<PAGE>
As filed with the Securities and Exchange Commission on
January 29, 1997
Registration Nos. 2-91889
811-4060
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. / /
----
Post-Effective Amendment No. 20 / X /
----
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / X /
Amendment No. 21 / X /
----
CASH ACCUMULATION TRUST
(Exact Name of Registrant as Specified in Charter)
840 Newport Center Drive
Newport Beach, CA 92660
(Address of principal executive offices)
(203) 352-4990
(Registrant's telephone number, including area code)
Name and address
of agent for service Copy to
- -------------------- -------
Newton B. Schott, Jr., Esq. Douglass N. Ellis, Jr., Esq.
2187 Atlantic Street Ropes & Gray
Stamford, Connecticut 06902 One International Place
Boston, Massachusetts 02110
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ X / on February 1, 1997 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Pursuant to Rule 24f-2(a) under the Investment Company Act of 1940,
the Registrant has registered an indefinite number or amount of its shares of
beneficial interest under the Securities Act of 1933. The Registrant filed a
Rule 24f-2 Notice with respect to the Registrant's fiscal year ended September
30, 1996 on November 27, 1996.
-2-
<PAGE>
CASH ACCUMULATION TRUST
NATIONAL MONEY MARKET FUND
CROSS REFERENCE SHEET
Part A: Information Required
in a Prospectus Prospectus Caption
--------------- ------------------
1. . . . . . . . . . . . . . . . Cover Page
2. . . . . . . . . . . . . . . . Schedule of Fees
3. . . . . . . . . . . . . . . . Financial Highlights
4. . . . . . . . . . . . . . . . Investment Objective and Policies
General Policies; Net Asset Value;
Yields; Description of Trust
5. . . . . . . . . . . . . . . . Manager of the Fund; Distributor and
Distribution Plan; Schedule of Fees;
Back Cover
6. . . . . . . . . . . . . . . . Description of the Trust;
Dividends; Taxes
7. . . . . . . . . . . . . . . . Investment Objective and Policies;
How to Buy Shares; Distributor and
Distribution Plan; Net Asset Value
8. . . . . . . . . . . . . . . . How to Redeem
9. . . . . . . . . . . . . . . . None
-3-
<PAGE>
Part B: Information Required
in a Statement of Statement of Additional
Additional Information Information Caption
---------------------- -------------------
10. . . . . . . . . . . . . . . . Cover Page
11. . . . . . . . . . . . . . . . Table of Contents
12. . . . . . . . . . . . . . . . Not Applicable
13. . . . . . . . . . . . . . . . Investment Objectives, Policies
and Restrictions; Credit and
Market Risk
14. . . . . . . . . . . . . . . . Management of the Fund
15. . . . . . . . . . . . . . . . Management of the Fund
16. . . . . . . . . . . . . . . . Investment Advisory and Other
Services
17. . . . . . . . . . . . . . . . Portfolio Transactions and
Brokerage
18. . . . . . . . . . . . . . . . Organization and Capitalization
of the Trust
19. . . . . . . . . . . . . . . . Net Income, Yields and Valuation;
Redemptions
20. . . . . . . . . . . . . . . . Taxes
21. . . . . . . . . . . . . . . . Investment Advisory and Other
Services
22. . . . . . . . . . . . . . . . Net Income, Yields and Valuation
23. . . . . . . . . . . . . . . . Financial Statements
-4-
<PAGE>
NATIONAL MONEY MARKET FUND
CASH ACCUMULATION TRUST
840 NEWPORT CENTER DRIVE
NEWPORT BEACH, CA 92660
(203) 352-4990
PROSPECTUS
FEBRUARY 1, 1997
The National Money Market Fund (the "Fund") is an open-end, diversified
management investment company organized as a series of Cash Accumulation Trust
(the "Trust"). The Fund's investment objective is current income to the extent
consistent with preservation of capital and liquidity. As a money market fund,
the Fund seeks to achieve its objective by investing in a variety of high
quality "money market" instruments.
Shares of the Fund are offered without a sales charge at net asset value.
INVESTMENTS IN THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus concisely presents the information which investors ought to
know before investing. Please read this Prospectus carefully and keep it for
further reference.
A Statement of Additional Information (the "SAI") dated February 1, 1997, as
amended or supplemented from time to time, is available free of charge by
writing to PIMCO Funds Distribution Company, 2187 Atlantic Street, Stamford,
Connecticut 06902, or by telephoning (800) 628-1237. The SAI, which contains
more detailed information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Schedule of Fees....................... 2
Financial Highlights................... 2
Investment Objective and Policies...... 3
General Policies....................... 4
Net Asset Value........................ 5
Yields................................. 5
How to Buy Shares...................... 5
<CAPTION>
PAGE
---
<S> <C>
How to Redeem.......................... 7
Manager of the Fund.................... 11
Distributor and Distribution Plan...... 12
Dividends.............................. 12
Taxes.................................. 12
Description of the Trust............... 13
Custodian.............................. 13
</TABLE>
<PAGE>
SCHEDULE OF FEES
<TABLE>
<CAPTION>
ANNUAL FUND EXAMPLE: YOU WOULD PAY THE
OPERATING EXPENSES FOLLOWING EXPENSES ON A $1,000
(AS A PERCENTAGE OF AVERAGE NET ASSETS) INVESTMENT ASSUMING (1) 5% ANNUAL
---------------------------------------------- RETURN AND (2) REDEMPTION AT THE
END OF EACH TIME PERIOD:
TOTAL ----------------------------------
FUND
MANAGEMENT OTHER OPERATING 3 5 10
FEES 12b-1 FEES EXPENSES EXPENSES 1 YEAR YEARS YEARS YEARS
---------- ---------- -------- --------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
National Money Market
Fund.................. .42% .10% .17% .69% $ 7 $ 22 $ 38 $ 86
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses of the Fund that are borne directly or indirectly by
shareholders. Annual Fund Operating Expenses are based on the Fund's actual
expenses during the fiscal year ended September 30, 1996 and the Fund's average
net assets during such fiscal year. NOTE: THE FIGURES SHOWN IN THE EXAMPLE ARE
ENTIRELY HYPOTHETICAL. THEY ARE NOT REPRESENTATIONS OF PAST OR FUTURE
PERFORMANCE OR EXPENSES. ACTUAL PERFORMANCE AND/OR EXPENSES MAY BE MORE OR LESS
THAN SHOWN.
