UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file   811-21417
number    

NFJ Dividend, Interest & Premium Strategy Fund
(Exact name of registrant as specified in charter)

1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)

Lawrence G. Altadonna - 1345 Avenue of the Americas, New York, New York 10105
(Name and address of agent for service)

Registrant’s telephone number, including   212-739-3371         
area code:  

Date of fiscal year   January 31, 2008
end:    

Date of reporting   July 31, 2007
period:    

Form N-CSRS is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSRS in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSRS unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549 0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.


ITEM 1. REPORT TO SHAREHOLDERS

#000000

NFJ Dividend, Interest & Premium Strategy Fund
NFJ Dividend, Interest & Premium Strategy Fund

Nicholas-Applegate Equity & Convertible
          Income Fund

 

 

 

S e m i - A n n u a l   R e p o r t
J u l y   31 ,   2 0 0 7

 
     
     

  Contents    
  Letter to Shareholders   1
  Performance & Statistics   2-3
  Schedules of Investments   4-14
  Statements of Assets and Liabilities   15
  Statements of Operations   16
  Statements of Changes in Net Assets   17
  Notes to Financial Statements   18-21
  Financial Highlights   22-23
  Annual Shareholder Meeting Results/Subsequent
Dividend Declarations
  24
  Matters Relating to the Trustees Consideration of the
Advisory & Sub-Advisory Agreements
  25-28
   

 

 

 

 

   
   




NFJ Dividend, Interest & Premium Strategy Fund 
Nicholas-Applegate Equity & Convertible Income Fund Letter to Shareholders 

July 31, 2007

Dear Shareholder:

We are pleased to provide you with the semi-annual report for the NFJ Dividend Interest & Premium Strategy Fund and the Nicholas-Applegate Equity & Convertible Income Fund (collectively the “Funds”) for the periods ended July 31, 2007. Nicholas-Applegate Equity & Convertible Income Fund commenced operations on February 27, 2007.

U.S. stocks posted relatively volatile performance during the reporting period. Strong secular growth in the global economy contributed to solid corporate earnings growth and advancing market conditions during the middle of the period. Concerns over housing and credit markets weakness fueled market declines at the beginning and end of the period.

In this environment, large-cap stocks generally outperformed small-cap stocks and growth stocks generally outperformed value stocks. Large-cap value stocks, as represented by the Russell 1000 Value Index, returned 0.05% for the reporting period, while large-cap growth stocks, as measured by the Russell 1000 Growth Index, returned 3.79% .

Following a steady succession of interest-rate increases, the Federal Reserve Board (the “Fed”) set short-term interest rates at 5.25%, before the period began, and held firm to that level through the period. During the period, the Fed cited mixed signals in the economy, most notably weakness in housing, elevated levels of core inflation and steady, moderate economic growth.

Please refer to the following pages for specific information on the Funds. If you have any questions regarding the information provided, we encourage you to contact your financial advisor or call the Funds’ shareholder servicing agent at (800) 331-1710. In addition, a wide range of information and resources are available on our Web site at www.allianzinvestors.com/closedendfunds.

Together with Allianz Global Investors Fund Management LLC, the Funds’ investment manager, and NFJ Investment Group L.P., Nicholas-Applegate Capital Management LLC and Oppenheimer Capital, the Funds’ sub-advisers, we thank you for investing with us.

We remain dedicated to serving your investment needs.

Sincerely,

 
Hans W. Kertess
Chairman
Brian S. Shlissel
President & Chief Executive Officer
 

 

  NFJ Dividend, Interest & Premium Strategy Fund
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 1



NFJ Dividend, Interest & Premium Strategy Fund Performance & Statistics
July 31, 2007 (unaudited) 

•   For the six months ended July 31, NFJ Dividend, Interest & Premium Strategy Fund returned 1.99% on net asset value (NAV) and (4.38)% on market price.

•   Within the equity portion of the portfolio, an overweighting in energy and materials and an underweighting in financials aided Fund performance. Additionally, stock selection within the energy, consumer discretionary and consumer staples sectors contributed positively. Specifically, Occidental Petroleum, Petroleo Brasileiro, Marathon Oil, Whirlpool, VF Corp, Coca-Cola, Kraft Foods and SuperValu posted strong results during the period. Other contributors to performance included TXU in utilities, Dow Chemical in materials and Deluxe Corp in industrials.

•   Detracting from performance within the equity portion during the reporting period was an underweighting in industrials and stock selection in telecommunications and materials. Detractors in these sectors included Windstream, AT&T and Lyondell Chemical. Other performance detractors included Masco in industrials, Pfizer in healthcare and Regions Financial in financials.

•   During the period, the Fund achieved its equity-index option strategy objectives with respect to premiums collected and correlation to the underlying portfolio. Performance was bolstered by increased volatility during the period.

•   The convertible portion of the portfolio followed the broad equity move higher, as corporate profits continued to exceed expectations. Industrial companies benefited from robust first quarter earnings and impressive operating improvements. Energy companies moved higher on solid corporate profits, attractive valuations and higher energy prices. Select financials moved lower on concerns that tighter lending standards would impact future mergers and acquisition activity. The Fund had no exposure to sub-prime mortgages during the reporting period.

Total Return(1) : Market Price Net Asset Value (“NAV )
Six months (4.38)% 1.99)%  
1 year 14.21% 13.31%  
Commencement of Operations (2/28/05) to 7/31/07 6.30% 10.88%  

Market Price/NAV Performance:
Commencement of Operations (2/28/05) to 7/31/07
  Market Price/NAV:      
Market Price   $23.77  
NAV   $25.20  
Discount to NAV   (5.67 )%
Market Price Yield(2)   8.83 %
 
Investment Allocation
(as a percentage of total investments
before call options written)
   
     

(1) Past performance is no guarantee of future results. Total return is calculated by subtracting the value of an investment in the Fund at the beginning of the specified period from the value at the end of the period and dividing the remainder by the value of the investment at the begining of the period and expressing the result as a percentage. The calculation assumes that all of the Fund’s income dividends and capital gain distributions have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized. Total return for a period more than one year represents the average annual return.

An investment in the Fund involves risk, including the loss of principal. Total return, market price, market yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a onetime public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is equal to total assets less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.

(2) Market Price Yield is determined by dividing the annualized current quarterly per share dividend to shareholders by the market price per common share at July 31, 2007.

 

    NFJ Dividend, Interest & Premium Strategy Fund
2   Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



Nicholas-Applegate Equity & Convertible Income Fund Performance & Statistics
July 31, 2007 (unaudited) 

•  From the Fund’s inception on February 27, 2007 through July 31, 2007, the Nicholas-Applegate Equity & Convertible Income Fund returned 4.82% on net asset value (NAV) and (4.16)% on market price.

•  Within the equity portion of the portfolio, an overweighting in industrials and materials contributed positively to Fund performance. Additionally, stock selection in the consumer discretionary and energy sectors benefitted performance positively. Specifically, CSX Corp, Freeport-McMoRan Copper & Gold, Johnson Controls, Inc. and National Oilwell Varco performed particularly well.

•  Detracting from Fund performance within the equity portion of the portfolio was an overweighting in healthcare and stock selection in financials and consumer staples. Detractors within these sectors included CME Group, Inc., Blackrock, Inc. and Molson Coors Brewing Co. Other performance detractors included Cognizant Technology Solutions in information technology and Bristol-Meyers Squibb in healthcare.

•  The Fund’s equity index option strategy enhanced overall performance as volatility increased from historic lows at the start of February. The strategy benefited from moderate volatility during May and June. July was marked with substantially-higher volatility, as liquidity fears and sub-prime mortgage concerns continued to fuel investor pessimism and ultimately resulted in a market sell-off.

•  The convertible portion followed the broad equity move higher, as corporate profits continued to exceed expectations. Industrial companies benefited from robust first quarter earnings and impressive operating improvements. Energy companies moved higher on solid corporate profits, attractive valuations and higher energy prices. Select financials moved lower on concerns that tighter lending standards would impact future merger and acquisition activity. The Fund had no exposure to sub-prime mortgages during the reporting period.

Total Return(1) : Market Price Net Asset Value (“NAV )
Commencement of Operations (2/27/07) to 7/31/07 (4.16)% 4.82%  

Market Price/NAV Performance:
Commencement of Operations (2/27/07) to 7/31/07


  Market Price/NAV:      
Market Price   $23.47  
NAV   $24.44  
Discount to NAV   (3.97 )%
Market Price Yield(2)   9.59 %
 
Investment Allocation
(as a percentage of total investments
before call options written)
   
     

(1) Past performance is no guarantee of future results. Total return is calculated by subtracting the value of an investment in the Fund at the beginning of the specified period from the value at the end of the period and dividing the remainder by the value of the investment at the begining of the period and expressing the result as a percentage. The calculation assumes that all income dividends and capital gain distributions have been reinvested. Total return does not reflect broker commissions or sales charges. Total return for a period of less than one year is not annualized.

An investment in the Fund involves risk, including the loss of principal. Total return, price, yield and net asset value will fluctuate with changes in market conditions. This data is provided for information only and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. Net asset value is equal to total assets less total liabilities divided by the number of common shares outstanding. Holdings are subject to change daily.

(2) Market Price Yield is determined by dividing the annualized current quarterly per share dividend to shareholders by the market price per common share at July 31, 2007.

