUDITED) ----------- ---------------------- ASSETS Investments, at value* $ 85,375,256 Foreign currencies, at value** 444,027 Cash 440,355 Cash collateral received for securities loaned 3,928,420 Receivables: -- Investment securities sold 4,776,935 Capital shares sold 876 Dividends 52,440 Foreign taxes receivable 12,198 Interest -- From investment advisor -- Other assets 24,848 ---------- --------------- Total assets 95,055,355 ---------- --------------- LIABILITIES Payables: Bank overdraft 305,581 Investments purchased 3,837,772 Capital shares redeemed - 205,387 Collateral on securities loaned 3,928,420 Dividends -- To investment advisor (73,849) (28,011) Unrealized loss on forward currency contracts -- Other Liabilites (279,829) (99,207) ---------- --------------- Total Liabilities (353,678) 8,149,942 ---------- --------------- NET ASSETS 353,678 86,905,413 ---------- --------------- * Investments, at cost 92,668,242 ---------- --------------- ** Foreign currencies, at cost 451,790 ---------- --------------- NET ASSETS CONSIST OF: Paid-in capital 345,664,727 Undistributed net investment income (loss) 353,678 (148,895) Accumulated net realized gain (loss) on investments and foreign currencies (251,315,988) Net unrealized appreciation (depreciation) of investments and of other assets and -- liabilities denominated in foreign currencies (7,294,431) ---------- --------------- Net Assets applicable to all shares outstanding 353,678 86,905,413 ---------- --------------- Net Assets of Institutional Shares 353,678 86,905,296 Net Assets of Retirement shares 0 117 ---------- --------------- Institutional Shares outstanding 823,976 8,538,705 Retirement Shares outstanding 12 ---------- --------------- Net Asset Value - Institutional Share 10.18 Net Asset Value - Retirement Share 10.12 ---------- --------------- Share conversion ratio
PRO-FORMA COMBINING THE STATEMENT OF OPERATIONS
GLOBAL SELECT GLOBAL TECHNOLOGY GLOBAL HEALTHCARE YEAR ENDED YEAR ENDED YEAR ENDED MARCH 31, 2002 MARCH 31, 2002 MARCH 31, 2002 --------------- --------------- ------------------ INVESTMENT INCOME Dividends, net of foreign taxes* $ 203,308 $ 109,357 $ 396,546 Interest 21,665 265,489 117,734 Securities Lending 23,101 289,101 78,801 ------------- ------------ ------------ Total Income 248,074 663,947 593,081 ------------- ------------ ------------ EXPENSES Advisory fee 249,950 648,629 1,076,579 Accounting and administration fees 39,166 54,150 62,000 Custodian fees 53,649 80,199 80,677 Transfer agent fees and expenses 24,715 17,005 48,996 Shareholder servicing fees -- -- -- Administrative services 31,244 65,992 107,658 Professional fees 7,682 21,185 25,905 Shareholder reporting 116 -- -- Registration fees 9,784 24,591 18,865 Trustees' fees and expenses 1,361 14,674 5,649 Interest and credit facility fee 6,023 2,665 2,854 Insurance 48 27,649 22,615 Miscellaneous 4,798 5,862 7,541 -------------- -------------- -------------- Total Expenses 428,536 962,601 1,459,339 Expenses (reimbursed)/recouped (44,587) (12,866) -- -------------- -------------- -------------- Net Expenses 383,949 949,735 1,459,339 -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (135,875) (285,788) (866,258) -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) from: Securities (5,273,293) (49,466,876) 2,714,574 Foreign currency transactions (60,379) (220,163) (5,118) -------------- -------------- -------------- Net realized gain (loss) (5,333,672) (49,687,039) 2,709,456 -------------- -------------- -------------- Change in unrealized appreciation (depreciation) of: Investments 5,307,602 41,189,485 1,773,656 Other assets and liabilities denominated in foreign currencies 17,651 10,102 535 -------------- -------------- -------------- Net unrealized appreciation (depreciation) 5,325,253 41,199,587 1,774,191 -------------- -------------- -------------- NET GAIN (LOSS) ON INVESTMENTS (8,419) (8,487,452) 4,483,647 -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (144,294) $ (8,773,240) $ 3,617,389 -------------- -------------- -------------- *Foreign taxes withheld $ 11,693 $ 16,679 $ 7,600 -------------- -------------- -------------- Average net assets (unaudited) 31,243,750 65,992,000 107,657,900 PRO-FORMA COMBINED STATEMENT ADJUSTMENTS OF OPERATIONS unaudited ------------ ------------------ INVESTMENT INCOME Dividends, net of foreign taxes* 0 709,211 Interest 0 404,888 Securities Lending 0 391,003 ---------- --------------- Total Income 0 1,505,102 ---------- --------------- EXPENSES Advisory fee (336,009) 1,639,149 a Accounting and administration fees (42,337) 112,979 b Custodian fees (1,200) 213,325 c Transfer agent fees and expenses (22,000) 68,716 d Shareholder servicing fees 0 -- Administrative services 0 204,894 Professional fees 0 54,772 Shareholder reporting 0 116 Registration fees 0 53,240 Trustees' fees and expenses 0 21,684 Interest and credit facility fee 0 11,542 Insurance 0 50,312 Miscellaneous 0 18,201 ---------- --------------- Total Expenses (401,546) 2,448,930 Expenses (reimbursed)/recouped 118,904 61,451 ---------- --------------- Net Expenses (282,642) 2,510,381 e ---------- --------------- NET INVESTMENT INCOME (LOSS) 282,642 (1,005,279) ---------- --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) from: Securities 0 (52,025,595) Foreign currency transactions 0 (285,660) ---------- --------------- Net realized gain (loss) 0 (52,311,255) ---------- --------------- Change in unrealized appreciation (depreciation) of: Investments 0 48,270,743 Other assets and liabilities denominated in foreign currencies 0 28,288 ---------- --------------- Net unrealized appreciation (depreciation) 0 48,299,031 ---------- --------------- NET GAIN (LOSS) ON INVESTMENTS 0 (4,012,224) ---------- --------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 282,642 (5,017,503) ---------- --------------- *Foreign taxes withheld 35,972 ---------- --------------- Average net assets 204,893,650
FOOT NOTES a - Global Select will be the survivor w/ man fee of 80 bp vs 100 in Global Tech and Global health b - BP fees on combined assets would eliminate account minimums of $40k/yr c - Eliminate triplicative BIDS Worldview fee d - Eliminate triplicative account minimums e - Fee cap for Global Select was 120 bp which is lower than the 140 bp for both Global Tech and Global Health PRO-FORMA COMBINING THE STATEMENT OF OPERATIONS SEPTEMBER 30, 2002
GLOBAL SELECT GLOBAL TECHNOLOGY GLOBAL HEALTHCARE PERIOD ENDED PERIOD ENDED PERIOD ENDED SEPTEMBER 30, 2002 SEPTEMBER 30, 2002 SEPTEMBER 30, 2002 (UNAUDITED) (UNAUDITED) (UNAUDITED) ------------------ ------------------ ------------------ INVESTMENT INCOME Dividends, net of foreign taxes* $ 230,025 $ 21,070 $ 65,012 Interest 3,360 8,139 3,599 Securities Lending 1,154 7,399 927 --------------- ------------------ ------------------ Total Income 234,539 36,608 69,538 --------------- ------------------ ------------------ EXPENSES Advisory fee 166,983 162,422 206,816 Accounting and administration fees 26,072 27,894 22,973 Custodian fees 34,760 33,356 27,520 Transfer agent fees and expenses 11,650 20,820 22,420 Administrative services 20,873 16,242 20,682 Professional fees 6,509 11,060 6,529 Shareholder reporting 3,262 3,576 4,834 Registration fees 1,726 7,627 8,594 Trustees' fees and expenses 1,125 1,312 1,788 Interest and credit facility fee 10,792 1,747 708 Insurance -- 6,535 5,011 Miscellaneous 1,517 4,482 4,056 --------------- ------------------ ------------------ Total Expenses 285,269 297,073 331,931 Expenses (reimbursed)/recouped (39,318) (53,133) (39,947) --------------- ------------------ ------------------ Net Expenses 245,951 243,940 291,984 --------------- ------------------ ------------------ NET INVESTMENT INCOME (LOSS) (11,412) (207,332) (222,446) --------------- ------------------ ------------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) from: Securities (5,493,344) (12,802,292) (15,474,650) Foreign currency transactions (44,324) 3,618 (480) ------------- --------------- ---------------- Net realized gain (loss) (5,537,668) (12,798,674) (15,475,130) --------------- ------------------ ------------------ Change in unrealized appreciation (depreciation) of: Investments (7,349,365) (10,217,725) (3,461,092) Other assets and liabilities denominated in foreign currencies (4,749) 371 675 --------------- ------------------ ------------------ Net unrealized appreciation (depreciation) (7,354,114) (10,217,354) (3,460,417) --------------- ------------------ ------------------ NET GAIN (LOSS) ON INVESTMENTS (12,891,782) (23,016,028) (18,935,547) --------------- ------------------ ------------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (12,903,194) $ (23,223,360) $ (19,157,993) --------------- ------------------ ------------------ *Foreign taxes withheld $ 21,588 $ 1,187 $ 266 --------------- ------------------ ------------------ Average Net Assets 41,631,691 32,395,246 41,250,186 PRO-FORMA COMBINED STATEMENT OF OPERATIONS ADJUSTMENTS (UNAUDITED) ----------- -------------------- INVESTMENT INCOME Dividends, net of foreign taxes* 0 316,107 Interest 0 15,098 Securities Lending 0 9,480 --------- -------------- Total Income -- 340,685 --------- -------------- EXPENSES Advisory fee (73,849) 462,372 a Accounting and administration fees (37,777) 39,162 b Custodian fees (600) 95,036 c Transfer agent fees and expenses (11,000) 43,890 d Administrative services -- 57,797 e Professional fees -- 24,098 Shareholder reporting -- 11,672 Registration fees -- 17,947 Trustees' fees and expenses -- 4,225 Interest and credit facility fee -- 13,247 Insurance -- 11,546 Miscellaneous -- 10,055 --------- -------------- Total Expenses (123,226) 791,047 Expenses (reimbursed)/recouped 52,190 (80,208) --------- -------------- Net Expenses (71,036) 710,839 f --------- -------------- NET INVESTMENT INCOME (LOSS) 71,036 (370,154) --------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain (loss) from: Securities 0 (33,770,286) Foreign currency transactions 0 (41,186) --------- -------------- Net realized gain (loss) -- (33,811,472) --------- -------------- Change in unrealized appreciation (depreciation) of: Investments 0 (21,028,182) Other assets and liabilities denominated in foreign currencies 0 (3,703) --------- -------------- Net unrealized appreciation (depreciation) -- (21,031,885) --------- -------------- NET GAIN (LOSS) ON INVESTMENTS -- (54,843,357) --------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 71,036 (55,213,511) --------- -------------- *Foreign taxes withheld 23,041 --------- -------------- Average net assets 115,277,123
a - Global Select will be the survivor w/ current management fee of 80 bp vs 100 in Global Tech and Global health. a cont. - A new registration is pending that would reduce the management fee to 50 bp but add 25 bp Shareholder Servicing Fee) b - BP fees on combined assets would eliminate account minimums of $40k/yr c - Eliminate triplicative BIDS Worldview fee d - Eliminate triplicative account minimums e - A new registration is pending that will replace the current 10 bp Administrative Services Fee with a 25 bp fee. f - Effective fee cap for Global Select was 118 bp which is lower than the 140 bp for both Global Tech and Global Health (plus non reimbursable expenses per prospectus) PRO FORMA SCHEDULE OF INVESTMENTS OF COMBINED FUND (UNAUDITED) SEPTEMBER 30, 2002
------------------------------------------------------- GLOBAL SELECT FUND GLOBAL TECHNOLOGY FUND NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - --------------------------------------------------------------------------------------------------------------- COMMON STOCK - 92.2% - --------------------------------------------------------------------------------------------------------------- AUSTRALIA - 0.6% News Corp. Ltd. - ADR 27,600 $ 531,300 ----------- BERMUDA - 0.7% Tyco International, Ltd. 45,000 634,500 ----------- CANADA - 1.7% Biovail Corp. * Forzani Group, Ltd. Cl. A * 33,601 378,122 Precision Drilling Corp. * 17,900 538,790 Talisman Energy, Inc. 9,100 364,910 ----------- 1,281,822 ----------- CHINA - 0.3% Byd Co., Ltd. * 128,000 260,938 ------------ FINLAND - 1.5% Nokia Corp. - ADR 64,900 859,925 31,700 420,025 ----------- ------------ FRANCE - 1.2% Sanofi - Synthelabo S.A. 9,400 529,969 ----------- HONG KONG - 0.5% Mainland Headwear Holdings, Ltd. 730,000 226,968 TCL International Holdings, Ltd. 771,000 219,946 ----------- ------------ 226,968 219,946 ----------- ------------ IRELAND - 0.9% Bank of Ireland * 78,800 767,060 ----------- ISRAEL - 1.2% Teva Pharmaceutical Industries, Ltd. - ADR 8,800 589,600 ----------- JAPAN - 4.3% Citizens Electronics Co., Ltd. 6,300 450,222 KAO Corporation 27,000 595,490 Mitsubishi Tokyo Financial Group, Inc. 62 457,845 Nintendo Co., Ltd. 3,500 407,672 Nissan Motor Co., Ltd. 88,900 660,141 Shiseido Company, Ltd. 47,000 560,958 Sony Corp. S.A. 13,800 567,180 ----------- 3,699,508 ----------- ----------------------------- ------------------------------- GLOBAL HEALTHCARE FUND ADJUSTMENT COMBINED FUNDS PROFORMA NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - -------------------------------------------------------------------------------------------------------------------------------- COMMON STOCK - 92.2% - -------------------------------------------------------------------------------------------------------------------------------- AUSTRALIA - 0.6% News Corp. Ltd. - ADR 27,600 531,300 ------------- BERMUDA - 0.7% Tyco International, Ltd. 45,000 634,500 ------------- CANADA - 1.7% Biovail Corp. * 8,200 202,458 8,200 202,458 Forzani Group, Ltd. Cl. A * 33,601 378,122 Precision Drilling Corp. * 17,900 538,790 Talisman Energy, Inc. 9,100 364,910 ------------ ------------- 202,458 1,484,280 ------------ ------------- CHINA - 0.3% Byd Co., Ltd. * 128,000 260,938 ------------- FINLAND - 1.5% Nokia Corp. - ADR 96,600 1,279,950 ------------- FRANCE - 1.2% Sanofi - Synthelabo S.A. 8,400 473,589 17,800 1,003,558 ------------ ------------- HONG KONG - 0.5% Mainland Headwear Holdings, Ltd. 730,000 226,968 TCL International Holdings, Ltd. 771,000 219,946 ------------- 446,914 ------------- IRELAND - 0.9% Bank of Ireland * 78,800 767,060 ------------- ISRAEL - 1.2% Teva Pharmaceutical Industries, Ltd. - ADR 6,200 415,400 15,000 1,005,000 ------------ ------------- JAPAN - 4.3% Citizens Electronics Co., Ltd. 6,300 450,222 KAO Corporation 27,000 595,490 Mitsubishi Tokyo Financial Group, Inc. 62 457,845 Nintendo Co., Ltd. 3,500 407,672 Nissan Motor Co., Ltd. 88,900 660,141 Shiseido Company, Ltd. 47,000 560,958 Sony Corp. S.A. 13,800 567,180 ------------- 3,699,508 -------------