FINANCIAL HIGHLIGHTS
The following information for the five years ended September 30, 1996 has
been audited by the former independent accountants for the National Money Market
Fund for the periods listed, whose report thereon is included in the SAI.
Financial Statements and related Notes are also included in the SAI.
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
----- ----- ----- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of
period....................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations -- net investment
income....................... .05 .05 .03 .02 .04 .06 .08 .09 .07 .06
Dividends to shareholders..... (.05) (.05) (.03) (.02) (.04) (.06) (.08) (.09) (.07) (.06)
----- ----- ----- ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period....................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ------ ------ ------ ------ ------ ------ ------
----- ----- ----- ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN 5.0% 5.2% 3.2% 2.3% 3.7% 6.2% 7.8% 8.6% 6.8% 5.7%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period
(in millions)................ $652 $685 $823 $652 $2,286 $2,523 $2,217 $2,438 $2,034 $1,925
Ratios to average net assets:
Net investment income......... 4.86% 5.15% 3.20% 2.26% 3.70% 6.17% 7.75% 8.64% 6.77% 5.77%
Expenses...................... .69% .69% .61% .71% .74% .74% .73% .71% .73% .74%
</TABLE>
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to achieve its objective of current income to the extent
consistent with preservation of capital and liquidity through investment in the
different types of securities described below.
The Fund invests in a variety of "money market" instruments rated in the two
highest rating categories by at least two major rating agencies (or by one major
rating agency, if only one major agency has issued a rating) or unrated but
considered by the Fund's manager to be of comparable quality. These instruments
include:
- Prime commercial paper and master demand
notes.
- Short-term U.S. Government Securities -- "U.S.
Government Securities" are issued or guaranteed by the United States
Government or its agencies, authorities or instrumentalities. Some are
backed by the full faith and credit of the U.S. Treasury (e.g., Treasury
Bills and obligations of the Small Business Administration) while others are
not backed by the full faith and credit of the U.S. Government, but instead
are backed only by the credit instrumentality, or by the discretionary
authority of the U.S. Government to purchase the issuing entity's
obligations. Agencies or instrumentalities whose obligations are not backed
by the full faith and credit of the U.S. Government include, among others,
the Federal Home Loan Mortgage Corporation, Federal Home Loan Banks, the
Federal National Mortgage Association, the Tennessee Valley Authority and
the Bank for Cooperatives.
- Short-term corporate debt securities.
- Short-term debt securities that are backed by
pools of commercial or consumer finance loans.
- Certificates of deposit, bankers' acceptances and
other bank obligations (when and if such other bank obligations become
available in the future) -- the obligations must be those issued by a bank
having total assets of at least $2 billion as of the date of the bank's most
recently published financials. In addition to the foregoing, the Fund may
also invest in certificates of deposit of $100,000 or less of domestic banks
and savings and loan associations, regardless of total assets, if the
certificates of deposit are fully insured as to principal by the Federal
Deposit Insurance Corporation. If the principal amount of a certificate of
deposit plus accrued interest exceeds $100,000, then the excess will not be
so insured.
The Fund may invest up to 100% of its assets in obligations issued by
banks. If the bank is a domestic bank, it must be a member of the Federal
Deposit Insurance Corporation. This does not prevent the Fund from investing
in obligations issued by foreign branches of domestic banks and there is
currently no limit on the portion of the Fund's assets that may be invested
in these obligations. If the bank is foreign, the obligation must be issued
by a domestic branch or domestic subsidiary and the obligation must, in the
opinion of the Fund's manager, be of a quality comparable to the other debt
securities which may be purchased by the Fund. There are special risks
associated with investments in such foreign bank obligations, including the
risks associated with foreign political, economic and legal developments
(see below) and the fact that foreign banks may not be subject to regulatory
requirements the same as or similar to those that apply to domestic banks.
- Other money market instruments.
The Fund may invest some or all of its assets in any of the foregoing money
market instruments, depending upon its manager's view of market and broader
economic conditions.
The Fund may purchase any of the foregoing money market instruments through
firm commitment arrangements with domestic commercial banks and registered
broker-dealers and may enter into repurchase agreements with domestic commercial
banks and registered broker-dealers with respect to any of the foregoing
3
<PAGE>
money market instruments, longer term U.S. Government Securities or corporate
debt securities rated in the highest rating category by at least two major
rating agencies (or by one major agency, if only one has issued a rating). The
Fund will only enter into firm commitment arrangements and repurchase agreements
with banks and broker-dealers which the Fund's manager determines present
minimal credit risks.
The Fund may invest in foreign securities denominated in U.S. dollars, which
may be subject to risks of foreign political, economic and legal developments.
These investments are also considered to be riskier than U.S. investments
because there may not be as much publicly available information about the
issuers. Those issuers may also have different auditing and financial reporting
standards and their securities may be less liquid and more volatile than
comparable U.S. securities. The Fund will invest in these securities only when
the Fund's manager believes the risks are minimal.
Federal law limits the portion of the Fund's assets that may be invested in
instruments that are not rated in the highest rating category (or that are
unrated but determined to be of comparable quality by the Fund's manager).
GENERAL POLICIES
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with banks and broker dealers.
These are agreements by which the Fund acquires a security (usually a U.S.