  NFJ Dividend, Interest & Premium Strategy Fund
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 3



NFJ Dividend, Interest & Premium Strategy Fund Schedule of Investments
July 31, 2007 (unaudited) 
 
Shares          
(000)

 

 

 

Value

 

COMMON STOCK—74.6%      
    Banking—7.5%      
900   Bank of America Corp. (a) $ 42,678,000  
800   KeyCorp (a)   27,752,000  
2,000   Regions Financial Corp. (a)   60,140,000  
1,000   Wachovia Corp. (a)   47,210,000  
        177,780,000  
    Beverages—3.4%      
800   Anheuser-Busch Cos., Inc. (a)   39,016,000  
800   Coca-Cola Co.   41,688,000  
        80,704,000  
    Capital Markets—1.7%      
550   Merrill Lynch & Co., Inc.   40,810,000  
    Chemicals—3.7%      
2,000   Dow Chemical Co. (a)   86,960,000  
    Commercial Services—0.7%      
400   R.R. Donnelley & Sons Co. (a)   16,904,000  
    Computers & Peripherals—3.7%      
300   International Business Machines Corp.   33,195,000  
2,300   Seagate Technology, Inc.   54,073,000  
        87,268,000  
    Diversified Financial Services—0.7%      
400   JP Morgan Chase & Co. (a)   17,604,000  
    Energy Equipment & Services—1.6%      
545   GlobalSantaFe Corp.   39,110,634  
    Food—1.6%      
1,137   Kraft Foods, Inc.Cl. A   37,240,320  
    Gas—1.1%      
677   KeySpan Corp.   28,133,505  
    Household Durables—1.8%      
102   Black & Decker Corp.   8,812,826  
600   Stanley Works   33,198,000  
        42,010,826  
    Household Products—1.3%      
450   Kimberly-Clark Corp.   30,271,500  
    Independent Power Producers & Energy Traders—1.7%      
625   TXU Corp.   40,800,825  
    Insurance—3.3%      
700   Allstate Corp. (a)   37,205,000  
400   Lincoln National Corp. (a)   24,128,000  
350   Travelers Cos., Inc.   17,773,000  
        79,106,000  
    Leisure Equipment & Products—0.4%      
400   Mattel, Inc.   9,164,000  
    Media—3.7%      
1,200   CBS Corp.Cl. B   38,064,000  
1,000   Gannett Co., Inc. (a)   49,900,000  
        87,964,000  

    NFJ Dividend, Interest & Premium Strategy Fund
4   Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



NFJ Dividend, Interest & Premium Strategy Fund Schedule of Investments
July 31, 2007 (unaudited) 
 
Shares
(000)

 

 

 

 

 

Value

 

    Multi-Utilities—0.7%          
300   Sempra Energy     $ 15,816,000  
    Oil & Gas—14.0%          
1,000   Anadarko Petroleum Corp. (a)       50,330,000  
600   Chevron Corp. (a)       51,156,000  
600   ConocoPhillips       48,504,000  
743   Marathon Oil Corp.       41,013,600  
900   Occidental Petroleum Corp.       51,048,000  
200   PetroChina Co., Ltd., ADR       29,452,000  
952   Petroleo Brasileiro SA, ADR       61,784,800  
            333,288,400  
    Pharmaceuticals—8.8%          
1,700   GlaxoSmithKline PLC, ADR       86,836,000  
600   Merck & Co., Inc. (a)       29,790,000  
4,000   Pfizer, Inc. (a)       94,040,000  
            210,666,000  
    Real Estate (REIT)—0.7%          
500   Duke Realty Corp.       16,345,000  
    Road and Rail—1.6%          
700   Norfolk Southern Corp.       37,646,000  
    Telecommunications—5.4%          
500   AT&T, Inc. (a)       19,580,000  
700   Verizon Communications, Inc. (a)       29,834,000  
5,750   Windstream Corp. (a)       79,120,000  
            128,534,000  
    Textiles, Apparel & Luxury Goods—0.0%          
10   VF Corp.       857,900  
    Thrift & Mortgage Finance—2.2%          
400   Freddie Mac       22,908,000  
800   Washington Mutual, Inc. (a)       30,024,000  
            52,932,000  
    Tobacco—3.3%          
600   Altria Group, Inc. (a)       39,882,000  
650   Reynolds American, Inc. (a)       39,760,500  
            79,642,500  
 
    Total Common Stock (cost-$1,728,588,328)       1,777,559,410  
 
CONVERTIBLE PREFERRED STOCK—16.2%      
      Credit Rating        
      (Moody’s/S&P)    
    Agriculture—0.6%          
117   Bunge Ltd., 4.875%, 12/31/49  Ba1/BB  
 
14,117,350  
    Automotive—0.5%          
575   General Motors Corp., 6.25%, 7/15/33, Ser. C Caa1/B-  
 
12,767,419  

  NFJ Dividend, Interest & Premium Strategy Fund
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 5



NFJ Dividend, Interest & Premium Strategy Fund Schedule of Investments
July 31, 2007 (unaudited) 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

 

 

 

 

(000)

 

 

Credit Rating

 

 

Value

 

    Banking—1.1%            
195   Washington Mutual Capital Trust, 5.375%, 5/3/41, Ser. UNIT A3 /BBB   $ 10,409,100  
131   Wells Fargo & Co., 8.00%, 6/1/08, Ser. AAPL Aa1 /AA+     15,838,956  
              26,248,056  
    Commercial Services—0.3%            
161   United Rentals, Inc., 6.50%, 8/1/28 B3 /B-     7,735,680  
    Diversified Financial Services—6.3%            
389   Citigroup Funding, Inc., 4.583%, 9/27/08, Ser. GNW (d) Aa1 /AA     11,511,255  
416   E*Trade Financial Corp., 6.125%, 11/18/08 Ba3 /NR     10,140,000  
    Goldman Sachs Group, Inc.,            
495      12.00%, 12/12/07, Ser. CSCO (Cisco Systems, Inc.) (f) Aa3 /NR     13,211,160  
608      20.00%, 12/31/07, Ser. TWX (Time Warner, Inc.) (f) Aa3 /NR     10,600,926  
322      20.00%, 3/6/08, Ser. DISH (EchoStar Communications Corp.) (f) Aa3 /NR     12,492,348  
187   Lazard Ltd, 6.625%, 5/15/08 Ba1 /NR     6,014,470  
    Lehman Brothers Holdings, Inc.,            
430      6.25%, 10/15/07, Ser. GIS (General Mills, Inc.) (f) A1 /A+     11,235,900  
206      20.00%, 8/15/07, Ser. UTX (United Technologies Corp.) (f) A1 /A+     12,445,080  
348      20.00%, 2/24/08, Ser. HPQ (Hewlett-Packard Co.) (f) A1 /A+     14,425,719  
    Morgan Stanley,            
184      20.00%, 12/15/07, Ser. XOM (Exxon Mobil Corp.) (f) Aa3 /AA-     13,186,954  
337      20.00%, 1/31/08, Ser. T (AT&T, Inc.) (f) Aa3 /AA-     11,649,691  
26      20.00%, 3/8/08, Ser. GOOG (Google, Inc.) (f) Aa3 /NR     11,568,482  
362      20.00%, 3/24/08, Ser. DIS (The Walt Disney Co.) (f) Aa3 /NR     11,268,261  
              149,750,246  
    Electric—1.8%            
244   AES Trust III, 6.75%, 10/15/29 B3 /B     11,631,365  
230   Entergy Corp., 7.625%, 2/17/09  NR /BBB     14,260,000  
48   NRG Energy, Inc., 5.75%, 3/16/09 B2 /CCC+     16,585,938  
              42,477,303  
    Hand/Machine Tools—0.3%            
8   Stanley Works, 6.975%, 5/17/12 (d) A2 /A     8,425,000  
    Insurance—1.3%            
405   Metlife, Inc., 6.375%, 8/15/08 NR /BBB+     12,092,436  
165   Platinum Underwriters Holdings Ltd., 6.00%, 2/15/09, Ser. A NR /BB+     5,176,875  
504   XL Capital Ltd., 7.00%, 2/15/09 A3 /A-     13,777,128  
              31,046,439  
    Investment Companies—0.4%            
175   Vale Capital Ltd., 5.50%, 6/15/10, Ser. RIOP NR /NR     9,384,375  
    Metals & Mining—0.7%            
121   Freeport-McMoRan Copper & Gold, Inc., 6.75%, 5/1/10 NR /B+     17,170,015  
    Oil & Gas—0.5%            
104   Chesapeake Energy Corp., 5.00%, 12/31/49 NR /B     11,332,631  
    Pharmaceuticals—0.6%            
209   Schering-Plough Corp., 6.00%, 9/14/07 Baa3 /BBB     13,514,676  
    Real Estate (REIT)—0.5%            
465   FelCor Lodging Trust, Inc., 1.95%, 12/31/49, Ser. A B2 /B-     11,688,150  

    NFJ Dividend, Interest & Premium Strategy Fund
6   Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



NFJ Dividend, Interest & Premium Strategy Fund Schedule of Investments
July 31, 2007 (unaudited) 
               
Shares

 

 

Credit Rating

 

 

 

 

(000)

 

 

(Moody’s/S&P)

 

 

Value
    Retail—0.2%            
4   Blockbuster, Inc., 7.50%, 12/31/49 NR /NR   $ 4,203,000  
    Telecommunications—0.6%            
239   Crown Castle International Corp., 6.25%, 8/15/12 NR /NR     13,796,186  
    Waste Disposal—0.5%            
40   Allied Waste Industries, Inc., 6.25%, 3/1/08, Ser. D B3 /B     13,562,475  
                 
    Total Convertible Preferred Stock (cost-$379,237,266)         387,219,001  
 
CONVERTIBLE BONDS & NOTES—8.1%            
Principal                
Amount                
(000)                
    Banking—0.4%            
$     10,000   UBS AG Jersey, 22.00%, 8/15/07 (b)(c) NR /NR     9,537,500  
    Commercial Services—1.1%            
    Quanta Services, Inc.,            
3,000      3.75%, 4/30/26 (b)(c) NR /B     4,226,250  
7,930      3.75%, 4/30/26, GDR NR /B     11,171,388  
7,500   Vertrue, Inc., 5.50%, 10/1/10 NR /B-     9,750,000  
              25,147,638  
    Computers—1.7%            
10,000   DST Systems, Inc., 4.125%, 8/15/23 NR /NR     16,275,000  
12,950   Electronic Data Systems Corp., 3.875%, 7/15/23 Ba1 /BBB-     13,273,750  
10,100   Maxtor Corp., 6.80%, 4/30/10 Ba1 /NR     10,668,125  
              40,216,875  
    Electric—0.4%            
3,500   PG&E Corp., 9.50%, 6/30/10 NR /NR     10,867,500  
    Electrical Components & Equipment—0.0%            
750   General Cable Corp., 0.875%, 11/15/13 B1 /B+     1,259,062  
    Electronics—0.1%            
1,500   Fisher Scientific International, Inc., 3.25%, 3/1/24 Baa3/BBB     2,145,000  
    Hotel/Gaming—0.1%            
1,695   Mandalay Resort Group, 6.11%, 3/21/33 (d) Ba2 /BB     2,398,425  
    Oil & Gas—0.6%            
8,825   Devon Energy Corp., 4.95%, 8/15/08 Baa2/BBB     14,075,875  
    Real Estate (REIT)—0.5%            
9,500   Digital Realty Trust L.P., 4.125%, 8/15/26 (b)(c) NR /NR     11,024,750  
    Retail—0.5%            
12,800   Sonic Automotive, Inc., 5.25%, 5/7/09 B2 /B     12,592,000  
    Semi-conductors—0.2%            
4,500   Intel Corp., 2.95%, 12/15/35 NR /A-     4,393,125  
    Software—0.2%            
5,000   Lawson Software, Inc., 2.50%, 4/15/12 (b)(c) NR /NR     5,150,000  