--------------------------------------------------------- GLOBAL SELECT FUND GLOBAL TECHNOLOGY FUND NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - ----------------------------------------------------------------------------------------------------------------- NETHERLANDS - 1.6% Chicago Bridge & Iron Co. - NV Shr 23,900 573,600 ASM Lithography Holding N.V. * 24,000 148,560 Unilever NV 11,100 657,078 ----------- ------------ 1,230,678 148,560 ----------- ------------ NORWAY - 0.4% Frontline, Ltd. 20,800 79,991 Tomra Systems ASA 44,100 268,975 ----------- 348,966 ----------- RUSSIAN FEDERATION - 0.2% Surgutneftegaz - ADR 8,300 136,909 ----------- SINGAPORE - 1.4% DBS Group Holdings, Ltd. 66,000 415,923 Flextronics International, Ltd. * 64,800 451,786 47,600 331,867 ----------- ------------ 867,709 331,867 ----------- ------------ SOUTH KOREA - 2.3% Intops Co., Ltd. * 29,806 322,883 Samsung Electro Mechanics Co., Ltd. 6,460 231,513 Samsung Electronics Co., Ltd. 1,980 481,393 4,610 551,961 Samsung Electronics Co., Ltd. 144A - GDR 3,300 391,050 ----------- ------------ 1,195,326 783,474 ----------- ------------ SPAIN - 0.2% Telefonica S.A. * 26,300 195,972 ----------- SWEDEN - 0.5% Autoliv, Inc. 23,300 490,000 ----------- SWITZERLAND - 1.9% Converium Holding AG - ADR * 21,100 453,650 Micronas Semiconductor-Reg * 6,728 92,480 Nestle S.A. 2,900 633,858 UBS AG 11,500 478,516 ----------- ----------- ------------ 1,566,024 6,728 92,480 ----------- ----------- ------------ TAIWAN - 0.5% Alcon, Inc. * Siliconware Precision Industries Co. * 409,000 211,814 ----------- 211,814 ----------- UNITED KINGDOM - 4.3% BP Amoco PLC 59,700 399,008 Corus Group PLC * 189,100 101,852 Diageo PLC 44,000 545,944 HSBC Holdings PLC 28,400 292,209 Next PLC 36,100 527,401 Shire Pharmaceuticals Group PLC * 68,600 555,584 Shire Pharmeuticals Group PLC * 2,000 49,540 Vodafone Group PLC 444,900 570,215 Vodafone Group PLC - ADR 8,700 111,621 ----------- 3,153,374 ----------- ------------------------- ------------------------------- GLOBAL HEALTHCARE FUND ADJUSTMENT COMBINED FUNDS PROFORMA NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - --------------------------------------------------------------------------------- -------------------------------- NETHERLANDS - 1.6% Chicago Bridge & Iron Co. - NV Shr 23,900 573,600 ASM Lithography Holding N.V. * 24,000 148,560 Unilever NV 11,100 657,078 ------------- 1,379,238 ------------- NORWAY - 0.4% Frontline, Ltd. 20,800 79,991 Tomra Systems ASA 44,100 268,975 ------------- 348,966 ------------- RUSSIAN FEDERATION - 0.2% Surgutneftegaz - ADR 8,300 136,909 ------------- SINGAPORE - 1.4% DBS Group Holdings, Ltd. 66,000 415,923 Flextronics International, Ltd. * 112,400 783,653 ------------- 1,199,576 ------------- SOUTH KOREA - 2.3% Intops Co., Ltd. * 29,806 322,883 Samsung Electro Mechanics Co., Ltd. 6,460 231,513 Samsung Electronics Co., Ltd. 6,590 1,033,354 Samsung Electronics Co., Ltd. 144A - GDR 3,300 391,050 ------------- 1,978,800 ------------- SPAIN - 0.2% Telefonica S.A. * 26,300 195,972 ------------- SWEDEN - 0.5% Autoliv, Inc. 23,300 490,000 ------------- SWITZERLAND - 1.9% Converium Holding AG - ADR * 21,100 453,650 Micronas Semiconductor-Reg * 6,728 92,480 Nestle S.A. 2,900 633,858 UBS AG 11,500 478,516 ------------- 6,728 1,658,504 ------------- TAIWAN - 0.5% Alcon, Inc. * 5,700 220,875 5,700 220,875 Siliconware Precision Industries Co. * 409,000 211,814 ------------ ------------- 220,875 432,689 ------------ ------------- UNITED KINGDOM - 4.3% BP Amoco PLC 59,700 399,008 Corus Group PLC * 189,100 101,852 Diageo PLC 44,000 545,944 HSBC Holdings PLC 28,400 292,209 Next PLC 36,100 527,401 Shire Pharmaceuticals Group PLC * 22,700 562,279 91,300 1,117,863 Shire Pharmeuticals Group PLC * 2,000 49,540 Vodafone Group PLC 444,900 570,215 Vodafone Group PLC - ADR 8,700 111,621 ------------ ------------- 562,279 3,715,653 ------------ -------------
----------------------------------------------------- GLOBAL SELECT FUND GLOBAL TECHNOLOGY FUND NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - ------------------------------------------------------------------------------------------------------------- UNITED STATES - 66.0% 3M Co. 5,900 648,823 aaiPharma, Inc. * Abgenix, Inc. * Accredo Health, Inc. * Affiliated Computer Services, Inc. Cl. A * 8,800 374,440 Allergan, Inc. Allstate Corp. 17,600 625,680 Amazon.com, Inc. * 29,400 468,342 American Express Co. 15,200 473,936 Amgen, Inc. * 10,400 433,680 Anadarko Petroleum Corp. 17,600 783,904 Anheuser Busch, Inc. 11,600 586,960 Anteon International Corp. * 16,600 451,188 Anthem, Inc. * 12,400 806,000 Applied Signal Technology * 32,700 299,205 Atrix Laboratories, Inc. * Autozone, Inc. * 8,800 693,968 Ball Corp. 12,400 624,836 Barr Laboratories, Inc. * Beckman Coulter, Inc. Big Lots, Inc. * 37,400 592,042 Biomet, Inc. BMC Software, Inc. * 22,200 290,154 Boston Scientific Corp. * CACI International, Inc. Cl. A * 9,900 350,955 Cendant Corp. * 21,900 235,644 Cephalon, Inc. * Cerner Corp. * Chippac, Inc. Cl. A * 77,832 166,483 Choicepoint, Inc. * 12,233 435,984 Cisco Systems, Inc. * 36,700 384,616 50,900 533,432 Community Health Systems, Inc. * Conceptus, Inc. * Cray, Inc. * 109,300 431,735 Crown Cork & Seal Co., Inc. 55,900 293,475 Dell Computer Corp. * 39,800 935,698 Dial Corp. 26,400 566,544 DuPont Photomasks, Inc. * 10,100 230,078 Electronic Arts, Inc. * 15,200 1,002,592 Elite Information Group, Inc. * 31,500 219,240 EMCOR Group, Inc. * 8,200 407,540 Extreme Networks, Inc. * 42,500 178,925 Forest Laboratories, Inc. Cl. A. * 7,100 582,271 Foundry Networks, Inc. * 42,200 231,256 Genentech, Inc. * Gilead Sciences, Inc. * HCA, Inc. HPL Technologies, Inc. * 22,100 1,105 Hunt J.B. Transportation Services, Inc. * 19,800 466,290 IMC Global, Inc. 40,800 491,640 Imation Corp. * 14,400 407,952 Inamed Corp. * Integrated Circuit Systems, Inc. * 22,200 348,540 Intergraph Corp. * 19,800 338,382 International Business Machines Corp. 5,800 338,662 Interpore International, Inc. * Intersil Corp. Cl. A * 20,800 269,568 Intuit, Inc. * 14,700 669,291 Invision Technologies, Inc. * 15,000 480,150 Jetblue Airways Corp. * 10,300 415,399 ------------------------- ------------------------------- GLOBAL HEALTHCARE FUND ADJUSTMENT COMBINED FUNDS PROFORMA NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - --------------------------------------------------------------------------------- -------------------------------- UNITED STATES - 66.0% 3M Co. 5,900 648,823 aaiPharma, Inc. * 8,900 106,720 8,900 106,720 Abgenix, Inc. * 30,800 199,892 30,800 199,892 Accredo Health, Inc. * 8,500 405,280 8,500 405,280 Affiliated Computer Services, Inc. Cl. A * 8,800 374,440 Allergan, Inc. 11,700 636,480 11,700 636,480 Allstate Corp. 17,600 625,680 Amazon.com, Inc. * 29,400 468,342 American Express Co. 15,200 473,936 Amgen, Inc. * 23,800 992,460 34,200 1,426,140 Anadarko Petroleum Corp. 17,600 783,904 Anheuser Busch, Inc. 11,600 586,960 Anteon International Corp. * 16,600 451,188 Anthem, Inc. * 5,100 331,500 17,500 1,137,500 Applied Signal Technology * 32,700 299,205 Atrix Laboratories, Inc. * 13,200 195,360 13,200 195,360 Autozone, Inc. * 8,800 693,968 Ball Corp. 12,400 624,836 Barr Laboratories, Inc. * 10,700 666,503 10,700 666,503 Beckman Coulter, Inc. 10,700 414,090 10,700 414,090 Big Lots, Inc. * 37,400 592,042 Biomet, Inc. 7,900 210,377 7,900 210,377 BMC Software, Inc. * 22,200 290,154 Boston Scientific Corp. * 15,000 473,400 15,000 473,400 CACI International, Inc. Cl. A * 9,900 350,955 Cendant Corp. * 21,900 235,644 Cephalon, Inc. * 5,000 204,100 5,000 204,100 Cerner Corp. * 5,900 207,739 5,900 207,739 Chippac, Inc. Cl. A * 77,832 166,483 Choicepoint, Inc. * 12,233 435,984 Cisco Systems, Inc. * 87,600 918,048 Community Health Systems, Inc. * 9,700 258,311 9,700 258,311 Conceptus, Inc. * 34,900 533,970 34,900 533,970 Cray, Inc. * 109,300 431,735 Crown Cork & Seal Co., Inc. 55,900 293,475 Dell Computer Corp. * 39,800 935,698 Dial Corp. 26,400 566,544 DuPont Photomasks, Inc. * 10,100 230,078 Electronic Arts, Inc. * 15,200 1,002,592 Elite Information Group, Inc. * 31,500 219,240 EMCOR Group, Inc. * 8,200 407,540 Extreme Networks, Inc. * 42,500 178,925 Forest Laboratories, Inc. Cl. A. * 6,000 492,060 13,100 1,074,331 Foundry Networks, Inc. * 42,200 231,256 Genentech, Inc. * 22,900 747,227 22,900 747,227 Gilead Sciences, Inc. * 20,000 670,600 20,000 670,600 HCA, Inc. 12,300 585,603 12,300 585,603 HPL Technologies, Inc. * 22,100 1,105 Hunt J.B. Transportation Services, Inc. * 19,800 466,290 IMC Global, Inc. 40,800 491,640 Imation Corp. * 14,400 407,952 Inamed Corp. * 12,200 280,600 12,200 280,600 Integrated Circuit Systems, Inc. * 22,200 348,540 Intergraph Corp. * 19,800 338,382 International Business Machines Corp. 5,800 338,662 Interpore International, Inc. * 16,600 134,460 16,600 134,460 Intersil Corp. Cl. A * 20,800 269,568 Intuit, Inc. * 14,700 669,291 Invision Technologies, Inc. * 15,000 480,150 Jetblue Airways Corp. * 10,300 415,399
----------------------------------------------------- GLOBAL SELECT FUND GLOBAL TECHNOLOGY FUND NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - ------------------------------------------------------------------------------------------------------------- Johnson & Johnson 14,300 773,344 LSI Logic Corp. * 32,000 203,200 Lockheed Martin Corp. 8,100 523,827 Lowe's Companies, Inc. 17,800 736,920 Marvell Technology Group, Ltd. * 23,600 374,060 McData Corp. Cl. A * 28,300 153,669 Medimmune, Inc. * Medtronic, Inc. 15,300 644,436 MGM Mirage, Inc. * 24,900 928,770 Microchip Technology, Inc. * 14,900 304,705 Micron Technology, Inc. * 19,000 235,030 14,700 181,839 Microsoft Corp. * 21,200 926,228 11,400 498,066 Millennium Pharmaceuticals, Inc. * Moody's Corp. 11,000 533,500 Neoware Systems, Inc. * 19,100 268,355 Netscreen Technologies, Inc. * 19,000 206,150 Nextel Communications, Inc. Cl. A * 98,100 740,655 Northrop Grunman Corp. 6,200 769,048 Overture Services, Inc. * 11,700 275,769 20,700 487,899 Patterson Energy, Inc. * 18,600 474,486 Pfizer, Inc. 15,700 455,614 Pharmacia Corp. 11,000 427,680 Planar Systems, Inc. * 18,500 294,890 Priority Healthcare Corp.- Cl. B * Proctor & Gamble Co. 12,400 1,108,312 Quiksilver, Inc. * 33,100 747,729 Rent-A-Center, Inc. * 7,000 363,650 Sanmina Corp. * 78,300 216,891 Scripps Co. Cl. A 7,400 512,820 Silicon Laboratories, Inc. * 13,100 240,123 SmartForce PLC * 43,560 143,748 Smith International, Inc. * 11,000 322,410 St. Jude Medical, Inc. * Sun Microsystems, Inc. * 34,600 89,614 SunGard Data Systems, Inc. * 14,400 280,080 Symantec Corp. * 14,700 494,949 Synopsys, Inc. * 6,200 236,530 Tekelec * 28,200 243,366 Tenet Healthcare Corp. * Therasense, Inc. * Triad Hospitals, Inc. * USA Networks, Inc. * 20,600 399,228 Universal Health Services-B * Viacom, Inc. Cl. B * 11,800 478,490 Vishay Intertechnology, Inc. * 16,700 146,960 ------------------------- ------------------------------- GLOBAL HEALTHCARE FUND ADJUSTMENT COMBINED FUNDS PROFORMA NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - --------------------------------------------------------------------------------- -------------------------------- Johnson & Johnson 14,300 773,344 LSI Logic Corp. * 32,000 203,200 Lockheed Martin Corp. 8,100 523,827 Lowe's Companies, Inc. 17,800 736,920 Marvell Technology Group, Ltd. * 23,600 374,060 McData Corp. Cl. A * 28,300 153,669 Medimmune, Inc. * 36,700 765,929 36,700 765,929 Medtronic, Inc. 21,000 884,520 36,300 1,528,956 MGM Mirage, Inc. * 24,900 928,770 Microchip Technology, Inc. * 14,900 304,705 Micron Technology, Inc. * 33,700 416,869 Microsoft Corp. * 32,600 1,424,294 Millennium Pharmaceuticals, Inc. * 58,300 543,356 58,300 543,356 Moody's Corp. 11,000 533,500 Neoware Systems, Inc. * 19,100 268,355 Netscreen Technologies, Inc. * 19,000 206,150 Nextel Communications, Inc. Cl. A * 98,100 740,655 Northrop Grunman Corp. 6,200 769,048 Overture Services, Inc. * 32,400 763,668 Patterson Energy, Inc. * 18,600 474,486 Pfizer, Inc. 20,000 580,400 35,700 1,036,014 Pharmacia Corp. 25,900 1,006,992 36,900 1,434,672 Planar Systems, Inc. * 18,500 294,890 Priority Healthcare Corp.- Cl. B * 17,300 435,960 17,300 435,960 Proctor & Gamble Co. 12,400 1,108,312 Quiksilver, Inc. * 33,100 747,729 Rent-A-Center, Inc. * 7,000 363,650 Sanmina Corp. * 78,300 216,891 Scripps Co. Cl. A 7,400 512,820 Silicon Laboratories, Inc. * 13,100 240,123 SmartForce PLC * 43,560 143,748 Smith International, Inc. * 11,000 322,410 St. Jude Medical, Inc. * 18,500 660,450 18,500 660,450 Sun Microsystems, Inc. * 34,600 89,614 SunGard Data Systems, Inc. * 14,400 280,080 Symantec Corp. * 14,700 494,949 Synopsys, Inc. * 6,200 236,530 Tekelec * 28,200 243,366 Tenet Healthcare Corp. * 22,300 1,103,850 22,300 1,103,850 Therasense, Inc. * 13,200 184,272 13,200 184,272 Triad Hospitals, Inc. * 6,600 250,470 6,600 250,470 USA Networks, Inc. * 20,600 399,228 Universal Health Services-B * 9,800 501,270 9,800 501,270 Viacom, Inc. Cl. B * 11,800 478,490 Vishay Intertechnology, Inc. * 16,700 146,960