Government Security) for cash and obtains a simultaneous commitment from the
seller to repurchase the security at an agreed upon price and date. The resale
price is in excess of the acquisition price and reflects an agreed-upon market
rate unrelated to the coupon rate on the purchased security. Repurchase
agreements will provide that the value of the underlying security will always be
greater than or equal to the repurchase price. Such transactions afford an
opportunity for the Fund to earn a return on temporarily available cash at no
market risk, although there is a risk that the seller may default on its
obligation to pay the agreed-upon sum on the redelivery date. Such a default may
subject the Fund to expenses, delays and risks of loss. While the underlying
security in a repurchase agreement transaction may mature in more than 397
calendar days, the repurchase agreements themselves usually run for less than
seven days and the Fund will not, without shareholder approval, enter into a
repurchase agreement if as a result more than 10% of the Fund's net assets would
be invested in "illiquid securities." The staff of the Securities and Exchange
Commission is currently of the view that repurchase agreements maturing in seven
days or more are illiquid securities.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities to broker-dealers under contracts
calling for collateral in U.S. Government Securities or cash equal to at least
the market value of the securities loaned. The Fund will continue to benefit
from interest on the securities loaned and will also receive either interest,
through investment of cash collateral in the Fund's permissible investments, or
lending fees, if the collateral is U.S. Government Securities. The Fund would
normally pay lending fees to the lending broker-dealer. Any voting rights, or
rights to consent, relating to securities loaned pass to the borrower. However,
if a material event affecting the investment occurs, such loans will be called
so that the securities may be voted by the Fund.
MATURITIES OF PORTFOLIO SECURITIES
All of the Fund's investments will, at the time of investment, have remaining
maturities of 397 calendar days or less and the dollar-weighted average maturity
of the Fund's portfolio securities will not exceed 90 days. When the Fund has
purchased a security subject to a repurchase agreement, the amount and maturity
of the investment will be determined by reference to the amount and term of the
repurchase agreement rather than of the underlying security. In the case of
certain variable or floating rate instruments or instruments subject to certain
demand or put arrangements, the maturity of the instrument will be determined by
reference to the time remaining until the next readjustment of the interest rate
or until the principal amount can be recovered through exercise of the demand or
put right. The stated maturity of such securities may be greater
4
<PAGE>
than 397 calendar days. If the disposition of a portfolio security results in a
dollar-weighted average portfolio maturity in excess of 90 days, the Fund will
invest its available cash in such a manner as to reduce its dollar-weighted
average maturity to 90 days or less as soon as reasonably practicable.
CHANGES IN RATINGS
In determining whether a security is a suitable investment for the Fund,
reference will be made to the quality of the security, including its rating, at
the time of purchase. The Fund may or may not dispose of a portfolio security as
a result of a change in the security's rating, depending on an evaluation of the
security in light of the Fund's investment objective and policies.
CREDIT RISK
All investments of the Fund will be in instruments that the Fund's manager,
acting under standards established by the Trust's Trustees, determines present
minimal credit risk at time of acquisition. Neither this determination nor the
ratings assigned by rating agencies constitute an assurance against default by
the issuers of instruments held by the Fund. For a description of rating agency
rating categories, see the SAI.
FUNDAMENTAL POLICIES
The investment objective of the Fund set forth in the second sentence on the
front page of this Prospectus is fundamental and may not be changed without
shareholder approval. Except as otherwise indicated, the investment policies of
the Fund are not fundamental and may be changed without shareholder approval.
NET ASSET VALUE
Normally, the Fund will value its portfolio securities by using the "amortized
cost" method of valuation. This means that the net asset value of the Fund's
shares will be unaffected by minor shifts in the market value of its portfolio
securities, even though the market value of its portfolio may change as a result
of variations in the level of prevailing interest rates and yield relationships.
The Trustees of the Trust will consider what action, if any, should be taken to
maintain the net asset value per share of the Fund at $1, including the pro rata
increase or decrease of the number of shares of the Fund held in each
shareholder's account. There can be no assurance that a net asset value of $1
per share will be maintained at all times. The Fund will value its shares once
on each day the New York Stock Exchange (the "Exchange") is open, as of the
close of regular trading on the Exchange.
YIELDS
Considerations of liquidity, safety and preservation of capital mean that the
Fund may not necessarily invest in money market instruments paying the highest
available yield at any particular time. Shareholders comparing the Fund's yield
with those of alternative investments (such as savings accounts, various types
of bank deposits and other money market funds) should consider such things as
liquidity, minimum balance requirements, penalties for early withdrawal and the
impact of taxes on alternative types of investments.
Yield information may be useful in reviewing the Fund's performance and
providing a basis for comparison with other investment alternatives. However,
unlike bank deposits or other investments which pay a fixed yield for a stated
period of time, money market fund yields fluctuate.
The Fund may advertise its Yield and its Effective Yield. The Yield of the
Fund is based upon the income earned by the Fund over a seven-day period and
then annualized, i.e., the income earned in the period is assumed to be earned
every seven days over a 52-week period and stated as a percentage of the
investment. Effective Yield is calculated similarly but, when annualized, the
income earned by the investment is assumed to be reinvested in Fund shares and
thus compounded in the course of a 52-week period. Effective Yield will be
higher than Yield because of the compounding effect of this assumed
reinvestment.
HOW TO BUY SHARES
Shares of the Fund are continuously offered through PIMCO Funds Distribution
Company (the "Distributor"), the Fund's principal underwriter, and through other
firms which are members of the National Association of Securities Dealers, Inc.
and which have dealer
5
<PAGE>
agreements with the Distributor ("participating brokers") or which have agreed
to act as introducing brokers for the Distributor ("introducing brokers").
Shares of the Fund are offered for sale at the net asset value next determined
after receipt by the Fund of an order in proper form. The Fund seeks to maintain
the net asset value of the Fund at a constant $1 per share. There is no sales
charge to the investor, although Fund assets are used to pay some of the costs
of distributing Fund shares.
There are two ways to purchase shares: either (1) through your dealer or
broker which has a dealer agreement or (2) directly by mailing an Account
Application with payment, as described below under the heading "Direct
Investment," to the Distributor (if no dealer is named in the application, the
Distributor may act as dealer).
The minimum initial investment is $1,000 and the minimum additional investment
is $100, except that lower minimums may apply to purchases through the CAT
Auto-Invest plan described below, and higher minimums may apply for purchases
through certain brokers.
INVESTMENTS THROUGH YOUR BROKER
Brokerage firms provide varying arrangements for their clients to purchase and
redeem Fund shares. For information about your brokerage firm's arrangements,
including information about procedures for forwarding purchase and redemption
orders to the Fund and crediting dividends to your account, contact your broker.
