ghosh presentation

1Proprietary and Confidential. Do Not Reproduce Without Permission

Expanding Opportunities Abroad

June 1, 2007 Kunal Ghosh, Senior Vice President, Portfolio Manager

For Broker Dealer Use Only

2Nicholas-Applegate Capital Management Proprietary and Confidential. Do Not Reproduce Without Permission

Agenda

Economic Summary

• US Slowdown

• Earnings Growth

• Corporate Health

Valuations

Outlook


Leading Economic Indicators - Economic Slowdown Developing

Leading economic indicators in major developed economies have trended lower in recent months on expectations of a U.S. led slowdown of the global economy.

1117 Source: OECD; See Additional Disclosures Updated: 31-Mar-07

United Kingdom

-10.0

-5.0

0.0

5.0

10.0

15.0

99 00 01 02 03 04 05 06 07

6 mo % Change

Japan

-10.0

-5.0

0.0

5.0

10.0

99 00 01 02 03 04 05 06 07

6 mo % ChangeEuropean Union

-10.0

-5.0

0.0

5.0

10.0

99 00 01 02 03 04 05 06 07

6 mo % Change

United States

-10.0

-5.0

0.0

5.0

10.0

15.0

99 00 01 02 03 04 05 06 07

6 mo % Change


Outlook in Germany: IFO Index of Business Expectations

German business expectations have rebounded and remain at elevated levels. Near term, Germany should be on track for its fastest economic growth in years as exports and investment overcome a VAT tax increase and a slowdown in the U.S.

983 Source: Bloomberg; see additional disclosure Updated: 30-Apr-07

German Business Expectations

85

90

95

100

105

110

Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06


Capex Expectations Rebound

After hitting multi-year lows, capex expectations spiked in the first quarter. This may be a sign that a slumping housing market is not spilling over to the broader economy - easing investor fear of a U.S. recession.

3195 Source: Federal Reserve Bank of Philadelphia; Nicholas-Applegate; See Additional Disclosures

-10

0

10

20

30

40

50

1/0

0

5/0

0

9/0

0

1/0

1

5/0

1

9/0

1

1/0

2

5/0

2

9/0

2

1/0

3

5/0

3

9/0

3

1/0

4

5/0

4

9/0

4

1/0

5

5/0

5

9/0

5

1/0

6

5/0

6

9/0

6

1/0

7

Ca

pe

x E

xp

ec

tati

on

s

Philadelphia Fed Capex Expectations

Updated: 30-Apr-07


Growth in the CPI

Core CPI (CPI less food and energy) is moderating while the broad CPI continues to spike upward on higher energy prices. Though inflation remains slightly above the "comfort" zone of many central bankers, we expect this will change in the months ahead.

4278 Source: FactSet; Nicholas-Applegate; See Additional Disclosures Updated: 30-Apr-07

0%

1%

2%

3%

4%

5%Ja

n-0

4

Ap

r-0

4

Jul-

04

Oct

-04

Jan

-05

Ap

r-0

5

Jul-

05

Oct

-05

Jan

-06

Ap

r-0

6

Jul-

06

Oct

-06

Jan

-07

Ap

r-0

7

Date

Pe

rce

nt

Ch

an

ge

Yo

Y

Core CPI

CPI


Earnings Growth Rates Fall

Earnings growth continues to slow, falling to the long-term averages into the mid single digits. CY2007 growth should be about 6 percent.

1004 Source: FactSet; First Call; see additional disclosure Updated: 31-Mar-07

Earnings Growth is Becoming More Modest

44.2 44.946.4

48.049.3 50.3

52.555.5

58.8

62.164.3

67.069.1

71.573.8

76.178.9

82.1

85.888.1

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2Q02 4Q02 2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06e 4Q06

30

40

50

60

70

80

90S&P 500 Annual EPS (rhs)

S&P 500 YoY EPS Growth (lhs)


Global Forward Price-to-Earnings

Based on price-to-earnings ratios, most of the foreign markets still appear to be relatively undervalued.

684 Source: FactSet; Morgan Stanley; see additional disclosure

Forward 12-Month PE Ratios

8

12

16

20

3/05 6/05 9/05 12/05 3/06 6/06 9/06 12/06 3/07

Europe

Japan

EM

United States

Updated: 30-Apr-07


Performance Versus Spreads

672 Source: Bloomberg; CSFB; Merrill Lynch; see additional disclosure

Spreads are tight as investors reach for yield. We expect that spreads will remain at these levels as default rates rise only slightly this year.