------------------------------------------------------ GLOBAL SELECT FUND GLOBAL TECHNOLOGY FUND NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - -------------------------------------------------------------------------------------------------------------- Wal-Mart Stores, Inc. 9,100 448,084 Wells Fargo & Co. 10,100 486,416 Whole Foods Market, Inc. * 16,400 702,576 Williams Somona, Inc. * 31,000 732,530 Xerox Corp. * 60,700 300,465 Yahoo!, Inc. * 29,200 279,444 Zimmer Holdings, Inc. * 17,100 655,614 ----------- ------------ 28,910,934 11,703,840 ----------- ------------ TOTAL COMMON STOCK (COST GLOBAL SELECT: $50,521,057) 47,428,358 ----------- (COST GLOBAL TECHNOLOGY: $18,681,630) 13,961,130 ------------ (COST GLOBAL HEALTHCARE: $17,164,875) NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - -------------------------------------------------------------------------------- ------------------------- EQUITY-LINKED SECURITIES - 3.2% - -------------------------------------------------------------------------------- ------------------------- INDIA - 1.4% Credit Suisse FB Infosys Technologies - 04/30/04 5,200 365,716 Merrill Lynch Satyam Computer Services, Ltd. - 11/18/02 86,352 385,130 103,222 460,370 ----------- ------------ 385,130 826,086 ----------- ------------ TAIWAN - 0.9% Credit Suisse FB Taiwan Semiconductor Manufacturing Co., Ltd. - 01/26/04 601,212 408,824 Nanya Technology Corp. - 01/17/02 272,700 169,074 Merrill Lynch Taiwan Styrene Monomer Corp. - 05/15/03 250,000 167,500 ----------- ------------ 167,500 577,898 ----------- ------------ UNITED KINGDOM - 0.9% UBS Hyb Elitegroup - 03/05/03 64,000 152,960 UBS Siliconware Corp. 546,000 283,920 UBS Unit Accton Technology Corp. - 12/20/02 246,075 374,034 ------------ 810,914 ------------ TOTAL EQUITY-LINKED SECURITIES (COST GLOBAL SELECT: $635,747) 552,630 ----------- (COST GLOBAL TECHNOLOGY: $2,859,647) 2,214,898 ------------ PRINCIPAL PRINCIPAL AMOUNT VALUE AMOUNT VALUE - -------------------------------------------------------------------------------- ------------------------- TIME DEPOSIT - 0.8% - -------------------------------------------------------- ------------------------- Bank One Grand Cayman 1.340%, 10/01/02 (COST: $681,087) 681,087 681,087 ----------- ------------ Brown Brothers Harriman & Co. 1.340%, 10/01/02 (COST: $2,124,199) 18,428 18,428 ----------- ----------- TOTAL INVESTMENTS - 96.2% ** (COST GLOBAL SELECT: $51,175,232) 47,999,416 (COST GLOBAL TECHNOLOGY: $22,222,364) 16,857,115 (COST GLOBAL HEALTHCARE: $19,270,646) OTHER ASSETS /LIABILITIES - 3.8% 1,281,378 (53,526) ------------- -------------- NET ASSETS - 100.0% $ 49,280,794 $ 16,803,589 ============= ============== - ------------------------------------------------------ ------------------------ ------------------------- ------------------------- ------------------------------- GLOBAL HEALTHCARE FUND ADJUSTMENT COMBINED FUNDS PROFORMA NUMBER NUMBER OF SHARES VALUE OF SHARES VALUE - --------------------------------------------------------------------------------- -------------------------------- Wal-Mart Stores, Inc. 9,100 448,084 Wells Fargo & Co. 10,100 486,416 Whole Foods Market, Inc. * 16,400 702,576 Williams Somona, Inc. * 31,000 732,530 Xerox Corp. * 60,700 300,465 Yahoo!, Inc. * 29,200 279,444 Zimmer Holdings, Inc. * 22,800 874,152 39,900 1,529,766 ------------ ------------- 16,538,353 57,153,127 ------------ ------------- TOTAL COMMON STOCK (COST GLOBAL SELECT: $50,521,057) ------------- (COST GLOBAL TECHNOLOGY: $18,681,630) ------------- (COST GLOBAL HEALTHCARE: $17,164,875) 18,412,954 79,802,442 ------------ ------------- NUMBER OF SHARES VALUE - ---------------------------------------------------------- ------------------------------- EQUITY-LINKED SECURITIES - 3.2% - ---------------------------------------------------------- ------------------------------- INDIA - 1.4% Credit Suisse FB Infosys Technologies - 04/30/04 5,200 365,716 Merrill Lynch Satyam Computer Services, Ltd. - 11/18/02 189,574 845,500 ------------- 1,211,216 ------------- TAIWAN - 0.9% Credit Suisse FB Taiwan Semiconductor Manufacturing Co., Ltd. - 01/26/04 601,212 408,824 Nanya Technology Corp. - 01/17/02 272,700 169,074 Merrill Lynch Taiwan Styrene Monomer Corp. - 05/15/03 250,000 167,500 ------------- 745,398 ------------- UNITED KINGDOM - 0.9% UBS Hyb Elitegroup - 03/05/03 64,000 152,960 UBS Siliconware Corp. 546,000 283,920 UBS Unit Accton Technology Corp. - 12/20/02 246,075 374,034 ------------- 810,914 ------------- TOTAL EQUITY-LINKED SECURITIES (COST GLOBAL SELECT: $635,747) (COST GLOBAL TECHNOLOGY: $2,859,647) 2,767,528 ------------- PRINCIPAL AMOUNT VALUE - --------------------------------------------------------------------------------- ------------------------------- TIME DEPOSIT - 0.8% - --------------------------------------------------------------------------------- ------------------------------- Bank One Grand Cayman 1.340%, 10/01/02 (COST: $681,087) 681,087 681,087 --------------- ------------- Brown Brothers Harriman & Co. 1.340%, 10/01/02 (COST: $2,124,199) 2,105,771 2,105,771 ----------- ------------ TOTAL INVESTMENTS - 96.2% ** (COST GLOBAL SELECT: $51,175,232) (COST GLOBAL TECHNOLOGY: $22,222,364) (COST GLOBAL HEALTHCARE: $19,270,646) 20,518,725 85,375,256 ------------- OTHER ASSETS /LIABILITIES - 3.8% (51,373) 1,176,479 -------------- ---------------- NET ASSETS - 100.0% $ 20,467,352 342,136 $ 86,893,871 ============== ================ - ------------------------------------------------------ ------------------------ -------------------------------
* NON-INCOME PRODUCING SECURITIES. ** PERCENTAGES FOR THE COMBINED PRO FORMA NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) Note 1 - Basis of Combination: On November 8, 2002, the Board of Trustees approved the Plan of Reorganization (the "Plan") of the Global Technology Fund and Global Health Care Fund (collectively the "Funds", individually the "Fund"), whereby, subject to approval by the shareholders of Funds, the Global Select Fund will acquire all of the assets of the Funds subject to the liabilities of such Fund, in exchange for a number of shares of Global Select Fund Class I shares equal in value to the net assets of such Fund (the "Merger"). The Merger will be accounted for as a tax-free merger of investment companies. The unaudited pro forma combined financial statements are presented for the information of the reader and may not necessarily be representative of what the actual combined financial statements would have been had the reorganization occurred at September 30, 2002. The unaudited pro forma portfolio of investments, and statement of assets and liabilities reflect the financial position of the Funds at September 30, 2002. The unaudited pro forma statement of operations reflects the results of operations of the Funds for the period ended September 30, 2002. These statements have been derived from the Funds' respective books and records utilized in calculating daily net asset value at the date indicated above for each Fund under generally accepted accounting principles. The historical cost of investment securities will be carried forward to the surviving entity and the results of operations of Global Select Fund for pre-combination periods will not be restated. The unaudited pro forma portfolio of investments, and unaudited statement of assets and liabilities and statement of operations should be read in conjunction with the historical financial statements of each Fund which are incorporated by reference in the Statement of Additional Information. 2 NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 2002 (UNAUDITED)
GLOBAL GLOBAL GLOBAL SELECT TECHNOLOGY HEALTH CARE ASSETS Investments, at value* $ 47,999,416 $ 16,857,115 $ 20,518,725 Foreign currencies, at value** 444,027 -- -- Cash 440,355 -- -- Cash collateral received for securities loaned 1,378,040 2,550,380 -- Receivables: Investment securities sold 4,439,115 139,554 198,266 Capital shares sold -- 405 471 Dividends 43,620 -- 8,820 Foreign taxes receivable 5,386 -- 6,812 Interest -- -- -- From investment advisor -- -- -- Other assets 2,134 10,511 12,203 ------------- ------------- ------------- Total assets 54,752,093 19,557,965 20,745,297 ------------- ------------- ------------- LIABILITIES Payables: Bank overdraft $ -- $ 107,492 $ 198,089 Investments purchased 3,837,772 -- -- Capital shares redeemed 185,512 14,430 5,445 Collateral on securities loaned 1,378,040 2,550,380 -- Dividends -- -- -- To investment advisor 22,110 8,266 15,462 Unrealized loss on forward currency contracts -- -- -- Other Liabilites 47,865 73,808 58,949 ------------- ------------- ------------- Total Liabilities 5,471,299 2,754,376 277,945 ------------- ------------- ------------- NET ASSETS 49,280,794 16,803,589 20,467,352 ------------- ------------- ------------- * Investments, at cost 51,175,232 22,222,364 19,270,646 ------------- ------------- ------------- ** Foreign currencies, at cost 451,790 -- -- ------------- ------------- ------------- NET ASSETS CONSIST OF: Paid-in capital $ 65,586,163 $ 223,143,841 $ 54,938,413 Undistributed net investment income (loss) (34,430) (245,698) (222,446) Accumulated net realized gain (loss) on investments and foreign currencies (13,092,470) (200,729,674) (35,497,533) Net unrealized appreciation (depreciation ) of investments and of other assets and liabilities denominated in foreign currencies (3,178,469) (5,364,880) 1,248,918 ------------- ------------- ------------- Net Assets applicable to all shares outstanding $ 49,280,794 $ 16,803,589 $ 20,467,352 ------------- ------------- ------------- Net Assets of Institutional Shares 49,280,677 16,803,589 20,467,352 Net Assets of Retirement shares $ 117 $ -- $ -- ------------- ------------- ------------- Institutional Shares outstanding 4,861,760 1,689,248 1,163,721 Retirement Shares outstanding 12 -- -- ------------- ------------- ------------- Net Asset Value - Institutional Share $ 10.14 $ 9.95 $ 17.59 Net Asset Value - Retirement Share $ 10.12 $ -- $ -- ------------- ------------- -------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS STATEMENTS OF OPERATIONS PERIOD ENDED SEPTEMBER 30, 2002 (UNAUDITED)
GLOBAL GLOBAL GLOBAL SELECT TECHNOLOGY HEALTH CARE INVESTMENT INCOME Dividends, net of foreign taxes* $ 230,025 $ 21,070 $ 65,012 Interest 3,360 8,139 3,599 Securities Lending 1,154 7,399 927 ------------ ------------ ------------ Total Income 234,539 36,608 69,538 ------------ ------------ ------------ EXPENSES Advisory fee 166,983 162,422 206,816 Accounting and administration fees 26,072 27,894 22,973 Custodian fees 34,760 33,356 27,520 Transfer agent fees and expenses 11,650 20,820 22,420 Shareholder servicing fees -- -- -- Administrative services 20,873 16,242 20,682 Professional fees 6,509 11,060 6,529 Shareholder reporting 3,262 3,576 4,834 Registration fees 1,726 7,627 8,594 Trustees' fees and expenses 1,125 1,312 1,788 Interest and credit facility fee 10,792 1,747 708 Insurance -- 6,535 5,011 Miscellaneous 1,517 4,482 4,056 ------------ ------------ ------------ Total Expenses 285,269 297,073 331,931 Expenses (reimbursed)/recouped (39,318) (53,133) (39,947) ------------ ------------ ------------ Net Expenses 245,951 243,940 291,984 ------------ ------------ ------------ NET INVESTMENT INCOME (LOSS) (11,412) (207,332) (222,446) ------------ ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Realized gain from: Securities (5,493,344) (12,802,292) (15,474,650) Foreign currency transactions (44,324) 3,618 (480) ------------ ------------ ------------ Net realized gain (loss) (5,537,668) (12,798,674) (15,475,130) ------------ ------------ ------------ Change in unrealized appreciation (depreciation) of: Investments (7,349,365) (10,217,725) (3,461,092) Other assets and liabilities denominated in foreign currencies (4,749) 371 675 ------------ ------------ ------------ Net unrealized appreciation (depreciation) (7,354,114) (10,217,354) (3,460,417) ------------ ------------ ------------ NET GAIN (LOSS) ON INVESTMENTS (12,891,782) (23,016,028) (18,935,547) ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(12,903,194) $(23,223,360) $(19,157,993) ------------ ------------ ------------ *Foreign taxes withheld $ 21,588 $ 1,187 $ 266 ------------ ------------ ------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS STATEMENTS OF CHANGES IN NET ASSETS PERIODS ENDED SEPTEMBER 30, 2002 MARCH 31, 2002