Some firms may establish higher minimum investment requirements than set forth
above. Firms may arrange with their clients for other investment or
administrative services. Such firms may independently establish and charge
additional amounts to their clients for such services, which charges would
reduce their clients' return. Firms will ordinarily hold Fund shares in nominee
or street name as agent for and on behalf of their customers. In such instances,
the Fund's transfer agent (the "Transfer Agent") will have no information with
respect to or control over accounts of specific shareholders. Such shareholders
may obtain access to their accounts and information about their accounts only
from their broker. In addition, certain privileges with respect to the purchase
and redemption of shares or the reinvestment of dividends may not be available
through such firms. Some firms may participate in a program allowing them access
to their clients' accounts for servicing including, without limitation,
transfers of registration and dividend payee changes, and may perform functions
such as generation of confirmation statements and disbursements of cash
dividends. This Prospectus should be read in connection with such firms'
material regarding their fees and services.
DIRECT INVESTMENT
Investors who wish to invest in the Fund directly, rather than through a
participating broker, may do so by opening an account through the Distributor.
To open an account, an investor should complete the Account Application, which
can be obtained by calling (800) 628-1237 or by writing to the Distributor at
2187 Atlantic Street, Stamford, CT 06902. All shareholders who open direct
accounts through the Distributor will receive from the Distributor individual
confirmations of each purchase, redemption, dividend reinvestment or transfer of
Fund shares, including the total number of Fund shares owned as of the
confirmation date. Information regarding direct investment or any other features
or plans offered by the Fund may be obtained by calling the Transfer Agent at
(800) 426-0107.
PURCHASES BY MAIL. Investors who wish to invest directly may send a check
payable to PIMCO Funds Distribution Company along with a completed Account
Application to:
PIMCO Funds Distribution Company
c/o Shareholder Services, Inc.
P.O. Box 5866
Denver, Colorado 80217-5866
Purchases are accepted subject to collection of checks at full value and
conversion into federal funds. Payment by a check drawn on any bank that is a
member of the Federal Reserve System can normally be converted into federal
funds within two business days after receipt of the check. Checks drawn on a
non-member bank may take up to 15 days to convert into federal funds.
6
<PAGE>
SUBSEQUENT PURCHASES BY MAIL. Subsequent direct purchases can be made as
indicated above by mailing a check with (1) a letter specifying the amount of
the investment and the shareholder's name and account number or (2) the
additional investment portion of a confirmation statement. Except for the CAT
Auto-Invest plan, the minimum subsequent direct purchase is $100. All payments
should be made payable to PIMCO Funds Distribution Company. Checks should be
mailed to the address above under "Purchases by Mail."
CHANGES IN ACCOUNT REGISTRATION. For an account maintained through the
Distributor (rather than a participating broker), changes in registration
information or account privileges may be made by writing to the Transfer Agent,
Shareholder Services, Inc., P.O. Box 5866, Denver, Colorado 80217-5866, or by
use of forms which are available from the Distributor. A signature guarantee is
required. See "Signature Guarantee" under "How to Redeem."
ALL PURCHASES
A purchase order does not become effective until the custodian has federal
funds immediately available to it, whether by direct wire or conversion of other
forms of payment, prior to the close of regular trading on the Exchange on days
the Exchange is open (generally, weekdays other than normal holidays). Orders
received in good order by the Fund or its agents prior to the close of regular
trading on the Exchange (normally 4:00 p.m. Eastern time) will be executed at
the net asset value calculated at the close of regular trading on that day and
begin to earn dividends on the next day, except that orders received in good
order and accompanied by full payment in federal funds (or converted into
federal funds before the close of regular trading on the Exchange) will begin to
earn dividends on the day the order is received. The Distributor will promptly
forward orders received by it for shares of the Fund. Participating brokers are
responsible for forwarding their customers' orders. The Distributor and the Fund
are not responsible for any delay by your broker in forwarding an order to the
Fund. The Fund and the Distributor reserve the right to reject any purchase
order for any reason.
CAT AUTO-INVEST
The CAT Auto-Invest plan provides for periodic investments into the
shareholder's account with the Fund by means of automatic transfers of a
designated amount from the shareholder's bank account. Investments may be made
monthly or quarterly, and may be in any amount subject to a minimum of $50 per
month. Further information regarding the CAT Auto-Invest plan is available from
the Distributor or participating brokers. You may enroll by completing the
appropriate section on the Supplemental Application, which is available by
calling (800) 628-1237.
HOW TO REDEEM
Shareholders may withdraw all or any portion of their investments in the Fund
by redeeming shares at the Fund's net asset value, which the Fund seeks to
maintain at $1 per share. Shareholders may redeem shares of the Fund on any day
that the Exchange is open for business.
ACCOUNTS MAINTAINED WITH A BROKER
If your account is maintained with a participating broker, you may redeem by
submitting a written withdrawal request to your broker. For the convenience of
their customers, participating brokers may also offer checkwriting, debit card
and telephone redemption services, and may charge fees for these services. For
more information, contact your participating broker.
ACCOUNTS MAINTAINED THROUGH THE DISTRIBUTOR
If you maintain your account directly through the Distributor (rather than
through a participating broker), you may redeem shares from your account (1) by
submitting a written redemption request directly to the Transfer Agent, (2) by
telephone redemption (unless you have elected in writing not to utilize this
option), (3) through an Automatic Withdrawal Plan or (4) through the
checkwriting privilege. Your original Account Application permits you to redeem
by written request and to elect one or more of the additional redemption
procedures described below. You may change the instructions indicated on your
original Account Application, or may request additional redemption options, only
by transmitting written directions to
7
<PAGE>
the Transfer Agent. Requests to institute or change any of the additional
redemption procedures will require a signature guarantee. Redemption proceeds
will normally be mailed to the redeeming shareholder within one business day
after receipt of the redemption request in good order by the Fund's agent,
except where those shares have recently been purchased by personal check.