* High yield performance measured using Merrill Lynch High Yield Master II Index. High yield debt spreads are equal to yield-to-maturity of high yield debt market, less the 10-year US Treasury yield.

High Yield Performance Relative to Yield Spreads

-10

-5

0

5

10

15

20

25

30

35

40

45

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007YTD

Pe

rfo

rma

nc

e (

%)

0

200

400

600

800

1000

1200

B-R

ate

d Y

ield

Sp

rea

d (

ba

sis

po

ints

)

High Yield Performance

High Yield Debt Spreads*

Updated: 30-Apr-07


Flattening Yield Curves

Yield curves are flattening or inverting in most major developed economies. As a result, we suspect that in the U.S. the Fed has ended its tightening campaign; but rates will rise slowly in Europe and Japan.

1092 Source: FactSet; See Additional Disclosures

3 Mos 6 Mos 2 Yr 5 Yr 10 Yr 30 Yr

US Apr-06

US Oct-06

US Apr-07

1.0

2.0

3.0

4.0

5.0

6.0


UK Apr-06

UK Oct-06

UK Apr-07


Eurozone Apr-06

Eurozone Oct-06

Eurozone Apr-07

Updated: 30-Apr-07


Interest Rate Differential and Exchange Rate

The interest rate differential is moving against the dollar, as the Fed ends tightening and Europe raises rates. The dollar should weaken slightly in this environment.

### Source: Datastream; Bloomberg; see additional disclosure

* U.S. short term rates minus European constant short term rates

US/Europe Interest Rate Differential* vs. USD/Euro Spot Rate

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

4

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

1.6

1.7

U.S./Euro Interest Rate Differential (lhs)

USD/Euro Spot Rate (rhs)

Updated: 30-Apr-07


International Systematic: Weightings

Risk Controls Ensure Consistency with Benchmark.

As of 31-Mar-07* Representative account Source: Nicholas-Applegate; see additional disclosure

Nicholas-Applegate International Systematic*

MSCI EAFE Index

Top Sector Weightings Top 10 Country Weightings

27.5

19.6

9.9

7.1

5.8

5.4

4.4

4.4

2.7

2.5

22.5

23.2

6.8

10.0

3.8

5.9

1.5

7.7

0.0

4.0

0 5 10 15 20 25 30

Japan

United Kingdom

Switzerland

France

Italy

Australia

Finland

Germany

China

Spain

27.4

14.9

12.8

10.0

9.1

6.1

5.6

5.3

3.2

3.0

29.5

12.0

5.4

8.8

6.8

8.2

5.4

6.9

5.6

11.6

0 5 10 15 20 25 30 35

Financials

Industrials

Consumer Discretionary

Information Technology

Materials

Health Care

Consumer Staples

Telecomm. Services

Energy

Utilities


International Systematic: Annual Returns

The International Systematic Strategy Has Provided Strong Returns Relative to the MSCI EAFE Index Over Time.

* Composite inception: 01-Jun-01Source: Nicholas-Applegate; see additional disclosure As of 31-Mar-07

Annual Returns

2.9

32.9

24.4

29.0

44.8

-10.7-8.0

4.1

26.9

14.0

20.7

39.2

-15.7

-11.7

-20

-10

0

10

20

30

40

50

YTD 2006 2005 2004 2003 2002 2001

% Nicholas-Applegate International Systematic*

MSCI EAFE Index

Nicholas-Applegate Capital Management Proprietary and Confidential. Do Not Reproduce Without Permission

Additional Disclosure

Updated Apr-07

Nicholas-Applegate Capital Management (NACM or the Firm), as defined below, has prepared and presented this report in compliance with the Performance Presentation Standards of the Association for Investment Management and Research (AIMR-PPS®), the U.S. and Canadian version of the Global Investment Performance Standards (GIPS®). AIMR (CFA Institute) has not been involved with the preparation or review of this report. The Firm, as defined below, has also prepared and presented this report in compliance with GIPS®.

All materials are presented for Institutional Client use only and are not intended for distribution to the public. Past performance is no indication of future results.

NACM is an investment advisory firm registered with the Securities and Exchange Commission. On January 31, 2001, Allianz SE, the public European company (formerly known as Allianz AG, the public German insurance company), through various wholly-owned/controlled subsidiaries, acquired and now controls Nicholas-Applegate and its affiliates. The Firm is defined as all actual, institutional and mutual fund accounts (including sub-advisory relationships) managed by NACM. Nicholas-Applegate also provides investment management services to its affiliate Allianz Global Investors Managed Accounts LLC (AGIMA), with regard to certain managed account assets for which AGIMA serves as the investment adviser. These assets managed on behalf of AGIMA are held out to both clients and potential clients as a separate and distinct business unit and are therefore excluded from the NACM definition of the Firm assets under AIMR-PPS®/GIPS®. The effective date of NACM’s firm-wide compliance with the AIMR-PPS® is January 1, 1993.