GLOBAL SELECT GLOBAL TECHNOLOGY ------------------------------------------------------------- SEPTEMBER 30, SEPTEMBER 30, 2002 MARCH 31, 2002 MARCH 31, (UNAUDITED) 2002 (UNAUDITED) 2002 ------------ ------------ ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS: Net investment income (loss) $ (11,412) $ (135,875) $ (207,332) $ (285,788) Net realized gain (loss) (5,537,668) (5,333,672) (12,798,674) (49,687,039) Net unrealized appreciation (depreciation) (7,354,114) 5,325,253 (10,217,354) 41,199,587 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets from investment operations (12,903,194) (144,294) (23,223,360) (8,773,240) ------------ ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS: From net investment income Institutional Class -- -- -- -- Retirement Class -- -- -- -- From net realized gains Institutional Class -- -- -- -- Retirement Class -- -- -- -- ------------ ------------ ------------ ------------ Total distributions -- -- -- -- ------------ ------------ ------------ ------------ FROM CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold Institutional Class 27,616,225 33,703,058 4,850,000 40,561,990 Retirement Class -- 150 -- -- Distributions reinvested Institutional Class -- -- -- -- Retirement Class -- -- -- -- Cost of shares redeemed Institutional Class (6,651,294) (7,363,152) (22,616,949) (49,616,643) Retirement Class -- -- -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in net assets from share transactions 20,964,931 26,340,056 (17,766,949) (9,054,653) ------------ ------------ ------------ ------------ Net Increase (Decrease) in Net Assets 8,061,737 26,195,762 (40,990,309) (17,827,893) NET ASSETS Beginning 41,219,057 15,023,295 57,793,898 75,621,791 ------------ ------------ ------------ ------------ Ending $ 49,280,794 $ 41,219,057 $ 16,803,589 $ 57,793,898 ------------ ------------ ------------ ------------ Undistributed net investment income (loss), ending $ (34,429) $ (23,018) $ (245,698) $ (38,366) ------------ ------------ ------------ ------------ INSTITUTIONAL CLASS - CAPITAL SHARE ACTIVITY Shares sold 2,393,513 2,447,740 329,923 1,853,554 Distributions reinvested -- -- -- -- Shares redeemed (547,742) (600,345) (1,575,537) (2,313,856) ------------ ------------ ------------ ------------ Net Institutional Share Activity 1,845,771 1,847,395 (1,245,614) (460,302) ------------ ------------ ------------ ------------ RETIREMENT CLASS - CAPITAL SHARE ACTIVITY Shares sold -- 12 -- -- Distributions reinvested -- -- -- -- Shares redeemed -- -- -- -- ------------ ------------ ------------ ------------ Net Retirement Share Activity -- 12 -- -- ------------ ------------ ------------ ------------ GLOBAL HEALTH CARE ------------------------------- SEPTEMBER 30, 2002 MARCH 31, (UNAUDITED) 2002 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS: Net investment income (loss) $ (222,446) $ (866,258) Net realized gain (loss) (15,475,130) 2,709,456 Net unrealized appreciation (depreciation) (3,460,417) 1,774,191 ------------ ------------ Net increase (decrease) in net assets from investment operations (19,157,993) 3,617,389 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS: From net investment income Institutional Class -- -- Retirement Class -- -- From net realized gains Institutional Class -- -- Retirement Class -- -- ------------ ------------ Total distributions -- -- ------------ ------------ FROM CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold Institutional Class 3,596,284 59,276,124 Retirement Class -- -- Distributions reinvested Institutional Class -- -- Retirement Class -- -- Cost of shares redeemed Institutional Class (57,148,058) (57,820,203) Retirement Class -- -- ------------ ------------ Net increase (decrease) in net assets from share transactions (53,551,774) 1,455,921 ------------ ------------ Net Increase (Decrease) in Net Assets (72,709,767) 5,073,310 NET ASSETS Beginning 93,177,119 88,103,809 ------------ ------------ Ending $ 20,467,352 $ 93,177,119 ------------ ------------ Undistributed net investment income (loss), ending $ (222,446) $ -- ------------ ------------ INSTITUTIONAL CLASS - CAPITAL SHARE ACTIVITY Shares sold 178,187 2,240,697 Distributions reinvested -- -- Shares redeemed (2,752,573) (2,336,350) ------------ ------------ Net Institutional Share Activity (2,574,386) (95,653) ------------ ------------ RETIREMENT CLASS - CAPITAL SHARE ACTIVITY Shares sold -- -- Distributions reinvested -- -- Shares redeemed -- -- ------------ ------------ Net Retirement Share Activity -- -- ------------ ------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS NOTES TO FINANCIAL STATEMENTS - (UNAUDITED) NOTE A -- ORGANIZATION Nicholas-Applegate Institutional Funds (formerly Nicholas-Applegate Investment Trust) (the "Trust") is an open-end management investment company. The Trust was established as a Delaware business trust on December 17, 1992 and consists of sixteen separate portfolios (collectively the "Funds" and each a "Fund"). Each Fund's investment objectives, strategies and risks are discussed in the Funds' current prospectuses. All of the Funds offer Institutional shares ("Class I") and ten Funds offer Retirement shares ("Class R"). Class I and Class R shares have no sales charge or distribution fee, but Class R shares have a shareholder servicing fee. The Global Select, Global Health Care and Global Technology Class I shares are covered in this report with each Fund's operations accounted for separately. NOTE B -- SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies consistently followed by the Funds in preparing these financial statements are described below. The policies conform with accounting principles generally accepted in the United States. SECURITY VALUATIONS The Funds value equity securities traded on national or international exchanges and market systems at the last sales price reported by the security's primary market at the time of daily valuation. If a last sales price is not available, these securities are valued at the mean between last reported bid and ask prices. Debt securities are valued at bid prices obtained from independent pricing services or from one or more dealers making markets in the securities. Security prices quoted in a foreign currency are translated using the current U.S. dollar exchange rate. Short-term securities maturing within 60 days are valued at amortized cost which approximates market value. When market quotations for securities are not readily available, a fair value is determined by the Investment Adviser in accordance with procedures established by the Board of Trustees. SECURITY TRANSACTIONS AND INVESTMENT INCOME Security transactions are accounted for as of trade date. Realized gains and losses from security transactions are determined on an identified-cost basis. Dividend income is recorded on the ex-dividend date or, for certain foreign securities, when the information becomes available to the Funds. Interest income is recorded on an accrual basis. Discounts and premiums on debt securities are accreted and amortized on the yield to maturity basis. FOREIGN CURRENCY TRANSACTIONS At each net asset valuation date, the value of assets and liabilities denominated in foreign currencies are translated into U.S. dollars using the current exchange rate. Security transactions, income and expenses are converted at the prevailing exchange rate on the day of the event. The effect of changes in exchange rates on securities denominated in a foreign currency is included with the net realized and unrealized gain or loss of the associated security. Other foreign currency gains or losses are reported separately. Certain Funds may use forward foreign currency contracts to reduce their exposure to currency fluctuations of their foreign securities. These contracts are commitments to purchase or sell a foreign currency at a specified rate on a future date. When the contract is fulfilled or closed, gains or losses are realized. Until then, the gain or loss is included in unrealized appreciation or depreciation of investments. The contract commitment is fully collateralized by cash or securities of the Fund. Foreign denominated assets and forward currency contracts may involve more risks than domestic transactions, including currency risk, political and economic risk, regulatory and market risk. Evaluating and monitoring such risk exposure is a part of the Funds' management strategy. FUTURES CONTRACTS Each Fund may enter into futures contracts involving foreign currency, interest rates, securities, and securities indices, for hedging purposes only. A futures contract obligates the seller of the contract to deliver and the purchaser of the contract to take delivery of the type of foreign currency, financial instrument or security called for in the contract at a specified future time for a specified price. Upon entering into such a contract, a Fund is required to deposit and maintain as collateral such initial margin as required by the exchange on which the contract is traded. Pursuant to the contract, a Fund agrees to receive from or pay to the broker an amount equal to the daily fluctuations in the value of the contract. Such receipts or payments are known as variation margin and are recorded as unrealized gains or losses by the Fund. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. OPTIONS CONTRACTS The Funds may: (a) buy call options on foreign currency in anticipation of an increase in the value of the underlying asset; (b) buy put options on foreign currency, portfolio securities, and futures in anticipation of a decrease in the value of the underlying asset; and (c) write call options on portfolio securities and futures to generate income from premiums, and in anticipation of a decrease or only limited increase in the value of the underlying asset. If a call written by a Fund is exercised, the Fund foregoes any possible profit from an increase in the market price of the underlying asset over the exercise price plus the premium received. When a Fund writes options on futures contracts, it will be subject to margin requirements similar to those applied to futures contracts. EQUITY-LINKED SECURITIES The Funds may purchase equity-linked securities, also known as participation notes, equity swaps, and zero strike calls and warrants. Equity-linked securities are primarily used by a Fund to access the securities market of a country from which the Fund would otherwise be precluded. The Fund deposits an amount of cash with its custodian (or broker, if legally permitted) in an amount equal to the selling price of the underlying security in exchange for an equity linked security. Upon sale, the Fund receives cash from the broker or custodian based on the change in the value of the underlying security. Aside from market risk of the underlying security, there is a risk of default by the other party to the transaction. In the event of insolvency of the other party, the Fund might be unable to obtain its expected benefit. In addition, while a Fund will seek to enter into such transactions only with parties which are capable of entering into closing transactions with the Fund, there can be no assurance that the Fund will be able to close out such a transaction with the other party or obtain an offsetting position with any other party, at any time prior to the end of the term of the underlying agreement. This may impair the Fund's ability to enter into other transactions at a time when doing so might be advantageous. SECURITIES LENDING Each Fund may temporarily loan securities up to 30% of its total assets to brokers, dealers or other financial institutions in exchange for a negotiated lender's fee. The borrower fully collateralizes the loans with cash. The risk associated with portfolio lending is that the borrower may not provide additional collateral when required or return the securities when due. The market value of securities on loan and the related collateral at September 30, 2002 were:
MARKET VALUE COLLATERAL FUND (IN 000'S) (IN 000'S) ---------- ---------- Global Select 1,330 1,378 Global Technology 2,400 2,550
CREDIT FACILITY The Trust has a $30 million credit facility available to fund temporary or emergency borrowing. Each Fund pays its pro-rata share of an annual commitment fee plus interest on its specific borrowings. For the period ended September 30, 2002, the Funds had no borrowings against the line of credit. FEDERAL INCOME TAXES The Funds intend to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of their taxable income to shareholders. Accordingly, no provision for federal income taxes is required. A Fund investing in foreign securities records any foreign taxes on income and gains on such investments in accordance with the applicable tax rules. The Funds' tax accounting treatment of loss deferrals, passive foreign investment companies and expiration of capital loss carryforwards are different from the financial statement recognition of income and gains. Capital loss carryforwards may be used to offset current or future capital gains until expiration. The following table reflects the capital loss carryforwards as of March 31, 2002.