  NFJ Dividend, Interest & Premium Strategy Fund
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 7



NFJ Dividend, Interest & Premium Strategy Fund Schedule of Investments
July 31, 2007 (unaudited) 
             
Principal

 

 

 

 

 

 

Amount

 

 

Credit Rating

 

 

 

 

(000)

 

 

(Moody’s/S&P)

 

 

Value

 

    Telecommunications—2.3%            
$     10,500   CenturyTel, Inc., 4.75%, 8/1/32 Baa2 /BBB   $ 11,905,950  
3,880   Harris Corp., 3.50%, 8/15/22, GDR Baa2 /BBB+     9,438,100  
13,300   Level 3 Communications, Inc., 6.00%, 3/15/10 Caa3 /CCC     12,435,500  
14,000   Nextel Communications, Inc., 5.25%, 1/15/10 Baa3 /BBB     13,930,000  
6,500   Nortel Networks Corp., 4.25%, 9/1/08, GDR B3 /B-     6,402,500  
              54,112,050  
 
    Total Convertible Bonds & Notes (cost-$178,877,638)         192,919,800  
 
SHORT-TERM INVESTMENT—2.4%            
    Time Deposit—2.4%            
56,171   Societe GeneraleGrand Cayman, 4.66%, 8/1/07 (cost-$56,171,002)     56,171,002  
 
    Total Investments, before call options written            
    (cost-$2,342,874,234)101.3%         2,413,869,213  
 
CALL OPTIONS WRITTEN (e)—(0.3)%            
Contracts                
    American Stock Exchange Morgan Stanley Cyclical Flex Index,            
300      strike price $1100, expires 8/3/07          
250      strike price $1102, expires 8/31/07         (72,250 )
    American Stock Exchange Morgan Stanley Cyclical Index,            
250      strike price $1090, expires 8/18/07         (110,000 )
500      strike price $1110, expires 8/18/07         (65,000 )
    American Stock Exchange Oil Flex Index,            
250      strike price $1455, expires 8/31/07         (161,250 )
250      strike price $1560, expires 9/7/07         (10,500 )
    American Stock Exchange Oil Index,            
200      strike price $1440, expires 8/18/07         (189,000 )
200      strike price $1450, expires 8/18/07         (151,000 )
200      strike price $1465, expires 8/3/07          
150      strike price $1480, expires 8/18/07         (55,500 )
150      strike price $1490, expires 8/18/07         (43,125 )
300      strike price $1500, expires 8/18/07         (66,000 )
250      strike price $1520, expires 9/22/07         (263,750 )
300      strike price $1560, expires 9/22/07         (178,500 )
200      strike price $1580, expires 9/22/07         (88,000 )
    American Stock Exchange Pharmaceutical Index,            
1,350      strike price $360, expires 9/22/07         (195,750 )
250      strike price $370, expires 9/22/07         (38,750 )
    Nasdaq 100 Stock Index,            
50      strike price $1975, expires 8/18/07         (99,000 )
50      strike price $2000, expires 8/18/07         (58,250 )
150      strike price $2100, expires 9/22/07         (145,500 )
50      strike price $2150, expires 9/22/07         (19,250 )
    Pharmaceutical HOLDRS,            
5,000      strike price $101.30, expires 8/24/07         (105,000 )

    NFJ Dividend, Interest & Premium Strategy Fund
8   Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



NFJ Dividend, Interest & Premium Strategy Fund Schedule of Investments
July 31, 2007 (unaudited) 
         
         
Contracts
 
    Value  
    Philadelphia Stock Exchange KBW Bank Sector Flex Index,      
2,000      strike price $113, expires 8/10/07 $  
3,000      strike price $113, expires 10/5/07   (540,000 )
3,000      strike price $113.75, expires 9/21/07   (309,000 )
3,000      strike price $117.50, expires 9/7/07    
3,000      strike price $117.75, expires 8/3/07   (36,000 )
    Philadelphia Stock Exchange KBW Bank Sector Index,      
3,000      strike price $116, expires 8/24/07   (18,000 )
4,000      strike price $117.50, expires 8/18/07   (40,000 )
3,500      strike price $117.50, expires 9/22/07   (175,000 )
2,000      strike price $120, expires 8/18/07   (50,000 )
2,500      strike price $120, expires 9/22/07   (75,000 )
    Philadelphia Stock Exchange Utility Flex Index,      
500      strike price $532, expires 8/24/07   (62,000 )
    Philadelphia Stock Exchange Utility Index,      
500      strike price $535, expires 8/18/07   (182,500 )
500      strike price $545, expires 9/22/07   (130,000 )
    Standard & Poors 500 Flex Index,      
300      strike price $1520, expires 10/5/07   (713,700 )
250      strike price $1530, expires 8/31/07   (147,250 )
200      strike price $1538, expires 8/10/07   (3,200 )
250      strike price $1540, expires 8/3/07    
    Standard & Poors 500 Index,      
200      strike price $1525, expires 8/17/07   (62,000 )
200      strike price $1540, expires 8/18/07   (32,000 )
200      strike price $1550, expires 8/18/07   (19,000 )
300      strike price $1550, expires 9/22/07   (240,000 )
200      strike price $1560, expires 8/18/07   (14,500 )
300      strike price $1575, expires 9/22/07   (127,500 )
100      strike price $1580, expires 9/22/07   (39,000 )
100      strike price $1590, expires 9/22/07   (28,000 )
    Telecommunication Basket Index,      
5,000      strike price $103, expires 9/7/07   (350,000 )
5,000      strike price $103.30, expires 10/5/07   (875,000 )
 
    Total Call Options Written (premium received-$24,878,361)   (6,384,025 )
 
    Total Investments, net of call options written      
    (cost-$2,317,995,873)101.0%   2,407,485,188  
 
    Liabilities in excess of other assets(1.0%)   (25,096,460 )
 
    Net Assets—100.0%   2,382,388,728  

  NFJ Dividend, Interest & Premium Strategy Fund
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 9



Nicholas-Applegate Equity & Convertible Income Fund Schedule of Investments
July 31, 2007 (unaudited) 
           
Shares

 

 

 

 

 

(000)

 

 

 

Value

 

COMMON STOCK—60.5%      
    Aerospace/Defense—3.1%      
82   Boeing Co. $ 8,439,888  
87   L-3 Communications Holdings, Inc.   8,516,988  
        16,956,876  
    Automotive—1.6%      
75   Johnson Controls, Inc. (a)   8,520,195  
    Beverages—3.0%      
162   Coca-Cola Co.   8,457,453  
88   Molson Coors Brewing Co.Cl. B   7,853,402  
        16,310,855  
    Chemicals—1.5%      
124   Monsanto Co. (a)   8,017,580  
    Commercial Services—2.9%      
95   Manpower, Inc. (a)   7,533,465  
140   McKesson Corp. (a)   8,086,400  
        15,619,865  
    Computers—3.2%      
474   EMC Corp. (a) (e)   8,773,740  
77   International Business Machines Corp. (a)   8,486,855  
        17,260,595  
    Electric—1.4%      
90   Constellation Energy Group, Inc.   7,575,520  
    Healthcare Products—1.5%      
151   Baxter International, Inc. (a)   7,963,640  
    Insurance—2.9%      
154   Cigna Corp.   7,931,904  
86   Prudential Financial, Inc. (a)   7,595,591  
        15,527,495  
    Iron/Steel—1.2%      
67   United States Steel Corp.   6,605,088  
    Machinery—4.5%      
195   AGCO Corp. (a) (e)   7,497,693  
69   Deere & Co. (a)   8,345,106  
103   Terex Corp. (a) (e)   8,909,625  
        24,752,424  
    Metals & Mining—1.6%      
93   Freeport-McMoRan Copper & Gold, Inc. (a)   8,740,140  
    Miscellaneous Manufacturing—3.1%      
232   General Electric Co. (a)   8,976,816  
71   Textron, Inc. (a)   8,037,768  
        17,014,584  
    Oil & Gas—6.3%      
87   Diamond Offshore Drilling, Inc. (a)   8,935,388  
71   National Oilwell Varco, Inc. (e)   8,491,777  
99   Schlumberger Ltd.   9,405,696  
115   Valero Energy Corp. (a)   7,672,645  
        34,505,506  

    NFJ Dividend, Interest & Premium Strategy Fund
10 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



Nicholas-Applegate Equity & Convertible Income Fund Schedule of Investments
July 31, 2007 (unaudited) 
                 
Shares

 

 

 

 

 

 

 

 

(000)

 

 

 

 

 

 

Value

 

    Pharmaceuticals—7.3%            
141   Abbott Laboratories (a)       $ 7,152,359  
266   Bristol-Myers Squibb Co. (a)         7,551,378  
219   Gilead Sciences,Inc. (a) (e)         8,149,647  
109   Medco Health Solutions, Inc. (a) (e)         8,882,811  
161   Merck & Co., Inc.         7,973,790  
              39,709,985  
    Retail—1.5%            
139   Target Corp. (a)         8,395,002  
    Semi-conductors—3.0%            
355   Intel Corp.         8,373,290  
225   Texas Instruments, Inc. (a)         7,903,674  
              16,276,964  
    Software—3.0%            
276   Microsoft Corp.         7,992,543  
443   Oracle Corp. (a) (e)         8,460,600  
              16,453,143  
    Telecommunications—6.3%            
156   Harris Corp. (a)         8,533,840  
293   Juniper Networks, Inc. (a) (e)         8,790,264  
206   Qualcomm, Inc. (a)         8,592,395  
202   Verizon Communications, Inc.         8,609,240  
              34,525,739  
    Transportation—1.6%            
184   CSX Corp. (a)         8,737,663  
 