WRITTEN REQUESTS. To redeem shares in writing (whether or not represented by
certificates), send the following items to the Transfer Agent, Shareholder
Services, Inc., P.O. Box 5866, Denver, Colorado 80217-5866: (1) a written
request for redemption signed by all registered owners exactly as the account is
registered on the Transfer Agent's records, including fiduciary titles, if any,
and specifying the account number, the dollar amount or number of shares to be
redeemed and the name of the Fund; (2) a guarantee of all signatures on the
written request or on the share certificate or accompanying stock power, as
described below under "Signature Guarantee"; (3) any share certificates issued
for any of the shares to be redeemed (see "Certificated Shares" below); and (4)
any additional documents which may be required by the Transfer Agent for
redemption by corporations, partnerships or other organizations, executors,
administrators, trustees, custodians or guardians, or if the redemption is
requested by anyone other than the shareholder(s) of record. Transfers of shares
are subject to the same requirements. A signature guarantee is not required for
redemptions of $50,000 or less, requested by and payable to all shareholders of
record for the account, to be sent to the address of record for that account. To
avoid delay in redemption or transfer, shareholders having any questions about
these requirements should contact the Transfer Agent in writing or by calling
(800) 426-0107 before submitting a request. Redemption or transfer requests will
not be honored until all required documents in the proper form have been
received by the Transfer Agent.
TELEPHONE REDEMPTIONS. The Fund accepts telephone requests for redemption of
uncertificated shares for amounts up to $50,000 from shareholders who maintain
their account through the Distributor. (Telephone redemptions are not available
for shareholders who have elected in writing not to utilize this option.) The
proceeds of a telephone redemption will be sent to the shareholder at his
address as set forth in the Account Application or in a subsequent written
authorization with a signature guarantee. By completing an Account Application,
an investor agrees that the Fund shall not be liable for any loss incurred by
the investor by reason of the Fund accepting unauthorized telephone redemption
requests for his account if the Fund reasonably believes the request is genuine,
unless the investor has specifically elected in writing not to utilize the
telephone redemption service. Thus, shareholders risk possible losses in the
event of a telephone redemption not authorized by them. The Fund will employ
reasonable procedures to confirm that shareholders' telephone instructions are
genuine, and, if it does not, it may be liable for any losses due to
unauthorized or fraudulent instructions. The Fund will require a form of
personal identification prior to acting upon telephone instructions, will
provide written confirmations of such transactions and will record shareholders'
instructions.
A shareholder making a telephone redemption should call the Transfer Agent at
(800) 426-0107 and state (i) the name of the shareholder as it appears on the
Transfer Agent's records, (ii) his or her account number with the Fund, (iii)
the amount to be withdrawn and (iv) the name of the person requesting the
redemption. Usually the proceeds are sent to the investor on the next Fund
business day after the redemption is effected. If the redemption request is
received after the closing of the Exchange, the redemption is effected on the
following Fund business day at that day's net asset value and the proceeds are
usually sent to the investor on the second Fund business day following receipt
of the request. The Fund reserves the right to terminate or modify the telephone
redemption service at any time. During times of severe disruptions in the
securities markets, the volume of calls may make it difficult to redeem by
telephone, in which case a shareholder may wish to send a written request for
redemption as described under "Written Requests" above. Telephone communications
may be recorded by the Distributor or the Transfer Agent.
8
<PAGE>
CHECKWRITING PRIVILEGE. Shareholders who maintain their accounts through the
Distributor may withdraw money from their accounts by writing checks. Checks are
drawn on First National Bank of Boston.
To establish checkwriting privileges, complete the appropriate portion of the
Account Application, and request a special checkwriting application from the
Distributor by calling (800) 628-1237. Mail the completed applications to
Shareholder Services, Inc., P.O. Box 5866, Denver, CO 80217. A checkbook will
then be issued to you. The minimum amount of any check is $250. The checkwriting
privilege does not apply to certificated shares. There is no charge to
shareholders who elect these checkwriting privileges, the costs of which are
borne by the Fund as an expense of all shareholders.
EXPEDITED WIRE TRANSFER REDEMPTIONS. If a shareholder who maintains his
account through the Distributor has given authorization for expedited wire
redemptions, shares can be redeemed and the proceeds sent by wire transfer to a
single previously designated bank account. Requests received by the Fund prior
to the close of regular trading on the Exchange will result in shares being
redeemed that day at the next determined net asset value and normally the
proceeds being sent to the designated bank account the following business day.
The bank must be a member of the Federal Reserve wire system. Delivery of the
proceeds of a wire redemption request may be delayed by the Fund for up to 7
days if the Distributor deems it appropriate under then current market
conditions. Once authorization is on file, the Fund will honor requests by any
person by telephone at (800) 525-7041 or by written instructions. The Fund
cannot be responsible for the efficiency of the Federal Reserve wire system or
the shareholder's bank. The Fund does not currently charge for wire transfers.
The shareholder is responsible for any charges imposed by the shareholder's
bank. The minimum amount that may be wired is $2,500. The Fund reserves the
right to change this minimum or to terminate the wire redemption privilege at
any time. Shares purchased by check may not be redeemed by wire transfer until
such shares have been owned (i.e., paid for) for at least 15 days. Expedited
wire transfer redemptions may be authorized by completing a form available from
the Distributor. Wire redemptions may not be used to redeem shares in
certificated form. To change the name of the single designated bank account to
receive wire redemption proceeds, it is necessary to send a written request with
signature(s) guaranteed to PIMCO Funds Distribution Company, c/o Shareholder
Services, Inc., P.O. Box 5866, Denver, Colorado 80217-5866.
CERTIFICATED SHARES. To redeem shares for which certificates have been issued,
the certificates must be mailed to or deposited with the Fund, duly endorsed or
accompanied by a duly endorsed stock power and a written request for redemption.
Signatures must be guaranteed as described under "Signature Guarantee." Further
documentation may be requested from institutions or fiduciary accounts, such as
corporations, custo-
dians (e.g., under the Uniform Gifts to Minors Act), executors, administrators,
trustees or guardians ("institutional account owners"). The redemption request
and stock power must be signed exactly as the account is registered, including
indication of any special capacity of the registered owner.