CAPITAL LOSS CARRYFORWARD EXPIRATION FUND (IN 000'S) DATE ---------- ---- Global Select 7,168 3/31/10 Global Technology 52,122 3/31/09 Global Health Care 18,056 3/31/10
DISTRIBUTIONS TO SHAREHOLDERS The Funds record distributions to shareholders on the ex-dividend date. Distributions are determined in accordance with income tax regulations that may differ from generally accepted accounting principles. Accordingly, the Funds' capital accounts are periodically reclassified to reflect income and gains available for distribution under income tax regulations. The Funds make income and capital gain distributions at least annually. Funds with income objectives make distributions either quarterly or monthly in accordance with the prospectuses. The tax character of distributions paid during the fiscal year ended March 31, 2002 were as follows:
DISTRIBUTION PAID FROM: ------------------------------------------------------------------------------------ FUND NET TOTAL TOTAL ORDINARY LONG TERM TAXABLE TAX RETURN DISTRIBUTIONS INCOME CAPITAL GAIN DISTRIBUTIONS OF CAPITAL PAID(1) ------ ------------ ------------- ------- Global Select -- -- -- -- -- Global Technology -- -- -- -- -- Global Health Care -- -- -- -- --
As of March 31, 2002 the components of accumulated earnings/(deficit) on a tax basis were as follows:
COMPONENTS OF ACCUMULATED EARNINGS/(DEFICIT): ------------------------------------------------------------------------------------------------------- FUND UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED ACCUMULATED UNREALIZED TOTAL ORDINARY LONG-TERM CAPITAL AND APPRECIATION/ ACCUMULATED INCOME CAPITAL GAINS EARNINGS OTHER LOSSES (DEPRECIATION) EARNING/(DEFICIT) ------ ------------- -------- ------------ -------------- ----------------- Global Select -- -- -- (7,194,831)(5) 3,792,656(1) (3,402,175) Global Technology -- -- -- (187,131,523)(4) 4,014,631(3) (183,116,892) Global Health Care -- -- -- (18,056,173)(2) 2,743,105(3) (15,313,068)
(1) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales and current year forward contracts marked-to-market. (2) On March 31, 2002, the Fund had a net capital loss carryforward of approximately $18,056,713 which will expire on March 31, 2010. (3) The differences between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. (4) On March 31, 2002, the Fund had net capital loss carryforwards of approximately $187,093,157 which will expire on March 31, 2009 and March 31, 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. For the year ended March 31, 2002, the Fund deferred to April 1, 2002, post October currency losses. (5) On March 31, 2002, the Fund had net capital loss carryforwards of approximately $7,168,402 which will expire on March 31, 2010. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. For the year ended March 31, 2002, the Fund deferred to April 1, 2002, post October currency losses. FUND EXPENSES AND MULTI-CLASS ALLOCATIONS Each Fund bears expenses incurred specifically on its behalf plus an allocation of its share of Trust level expenses. Each share offered by a Fund has equal rights to assets but incurs certain Class specific expenses. The Funds allocate income, gains and losses, both realized and unrealized, and expenses, except for Class specific expenses, based on the relative net assets of each share class. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. NICHOLAS-APPLEGATE SOUTHEAST ASIA FUND, LTD. The Global Technology Fund invests in the Indian and certain other Southeast Asia stock markets through Nicholas-Applegate Southeast Asia Fund Ltd., a subsidiary company of each of the Funds and incorporated under the laws of Mauritius (the "Mauritius Subsidiary"). The Mauritius Subsidiary is entitled to benefit from the double taxation treaty between India and Mauritius, and invests in India in what the Investment Adviser considers to be the most efficient way currently available. The Mauritius Subsidiary may also be utilized to invest in other Southeast Asia markets where deemed appropriate or advisable by the Investment Adviser. Each Fund holds a 100% interest in a separate class of securities issued by the Mauritius Subsidiary, represented by a separate, underlying portfolio of securities. The accounts of the Mauritius Subsidiary are reflected in the Fund using consolidation accounting principles. NOTE C -- TRANSACTIONS WITH AFFILIATES Nicholas-Applegate Capital Management, as the Investment Adviser of the Funds, receives the following annual fees payable monthly based on the average daily net assets of each Fund. Global Technology and Global Healthcare 1.00% Global Select 0.80%
Under an Administrative Services agreement the Investment Adviser provides operational support services to the Funds at an annual fee on average daily net assets of 0.10%. The Investment Adviser has agreed to limit the Fund's expenses to certain levels through March 31, 2003. Expenses reimbursed by the Investment Adviser prior to July 24, 1998 may be recouped from the Funds within five years of that date. Expenses reimbursed by the Investment Adviser from July 24, 1998 through May 7, 1999 may be recouped from the Funds within five years after the year in which they are reimbursed. Any expenses reimbursed after May 7, 1999 may be recouped within three years after the year in which they are reimbursed. The Investment Adviser will recover such reimbursements to the extent of the differences between a Fund's actual expenses (exclusive of interest expense, taxes, brokerage, and the costs of establishing and maintaining The Mauritius Subsidiary) when they fall below the limit.
EXPENSE LIMIT ------------- UNRECOUPED CLASS AMOUNTS AT FUND INSTITUTIONAL 09/30/02 ------------- -------- Global Select 1.05% 433,704 Global Technology 1.40% 65,998 Global Health Care 1.40% 39,947
Certain officers of the Trust are also officers of the Investment Adviser and Distributor. The Trustees who are not affiliated with the Investment Adviser receive annual compensation of approximately $31,000 each from the Trust. NOTE D -- INVESTMENT TRANSACTIONS The following table presents purchases and sales of securities, excluding short-term investments, during the period ended September 30, 2002 to indicate the volume of transactions in each Fund. The tax cost of securities held at September 30, 2002, and the related gross and net unrealized appreciation and depreciation, provide aggregate information on a tax basis against which future gains and losses on these investments are measured for distribution purposes.
NET GROSS GROSS UNREALIZED UNREALIZED UNREALIZED APPRECIATION PURCHASES SALES TAX COST APPRECIATION DEPRECIATION (DEPRECIATION) FUND (IN 000'S) (IN 000'S) (IN 000'S) (IN 000'S) (IN 000'S) (IN 000'S) - ---- ---------- ---------- ---------- ---------- ---------- ---------- Global Select 73,464 53,290 51,175 1,193 4,372 (3,179) Global Technology 29,598 43,735 22,222 659 6,024 (5,365) Global Health Care 92,689 146,944 19,271 1,651 403 1,248
NOTE E -- FINANCIAL INSTRUMENTS During the period, several of the Funds have been party to financial instruments with off-balance sheet risks, including forward foreign currency contracts and futures contracts, primarily in an attempt to minimize the risk to the Fund, in respect of its portfolio transactions. These instruments involve market and/or credit risk in excess of the amount recognized in the Statement of Assets and Liabilities. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from unexpected movement in currencies, securities values and interest rates. The contract amounts indicate the extent of the Funds' involvement in such contracts. NOTE F CORPORATE GOVERNANCE (UNAUDITED)
TERM OF NUMBER OF OFFICE AND PORTFOLIOS IN POSITION(S) LENGTH OF FUND COMPLEX NAME, ADDRESS (1) HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS AND AGE FUND SERVED (2) DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE DISINTERESTED TRUSTEES: WALTER E. AUCH Trustee Since May Retired; prior thereto, Chairman and 16 Trustee, Brinson Relationship Funds (80) 1999 CEO of Chicago Board of Options (since 1994) and Brinson Exchange (1979-1986). Supplementary Trust (since 1997); Director, Thompson Asset Management Corp (since 1987); Director, Smith Barney Trak Fund (since 1992) and Smith Barney Advisors (since 1992); Director, PIMCO Advisors L.P (since 1994); Director, Banyon Realty Trust (since 1988), Banyon Mortgage Investment Fund (since 1989) and Banyon Land Fund II (since 1988); Director, Express America Holdings Corp (since 1992); Director, Legend Properties, Inc. (since 1987); Director, Senele Group (since 1988); Director, Fort Dearborn Income Securities, Inc. (1987-1995); Trustee, Nicholas-Applegate Mutual Funds (1994-1999); Director, Geotek Industries, Inc. (1987-1998). DARLENE DEREMER Trustee Since May Managing Director, NewRiver Ebusiness 16 Founding Member and Director, (46) 1999 Advisory Services Division; Prior to, National Defined Contribution President and Founder, DeRemer Council (since 1997); Trustee, Associates, a strategic and marketing Boston Alzheimer's Association consulting firm for the financial (since 1998); Director, King's Wood services industry (since 1987); Vice Montessori School (since 1995); President and Director, Asset Editorial Board, National Management Division, State Street Bank Association of Variable Annuities and Trust Company, now referred to as since 1997); Director, State Street Global Advisers, Nicholas-Applegate Strategic (1982-1987); Vice President, T. Rowe Opportunities, Ltd. (1994-1997); Price & Trustee, Nicholas-Applegate Mutual Funds (1994-1999); Director, Associates (1979-1982); Member, Jurika & Voyles Fund Group Boston Club (since 1998); Member, (since 1994-2000). Financial Women's Association Advisory Board (since 1995); Founder, Mutual Fund Cafe Website.
TERM OF NUMBER OF OFFICE AND PORTFOLIOS IN POSITION(S) LENGTH OF FUND COMPLEX NAME, ADDRESS (1) HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER DIRECTORSHIPS AND AGE FUND SERVED (2) DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE GEORGE F. KEANE Trustee Since May Consultant, Associated Energy Managers 16 Director, Bramwell Funds (since (72) 1999 (since 1994); Prior to, President 1994); Director, Longview Oil & Gas Emeritus and founding Chief Executive (since 2000); Director, Security Officer, The Common Fund (1971-1992); Capital U.S. Real Estate (since and Endowment Advisors (1987-1992) 1997); Director, The Universal Bond (organizations that provide investment Fund (since 1997); Director, management programs for colleges and Universal Stainless & Alloy universities) ; Member, Investment Products Inc. (1994-2000); Advisory Committee, New York State Director, United Water Services and Common Retirement Fund (since 1982). affiliated companies (1996-2000); Director, and former Chairman of the Board, Trigen Energy Corporation (1994-2000); Trustee, Nicholas-Applegate Mutual Funds INTERESTED (1994-1999). TRUSTEES: E. BLAKE MOORE, Trustee and Since Managing General Counsel, 16 Director, Nicholas-Applegate JR. (44) Chairman February Nicholas-Applegate Capital Management Southeast Asia Fund (Since 2000). 2002 LLC, Nicholas-Applegate Securities LLC, Nicholas-Applegate Holdings LLC and Nicholas-Applegate Securities International LDC (Since 1995). OFFICERS: E. BLAKE MOORE, President Since May Managing General Counsel, 16 Director, Nicholas-Applegate JR. (44) 2001 Nicholas-Applegate Capital Management Southeast Asia Fund (Since 2000). LLC, Nicholas-Applegate Securities LLC, Nicholas-Applegate Holdings LLC and Nicholas-Applegate Securities International LDC (Since 1995). CHARLES H. Secretary Since May Deputy General Counsel, 16 Director, Nicholas-Applegate U.S. FIELD, JR. (46) 2001 Nicholas-Applegate Capital Management Growth Equity Fund (Since 1996); (Since 1996). Director, Nicholas-Applegate Southeast Asia Fund (Since 1999). Director, Nicholas-Applegate Strategic Opportunities Fund, LLC (1996-2000); Director, Torrey Pines Fund, Ltd. (Since 1999). C. WILLIAM Treasurer Since May Managing Chief Financial Officer, 16 NA MAHER (41) 1999 Nicholas-Applegate Capital Management, Nicholas-Applegate Securities, (Since 1998); Co-Managing Chief Financial Officer Nicholas-Applegate Holdings LLC (Since 2001). Formerly Chief Financial Officer, Mitchell Hutchins Asset Management, Inc. (1990-1998).