  Total Common Stock (cost-$341,720,249)     329,468,859  
 
CONVERTIBLE PREFERRED STOCK—28.0%            
      Credit Rating        
      (Moody’s/S&P)        
    Agriculture—1.0%            
45   Bunge Ltd., 4.875%, 12/31/49 Ba1 /BB     5,387,200  
    Automotive—1.8%            
137   Ford Motor Co. Capital Trust, 6.50%, 1/15/32 Caa2 /CCC-     5,171,228  
214   General Motors Corp., 6.25%, 7/15/33, Ser. C Caa1 /B-     4,750,719  
              9,921,947  
    Banking—1.0%            
44   Wells Fargo & Co., 8.00%, 6/1/08, Ser. AAPL Aa1 /AA+     5,249,517  
    Commercial Services—0.9%            
102   United Rentals, Inc., 6.50%, 8/1/28 B3 /B-     4,917,600  
    Diversified Financial Services—12.3%            
160   Citigroup Funding, Inc., 4.583%, 9/27/08, Ser. GNW (d) Aa1 /AA     4,740,800  
167   E*Trade Financial Corp., 6.125%, 11/18/08 Ba3 /NR     4,059,656  
    Goldman Sachs Group, Inc.,            
240      12.00%, 12/12/07, Ser. CSCO (Cisco Systems, Inc.) (f) Aa3 /NR     6,410,670  
296      20.00%, 12/31/07, Ser. TWX (Time Warner, Inc.) (f) Aa3 /NR     5,159,280  
147      20.00%, 3/6/08, Ser. DISH (EchoStar Communications Corp.) (f) Aa3 /NR     5,679,890  

  NFJ Dividend, Interest & Premium Strategy Fund      
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 11



Nicholas-Applegate Equity & Convertible Income Fund Schedule of Investments
July 31, 2007 (unaudited) 
                 
Shares

 

 

Credit Rating

 

 

 

 

(000)

 

 

(Moody’s/S&P)

 

 

Value

 

    Diversified Financial Services—(continued)            
136   Lazard Ltd, 6.625%, 5/15/08 Ba1 /NR   $ 4,352,581  
    Lehman Brothers Holdings, Inc.,            
184      6.25%, 10/15/07, Ser. GIS (General Mills, Inc.) (f) A1 /A+     4,804,784  
103      20.00%, 8/15/07, Ser. UTX (United Technologies Corp.) (f) A1 /A+     6,237,074  
145      20.00%, 2/24/08, Ser. HPQ (Hewlett-Packard Co.) (f) A1 /A+     6,021,022  
    Morgan Stanley,            
70      20.00%, 12/15/07, Ser. XOM (Exxon Mobile Corp.) (f) Aa3 /AA-     5,034,393  
139      20.00%, 1/31/08, Ser. T (AT&T, Inc.) (f) Aa3 /AA-     4,796,912  
11      20.00%, 3/8/08, Ser. GOOG (Google, Inc.) (f) Aa3 /NR     4,953,442  
151      20.00%, 3/24/08, Ser. DIS (The Walt Disney Co.) (f) Aa3 /NR     4,702,895  
              66,953,399  
    Electric—2.8%            
102   AES Trust III, 6.75%, 10/15/29 B3 /B     4,881,742  
82   Entergy Corp., 7.625%, 2/17/09 NR /BBB     5,093,300  
15   NRG Energy, Inc., 5.75%, 3/16/09 B2 /CCC+     5,161,406  
              15,136,448  
    Insurance—2.8%            
157   Metlife, Inc., 6.375%, 8/15/08 NR /BBB+     4,679,208  
165   Platinum Underwriters Holdings Ltd., 6.00%, 2/15/09, Ser. A NR /BB+     5,183,150  
197   XL Capital Ltd., 7.00%, 2/15/09 A3 /A-     5,400,864  
              15,263,222  
    Oil & Gas—0.9%            
44   Chesapeake Energy Corp., 5.00%, 12/31/49 NR /B     4,746,938  
    Pharmaceuticals—1.0%            
84   Schering-Plough Corp., 6.00%, 9/14/07 Baa3 /BBB     5,434,268  
    Real Estate (REIT)—0.9%            
199   FelCor Lodging Trust, Inc., 1.95%, 12/31/49, Ser. A B2 /B-     4,997,363  
    Retail—0.7%            
4   Blockbuster, Inc., 7.50%, 12/31/49 NR /NR     3,793,208  
    Telecommunications—1.0%            
98   Crown Castle International Corp., 6.25%, 8/15/12 NR /NR     5,679,713  
    Waste Disposal—0.9%            
15   Allied Waste Industries, Inc., 6.25%, 3/1/08, Ser. D B3 /B     4,962,786  
 
  Total Convertible Preferred Stock (cost-$160,358,689)     152,443,609  
 
CONVERTIBLE BONDS & NOTES—6.7%            
Principal

 

 

 

 

 

 

 

 

Amount

 

 

 

 

 

 

 

 

(000)

 

 

 

 

 

 

 

 

    Banking—0.9%            
$     5,125   UBS AG Jersey, 22.00%, 8/15/07 (b)(c) NR /NR     4,887,969  
    Commercial Services—0.9%            
4,800   Bowne & Co., Inc., 5.00%, 10/1/33 B2 /B-     5,183,040  
    Computers—1.0%            
4,925   Maxtor Corp., 6.80%, 4/30/10 Ba1 /NR     5,202,031  

    NFJ Dividend, Interest & Premium Strategy Fund
12 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



Nicholas-Applegate Equity & Convertible Income Fund Schedule of Investments
July 31, 2007 (unaudited) 
Principal
Amount Credit Rating
(000)

 

 

(Moody’s/S&P)

 

 

Value

 

    Electric—0.9%            
$1,540   PG&E Corp., 9.50%, 6/30/10 NR /NR   $ 4,781,700  
    Oil & Gas—1.1%            
3,775   Devon Energy Corp., 4.95%, 8/15/08 Baa2 /BBB     6,021,125  
    Telecommunications—1.9%            
4,340   CenturyTel, Inc., 4.75%, 8/1/32 Baa2 /BBB     4,921,126  
5,910   Level 3 Communications, Inc., 6.00%, 3/15/10 Caa3 /CCC     5,525,850  
              10,446,976  
 
    Total Convertible Bonds & Notes (cost-$37,151,885)         36,522,841  
 
CORPORATE BONDS & NOTES—1.8%            
    Paper Products—0.1%            
1,000   Neenah Paper, Inc., 7.375%, 11/15/14 B2 /B+     940,000  
    Pipelines—0.7%            
4,340   Dynergy Holdings, Inc., 7.75%, 6/1/19 (b) B2 /B-     3,754,100  
    Telecommunications—1.0%            
5,000   Millicom International Cellular S.A., 10.00%, 12/1/13, GDR B2 /B+     5,287,500  
 
    Total Corporate Bonds & Notes (cost-$10,220,206)         9,981,600  
 
U.S. GOVERNMENT SECURITIES—2.6%            
14,000   U.S. Treasury Notes, 10.375%, 11/15/12 (cost-$14,527,188)         14,222,040  
 
SHORT-TERM INVESTMENT—0.8%            
    Time Deposit—0.8%            
4,595   Bank of America, 4.66%, 8/1/07 (cost-$4,595,207)         4,595,207  
 
    Total Investments, before call options written            
    (cost-$568,573,424)100.4%         547,234,156  
 
CALL OPTIONS WRITTEN (d)—(0.7)%            
Contracts                
980   Abbott Laboratories, strike price $60, expires 8/18/07         (4,900 )
1,365   AGCO Corp., strike price $50, expires 11/17/07         (68,250 )
1,058   Baxter International, Inc., strike price $60, expires 11/17/07         (79,350 )
1,860   Bristol-Myers Squibb Co., strike price $35, expires 8/18/07         (9,300 )
1,292   CSX Corp., strike price $50, expires 8/18/07         (90,440 )
485   Deere & Co., strike price $130, expires 9/22/07         (160,050 )
607   Diamond Offshore Drilling, Inc., strike price $110, expires 9/22/07   (218,520 )
3,326   EMC Corp., strike price $19, expires 10/20/07         (382,490 )
650   Freeport-McMoRan Cooper & Gold, Inc., strike price $105, expires 11/17/07   (409,500 )
1,622   General Electric Co., strike price $40, expires 9/22/07         (137,870 )
1,528   Gilead Sciences, Inc., strike price $42.50, expires 8/18/07         (10,696 )
1,090   Harris Corp., strike price $65, expires 11/17/07         (109,000 )
535   International Business Machines Corp., strike price $120, expires 10/20/07   (104,325 )
528   Johnson Controls, Inc., strike price $125, expires 10/20/07         (163,680 )

  NFJ Dividend, Interest & Premium Strategy Fund
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 13



Nicholas-Applegate Equity & Convertible Income Fund Schedule of Investments
July 31, 2007 (unaudited) 


Contracts
        Value  
2,050   Juniper Networks, Inc., strike price $35, expires 10/20/07   $ (194,750 )
666   Manpower, Inc., strike price $95, expires 9/22/07     (16,650 )
980   McKesson Corp., strike price $65, expires 8/18/07     (14,700 )
764   Medco Health Solutions, Inc., strike price $85, expires 8/18/07     (49,660 )
870   Monsanto Co., strike price $75, expires 10/20/07     (108,750 )
3,094   Oracle Corp., strike price $20, expires 9/22/07     (185,640 )
600   Prudential Financial, Inc., strike price $105, expires 8/18/07     (6,000 )
1,445   Qualcomm, Inc., strike price $47.50, expires 10/20/07     (122,825 )
695   Schlumberger Ltd., strike price $100, expires 11/17/07     (394,065 )
969   Target Corp., strike price $67.50, expires 8/18/07     (19,380 )
725   Terex Corp., strike price $95, expires 10/20/07     (319,000 )
1,565   Texas Instruments, Inc., strike price $40, expires 10/20/07     (75,120 )
500   Textron, Inc., strike price $130, expires 9/22/07     (65,000 )
803   Valero Energy Corp., strike price $80, expires 9/22/07     (60,225 )
 
    Total Call Options Written (premium received-$5,293,438)     (3,580,136 )
 
    Total Investments, net of call options written        
    (cost-$563,279,986)99.7%     543,654,020  
 
    Other assets less liabilities0.3%     1,370,203  
 
    Net Assets—100.0%   $ 545,024,223  
 

Notes to Schedules of Investments:

(a)      All or partial amount segregated as collateral for call options written.
(b)      144A securitySecurity exempt from registration under Rule 144A of the Securities Act of 1933.
  These securities may be resold in transactions exempt from registration, typically only to qualified institutional buyers. Unless otherwise indicated, these securities are not considered to be illiquid.
(c)      Private Placement. Restricted as to resale and may not have a readily available market.
  For the NFJ Dividend, Interest & Premium Strategy Fund and Nicholas-Applegate Equity & Convertible Income Fund, securities with an aggregate market value of $29,938,500 and $4,887,969, representing 1.26% and 0.90% of net assets, respectively, are restricted.
(d)      Variable rate security. Interest rate disclosed reflects the rate in effect on July 31, 2007.
(e)      Non-income producing.
(f)      Securities exchangeable or convertible into securities of an entity different than the issuer. Such entity is identified in the parenthetical.
 