Each Composite includes all actual fee paying discretionary institutional and mutual fund client accounts (including sub-advisory relationships) with comparable investment objectives and risks managed by NACM for at least one full month. The Composite can include both tax-exempt and taxable accounts and all reinvestment of earnings. A complete list and description of the Firm’s composites and presentations are available upon request by contacting (619) 687-2800, or writing Nicholas-Applegate Capital Management, 600 W. Broadway, 29th Floor, San Diego, CA 92101, Attn: Performance Measurement Manager. Returns are calculated on a total return basis, including all dividends (net of withholding tax) and interest, accrued income, realized and unrealized gains or losses, and are net of all brokerage commissions, execution costs and without provision for federal or state income taxes. Securities transactions are accounted for on trade date and accrual accounting is utilized. Cash and equivalents are included in performance returns. Monthly returns of the Composite combine the individual accounts' returns (calculated on a time weighted rate of return basis which is revalued daily) by asset-weighting each account's asset value as of the beginning of the month. Annual returns are calculated by geometrically linking the monthly returns. Additional information regarding policies for calculating and reporting returns is available upon request by contacting NACM. All returns presented are calculated using U.S. dollars unless otherwise noted. The dispersion of annual returns is measured by the standard deviation across asset-weighted portfolio returns represented within the Composite for the full year. Periods with five or fewer accounts are not deemed statistically representative and are not presented.

All returns are gross unless otherwise noted. Gross returns do not give effect to investment advisory fees, which would reduce such returns. Investment advisory fees are described further in Part II of Form ADV. Advisory fees deducted periodically from accounts can have an impact on performance. As an example, the effect of investment advisory fees on the total value of a portfolio assuming (a) $1,000,000 investment, (b) portfolio return of 5% per year, and (c) 1.00% annual investment advisory fee would be $10,268.81 in the first year, $56,741.68 over five years, and $129,160.05 over ten years. Actual fees charged may vary by portfolio due to various conditions, including account size. Where “net of fee” performance is indicated, actual fees charged were used for performance calculations.

The asset and industry reports contained herein are unaudited. The summation of dollar values and percentages reported may not equal the total values, due to rounding discrepancies. Portfolio characteristics are derived using currently available data from independent research resources that are believed to be accurate. Estimates (est.) are preliminary and unaudited. Market participation is based on the average of quarterly returns in up and down markets as determined by the benchmark’s performance. Ranking data is obtained from the independent consultant indicated, sampling may not be representative of any one client’s experience. Results may vary. Currency conversions are provided by Russell Performance Universe and are based on monthly linked performance converted from U.S. dollar. Exchange rates are provided by the Federal Reserve Statistical Release as of month end. Unless otherwise noted, Nicholas-Applegate is the source of illustrations, performance data, and characteristics.

Representative account characteristics and partial lists of past recommendations do not reflect composite performance, which may be different. For more information regarding account characteristics, and a complete list of all representative buys and sells for a given time period, please contact Nicholas-Applegate at (619) 687-8000. Client lists represent a partial list of Nicholas-Applegate’s institutional clients who have consented to the use of their name. Inclusion on such list is not intended as an endorsement by any such client of Nicholas-Applegate or the advisory services provided to such client. Unless otherwise noted, equity index performance is calculated with gross dividends reinvested and estimated tax withheld, and bond index performance include all payments to bondholders, if any. Indexes may not represent the investment style of the given composite. Index calculations do not reflect fees, brokerage commissions or other expenses of investing. Investors may not make direct investments into any index.

Products Ahead of Benchmark information reflects the percent of actively marketed composites with gross performance greater than primary benchmark performance, as of the date indicated. This information is not audited, and although each composite is prepared in accordance with GIPS, the compilation is supplemental information not presented in accordance with GIPS. Results would be different if the composite performance of strategies that are not actively marketed was included. Assets in strategy information reflects the total assets associated with each composite, whether or not such assets are included in the computation of composite performance.

ghosh presentation

Documents

additional disclosure

additional disclosures

high yield performance

earnings growth rates

economic growth

yield curves

factset nicholasapplegate

high yield debt spreads