(1) Unless otherwise noted, the address of the Trustees and Officers is c/o: Nicholas-Applegate Capital Management, 600 West Broadway, 32nd Floor, San Diego, California 92101. (2) Each Trustee serves for an indefinite term, until her or his successor is elected. NICHOLAS-APPLEGATE INSITUTIONAL FUNDS PART C OTHER INFORMATION Item 15. INDEMNIFICATION Indemnification provisions for officers and trustees of Registrant are set forth in Article V, Section 2 of the Amended and Restated Declaration of Trust, and are hereby incorporated by reference. See Item 16(1) below. Under this Article, officers and trustees will be indemnified to the fullest extent permitted to trustees by laws applicable to a Delaware business trust, subject only to such limitations as may be required by the Investment Management Company Act of 1940, as amended ("1940 Act"), and the rules thereunder. Under the 1940 Act, trustees and officers of Registrant cannot be protected against liability to Registrant or its shareholders to which they would be subject because of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties of their office. Registrant also maintains liability insurance policies covering its trustees and officers. Item 16. EXHIBITS (1) (a) Declaration of Trust, filed with Registration Statement on December 31, 1992 and incorporated herein by reference (b) Amended and Restated Declaration of Trust, filed with Amendment No. 1 to Registration Statement on March 17, 1993 and incorporated herein by reference (c) Amended and Restated Declaration of Trust dated February 19, 1999, filed with Registration Statement on May 6, 1999 and incorporated herein by reference (d) Amendment No. 1 to the Amended and Restated Declaration of Trust dated February 19, 1999, filed with Registration Statement on June 18, 1999 and incorporated herein by reference (2) (a) Amended By-Laws, filed with Amendment No. 2 to Registration Statement on April 6, 1993 and incorporated herein by reference (b) Amended By-Laws dated February 19, 1999, filed with Registration Statement on May 6, 1993 and incorporated herein by reference (3) Voting trust agreement - none (4) Plan of Reorganization and Termination by Nicholas-Applegate Institutional Funds on behalf of Nicholas-Applegate Global Select Fund, Nicholas-Applegate Global - filed herewith C-1 Technology Fund and Nicholas-Applegate Global Health Care Fund - filed herewith (5) Provisions of instruments defining the rights of holders of securities are contained in Articles VI and VII of Registrant's Amended and Restated Declaration of Trust (6) (a) Investment Advisory Agreement between Registrant and Nicholas-Applegate Capital Management, filed with Registration Statement on May 6, 1999 and incorporated herein by reference (b) Form of letter agreement dated August 31, 1999 between Registrant and Nicholas-Applegate Capital Management, filed with Registration Statement on June 18, 1999 and incorporated herein by reference (c) Form of Sub-Investment Advisory Agreement between Registrant and Criterion Investment Management LLC, filed with Post-Effective Amendment No. 4 to Registration Statement on May 25, 2000 and incorporated herein by reference (d) Proposed Investment Advisory Agreement between Registrant and Nicholas-Applegate Capital Management, filed with Post-Effective Amendment No. 5 to Registration Statement on November 30, 2000 and incorporated herein by reference (e) Proposed Sub-Investment Advisory Agreement between Registrant and Criterion Investment Management LLC, filed with Post-Effective Amendment No. 5 to Registration Statement on November 30, 2000 and incorporated herein by reference (f) Form of letter agreement dated February 9, 2001 between Registrant and Nicholas-Applegate Capital Management amending the Investment Advisory Agreement, filed with Post-Effective Amendment No. 6 to Registration Statement on February 14, 2001 and incorporated herein by reference (g) Letter agreement dated May 8, 2001 between Registrant and Nicholas-Applegate Capital Management Amending the Investment Advisory Agreement dated January 31, 2001, filed with Post-Effective Amendment No. 9 to Registration Statement on October 1, 2001 and incorporated herein by reference (7) (a) Distribution Agreement between Registrant and Nicholas-Applegate Securities dated May 10, 1999, filed with Registration Statement on May 6, 1999 and incorporated herein by reference (b) Distribution Agreement between Registrant and Nicholas-Applegate Securities, filed with Post-Effective Amendment No. 5 to Registration Statement on November 30, 2000 and incorporated herein by reference C-2 (8) Benefit Plan for trustees or officers of Registrant in their capacity as such - none (9) (a) Custodian Services Agreement between Registrant and Brown Brothers Harriman & Co., filed with Registration Statement on May 6, 1999 and incorporated herein by reference (b) Foreign Custody Agreement between Registrant and Brown Brothers Harriman & Co., filed with Registration Statement on May 6, 1999 and incorporated herein by reference (c) Amendment to Custodian Serviecs Agreement between Registrant and Brown Brothers Harriman & Co., filed with Registration Statement on May 6, 1999 and incorporated herein by reference (d) Cash Management Authorization Services Agreement between Registrant and Brown Brothers Harriman & Co., filed with Registration Statement on May 6, 1999 and incorporated herein by reference (e) Form of letter agreement between Restrant and Brown Brothers Harriman & Co. amending Foreign Custody Agreement dated May 1, 1999, filed with Post-Effective Amendment No. 4 to Registration Statement on May 25, 2000 and incorporated herein by reference (f) Form of letter agreement between Registrant and Brown Brother s Harriman & Co. amending Custodian Services Agreement dated May 1, 1999, filed with Post-Effective Amendment No. 4 to Registration Statement on May 25, 2000 and incorporated herein by reference (g) Form of letter agreement between Registrant and Brown Brothers Harriman & Co. amending Cash Management Authorization Services Agreement dated May 1, 1999, filed with Post-Effecgive Amendment No. 4 to Registration Statement on May 25, 2000 and incorporated herein by reference (h) Form of letter agreement between Registrant and Brown Brothers Harriman & Co. amending Cash Management Authorization Services Agreement dated May 1, 1999, filed with Post-Effective Amendment No. 6 to Registration Statement on February 14, 2001 and incorporated herein by reference (i) 17f-5 Delegation Schedule between Registrant and Brown Brothers Harriman & Co. dated February 14, 2001, filed with Post-Effective Amendment No. 6 to Registration Statement on February 14, 2001 and incorporated herein by reference (j) Amendment to Custodian Services Agreement between Registrant and Brown Brothers Harriman & Co. dated February 14, 2001, filed with Post-Effective Amendment No. 7 to Registration Statement on April 10, 2001 and with Post-Effective Amendment No. 8 to Registration Statement on May 30, 2001 and incorporated herein by reference C-3 (10) (a) Rule 12b-1 Plan for Class R Shares, filed with Registration Statement on ___ [TBP] and incorporated herein by reference (b) Rule 18f-3 Plan between Registrant and Nicholas-Applegate Capital Management, filed with Registration Statement on May 6, 1999 and incorporated herein by reference (11) Opinion and consent of counsel as to the legality of the securities being registered, indicating whether they will, when sold, be legally issued, fully paid, and non-assessable - filed herewith (12) Opinion and consent of counsel as to the tax matters and consequences to shareholders discussed in the Prospectus/Proxy Statement - to be filed by Amendment within a reasonable time after closing. (13) (a) Administration and Fund Accounting Agency Agreement between Registrant and Brown Brothers Harriman & Co., filed with Registration Statement on May 6, 1999 and incorporated herein by reference (14) Consent of Ernst & Young - filed herewith (b) Administrative Services Agreement between Registrant and Nicholas-Applegate Capital Management, filed with Registration Statement on May 6, 1999 and incorporated herein by reference (c) License Agreement between Registrant and Nicholas-Applegate Cpital Management, filed with Registration Statement on May 6, 1999 and incorporated herein by reference (d) Expense Limitation Agreement between Registrant and Nicholas-Applegate Capital Management on May 6, 1999 and incorporated herein by reference (e) Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Company, filed with Registration Statement on May 27, 1999 and incorporated herein by reference (f) Form of letter agreement between Registrant and Brown Brothers Harriman & Co. Amending to Adminstration and Fund Accounting Agency Agreement dated May 1, 1999, filed with Post-Effective Amendment No. 4 to Registration Statement on May 27, 2000 and incorporated herein by reference (g) Form of letter agreement between Registration and Nicholas-Applegate Capital Management amending Expense Limitation Agreement, filed with Registration Statement on June 18, 1999 and incorporated herein by reference (h) Form of letter agreement between Registrant and State Street Bank and Trust Company amending Transfer Agency and Service Agreement, filed with Registration Statement on June 18, 1999 and incorporated herein by reference C-4 (i) Credit Agreement between Registrant and BankBoston, N.A., dated December 21, 1999, filed with Post-Effective Amendment No. 4 to Registration Statement on May 25, 2000 and incorporated herein by reference (j) Master Securities Lending Agreement between Registrant and Goldman, Sachs & Co. dated July 22, 1999, filed with Post-Effective Amendment No. 4 to Registration Statement on May 25, 2000 and incorporated herein by reference (k) Administrative Service Agreement between Registrant and Nicholas-Applegate Capital Management, filed with Post-Effective Amendment No. 5 to Registration Statement on November 30, 2000 and incorporated herein by reference (l) Form of letter agreement between Registrant and Brown Brothers Harriman & Co. amending Adminstration and Fund Accounting Agency Agreement dated May 1, 1999, filed with Post-Effective Amendment No. 6 to Registration Statement on February 14, 2001 and with Post-Effective Amendment No. 7 to Registration Statement on April 10, 2001 and incorporated herein by reference (m) Form of letter agreement between Registrant and Nicholas-Applegate Capital Management amending Expense Limitation Agreement, filed with Post-Effective Amendment No. 6 to Registration Statement on February 14, 2001 and incorporated herein by reference (n) Form of letter agreement between Registrant and State Street Bank and Trust Company amending Transfer Agency and Service Agreement, filed with Post-Effective Amendment No. 6 to Registration Statement on February 14, 2001 and incorporated herein by reference (o) Form of letter agreement between Registrant and Fleet Bank (formally BankBoston, N.A.) amending Credit Agreement dated December 21, 1999, filed with Post-Effective Amendment No. 6 to Registration Statement on February 14, 2001 and incorporated herein by reference (p) Amendment to Administration and Fund Accouting Agreement between Registrant and Brown Brothers Harriman & Co. dated February 14, 2001, filed with Post-Effective Amendment No. 7 to Registration Statement on April 10, 2001 and incorporated herein by reference (q) Letter agreement dated May 18, 2001 between Registrant and Nicholas-Applegate Capital Management amending Expense Limitation Agreement, filed with Post-Effective Amendment No. 8 to Registration Statement on May 30, 2001 and incorporated herein by reference (r) Letter agreement dated September 27, 2001 between Registrant and Nicholas-Applegate Capital Management amending Expense Limitation Agreement, filed C-5 with Post-Effective Amendment No. 9 to Registration Statement on October 1, 2001 and incorporated herein by reference (s) Letter agreement dated May 17, 2002 between Registrant and Nicholas-Applegate Capital Management amending Expense Limitation Agreement, filed with Post-Effective Amendment No.10 to Registration Statement on May 20, 2002 and incorporated herein by reference (14) Consent of Ernst & Young LLP - filed herewith (15) Financial statements omitted from part B - none. (16) (a) Limited Powers of Attorney of Trustees filed with Post-Effective Amendment No. 12 to Registration Statement on August 1, 1994 and incorporated herein by reference (b) Limited Powers of Attorney of Walter E. Auch, filed with Amendment No. 14 to Registration Statement on September 26, 1994 and incorporated herein by reference (c) Limited Powers of Attorney of Trustees - filed herewith (17) Additional Exhibits: Form of Proxy Card - filed herewith Item 17. UNDERTAKINGS (1) The undersigned Registrant agrees that prior to any public re-offering of the securities registered through the use of the prospectus which is a part of this Registration Statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the re-offering prospectus will contain the information called for by the applicable registration form for re-offering by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the Registration Statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new Registration Statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. (3) The undersigned Registrant agrees to file an amendment to the Registration Statement, pursuant to Rule 485(b) of Regulation C of the 1933 Act, for the purpose of including Exhibit 12, Opinion of Counsel Supporting Tax Matters with a reasonable time after closing. C-6 Pursuant to the requirements of the Securities Act of 1933, as amended (the "1933 Act"), the Registrant has duly caused this Registration Statement on Form N-14 to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of San Diego and the State of California on the 8th day of November, 2002. NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS By: /s/ _______________________________ Charles H. Field, Jr. Secretary Pursuant to the requirements of the 1933 Act, this Registration Statement has been signed below by the following persons in the capacities and on December 8, 2002. /s/ - ---------------------- Blake Moore, Jr. Chairman of the Board, Trustee and President E. Blake Moore, Jr. - ---------------------- William Maher Principal Financial and Accounting Officer /s/ - ---------------------- Charles H. Field, Jr. Secretary - ---------------------- Walter E. Auch Trustee - ---------------------- Darlene DeRemer Trustee - ---------------------- George F. Keane Trustee /s/ - ---------------------- By Charles H. Field, Jr. Attorney In Fact C-7 EX-99.4 3 a2092707zex-99_4.txt EX-99.4 EXHIBIT 4 FORM OF PLAN OF REORGANIZATION AND TERMINATION THIS PLAN OF REORGANIZATION AND TERMINATION ("Plan"), is adopted by Nicholas-Applegate Institutional Funds, a Delaware business trust ("Trust"), on behalf of Nicholas-Applegate Global Technology Fund and Nicholas-Applegate Global Health Care Fund (each a "Target") and Nicholas-Applegate Global Select Fund ("Acquiring Fund"), each a segregated portfolio of assets ("series") thereof. Trust wishes to effect two separate reorganizations, each described in section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended ("Code"), and intends this Plan to be, and adopts it as, a "plan of reorganization" within the meaning of the regulations under section 368 of the Code ("Regulations"). Each reorganization will involve the transfer of a Target's assets to Acquiring Fund in exchange solely for voting shares of beneficial interest in Acquiring Fund and Acquiring Fund's assumption of that Target's liabilities, followed by the constructive distribution of those shares PRO RATA to the holders of shares of beneficial interest in that Target in exchange therefor, all on the terms and conditions set forth herein. (All such transactions involving a Target and Acquiring Fund, sometimes referred to herein individually as a "Fund" and collectively as "Funds," are referred to herein as a "Reorganization.") For convenience, the balance of this Plan refers only to a single Reorganization and one Target, but the terms and conditions hereof apply separately to each Reorganization. The consummation of one Reorganization is not contingent on the consummation of the other Reorganization. Trust is a business trust that is duly organized, validly existing, and in good standing under the laws of the State of Delaware. Trust is duly registered as an open-end management investment company under the Investment Company Act of 1940, as amended ("1940 Act"). Before January 1, 1997, Trust "claimed" classification for federal tax purposes as an association taxable as a corporation, and it has never elected otherwise. Each Fund is a duly established and designated series of Trust. Target has a single class of shares, designated Class I shares ("Target Shares"). Acquiring Fund's shares are divided into multiple classes, including Class I shares. Only Acquiring Fund's Class I shares ("Acquiring Fund Shares"), which are substantially similar to the Target Shares, are involved in the Reorganization. 1. PLAN OF REORGANIZATION AND TERMINATION 1.1. At the Closing (as defined in paragraph 3.1), Target shall assign, sell, convey, transfer, and deliver all of its assets described in paragraph 1.2 ("Assets") to Acquiring Fund. In exchange therefor, Acquiring Fund shall -- (a) issue and deliver to Target the number of full and fractional (rounded to the third decimal place) Acquiring Fund Shares determined by dividing the net value of Target (computed as set forth in paragraph 2.1) by the net asset value ("NAV") of an Acquiring Fund Share (computed as set forth in paragraph 2.2), and (b) assume all of Target's liabilities described in paragraph 1.3 ("Liabilities"). A-1 1.2. The Assets shall consist of all cash, cash equivalents, securities, receivables (including interest and dividends receivable), claims and rights of action, rights to register shares under applicable securities laws, books and records, deferred and prepaid expenses shown as assets on Target's books, and other property owned by Target at the Effective Time (as defined in paragraph 3.1). 