 

Glossary:
ADR American Depositary Receipt
GDR — Global Depositary Receipt
NR — Not Rated
REIT — Real Estate Investment Trust

 

   NFJ Dividend, Interest & Premium Strategy Fund
14 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 | See accompanying Notes to Financial Statements



NFJ Dividend, Interest & Premium Strategy Fund  
Nicholas-Applegate Equity & Convertible Income Fund Statements of Assets
July 31, 2007 (unaudited) and Liabilities

NFJ Dividend, Nicholas-Applegate
Interest & Equity &
Premium Strategy Convertible Income
Fund Fund
Assets:              
Investments, at value (cost$2,342,874,234 and $568,573,424,              
   respectively)     $2,413,869,213     $547,234,156  
Dividends and interest receivable     6,058,712     2,069,376  
Receivable for investments sold     3,902,218      
Prepaid expenses     35,838     18,057  
   Total Assets     2,423,865,981     549,321,589  
 
Liabilities:              
Payable for investments purchased     32,879,423      
Call options written, at value (premiums received$24,878,361 and              
   $5,293,438, respectively)     6,384,025     3,580,136  
Investment management fees payable     1,887,674     478,210  
Offering expenses payable         42,308  
Accrued expenses     326,131     196,712  
   Total Liabilities     41,477,253     4,297,366  
Net Assets     $2,382,388,728     $545,024,223  
 
Composition of Net Assets              
Common Stock:              
   Par value ($0.00001 per share applicable to 94,524,325 and              
      22,304,189 shares issued and outstanding, respectively)     $945     $223  
   Paid-in-capital in excess of par     2,253,871,358     531,397,289  
Undistributed net investment income     5,096,919     2,079,693  
Accumulated net realized gain     33,930,191     31,172,984  
Net unrealized appreciation (depreciation) of investments and              
   call options written     89,489,315     (19,625,966 )
Net Assets     $2,382,388,728     $545,024,223  
Net Asset Value Per Share     $25.20     $24.44  

NFJ Dividend, Interest & Premium Strategy Fund
See accompanying Notes to Financial Statements | 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 15



NFJ Dividend, Interest & Premium Strategy Fund  
Nicholas-Applegate Equity & Convertible Income Fund Statements of
For the periods indicated (unaudited) Operations

NFJ Dividend, Nicholas-Applegate
Interest & Equity &
Premium Strategy Convertible Income
Fund Fund

 

 

 

 

For the period

 

 

Six Months

 

February 27, 2007*

 

 

ended

 

through

 

July 31, 2007 July 31, 2007
Investment Income:                
Dividends     $44,387,624       $8,125,333  
Interest     6,274,499       2,302,404  
Consent and other fee income     184,179       71,583  
   Total Investment Income     50,846,302       10,499,320  
 
Expenses:                
Investment management fees     11,003,671       2,289,492  
Custodian and accounting agent fees     255,213       99,975  
Shareholder communications     249,992       45,725  
Trustees’ fees and expenses     112,754       21,235  
Legal fees     41,895       10,850  
New York Stock Exchange listing fees     38,884        
Audit and tax services     34,340       41,385  
Insurance expense     20,753        
Transfer agent fees     14,019       13,640  
Miscellaneous     15,402       12,710  
   Total expenses     11,786,923       2,535,012  
 
Net Investment Income     39,059,379       7,964,308  
 
Realized and Change in Unrealized Gain (Loss):                
Net realized gain (loss) on:                
   Investments     135,133,642       49,392,760  
   Call options written     (72,058,586 )     (11,558,285 )
Net change in unrealized appreciation/depreciation of:                
   Investments     (74,671,315 )     (21,339,268 )
   Call options written     22,581,266       1,713,302  
Net realized and change in unrealized gain on investments and                
   call options written     10,985,007       18,208,509  
Net Increase in Net Assets Resulting from Investment Operations     $50,044,386       $26,172,817  

* Commencement of Operations.

   NFJ Dividend, Interest & Premium Strategy Fund
16 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 | See accompanying Notes to Financial Statements



NFJ Dividend, Interest & Premium Strategy Fund  
Nicholas-Applegate Equity & Convertible Income Fund Statements of Changes
                                                                                                                                            in Net Assets

Nicholas-Applegate
NFJ Dividend, Equity & Convertible

 

Interest & Premium Strategy Fund Income Fund
For the period
Six Months February 27, 2007*
ended through
July 31, 2007 Year ended July 31, 2007
(unaudited) January 31, 2007 (unaudited)
Investment Operations:                        
Net investment income     $39,059,379       $71,327,166       $7,964,308  
Net realized gain on investments and call                        
   options written     63,075,056       127,634,870       37,834,475  
Net change in unrealized appreciation/depreciation                        
   of investments and call options written     (52,090,049 )     145,481,658       (19,625,966 )
Net increase in net assets resulting from                        
   investment operations     50,044,386       344,443,694       26,172,817  
 
Dividends and Distributions to Shareholders from:                        
Net investment income     (43,698,795 )     (69,190,683 )     (5,884,615 )
Net realized gains     (55,551,747 )     (129,310,401 )     (6,661,491 )
Total dividends and distributions to shareholders     (99,250,542 )     (198,501,084 )     (12,546,106 )
 
Capital Share Transactions:                        
Net proceeds from the sale of common stock                 532,412,500  
Offering costs charged to paid-in capital in                        
   excess of par                 (1,115,000 )
Net increase from capital share transactions                 531,297,500  
Total increase (decrease) in net assets     (49,206,156 )     145,942,610       544,924,211  
 
Net Assets:                        
Beginning of period     2,431,594,884       2,285,652,274       100,012  
End of period (including undistributed net                        
   investment income of $5,096,919, $9,736,335,                        
   and $2,079,693 respectively)     $2,382,388,728       $2,431,594,884       $545,024,223  
Shares issued:                 22,300,000  

* Commencement of operations

NFJ Dividend, Interest & Premium Strategy Fund
See accompanying Notes to Financial Statements | 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 17



NFJ Dividend, Interest & Premium Strategy Fund  
Nicholas-Applegate Equity & Convertible Income Fund Notes to Financial   
July 31, 2007 (unaudited) Statements

1. Organization and Significant Accounting Policies

NFJ Dividend, Interest & Premium Strategy Fund and Nicholas-Applegate Equity & Convertible Income Fund, collectively referred to as the “Funds, were organized as Massachusetts business trusts on August 20, 2003 and December 12, 2006, respectively. Prior to commencing operations on February 28, 2005 and February 27, 2007, respectively, the Funds had no operations other than matters relating to their organization and registration as diversified, closed-end management investment companies under the Investment Company Act of 1940 and the rules and regulations there under, as amended, and the sale and issuance of 4,189 shares of beneficial interest at an aggregate par of $100,012, for each fund, to Allianz Global Investors of America L.P. (“Allianz Global). Allianz Global Investors Fund Management LLC (the “Investment Manager) serves as the Funds’ investment manager and is an indirect wholly-owned subsidiary of Allianz Global. Allianz Global is an indirect, majority-owned subsidiary of Allianz SE, a publicly traded European insurance and financial services company. Each Fund has an unlimited amount of $0.00001 par value common stock authorized.

The Nicholas-Applegate Equity & Convertible Income Fund issued 20,300,000 shares of common stock in its initial public offering. An additional 2,000,000 shares were issued in connection with the underwriterís over-allotment option. These shares were all issued at $25.00 per share before an underwriting discount of $1.125 per share. Offering costs of $1,115,000 (representing $0.05 per share) were offset against the proceeds of the offering and over-allotment option and have been charged to paid-in capital in excess of par.

NFJ Dividend, Interest & Premium Strategy Fund’s primary investment objective is to seek current income and gains, with a secondary objective of long-term capital appreciation. The Fund will pursue its investment objectives by investing in a diversified portfolio of dividend-paying common stocks and income-producing convertible securities. The Fund will also employ a strategy of writing (selling) call options and equity indexes in an attempt to generate gains from option premiums.

Nicholas Applegate Equity & Convertible Income Fund’s investment objective is to seek total return comprised of capital appreciation, current income and gains. The Fund will pursue its objective by investing in a diversified portfolio of equity securities and income producing convertible securities. The Fund will also employ a strategy of writing (selling) call options on the equity securities held by the Fund.

The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.

In the normal course of business, the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet been asserted. However, the Funds expect the risk of any loss to be remote.

In July 2006, the Financial Accounting Standards Board issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement No. 109 (the “Interpretation). The Interpretation establishes for all entities, including pass-through entities such as the Funds, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. Fund management has determined that its evaluation of the Interpretation has resulted in no impact to the Funds’ financial statements at July 31, 2007.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS) 157, Fair Value Measurements, which clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. Adoption of SFAS 157 requires the use of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. At this time, the Funds are in the process of reviewing SFAS 157 against its current valuation policies to determine future applicability.

   NFJ Dividend, Interest & Premium Strategy Fund
18 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



NFJ Dividend, Interest & Premium Strategy Fund  
Nicholas-Applegate Equity & Convertible Income Fund Notes to Financial   
July 31, 2007 (unaudited) Statements

1. Organization and Significant Accounting Policies (continued)

The following is a summary of significant accounting policies followed by the Funds:

(a) Valuation of Investments
Portfolio securities and other financial instruments for which market quotations are readily available are stated at market value. Portfolio securities and other financial instruments for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to guidelines established by the Board of Trustees. The Funds’ investments, including over-the-counter options, are valued daily using prices supplied by an independent pricing service or dealer quotations, or the last sale price on the exchange that is the primary market for such securities, or the mean between the last quoted bid and ask price for those securities for which the over-the-counter market is the primary market or for listed securities in which there were no sales. Independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Exchange traded options are valued at the settlement price determined by the relevant exchange. Short-term securities maturing in 60 days or less are valued at amortized cost, if their original term to maturity was 60 days less, or by amortizing their value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days. The prices used by the Funds to value securities may differ from the value that would be realized if the securities were sold and the differences could be material to the financial statements. Each Fund’s net asset value is normally determined daily as of the close of regular trading (normally, 4:00 p.m. Eastern time) on the New York Stock Exchange (“NYSE) on each day the NYSE is open for business.

(b) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date. Realized gains and losses on investments are determined on the identified cost basis. Interest income is recorded on an accrual basis. Discounts or premiums on corporate bonds and notes purchased are accreted or amortized, respectively to interest income over the lives of the respective securities using the effective interest method. Payments received from certain investments may be comprised of dividends, realized gains and return of capital. These payments may initially be recorded as dividend income and may subsequently be reclassified as realized gains and/or return of capital upon receipt of information from the issuer. Dividend income is recorded on the ex-dividend date.