AUTOMATIC WITHDRAWAL PLAN. An investor who owns or buys Fund shares having a
net asset value of $10,000 or more in an account maintained with the Distributor
may open an Automatic Withdrawal Plan and have a designated sum of money not
less than $100 paid monthly (or quarterly) out of the investor's Fund account to
the investor or another person. Such a Plan may be established by completing the
appropriate section of the Supplemental Application available by calling (800)
628-1237. Shares of the Fund are deposited in a Plan account and all
distributions are reinvested in
additional shares of the Fund at net asset value. Shares in a Plan account are
then redeemed to make each withdrawal payment. Redemptions for the purpose of
withdrawals are ordinarily made on the last business day of the month preceding
payment at that day's closing net asset value and checks are mailed on the first
business day of the next month. The Distributor may accelerate the redemption
and check mailing date by one day to avoid weekend delays. Payment will be made
to any person the investor designates; however, if the shares are registered in
the name of a trustee or other fiduciary, payment will be made only to the
fiduciary,
9
<PAGE>
except in the case of a profit-sharing or pension plan where payment will be
made to the designee. As withdrawal payments may include a return of principal,
they cannot be considered a guaranteed annuity or actual yield of income to the
investor. Continued withdrawals in excess of income will reduce and possibly
exhaust invested principal. The minimum investment accepted from a shareholder
while an Automatic Withdrawal Plan is in effect for that shareholder is $1,000.
An investor may not maintain a plan for the accumulation of shares of the Fund
and an Automatic Withdrawal Plan at the same time. The cost of administering
Automatic Withdrawal Plans for the benefit of those shareholders participating
in them is borne by the Fund as an expense of all shareholders. The Fund or the
Distributor may terminate or change the terms of the Automatic Withdrawal Plan
at any time.
Because an Automatic Withdrawal Plan may involve invasion of capital,
investors should consider carefully with their own financial advisers whether
the Plan and the specified amounts to be withdrawn are appropriate in their
circumstances. The Fund and the Distributor make no recommendations or
representations in this regard.
ALL REDEMPTIONS
If investors purchase shares with a check, the Fund may withhold redemption
proceeds until it can be reasonably assured that payment has been collected on
the check, which may take 15 or more days. To avoid such withholding, investors
should purchase shares by certified or official bank check or by wire transfer.
Dividends are paid through the day on which the shares are redeemed.
There is no charge by the Distributor with respect to redemptions; however, a
participating broker who processes a redemption for an investor may charge
customary commissions for its services. Dealers and other financial services
firms are responsible for transmitting their customers' redemption orders, and
neither the Fund nor the Distributor is responsible for such firms' delays in
order transmission. Requests for redemption received by the Distributor by the
close of regular trading on the Exchange (normally 4:00 p.m. Eastern time) on a
regular business day, and requests for redemption received by brokers or other
firms prior to the close of regular trading on the Exchange on a regular
business day and received by the Distributor prior to the close of the
Distributor's business that day, will be effected at the net asset value
effective at the close of regular trading on the Exchange on that day. Requests
received by the Distributor after the close of regular trading on the Exchange
(or received by such time by brokers or other firms and received by the
Distributor after its close of business) will be confirmed at the net asset
value effective at the close of regular trading on the next business day.
SIGNATURE GUARANTEE
When a signature guarantee is called for, the shareholder should have
"Signature Guaranteed" stamped under his signature and guaranteed by any of the
following entities: U.S. banks, foreign banks having U.S. correspondent banks,
credit unions, savings associations, U.S. registered dealers and brokers,
municipal securities dealers and brokers, government securities dealers and
brokers, national securities exchanges, registered securities associations and
clearing agencies (each an "Eligible Guarantor Institution"). The Transfer Agent
reserves the right to reject any signature guarantee pursuant to its written
signature guarantee standards or procedures, which may be revised in the future
to permit it to reject signature guarantees from Eligible Guarantor Institutions
that do not, based on credit guidelines, satisfy such written standards or
procedures.
If the proceeds of the redemption (i) exceed $50,000, (ii) are to be paid to a
person other than the record owner (which may be the shareholder's broker),
(iii) are to be sent other than to the account record owner's address as listed
in the Transfer Agent's records, or (iv) are to be paid to a corporation,
partnership, trust or fiduciary (other than the shareholder's broker where the
broker is the record owner), the signature(s) on the redemption request and on
the certificates, if any, or stock power must be guaranteed as described
above.
10
<PAGE>
The Fund may change the signature guarantee requirements from time to time upon
notice to shareholders, which may be given by means of a new Prospectus or
prospectus supplement.
SMALL ACCOUNTS
The Trust reserves the right to redeem involuntarily any shares in a
shareholder's account in excess of an amount set from time to time by the
Trustees of the Trust and to redeem involuntarily all shares in a shareholder's
account if the number of shares in such account is less than a minimum amount
(not to exceed 1,000 shares) set from time to time by the Trustees. Shareholders
will be notified before any such redemptions are made and will have at least 30
days to purchase shares to bring their accounts up to the required minimum.
MANAGER OF THE FUND
PIMCO Advisors L.P. (the "Manager") is the investment manager of the Fund. The
Fund also has a sub-adviser, Columbus Circle Investors ("CCI"), which, under the
supervision of the Manager and the Trust's Trustees, directs the investment of
the Fund's assets. Reference in this Prospectus to "the manager" or "the Fund's
manager" are references to either or both of the Manager and CCI, as
appropriate. CCI is an affiliate of the Manager. In addition to overseeing the
sub-adviser, the Manager also provides executive and other personnel for
management of the Trust. Pursuant to the Trust's Agreement and Declaration of
Trust, the Trustees supervise the affairs of the Trust as conducted by the
Manager.
The Manager provides management and investment advisory services to other
mutual funds, investment accounts and pension plans. As of December 31, 1996,
the Manager and its affiliates managed approximately $110 billion in assets.