1.3. The Liabilities shall consist of all of Target's liabilities, debts, obligations, and duties of whatever kind or nature, whether absolute, accrued, contingent, or otherwise, whether or not arising in the ordinary course of business, whether or not determinable at the Effective Time, and whether or not specifically referred to in this Plan. Notwithstanding the foregoing, Target agrees to use its best efforts to discharge all its known Liabilities before the Effective Time. 1.4. At or immediately before the Effective Time, Target shall declare and pay to its shareholders a dividend and/or other distribution in an amount large enough so that it will have distributed substantially all (and in any event not less than 90%) of its "investment company taxable income" and substantially all of its "net capital gain," if any (as such terms are defined in sections 852(b)(2) and 1222(11), respectively, of the Code, both computed without regard to any deduction for dividends paid) for the current taxable year through the Effective Time. 1.5. At the Effective Time (or as soon thereafter as is reasonably practicable), Target shall distribute the Acquiring Fund Shares it receives pursuant to paragraph 1.1 to its shareholders of record, determined as of the Effective Time (each a "Shareholder" and collectively "Shareholders"), in constructive exchange for their Target Shares. That distribution shall be accomplished by Trust's transfer agent's opening accounts on Acquiring Fund's share transfer books in the Shareholders' names and transferring those Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with the respective PRO RATA number of full and fractional (rounded to the third decimal place) Acquiring Fund Shares due that Shareholder. All outstanding Target Shares, including any represented by certificates, shall simultaneously be canceled on Target's share transfer books. Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares issued in connection with the Reorganization. 1.6. As soon as reasonably practicable after distribution of the Acquiring Fund Shares pursuant to paragraph 1.5, but in all events within six months after the Effective Time, Target shall be terminated as a series of Trust and any further actions shall be taken in connection therewith as required by applicable law. 1.7. Any reporting responsibility of Target to a public authority is and shall remain its responsibility up to and including the date on which it is terminated. A-2 1.8. Any transfer taxes payable on issuance of Acquiring Fund Shares in a name other than that of the registered holder on Target's books of the Target Shares constructively exchanged therefor shall be paid by the person to whom those Acquiring Fund Shares are to be issued, as a condition of that transfer. 2. VALUATION 2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a) the value of the Assets computed as of the close of regular trading on the New York Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"), using the valuation procedures set forth in Trust's then-current prospectus regarding Class I shares and statement of additional information (collectively, "P/SAI"), less (b) the amount of the Liabilities as of the Valuation Time. 2.2. For purposes of paragraph 1.1(a), the NAV of an Acquiring Fund Share shall be computed as of the Valuation Time, using the valuation procedures set forth in the P/SAI. 2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by or under the direction of Brown Brothers Harriman & Co., Private Bankers ("Custodian"). 3. CLOSING AND EFFECTIVE TIME 3.1. The Reorganization, together with related acts necessary to consummate the same ("Closing"), shall occur at Trust's principal office on or about January 31, 2003, or at such other place and/or on such other date Trust determines. All acts taking place at the Closing shall be deemed to take place simultaneously as of the close of business on the date thereof or at such other time Trust determines ("Effective Time"). If, immediately before the Valuation Time, (a) the NYSE is closed to trading or trading thereon is restricted or (b) trading or the reporting of trading on the NYSE or elsewhere is disrupted, so that accurate appraisal of Target's net value and/or the NAV of an Acquiring Fund Share is impracticable, the Effective Time shall be postponed until the first business day after the day when that trading has been fully resumed and that reporting has been restored. 3.2. Trust's fund accounting and pricing agent shall deliver at the Closing a certificate of an authorized officer verifying that the information (including adjusted basis and holding period, by lot) concerning the Assets, including all portfolio securities, transferred by Target to Acquiring Fund, as reflected on Acquiring Fund's books immediately after the Closing, does or will conform to that information on Target's books immediately before the Closing. Custodian shall deliver at the Closing a certificate of an authorized officer stating that (a) the Assets it holds will be transferred to Acquiring Fund at the Effective Time and (b) all necessary taxes in conjunction with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, A-3 have been paid or provision for payment has been made. Trust's transfer agent shall deliver at the Closing a certificate as to the opening of accounts in the Shareholders' names on Acquiring Fund's share transfer books and a confirmation, or other evidence satisfactory to Trust, that the Acquiring Fund Shares to be credited to Target at the Effective Time have been credited to Target's account on Acquiring Fund's books. 4. CONDITIONS PRECEDENT 4.1. Trust's obligation to implement this Plan on Acquiring Fund's behalf shall be subject to satisfaction of the following conditions at or before the Effective Time: 4.1.1. At the Closing, Target will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer, and deliver the Assets free of any liens or other encumbrances (except securities that are subject to "securities loans" as referred to in section 851(b)(2) of the Code); and on delivery and payment for the Assets, Acquiring Fund will acquire good and marketable title thereto; 4.1.2. Target is not in violation of, and the adoption of this Plan and consummation of the transactions contemplated hereby will not conflict with or violate, Delaware law or any provision of Trust's Amended and Restated Declaration of Trust dated February 19, 1999, or By-Laws (collectively "Declaration of Trust") or of any agreement, instrument, lease, or other undertaking to which Target is a party or by which it is bound or result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, judgment, or decree to which Target is a party or by which it is bound; 4.1.3. All material contracts and other commitments of or applicable to Target (other than this Plan and investment contracts, including options, futures, and forward contracts) will be terminated, or provision for discharge of any liabilities of Target thereunder will be made, at or prior to the Effective Time, without either Fund's incurring any liability or penalty with respect thereto and without diminishing or releasing any rights Target may have had with respect to actions taken or omitted or to be taken by any other party thereto prior to the Closing; 4.1.4. No litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or (to Trust's knowledge) threatened against Trust with respect to Target or any of its properties or assets that, if adversely determined, would materially and adversely affect Target's financial condition or the conduct of its business; and Trust knows of no facts that might form the basis for the institution of any such litigation, proceeding, or investigation and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially or adversely affects its business or its ability to consummate the transactions contemplated hereby; 4.1.5. Target incurred the Liabilities in the ordinary course of its business; A-4 4.1.6. Target is a "fund" as defined in section 851(g)(2) of the Code; it qualified for treatment as a regulated investment company under Subchapter M of the Code ("RIC") for each past taxable year since it commenced operations and will continue to meet all the requirements for that qualification for its current taxable year; the Assets will be invested at all times through the Effective Time in a manner that ensures compliance with the foregoing; and Target has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M did not apply to it; 4.1.7. Target is not under the jurisdiction of a court in a "title 11 or similar case" (as defined in section 368(a)(3)(A) of the Code); 4.1.8. During the five-year period ending at the Effective Time, (a) neither Target nor any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to it will have acquired Target Shares, either directly or through any transaction, agreement, or arrangement with any other person, with consideration other than Acquiring Fund Shares or Target Shares, except for shares redeemed in the ordinary course of Target's business as a series of an open-end investment company as required by section 22(e) of the 1940 Act, and (b) no distributions will have been made with respect to Target Shares, other than normal, regular dividend distributions made pursuant to Target's historic dividend-paying practice and other distributions that qualify for the deduction for dividends paid (within the meaning of section 561 of the Code) referred to in sections 852(a)(1) and 4982(c)(1)(A) of the Code; 4.1.9. From the date it commenced operations through the Effective Time, Target will conduct its "historic business" (within the meaning of section 1.368-1(d)(2) of the Regulations) in a substantially unchanged manner; and before the Effective Time Target will not (a) dispose of and/or acquire any assets (i) for the purpose of satisfying Acquiring Fund's investment objective or policies or (ii) for any other reason except in the ordinary course of its business as a RIC, or (b) otherwise change its historic investment policies; and 4.1.10. Not more than 25% of the value of Target's total assets (excluding cash, cash items, and U.S. government securities) is invested in the stock and securities of any one issuer, and not more than 50% of the value of such assets is invested in the stock and securities of five or fewer issuers. 4.2. Trust's obligation to implement this Plan on Target's behalf shall be subject to satisfaction of the following conditions at or before the Effective Time: 4.2.1. No consideration other than Acquiring Fund Shares (and Acquiring Fund's assumption of the Liabilities) will be issued in exchange for the Assets in the Reorganization; 4.2.2. The Acquiring Fund Shares to be issued and delivered to Target hereunder (a) at the Effective Time, will have been duly authorized and duly registered under the federal securities laws (and appropriate notices respecting them will have been duly filed under applicable state securities laws) and (b) when issued and delivered as provided herein, A-5 will be duly and validly issued and outstanding shares of Acquiring Fund, fully paid and non-assessable by Trust; 4.2.3. Acquiring Fund is not in violation of, and the adoption of this Plan and consummation of the transactions contemplated hereby will not conflict with or violate, Delaware law or any provision of the Declaration of Trust or of any agreement, instrument, lease, or other undertaking to which Acquiring Fund is a party or by which it is bound or result in the acceleration of any obligation, or the imposition of any penalty, under any agreement, judgment, or decree to which Acquiring Fund is a party or by which it is bound; 4.2.4. No litigation, administrative proceeding, or investigation of or before any court or governmental body is presently pending or (to Trust's knowledge) threatened against Trust with respect to Acquiring Fund or any of its properties or assets that, if adversely determined, would materially and adversely affect Acquiring Fund's financial condition or the conduct of its business; and Trust knows of no facts that might form the basis for the institution of any such litigation, proceeding, or investigation and is not a party to or subject to the provisions of any order, decree, or judgment of any court or governmental body that materially or adversely affects its business or its ability to consummate the transactions contemplated hereby; 4.2.5. Acquiring Fund is a "fund" as defined in section 851(g)(2) of the Code; it qualified for treatment as a RIC for each past taxable year since it commenced operations and will continue to meet all the requirements for such qualification for its current taxable year; it intends to continue to meet all such requirements for the next taxable year; and it has no earnings and profits accumulated in any taxable year in which the provisions of Subchapter M of the Code did not apply to it; 4.2.6. Acquiring Fund has no plan or intention to issue additional Acquiring Fund Shares following the Reorganization except for shares issued in the ordinary course of its business as a series of an open-end investment company; nor does Acquiring Fund, or any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to it, have any plan or intention to acquire -- during the five-year period beginning at the Effective Time, either directly or through any transaction, agreement, or arrangement with any other person -- with consideration other than Acquiring Fund Shares, any Acquiring Fund Shares issued to the Shareholders pursuant to the Reorganization, except for redemptions in the ordinary course of such business as required by section 22(e) of the 1940 Act; 4.2.7. Following the Reorganization, Acquiring Fund (a) will continue Target's "historic business" (within the meaning of section 1.368-1(d)(2) of the Regulations) and (b) will use a significant portion of Target's "historic business assets" (within the meaning of section 1.368-1(d)(3) of the Regulations) in a business; in addition, (c) Acquiring Fund has no plan or intention to sell or otherwise dispose of any of the Assets, except for dispositions made in the ordinary course of that business and dispositions necessary to maintain its status as a RIC, and (d) expects to retain substantially all the Assets in the same form as it receives them in the Reorganization, unless and until subsequent investment circumstances suggest the desirability of change or it becomes necessary to make dispositions thereof to maintain such status; A-6 4.2.8. There is no plan or intention for Acquiring Fund to be dissolved or merged into another business trust or a corporation or any "fund" thereof (as defined in section 851(g)(2) of the Code) following the Reorganization; 4.2.9. Acquiring Fund does not directly or indirectly own, nor at the Effective Time will it directly or indirectly own, nor has it directly or indirectly owned at any time during the past five years, any shares of Target; 4.2.10. During the five-year period ending at the Effective Time, neither Acquiring Fund nor any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to it will have acquired Target Shares with consideration other than Acquiring Fund Shares; and 4.2.11. Immediately after the Reorganization, (a) not more than 25% of the value of Acquiring Fund's total assets (excluding cash, cash items, and U.S. government securities) will be invested in the stock and securities of any one issuer and (b) not more than 50% of the value of such assets will be invested in the stock and securities of five or fewer issuers. 