(c) Federal Income Taxes
The Funds intend to distribute all of their taxable income and to comply with the other requirements of the U.S. Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, no provision for U.S. federal income taxes is required.

(d) Dividends and Distributions
The Funds declare quarterly dividends and distributions from net investment income and gains from option premiums and the sale of portfolio securities. The Funds record dividends and distributions to shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These “book-tax differences are considered either temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their income tax treatment; temporary differences do not require reclassification. To the extent dividends and/or distributions exceed current and accumulated earnings and profits for federal income tax purposes, they are reported as dividends and/or distributions of paid-in capital in excess of par.

(e) Call Option Transactions
The Funds employ a strategy of writing (selling) call options on equities and/or equity indexes in an attempt to generate gains from option premiums. When an option is written, the premium received is recorded as an asset with an equal liability, which is subsequently adjusted to the current market value of the option. Premiums received from writing options, which expire unexercised, are recorded on the expiration date as a realized gain. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transactions, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security or index option in determining whether there has been a realized gain or loss.

The Funds, as writers of call options, may have no control over whether the underlying securities or index option may be sold (called). As a result, the Funds bear the market risk of an unfavorable change in the price of the security or index underlying the written call options.

The use of derivative transactions may involve elements of both market and credit risk in excess of the amounts reflected on the Statements of Assets and Liabilities.

  NFJ Dividend, Interest & Premium Strategy Fund      
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 19



NFJ Dividend, Interest & Premium Strategy Fund  
Nicholas-Applegate Equity & Convertible Income Fund Notes to Financial   
July 31, 2007 (unaudited) Statements

1. Organization and Significant Accounting Policies (continued)

(f) Concentration of Risk
It is the Funds’ policy to invest a portion of their assets in convertible securities. Although convertible securities do derive part of their value from that of the securities into which they are convertible, they are not considered derivative financial instruments. However, certain of the Funds’ investments include features which render them more sensitive to price changes in their underlying securities. Consequently, the Funds are exposed to greater downside risk than traditional debt securities, but still less than that of the underlying common stock.

2. Investment Manager/Sub-Advisers
Each Fund has entered into Investment Management Agreements (the “Agreements) with the Investment Manager. Subject to the supervision of the Funds’ Board of Trustees, the Investment Manager is responsible for managing, either directly or through others selected by it, the Funds’ investment activities, business affairs and administrative matters. Pursuant to the Agreements, the NFJ Dividend, Interest & Premium Strategy Fund pays the Investment Manager an annual fee, payable monthly, at the annual rate of 0.90% of the Fund’s average daily total managed assets. The Nicholas-Applegate Equity & Convertible Income Fund pays the Investment Manager an annual fee, payable monthly, at the annual rate of 1.00% of the Fund’s average daily total managed assets. Total managed assets refer to the total assets of each Fund (including assets attributable to any preferred shares and borrowings that may be outstanding) minus accrued liabilities (other than liabilities representing borrowings). The Investment Manager has retained its affiliates, NFJ Investment Group L.P (“NFJ), Nicholas-Applegate Capital Management LLC (“NACM), and Oppenheimer Capital LLC (“OCC) (the “Sub-Advisers), to manage the NFJ Dividend, Interest & Premium Strategy Fund’s equity component, convertible component and index option strategy, respectively. NACM serves as the sole sub-adviser to the Nicholas-Applegate Equity & Convertible Income Fund. Subject to the supervision of the Investment Manager, NFJ, NACM and OCC make all of NFJ Dividend, Interest & Premium Strategy Funds investment decisions in connection with their respective components of the Funds’ investments. Subject to the supervision of the Investment Manager, NACM is responsible for making all of Nicholas-Applegate Equity & Convertible Income Funds’ investment decisions. For their services, pursuant to Sub-Advisory Agreements, the Investment Manager and not the Funds, pays each of the Sub-Advisers an annual fee payable on a monthly basis.

3. Investment in Securities
For the six months ended July 31, 2007, and for the period February 27, 2007 (commencement of operations) through July 31, 2007 for NFJ Dividend, Interest & Premium Strategy Fund and Nicholas-Applegate Equity & Convertible Income Fund, respectively, purchases and sales of investments, other than short-term securities and U.S. government obligations were:

NFJ Dividend, Nicholas-Applegate
Interest & Premium Equity & Convertible

 

 

Strategy Fund

 

Income Fund
Purchases     $1,100,699,738   $1,281,503,803
Sales   1,028,634,300 781,579,323
 
For the six months ended July 31, 2007, and for the period February 27, 2007 (commencement of operations) through July 31, 2007 for NFJ Dividend, Interest & Premium Strategy Fund and Nicholas-Applegate Equity & Convertible Income Fund, respectively, purchases and sales of U.S. government obligations were:
   
NFJ Dividend, Nicholas-Applegate
Interest & Premium Equity & Convertible

 

 

Strategy Fund

 

Income Fund
Purchases     $49,807,500
Sales   35,127,188
(a) Transactions in call options written for the six months ended July 31, 2007:  
NFJ Dividend, Interest & Premium Strategy Fund:   Contracts

 

Premiums
Options outstanding, January 31, 2007   56,880   $25,702,860
Options written   166,657 71,438,540
Options terminated in closing purchase transactions   (97,607 ) (51,350,179 )
Options expired
  (72,180 )

 

(20,912,860 )
Options Options outstanding, expired July 31, 2007   53,750   $24,878,361

   NFJ Dividend, Interest & Premium Strategy Fund
20 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |




NFJ Dividend, Interest & Premium Strategy Fund  
Nicholas-Applegate Equity & Convertible Income Fund Notes to Financial   
July 31, 2007 (unaudited) Statements

3. Investment in Securities (continued)

Transactions in call options written for the period February 27, 2007 (commencement of operations) through July 31, 2007:

Nicholas-Applegate Equity & Convertible Income Fund: Contracts
 
  Premiums
Options outstanding, February 27, 2007*     $  
Options written 148,580       23,287,087  
Options terminated in closing purchase transactions (87,927 )     (15,394,739 )
Options expired (27,920 )     (2,587,813 )
Options exercised
(81
)  
 
(11,097
)
Options Options outstanding, exercised July 31, 2007 32,652     $ 5,293,438  

*Commencement of operations

4. Income Tax Information

The cost of investments for federal income tax purposes and gross unrealized appreciation and gross unrealized depreciation of investments at July 31, 2007 were:

Net
Gross Gross Unrealized
Cost of Unrealized Unrealized Appreciation

 

 

Investments

 

Appreciation

 

Depreciation

 

(Depreciation)
NFJ Dividend, Interest & Premium  
Strategy     $2,342,874,234   $160,961,430   $89,966,451   $70,994,979
Nicholas-Applegate Equity &  
Convertible Income   568,573,424 7,033,087 28,372,355 (21,339,268 )

5. Legal Proceedings
In June and September 2004, the Investment Manager, certain of its affiliates (including Allianz Global Investors Distributors LLC, PEA Capital LLC and Allianz Global), agreed to settle, without admitting or denying the allegations, claims brought by the Securities and Exchange Commission (the Commission), the New Jersey Attorney General and the California Attorney General alleging violations of federal and state securities laws with respect to certain open-end funds for which the Investment Manager serves as investment adviser. Two settlements (with the Commission and New Jersey) related to an alleged “market timing arrangement in certain open-end funds sub-advised by PEA Capital LLC. Two settlements (with the Commission and California) related to the alleged use of cash and fund portfolio commissions to finance “shelf-space arrangements with broker-dealers for open-end funds. The Investment Manager and its affiliates agreed to pay a total of $68 million to settle the claims related to market timing and $20.6 million to settle the claims related to shelf space. In addition to monetary payments, the settling parties agreed to undertake certain corporate governance, compliance and disclosure reforms related to market timing, brokerage commissions, revenue sharing and shelf-space arrangements, and consented to cease and desist orders and censures. Subsequent to these events PEA Capital LLC deregistered and dissolved. None of the settlements alleged that any inappropriate activity took place with respect to the Funds.

Since February 2004, the Investment Manager, the Sub-Advisers and certain of their affiliates and their employees have been named as defendants in a number of pending lawsuits concerning “market timing and “revenue sharing/shelf-space/directed brokerage, which allege the same or similar conduct underlying the regulatory settlements discussed above. The market timing lawsuits have been consolidated in a multi-district litigation proceeding in the U.S. District Court for the District of Maryland and the revenue sharing/shelf-space/directed brokerage lawsuits have been consolidated in the U.S. District Court for the District of Connecticut. Any potential resolution of these matters may include, but not be limited to, judgments or settlements for damages against the Investment Manager or their affiliates or related injunctions.

The Investment Manager and the Sub-Advisers believe that these matters are not likely to have a material adverse effect on the Funds or on their ability to perform their respective investment advisory activities relating to the Funds.

The foregoing speaks only as of the date hereof.

NFJ Dividend, Interest & Premium Strategy Fund
| 7.31.07 |  
Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 21



NFJ Dividend, Interest & Premium Strategy Fund Financial Highlights
For a share outstanding throughout each period: 
Six Months For the Period
ended February 28, 2005*
July 31, 2007 Year ended through
(unaudited) January 31, 2007 January 31, 2006
Net asset value, beginning of period     $25.72       $24.18       $23.88 **
Investment Operations:                        
Net investment income     0.41       0.75       0.70  
Net realized and change in unrealized gain on investments,                        
   call options written and short sales     0.12       2.89       1.28  
Total from investment operations     0.53       3.64       1.98  
Dividends and Distributions to Shareholders from:                        
Net investment income     (0.46 )     (0.73 )     (0.65 )
Net realized gains     (0.59 )     (1.37 )     (1.00 )
Total dividends and distributions to shareholders     (1.05 )     (2.10 )     (1.65 )
Capital Share Transactions:                        
Offering costs charged to paid-in capital in excess of par                 (0.03 )
Net asset value, end of period     $25.20       $25.72       $24.18  
Market price, end of period     $23.77       $25.87       $22.20  
Total Investment Return (1)     (4.38 )%     27.15 %     (4.65 )%
RATIOS/SUPPLEMENTAL DATA:                        
Net assets, end of period (000)     $2,382,389       $2,431,595       $2,285,652  
Ratio of expenses to average net assets     0.96 %(2)     0.95 %     0.94 %(2)
Ratio of net investment income to average net assets     3.19 %(2)     3.08 %     3.27 %(2)
Portfolio turnover     43 %     69 %     97 %
* Commencement of operations.
** Initial public offering price of $25.00 per share less underwriting discount of $1.125 per share.
(1)      Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of each period and a sale of a share of common stock at the current market price on the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return for a period of less than one year is not annualized.
(2) Annualized.