The Manager is a Delaware limited partnership. A portion of the units of the
limited partner interest in the Manager is traded publicly on the Exchange. The
general partner of the Manager is PIMCO Partners, G.P. Pacific Mutual Life
Insurance Company and its affiliates hold a substantial interest in the Manager
through direct or indirect ownership of units of the Manager, and indirectly
hold a majority interest in PIMCO Partners, G.P., with the remainder held
indirectly by a group composed of the Managing Directors of Pacific Investment
Management Company, a subsidiary partnership of the Manager. The Manager is
governed by an Operating Board and an Equity Board, which exercise substantially
all of the governance powers of the general partner and serve as the functional
equivalent of a board of directors. Because of their ability to designate a
majority of the Members of the Operating Board, Pacific Investment Management
Company and the Managing Directors could be said to control the Manager,
although they disclaim such authority. The Manager is registered as an
investment adviser with the SEC. The Manager's address is 800 Newport Center
Drive, Suite 100, Newport Beach, California 92660.
CCI is the sub-adviser of the Fund. CCI also advises other mutual funds and
private accounts and is registered as an investment adviser with the SEC. CCI is
a general partnership with the Manager and a wholly-owned subsidiary of the
Manager as its only partners. CCI's address is One Station Place, Stamford,
Connecticut 06902.
Under a Management Contract between the Trust and the Manager, the Fund pays
the Manager a monthly fee based on its average daily net asset value at the
following annual rates: 0.425% of the first $500 million of net assets; 0.400%
of the next $500 million of net assets; 0.375% of the next $500 million of net
assets; 0.350% of the next $500 million of net assets; and 0.325% of amounts in
excess of $2 billion. Under a Sub-Adviser Agreement between the Manager and CCI,
the Manager pays CCI a monthly fee based on the Fund's average daily net asset
value at the annual rate of 0.05% of net assets.
In addition to the fee paid to the Manager described above, the Fund pays all
expenses not assumed by the Manager. These expenses include, without limitation,
fees and expenses of Trustees who are not "interested persons" of the Manager,
the sub-adviser or the Fund, interest charges, taxes, expenses of issue or
redemption of shares, distribution fees pursuant to the Distribution Plan, fees
and expenses of registering and qualifying the Fund and its shares for
distribution under federal and
11
<PAGE>
state laws and regulations, charges of custodians, auditing and legal expenses,
expenses of determining net asset value of the Fund's shares, reports to
shareholders, expenses of meetings of shareholders, expenses of printing and
mailing prospectuses, proxy materials to existing shareholders, and its
proportionate share of insurance premiums and professional association dues or
assessments.
DISTRIBUTOR AND DISTRIBUTION PLAN
PIMCO Funds Distribution Company (the "Distributor") is the principal
underwriter of the Fund.
As compensation for the services provided and expenses borne by the
Distributor (including fees paid to participating brokers as compensation for
their distribution services), the Fund pays the Distributor a distribution fee
which is accrued daily and paid monthly at an annual rate not to exceed .175% of
the Fund's average daily net assets. The fee is paid pursuant to a Distribution
Plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940.
The Distribution Plan is of the type known as a "reimbursement" plan. This
means that the Fund will make payments under the Plan only to the extent of
expenses incurred by the Distributor. The Distributor's expenses may include
printing of sales literature and prospectuses for non-shareholders, commissions
for personnel of participating brokers (up to 0.175% of average daily net assets
in their customers' accounts), compensation expenses for the Distributor's
personnel, advertising, overhead expenses allocable to the Fund and other
expenses of the Distributor and its predecessor. If in any year the
Distributor's expenses exceed the distribution fee paid by the Fund, the
Distributor can recover such excess only if the Distribution Plan continues to
be in effect in some later year when the Distributor's expenses for that year
are less than .175% of the Fund's average daily net assets.
From the Fund's inception to September 30, 1996, the expenses of the Fund's
principal underwriter exceeded the distribution fee by approximately $39,000,
which represented 0.006% of the Fund's net assets at September 30, 1996.
The Distributor is a wholly-owned subsidiary of the Manager.
DIVIDENDS
The Fund declares daily dividends of all of the net investment income of the
Fund and expects to pay shareholders on the third Thursday of the month such
dividends as are declared through the date of payment. If all of an investor's
shares of the Fund are redeemed at any time during a month, all dividends
accrued to date for the Fund will be paid together with the redemption proceeds.
Shareholders begin earning dividends on the day that the Fund receives federal
funds as payment for the shares and will continue to earn dividends through the
day on which shares are redeemed. Dividends of the Fund are paid in additional
shares of the Fund, based on its net asset value on the payment date, by credit
to the shareholder's account with the participating broker. At the shareholder's
election, dividends may be paid in cash rather than in additional shares.
Investors whose shares are held in a broker "street name" account should consult
their broker for information about their broker's practice concerning the
crediting of Fund dividends to the investor's account with the broker.
TAXES
The Fund plans to distribute substantially all of its net investment income
and net realized short-term capital gains, if any, to its shareholders on a
current basis and substantially all of its net realized long-term capital gains,
if any, at least annually. So long as it does so and otherwise satisfies the
requirements for being taxed as a regulated investment company, the Fund itself
does not pay federal income tax on the amount distributed. Shareholders will
receive an annual statement detailing federal tax information about dividends
and distributions paid to shareholders during or with respect to the preceding
calendar year.
Dividends of net interest or other ordinary income of the Fund and
distributions of its short-term capital gains, if any, are taxable to
shareholders as ordinary income for federal income tax purposes and will not
12
<PAGE>
qualify for the dividends-received deduction. Distributions paid from long-term
capital gains, if any, are taxable to shareholders as long-term capital gains
regardless of how long the shareholders have held their shares and will not
qualify for the dividends-received deduction.
To avoid imposition of a non-deductible federal excise tax, the Fund will
distribute prior to calendar year-end substantially all of its ordinary income
on a calendar year basis, and substantially all of the capital gain net income
the Fund realizes in the one-year period ending October 31, that has not
previously been distributed.
Distributions will be taxable as described above whether received in cash or
in additional shares. A dividend paid to a shareholder by the Fund in January of
a year generally is deemed to have been paid by the Fund on December 31 of the
preceding year, if the dividend was declared and payable to shareholders of
record on a date in October, November or December of that preceding year.