4.3. Trust's obligation to implement this Plan on each Fund's behalf shall be subject to satisfaction of the following conditions at or before the Effective Time: 4.3.1. The fair market value of the Acquiring Fund Shares each Shareholder receives will be approximately equal to the fair market value of its Target Shares it constructively surrenders in exchange therefor; 4.3.2. Its management (a) is unaware of any plan or intention of Shareholders to redeem, sell, or otherwise dispose of (i) any portion of their Target Shares before the Reorganization to any person "related" (within the meaning of section 1.368-1(e)(3) of the Regulations) to either Fund or (ii) any portion of the Acquiring Fund Shares they receive in the Reorganization to any person "related" (within such meaning) to Acquiring Fund, (b) does not anticipate dispositions of those Acquiring Fund Shares at the time of or soon after the Reorganization to exceed the usual rate and frequency of dispositions of shares of Target as a series of an open-end investment company, (c) expects that the percentage of Shareholder interests, if any, that will be disposed of as a result of or at the time of the Reorganization will be DE MINIMIS, and (d) does not anticipate that there will be extraordinary redemptions of Acquiring Fund Shares immediately following the Reorganization; 4.3.3. The Shareholders will pay their own expenses, if any, incurred in connection with the Reorganization; 4.3.4. The fair market value of the Assets on a going concern basis will equal or exceed the Liabilities to be assumed by Acquiring Fund and those to which the Assets are subject; 4.3.5. There is no intercompany indebtedness between the Funds that was issued or acquired, or will be settled, at a discount; A-7 4.3.6. Pursuant to the Reorganization, Target will transfer to Acquiring Fund, and Acquiring Fund will acquire, at least 90% of the fair market value of the net assets, and at least 70% of the fair market value of the gross assets, Target held immediately before the Reorganization. For the purposes of the foregoing, any amounts Target uses to pay its Reorganization expenses and to make redemptions and distributions immediately before the Reorganization (except (a) redemptions in the ordinary course of its business required by section 22(e) of the 1940 Act and (b) regular, normal dividend distributions made to conform to its policy of distributing all or substantially all of its income and gains to avoid the obligation to pay federal income tax and/or the excise tax under section 4982 of the Code) will be included as assets held thereby immediately before the Reorganization; 4.3.7. None of the compensation received by any Shareholder who is an employee of or service provider to Target will be separate consideration for, or allocable to, any of the Target Shares that Shareholder held; none of the Acquiring Fund Shares any such Shareholder receives will be separate consideration for, or allocable to, any employment agreement, investment advisory agreement, or other service agreement; and the consideration paid to any such Shareholder will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm's-length for similar services; 4.3.8. Immediately after the Reorganization, the Shareholders will not own shares constituting "control" (within the meaning of section 304(c) of the Code) of Acquiring Fund; 4.3.9. Neither Fund will be reimbursed for any expenses incurred by it or on its behalf in connection with the Reorganization unless those expenses are solely and directly related to the Reorganization (determined in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187) ("Reorganization Expenses"); 4.3.10. The aggregate value of the acquisitions, redemptions, and distributions limited by paragraphs 4.1.8, 4.2.6, and 4.2.10 will not exceed 50% of the value (without giving effect to such acquisitions, redemptions, and distributions) of the proprietary interest in Target at the Effective Time; 4.3.11. Trust has called a special meeting of Target's shareholders ("Meeting") to consider and act on this Plan and to take all other action necessary to obtain their approval, to the extent same is required, of the transactions contemplated herein; and such approval has been obtained; 4.3.12. This Plan has been duly authorized by all necessary action on the part of Trust's board of trustees ("Board"), which has made the determinations required by Rule 17a-8(a) under the 1940 Act; and, subject to Target's shareholders' approval in accordance with the Declaration of Trust and applicable law, this Plan constitutes a valid and legally binding obligation of each Fund, enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and similar laws relating to or affecting creditors' rights and by general principles of equity; A-8 4.3.13. No governmental consents, approvals, authorizations, or filings are required under the 1933 Act, the Securities Exchange Act of 1934, as amended ("1934 Act"), or the 1940 Act for Trust's adoption of this Plan, except for (a) the filing with the Securities and Exchange Commission ("SEC") of a registration statement by Trust on Form N-14 relating to the Acquiring Fund Shares issuable hereunder, and any supplement or amendment thereto ("Registration Statement"), including therein a prospectus/proxy statement ("Prospectus/Proxy Statement"), and (b) such consents, approvals, authorizations, and filings as have been made or received or as may be required subsequent to the Effective Time; 4.3.14. On the effective date of the Registration Statement, at the time of the Meeting, and at the Effective Time, the Prospectus/Proxy Statement will (a) comply in all material respects with the applicable provisions of the 1933 Act, the 1934 Act, and the 1940 Act and the rules and regulations thereunder and (b) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 4.3.15. All necessary filings will have been made with the SEC and state securities authorities, and no order or directive will have been received that any other or further action is required to permit the parties to carry out the transactions contemplated hereby; the Registration Statement will have become effective under the 1933 Act, no stop orders suspending the effectiveness thereof will have been issued, and the SEC will not have issued an unfavorable report with respect to the Reorganization under section 25(b) of the 1940 Act nor instituted any proceedings seeking to enjoin consummation of the transactions contemplated hereby under section 25(c) of the 1940 Act; and all consents, orders, and permits of federal, state, and local regulatory authorities (including the SEC and state securities authorities) Trust deems necessary to permit consummation, in all material respects, of the transactions contemplated hereby will have been obtained, except where failure to obtain same would not involve a risk of a material adverse effect on the assets or properties of either Fund; 4.3.16. At the Effective Time, no action, suit, or other proceeding will be pending before any court or governmental agency in which it is sought to restrain or prohibit, or to obtain damages or other relief in connection with, the transactions contemplated hereby; and 4.3.17. Trust will have received an opinion of Kirkpatrick & Lockhart LLP ("Counsel"), addressed to and in form and substance reasonably satisfactory to it, as to the federal income tax consequences mentioned below ("Tax Opinion"). In rendering the Tax Opinion, Counsel may assume satisfaction of all the conditions set forth in this paragraph 4, may treat them as representations and warranties Trust made to Counsel, and may rely as to factual matters, exclusively and without independent verification, on such representations and warranties. The Tax Opinion shall be substantially to the effect that, based on the facts and assumptions stated therein and conditioned on consummation of the Reorganization in accordance with this Plan, for federal income tax purposes: (a) Acquiring Fund's acquisition of the Assets in exchange solely for Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities, followed A-9 by Target's distribution of those shares PRO RATA to the Shareholders constructively in exchange for their Target Shares, will qualify as a "reorganization" as defined in section 368(a)(1)(C) of the Code, and each Fund will be "a party to a reorganization" within the meaning of section 368(b) of the Code; (b) Target will recognize no gain or loss on the transfer of the Assets to Acquiring Fund in exchange solely for Acquiring Fund Shares and Acquiring Fund's assumption of the Liabilities or on the subsequent distribution of those shares to the Shareholders in constructive exchange for their Target Shares; (c) Acquiring Fund will recognize no gain or loss on its receipt of the Assets in exchange solely for Acquiring Fund Shares and its assumption of the Liabilities; (d) Acquiring Fund's basis in the Assets will be the same as Target's basis therein immediately before the Reorganization, and Acquiring Fund's holding period for the Assets will include Target's holding period therefor; (e) A Shareholder will recognize no gain or loss on the constructive exchange of all its Target Shares solely for Acquiring Fund Shares pursuant to the Reorganization; and (f) A Shareholder's aggregate basis in the Acquiring Fund Shares it receives in the Reorganization will be the same as the aggregate basis in its Target Shares it constructively surrenders in exchange for those Acquiring Fund Shares, and its holding period for those Acquiring Fund Shares will include its holding period for those Target Shares, provided the Shareholder holds them as capital assets at the Effective Time. Notwithstanding subparagraphs (b) and (d), the Tax Opinion may state that no opinion is expressed as to the effect of the Reorganization on the Funds or any Shareholder with respect to any Asset as to which any unrealized gain or loss is required to be recognized for federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) under a mark-to-market system of accounting. 4.4. At any time before the Effective Time, Trust may waive any of the conditions set forth in this paragraph 4 if, in the judgment of the Board, such a waiver will not have a material adverse effect on either Fund's shareholders' interests. 5. TERMINATION AND AMENDMENT OF PLAN 5.1. The Board may terminate this Plan and abandon the Reorganization at any time before the Effective Time if circumstances develop that, in its judgment, make proceeding with the Reorganization inadvisable for either Fund. 5.2. The Board may amend, modify, or supplement this Plan at any time in any manner, notwithstanding Target's shareholders' approval thereof; A-10 provided that, following such approval no such amendment, modification, or supplement shall have a material adverse effect on the Shareholders' interests. 6. MISCELLANEOUS 6.1. This Plan shall be construed and interpreted in accordance with the internal laws of the State of Delaware, provided that, in the case of any conflict between those laws and the federal securities laws, the latter shall govern. 6.2. The Funds shall bear all the Reorganization Expenses in proportion to their respective net assets as of the Effective Time. 6.3. Nothing expressed or implied herein is intended or shall be construed to confer on or give any person, firm, trust, or corporation other than the Funds and their respective successors and assigns any rights or remedies under or by reason of this Plan. 6.4. Notice is hereby given that this instrument is adopted on behalf of Trust's trustees solely in their capacities as trustees, and not individually, and that Trust's obligations under this instrument are not binding on or enforceable against any of its trustees, officers, or shareholders or any series of Trust other than the Funds but are only binding on and enforceable against the respective Funds' property. Each Fund, in asserting any rights or claims under this Plan, shall look only to the other Fund's property in settlement of such rights or claims and not to such trustees, officers, or shareholders. A-11 EX-99.11 4 a2092707zex-99_11.txt EX-99.11 Exhibit 11 November 8, 2002 Nicholas-Applegate Institutional Funds 600 West Broadway San Diego, California 92101 Ladies and Gentlemen: You have requested our opinion as to certain matters regarding the issuance by Nicholas-Applegate Institutional Funds, a business trust organized under the laws of the State of Delaware ("Trust"), of Institutional class shares of beneficial interest in Nicholas-Applegate Global Select Fund ("Global Select Fund") ("Class I Shares"), a series of the Trust, pursuant to a Plan of Reorganization and Termination ("Plan") adopted by the Trust on behalf of Global Select Fund and on behalf of Nicholas-Applegate Global Technology Fund and Nicholas-Applegate Global Health Care Fund, other series of the Trust (each a "Target"). Under the Plan, Global Select Fund would acquire the assets of a Target in exchange for Class I Shares and the assumption by Global Select Fund of the Target's liabilities. In connection with the Plan, the Trust is about to file a Registration Statement on Form N-14 ("Registration Statement") for the purpose of registering under the Securities Act of 1933, as amended ("1933 Act"), the Class I Shares to be issued pursuant to the Plan. We have examined originals or copies believed by us to be genuine of the Trust's Amended and Restated Declaration of Trust dated February 19, 1999, and By-Laws (collectively, "Declaration of Trust"), minutes of meetings of the Trust's board of trustees, the form of Plan included in the Registration Statement, and other documents relating to the authorization and issuance of the Class I Shares we have deemed relevant. Based upon that examination, we are of the opinion that the Class I Shares being registered by the Registration Statement may be issued in accordance with the Plan and the Declaration of Trust, subject to compliance with the 1933 Act, the Investment Company Act of 1940, as amended, and applicable state laws regulating the distribution of securities, and when so issued those Class I Shares will be legally issued, fully paid, and non-assessable by the Trust. We hereby consent to this opinion's accompanying the Registration Statement and to the reference to our firm under the caption "Miscellaneous - Legal Matters" in the Prospectus/Proxy Statement included as part of the Registration Statement. Sincerely yours, KIRKPATRICK & LOCKHART LLP KIRKPATRICK & LOCKHART LLP EX-99.14 5 a2092707zex-99_14.txt EX-99.14 Exhibit 14 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the captions "Experts" and "Financial Highlights" in the Registration Statement under the Securities Act of 1933 (Form N-14) and related Prospectus and Statement of Additional Information of Nicholas-Applegate Institutional Funds and to the incorporation by reference therein of our report dated May 1, 2002 (except Note F, as to which the date is May 17, 2002), with respect to the financial statements and financial highlights included in its Annual Report for the year ended March 31, 2002, filed with the Securities and Exchange Commission. Los Angeles, California November 7, 2002 EX-99.16(C) 6 a2092707zex-99_16c.txt EX-99.16(C) Exhibit 16(c) POWER OF ATTORNEY KNOWN ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and appoints Charles H. Field, Jr. and E. Blake Moore, Jr. and each of them his true and lawful attorney-in-fact as agent with full power of substitution and resubstitution of him in his name, place and stead, to sign any and all registration statements applicable to Nicholas-Applegate Institutional Funds, and any amendment to supplement thereto, and to file the same with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof. Dated: December 6, 2002 /s/ --------------------------- Walter E. Auch POWER OF ATTORNEY KNOWN ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and appoints Charles H. Field, Jr. and E. Blake Moore, Jr. and each of them his true and lawful attorney-in-fact as agent with full power of substitution and resubstitution of him in his name, place and stead, to sign any and all registration statements applicable to Nicholas-Applegate Institutional Funds, and any amendment to supplement thereto, and to file the same with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof. Dated: December 6, 2002 /S/ ---------------------------- George F. Keane POWER OF ATTORNEY KNOWN ALL PERSONS BY THESE PRESENTS, that the undersigned constitutes and appoints Charles H. Field, Jr. and E. Blake Moore, Jr. and each of them her true and lawful attorney-in-fact as agent with full power of substitution and resubstitution of her in her name, place and stead, to sign any and all registration statements applicable to Nicholas-Applegate Institutional Funds, and any amendment to supplement thereto, and to file the same with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as she might or could do in person, hereby ratifying and confirming all that said attorney-in fact and agent, or her substitutes, may lawfully do or cause to be done by virtue hereof. Dated: December 6, 2002 /S/ ------------------------ Darlene T. DeRemer EX-99.17 7 a2092707zex-99_17.txt EX-99.17 EXHIBIT 17 NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS NICHOLAS-APPLEGATE GLOBAL TECHNOLOGY FUND NICHOLAS-APPLEGATE GLOBAL HEALTH CARE FUND 600 WEST BROADWAY SAN DIEGO, CALIFORNIA 92101 PROXY FOR THE MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 22, 2003 I (we), having received notice of the meeting and the Prospectus/Proxy Statement, appoint E. Blake Moore, Jr., Charles H. Field, and Deborah Wussow, and each of them, my (our) attorneys with full power of substitution in them and each of them and in my (our) name(s) to attend the Meeting of Shareholders to be held on January 22, 2003, at 10:00 a.m., Pacific time, at the offices of Nicholas-Applegate Institutional Funds (the "Trust"), 600 West Broadway, San Diego, California 92101, and any adjourned session or sessions thereof, and there to vote and act upon the following matter as more fully described in the accompanying Proxy Statement in respect of all shares of the Fund which I (we) will be entitled to vote or act upon, with all the powers I (we) would possess if personally present. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. 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 THE PROPOSAL. NOTE: In signing, please write name(s) exactly as appearing hereon. When signing as attorney, executor, administrator or other fiduciary, please give your full title as such. Joint owners should each sign personally. - -------------------------- Signature - -------------------------- Signature ___________________________, 200_ Date THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES AND SHOULD BE RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED. THE BOARD RECOMMENDS THAT YOU VOTE IN FAVOR OF THE FOLLOWING PROPOSAL: 1. To approve a Plan of Reorganization and Termination under which Nicholas-Applegate Global Select Fund ("Global Select Fund"), a series of the Trust, would acquire all of the assets of Nicholas-Applegate Global Technology Fund ("Global Technology Fund") and Nicholas-Applegate Global Health Care Fund ("Global Health Care Fund"), each another series of the Trust, in exchange solely for Class I shares of equal value of Global Select Fund and Global Select Fund's assumption of the liabilities of Global Technology Fund and Global Health Care Fund, followed by the distribution of those shares to the shareholders of Global Technology Fund and Global Health Care Fund. ______ FOR _____ AGAINST _____ ABSTAIN -----END PRIVACY-ENHANCED MESSAGE-----