 

 

 

 

   NFJ Dividend, Interest & Premium Strategy Fund
22 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 | See accompanying Notes to Financial Statements



Nicholas-Applegate Equity & Convertible Income Fund Financial Highlights
For a share outstanding for the period February 27, 2007* through July 31, 2007 (unaudited): 
Net asset value, beginning of period     $23.88 **
Investment Operations:        
Net investment income     0.35  
Net realized and unrealized gain on investments and call options written     0.82  
Total from investment operations     1.17  
Dividends and Distributions to Shareholders from:        
Net investment income     (0.26 )
Net realized gains     (0.30 )
Total dividends and distributions to shareholders     (0.56 )
Capital Share Transactions:        
Offering costs charged to paid-in capital in excess of par     (0.05 )
Net asset value, end of period     $24.44  
Market price, end of period     $23.47  
Total Investment Return (1)     (4.16 )%
RATIOS/SUPPLEMENTAL DATA:        
Net assets, end of period (000)     $545,024  
Ratio of expenses to average net assets     1.11 %(2)
Ratio of net investment income to average net assets     3.48 %(2)
Portfolio turnover     165 %
* Commencement of operations.
** Initial public offering price of $25.00 per share less underwriting discount of $1.125 per share.
(1)      Total investment return is calculated assuming a purchase of a share of common stock at the current market price on the first day of the period and a sale of a share of common stock at the current market price on the last day of the period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s dividend reinvestment plan. Total investment return does not reflect brokerage commissions or sales charges. Total investment return of a period of less than one year is not annualized.
(2) Annualized.

 

  NFJ Dividend, Interest & Premium Strategy Fund                                         
 See accompanying Notes to Financial Statements | 7.31.07 |   Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 23



NFJ Dividend, Interest & Premium Strategy Fund Annual Shareholder
July 31, 2007 (unaudited) Meeting Results 

The Fund held its annual meeting of shareholders on May 31, 2007. Shareholders voted to re-elect R. Peter Sullivan III and John J. Dalessandro II and elect William B. Ogden IV and John C. Maney as trustees as indicated below.

 

 

 

 

Withheld

 

 

Affirmative

 

Authority
Re-election of R. Peter Sullivan IIIClass II to serve until 2010   86,723,610   838,426
Re-election of John J. Dalessandro IIClass II to serve until 2010   86,674,255   887,781
Election of William B. Ogden IVClass I to serve until 2009   86,738,716   823,320
Election of John C. ManeyClass III to serve until 2008   86,738,396   823,640

Paul Belica, Robert E. Connor and Hans W. Kertess continue to serve as Trustees of the Fund.

Subsequent Dividend Declarations

On September 14, 2007 the following quarterly dividends were declared to shareholders, payable September 2, 2007 to shareholders of record on September 24, 2007:

NFJ Dividend, Interest & Premium Strategy   $ 0.525 per share
Nicholas-Applegate Equity & Convertible Income   $0.5625 per share

    NFJ Dividend, Interest & Premium Strategy Fund
24 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 | 



NFJ Dividend, Interest & Premium Strategy Fund Matters Relating to the
Trustees Consideration of the
Advisory & Sub-Advisory
Agreements
  (unaudited)

The Investment Company Act of 1940 requires that both the full Board of Trustees (the “Trustees) and a majority of the non-interested (“Independent) Trustees, voting separately, approve the Fund’s Management Agreement (the “Advisory Agreement) with the Investment Manager and Portfolio Management Agreements (the “Sub-Advisory Agreements, and together with the Advisory Agreements, the “Agreements) between the Investment Manager and the Sub-Advisers. The Trustees met on June 13, 2007 (the “contract review meeting) for the specific purpose of considering whether to approve the Advisory Agreement and the Sub-Advisory Agreements. The Independent Trustees were assisted in their evaluation of the Agreements by independent legal counsel, from whom they received separate legal advice and with whom they met separately from Fund management during the contract review meeting.

Based on their evaluation of factors that they deemed to be material, including those factors described below, the Board of Trustees, including a majority of the Independent Trustees, concluded that the Fund’s Advisory Agreement and the Sub-Advisory Agreements should be approved for a one-year period commencing July 1, 2007.

In connection with their deliberations regarding the continuation of the Agreements, the Trustees, including the Independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. As described below, the Trustees considered the nature, quality, and extent of the various investment management, administrative and other services performed by the Investment Manager and the Sub-Advisers under the Agreements.

In connection with their contract review meeting, the Trustees received and relied upon materials provided by the Investment Manager which included, among other items: (i) information provided by Lipper Analytical Services Inc. (“Lipper Inc.) on the total return investment performance (based on net assets) of the Fund for various time periods and the investment performance of a group of funds with substantially similar investment classifications/objectives identified by Lipper Inc., (ii) information provided by Lipper Inc. on the Fund’s management fees and other expenses and the management fees and other expenses of comparable funds identified by Lipper Inc., (iii) information regarding the investment performance and management fees of comparable portfolios of other clients of the Sub-Advisers, including institutional separate accounts and other clients, (iv) the profitability to the Investment Manager from its relationship with the Fund for the twelve months ended March 31, 2007, (v) descriptions of various functions performed by the Investment Manager and the Sub-Advisers for the Fund, such as portfolio management, compliance monitoring and portfolio trading practices, and (vi) information regarding the overall organization of the Investment Manager and the Sub-Advisers, including information regarding senior management, portfolio managers and other personnel providing investment management, administrative and other services to the Fund.

The Trustees’ conclusions as to the continuation of the Agreements were based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors.

As part of their review, the Trustees examined the Investment Manager’s and the Sub-Advisers’ abilities to provide high quality investment management and other services to the Fund. The Trustees considered the investment philosophy and research and decision-making processes of the Sub-Advisers; the experience of key advisory personnel of the Sub-Advisers responsible for portfolio management of the Fund; the ability of the Investment Manager and the Sub-Advisers to attract and retain capable personnel; the capability and integrity of the senior management and staff of the Investment Manager and the Sub-Advisers; and the level of skill required to manage the Fund. In addition, the Trustees reviewed the quality of the Investment Manager’s and the Sub-Advisers’ services with respect to regulatory compliance and compliance with the investment policies of the Fund; the nature and quality of certain administrative services the Investment Manager is responsible for providing to the Fund; and conditions that might affect the Investment Manager’s or the Sub-Advisers’ ability to provide high quality services to the Fund in the future under the Agreements, including each organization’s respective business reputation, financial condition and operational stability. Based on the foregoing, the Trustees concluded that the Sub-Advisers’ investment process, research capabilities and philosophy were well suited to the Fund given their investment objectives and policies, and that the Investment Manager and the Sub-Advisers would be able to continue to meet any reasonably foreseeable obligations under the Agreements.

  NFJ Dividend, Interest & Premium Strategy Fund
 | 7.31.07 |   Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 25



NFJ Dividend, Interest & Premium Strategy Fund Matters Relating to the
Trustees Consideration of the
Advisory & Sub-Advisory
Agreements

(unaudited) (continued)

Based on information provided by Lipper Inc., the Trustees also reviewed the Fund’s total return investment performance as well as the performance of comparable funds identified by Lipper Inc. In the course of their deliberations, the Trustees took into account information provided by the Investment Manager in connection with the contract review meeting, as well as during investment review meetings conducted with portfolio management personnel during the course of the year regarding the Fund’s performance.

In assessing the reasonableness of the Fund’s fees under the Agreements, the Trustees considered, among other information, the Fund’s management fee and the total expense ratio as a percentage of average net assets attributable to common shares and the management fee and total expense ratios of comparable funds identified by Lipper Inc.

The Trustees specifically took note of how the Fund compared to its Lipper Inc. peers as to performance and total expense ratio. The Trustees noted that while the Fund was not charged a separate administration fee, it was not clear whether the peer funds in the Lipper Inc. categories were charged such a fee by their investment managers. Thus, the Trustees, at the recommendation of the Investment Manager, considered the total expenses of the Fund compared to the total expenses of the peer funds, recognizing that the fees for management and administrative services would be subsumed within the total expense ratio.

The Trustees noted that the Fund had significantly outperformed its peer group’s median and low returns but had underperformed its peer group’s high returns for the one-year period ended March 31, 2007. The Trustees also noted that the Fund’s expense ratio was significantly below the high and median for its peer group and was above the low for its peer group.

After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding the Agreements, that they were satisfied with the Investment Manager’s and the Sub-Advisers’ responses and efforts relating to investment performance and the comparative positioning of the Fund with respect to the management fee paid to the Investment Manager.

The Trustees also considered the management fees charged by the Sub-Advisers to other clients, including institutional separate accounts with investment strategies similar to those of the Fund. Regarding the institutional separate accounts, they noted that the management fees paid by the Fund was generally higher than the fees paid by these other clients of the Sub-Advisers, but were advised that the administrative burden for the Investment Manager and the Sub-Advisers with respect to the Fund is also relatively higher, due in part to the more extensive regulatory regime to which the Fund was subject in comparison to institutional separate accounts. The Trustees noted that the management fees paid by the Fund was generally higher than the fees paid by the open-end funds but were advised that there are additional portfolio management challenges in managing the Fund, such as meeting a regular dividend.

Based on a profitability analysis provided by the Investment Manager, the Trustees also considered the profitability of the Investment Manager from its relationship with the Fund and determined that such profitability was not excessive.

The Trustees also took into account that, as closed-end investment companies, the Fund do not currently intend to raise additional assets, so the assets of the Fund will grow (if at all) only through the investment performance of the Fund. Therefore, the Trustees did not consider potential economies of scale as a principal factor in assessing the fee rates payable under the Agreements.

Additionally, the Trustees considered so-called “fall-out benefits to the Investment Manager and the Sub-Advisers, such as reputational value derived from serving as Investment Manager and Sub-Advisers to the Fund.

After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the Agreements, that the fees payable under the Agreements represent reasonable compensation in light of the nature and quality of the services being provided by the Investment Manager and Sub-Advisers to the Fund.

   NFJ Dividend, Interest & Premium Strategy Fund
26 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



Nicholas-Applegate Equity & Convertible Income Fund Matters Relating to the
  Trustees Consideration
  of the Advisory & Sub-
  Advisory Agreements
  (unaudited)

The Investment Company Act of 1940 requires that both the full Board of Trustees (the “Trustees) and a majority of the non-interested (“Independent) Trustees, voting separately, approve the Fund’s Management Agreement (the “Advisory Agreement) with Allianz Global Investors Fund Management LLC (the “Investment Manager); the Sub-Advisory Agreement (the “Sub-Advisory Agreement, and together with the Advisory Agreement, the “Agreements ) between the Investment Manager and Nicholas-Applegate Capital Management LLC (“NACM or the “Sub-Adviser). The Trustees met on February 20, 2007 (the “contract review meeting) for the specific purpose of considering whether to approve the Advisory Agreement and the Sub-Advisory Agreement. The Independent Trustees were assisted in their evaluation of the Agreements by independent legal counsel, from whom they received separate legal advice and with whom they met separately from Fund management during the contract review meeting.

Based on their evaluation of factors that they deemed to be material, including those factors described below, the Board of Trustees, including a majority of the Independent Trustees, concluded that the Fund’s Advisory Agreement and the Sub-Advisory Agreement should be approved.

In connection with their deliberations regarding the approval of the Agreements, the Trustees, including the Independent Trustees, considered such information and factors as they believed, in light of the legal advice furnished to them and their own business judgment, to be relevant. As described below, the Trustees considered the nature, quality, and extent of the various investment management, administrative and other services performed by the Investment Manager and the Sub-Adviser under the Agreements.

In connection with their contract review meeting, the Trustees received and relied upon materials provided by the Investment Manager which included, among other items: (i) information provided by Lipper Analytical Services Inc. (“Lipper Inc.) on the total return investment performance for various time periods and the investment performance of a group of funds with substantially similar investment classifications/objectives as the Fund identified by Lipper Inc., (ii) information on the management fees and other expenses of comparable funds identified by Lipper Inc., (iii) information regarding the investment performance and management fees of comparable portfolios of other clients of the Sub-Advisers, including institutional separate accounts and other clients, (iv) an estimate of the profitability to the Investment Manager and the Sub-Adviser from their relationship with the Fund (v) descriptions of various functions performed by the Investment Manager and the Sub-Adviser for the Fund, such as portfolio management, compliance monitoring and portfolio trading practices, and (vi) information regarding the overall organization of the Investment Manager and the Sub-Adviser, including information regarding senior management, portfolio managers and other personnel providing investment management, administrative and other services to the Fund.

The Trustees’ conclusions as to the approval of the Agreements were based on a comprehensive consideration of all information provided to the Trustees and not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations are described below, although individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors.

As part of their review, the Trustees examined the Investment Manager’s and the Sub-Adviser’s abilities to provide high quality investment management and other services to the Fund. The Trustees considered the investment philosophy and research and decision-making processes of the Sub-Adviser; the experience of key advisory personnel of the Sub-Adviser responsible for portfolio management of the Fund; the ability of the Investment Manager and the Sub-Adviser to attract and retain capable personnel; the capability and integrity of the senior management and staff of the Investment Manager and the Sub-Adviser; and the level of skill required to manage the Fund. In addition, the Trustees reviewed the quality of the Investment Manager’s and the Sub-Adviser’s services with respect to regulatory compliance and compliance with the investment policies of the Fund; the nature and quality of certain administrative services the Investment Manager is responsible for providing to the Fund; and conditions that might affect the Investment Manager’s or the Sub-Adviser’s ability to provide high quality services to the Fund in the future under the Agreements, including each organization’s respective business reputation, financial condition and operational stability. Based on the foregoing, the Trustees concluded that the Sub-Adviser’s investment process, research capabilities and philosophy were well suited to the Fund given their investment objectives and policies, and that the Investment Manager and the Sub-Adviser would be able to continue to meet any reasonably foreseeable obligations under the Agreements.

  NFJ Dividend, Interest & Premium Strategy Fund
| 7.31.07 |   Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report 27



Nicholas-Applegate Equity & Convertible Income Fund Matters Relating to the
  Trustees Consideration
  of the Advisory & Sub-
  Advisory Agreements
  (unaudited) (continued)

In assessing the reasonableness of the Fund’s fees under the Agreements, the Trustees considered, among other information, the Fund’s management fee and the total expense ratio as a percentage of average daily total managed assets and the total expense ratios of comparable funds identified by Lipper Inc.

For the Fund, the Trustees specifically took note of how the Fund compared to its Lipper Inc. peers as to the total expense ratio. The Trustees noted that while the Fund was not charged a separate administration fee, it was not clear whether the peer funds in the Lipper Inc. categories were charged such a fee by their investment managers. Thus, the Trustees, at the recommendation of the Investment Manager, considered the total expense ratio of the Fund compared to the total expenses of the peer funds, recognizing that the fees for management, administrative services and non-management fee would be subsumed within the total expense ratio.

The Trustees also considered the management fees charged by the Sub-Adviser to other clients, including institutional separate accounts with investment strategies similar to those of the Fund. Regarding the institutional separate accounts, they noted that the management fees paid by the Fund was generally higher than the fees paid by these other clients of the Sub-Adviser, but were advised that the administrative burden for the Investment Manager and the Sub-Adviser with respect to the Fund was also relatively higher, due in part to the more extensive regulatory regime to which the Fund was subject in comparison to institutional separate accounts. The Trustees noted that the management fees paid by the Fund was generally higher than the fees paid by the open-end funds but were advised that there are additional portfolio management challenges in managing the Fund, such as meeting a regular dividend.

Based on the profitability analysis provided by the Investment Manager, the Trustees also considered the estimate of the profitability of the Investment Manager and the Sub-Adviser from their relationship with the Fund and determined that such profitability was not excessive.

The Trustees also took into account that, a closed-end investment company, the Fund does not currently intend to raise additional assets, so the assets of the Fund will grow (if at all) only through investment performance. Therefore, the Trustees did not consider potential economies of scale as a principal factor in assessing the fee rates payable under the Agreements.

Additionally, the Trustees considered so-called “fall-out benefits to the Investment Manager and the Sub-Advisers, such as reputational value derived from serving as Investment Manager and Sub-Advisers to the Fund.

After reviewing these and other factors described herein, the Trustees concluded, within the context of their overall conclusions regarding the Agreements, that the fees payable under the Agreements represent reasonable compensation in light of the nature and quality of the services being provided by the Investment Manager and Sub-Advisers to the Fund.

    NFJ Dividend, Interest & Premium Strategy Fund
28 Nicholas-Applegate Equity & Convertible Income Fund Semi-Annual Report | 7.31.07 |



Trustees and Principal Officers

Hans W. Kertess   Brian S. Shlissel
   Trustee, Chairman of the Board of Trustees      President & Chief Executive Officer
Paul Belica   Lawrence G. Altadonna
   Trustee      Treasurer, Principal Financial & Accounting Officer
Robert E. Connor   Thomas J. Fuccillo
   Trustee      Vice President, Secretary & Chief Legal Officer
John J. Dalessandro II   Scott Whisten
   Trustee      Assistant Treasurer
John C. Maney   Youse E. Guia
   Trustee      Chief Compliance Officer
William B. Ogden IV   Kathleen A. Chapman
   Trustee      Assistant Secretary
R. Peter Sullivan III   William V. Healey
   Trustee      Assistant Secretary
    Richard H. Kirk
       Assistant Secretary
    Lagan Srivastava
       Assistant Secretary

Investment Manager
Allianz Global Investors Fund Management LLC
1345 Avenue of the Americas
New York, NY 10105

Sub-Advisers
NFJ Investment Group L.P.
2100 Ross Avenue, Suite 1840
Dallas, Texas 75201

Nicholas-Applegate Capital Management LLC
600 West Broadway, 30th Floor
San Diego, California 92101

Oppenheimer Capital LLC
1345 Avenue of the Americas
New York, New York 10105

Custodian & Accounting Agent
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109

Transfer Agent, Dividend Paying Agent and Registrar
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027

Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017

Legal Counsel
Ropes & Gray LLP
One International Plac
Boston, MA 02210-2624

This report, including the financial information herein, is transmitted to the shareholders of NFJ Dividend, Interest & Premium Strategy Fund and Nicholas-Applegate Equity & Convertible Fund for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Funds or any securities mentioned in this report.

The financial information included herein is taken from the records of the Funds without examination by an independent registered public accounting firm, who did not express an opinion hereon.

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that from time to time the Funds may purchase shares of its common stock in the open market.

The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of its fiscal year on Form N-Q. The Funds Form N-Q is available on the SECs website at www.sec.gov and may be reviewed and copied at the SECs Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The information on Form N-Q is also available on the Funds website at www.allianzinvestors.com/closedendfunds.

On January 18, 2007, and on June 15, 2007, Nicholas-Applegate Equity & Convertible Fund and NFJ Dividend, Interest & Premium Strategy Fund respectively, submitted a CEO annual certification to the New York Stock Exchange (NYSE) on which the Funds principal executive officer certified that he was not aware, as of the date, of any violation by the Fund of the NYSEs Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Funds principal executive and principal financial officer made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q relating to, among other things, the Funds disclosure controls and procedures and internal control over financial reporting, as applicable.

Information on the Funds is available at www.allianzinvestors.com/closedendfunds or by calling the Funds shareholder servicing agent at (800) 331-1710.



 



ITEM 2. CODE OF ETHICS

               Not required in this filing.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

               Not required in this filing.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

               Not required in this filing.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANT

               Not required in this filing.

ITEM 6. SCHEDULE OF INVESTMENTS Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this form.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END MANAGEMENT INVESTMENT COMPANIES.

               Not required in this filing.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED END MANAGEMENT INVESTMENT COMPANIES

               Not required in this filing.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED COMPANIES

               None

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board of Trustees since the Fund last provided disclosure in response to this item.

ITEM 11. CONTROLS AND PROCEDURES

(a) The registrant’s President and Chief Executive Officer and Principal Financial Officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR 270.3a-3(c)), as amended are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.

(b) There were no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(c)) under the Act (17 CFR 270.3a-3(d)) that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

ITEM 12. EXHIBITS

(a) (1) Exhibit 99 Cert. - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(b) Exhibit 99.906 Cert. - Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


Signature

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) NFJ Dividend, Interest &
                      Premium Strategy Fund               

By /s/ Brian S. Shlissel
President and Chief Executive Officer

Date October 9, 2007

By /s/ Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer

Date October 9, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By /s/ Brian S. Shlissel
President and Chief Executive Officer

Date October 9, 2007

By /s/ Lawrence G. Altadonna
Treasurer, Principal Financial & Accounting Officer

Date October 9, 2007