The Fund does not expect distributions to be exempt generally from state and
local taxes, although in some states dividends attributable to interest paid on
U.S. Government Securities held by the Fund may be exempt from state and local
taxes. Shareholders should consult with their tax advisers about the status of
such dividends in their own states and localities.
The foregoing is only a general summary of the federal income tax consequences
of investing in the Fund. Shareholders should consult with their own tax
advisers to determine the specific tax consequences of investments in the Fund
in light of their particular situations.
DESCRIPTION OF THE TRUST
The Trust was organized on April 27, 1984 as a Massachusetts business trust
and is a diversified open-end management investment company. The Trust has an
unlimited number of authorized shares of beneficial interest which may be
divided into an unlimited number of series of such shares, and which presently
consist of the one series of shares constituting the Fund. The Trustees may,
without shareholder approval, establish one or more additional series, or, also
without shareholder approval, terminate any series and distribute such series'
assets to its shareholders. These shares are entitled to one vote per share
(with proportional voting for fractional shares) on such matters as to which
shareholders are entitled to vote. The shares of each series vote individually
by series on all matters except those matters as to which the Investment Company
Act of 1940 requires shares of the series to vote together as a single class.
When the Trustees determine that a matter affects only the interests of one or
more series, only shareholders of the affected series shall be entitled to vote
on that matter. There will not normally be annual shareholders' meetings.
Shareholders may remove Trustees from office by votes cast at a meeting of
shareholders or by written consent. Shares are freely transferable.
Shareholders could, under certain circumstances, be held personally liable for
the obligations of the Trust. However, the risk of a shareholder incurring
financial loss on account of that liability is considered remote.
Shareholders may direct any questions they may have about the Fund to their
broker or to PIMCO Funds Distribution Company, 2187 Atlantic Street, Stamford,
Connecticut 06902 (telephone (800) 628-1237).
CUSTODIAN
The Bank of New York, 110 Washington Street, New York, New York 10286, is the
Fund's custodian.
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<PAGE>
CASH ACCUMULATION TRUST
840 Newport Center Drive
Newport Beach, CA 92660
MANAGER
PIMCO Advisors, L.P.
800 Newport Center Drive, Suite 100
Newport Beach, CA 92660
SUB-ADVISOR
Columbia Circle Investors
One Station Place
Stamford, CT 06902
DISTRIBUTOR
PIMCO Funds Distribution Company
2187 Atlantic Street
Stamford, CT 06902
SHAREHOLDER SERVICING AND TRANSFER AGENT
Shareholder Services, Inc.
P.O. Box 5866
Denver, CO 64105
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1055 Broadway
Kansas City, MO 64105
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
----------------------------
----------------------------
CASH
ACCUMULATION
TRUST
----------------------------
----------------------------
NATIONAL MONEY MARKET FUND
----------------------------
PROSPECTUS
February 1, 1997
----------------------------
----------------------------
<PAGE>
CASH ACCUMULATION TRUST
NATIONAL MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1997
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Prospectus dated February 1,
1997 of the National Money Market Fund as supplemented from time to time, and
should be read in conjunction therewith. A copy of the Prospectus may be
obtained from PIMCO Funds Distribution Company, 2187 Atlantic Street, Stamford,
Connecticut 06902.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS . . . . . . . . . . . . . . . 3
CREDIT AND MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . 8
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . .14
ORGANIZATION AND CAPITALIZATION OF THE TRUST . . . . . . . . . . . . . . . . .19
NET INCOME, YIELDS AND VALUATION . . . . . . . . . . . . . . . . . . . . . . .21
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
DESCRIPTION OF INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .25
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives and policies of the National Money Market Fund
(the "Fund") of Cash Accumulation Trust (the "Trust") are summarized on the
front page of the Prospectus and in the text of the Prospectus following the
captions "Investment Objective and Policies" and "General Policies." For a
description of the investments which the Fund may make, see "Description of
Investments." For a description of the relevant rating categories established
by five major rating agencies, see Appendix A-1.
PIMCO Advisors L.P., the manager of the Fund (the "Manager"), and Columbus
Circle Investors, the sub-adviser of the Fund ("CCI" or the "Sub-adviser"), will
monitor the Fund's investments in light of general economic and market
conditions and the creditworthiness of the issuers of the Fund's portfolio
securities, including the creditworthiness of issuers of master demand notes
insofar as it relates to the ability of the issuer to make payments on demand.
The Fund does not expect to invest more than 5% of its total assets in master
demand notes in the foreseeable future. As described in the Prospectus, after
purchase by the Fund, a security may cease to be rated, its rating may be
reduced below the minimum required for purchase by the Fund, or the security may
otherwise cease to be eligible for purchase by the Fund. No such event will
require the sale of such security by the Fund. However, the Manager, the Sub-
adviser or the Trust's Trustees will consider any such event in determining
whether the Fund should continue to hold the security.
The Fund, consistent with its investment objective, attempts to maximize
yields by engaging in portfolio trading and by buying and selling portfolio
investments in anticipation of or in response to changing economic and money
market conditions and trends. The Fund also invests to take advantage of what
are believed to be temporary disparities in the yields of the different segments
of the high-grade money market or among particular instruments within the same
segment of the market. These policies may result in frequent changes in the
Fund's portfolio. See "Portfolio Transactions and Brokerage."
As noted in the Prospectus, the Fund may invest in foreign securities which
may be subject to risks of foreign political, economic and legal conditions and
developments. Such conditions or developments might include favorable or
unfavorable changes in currency rates, exchange control regulations (including
currency blockage), the expropriation or nationalization of assets or deposits
and the imposition of withholding taxes on dividend or interest payments and
possible difficulty in obtaining and enforcing judgments against foreign
entities. There may also be less publicly available information about a foreign
company than about a domestic company and foreign companies may not be subject
to accounting, auditing and financial reporting standards and requirements
comparable to those of U.S. companies. In addition, securities of some foreign
companies are less liquid and more volatile than securities of comparable U.S.
companies, and foreign brokerage commissions and other transaction costs
generally are higher than in the United States.
-3-
<PAGE>
REPURCHASE AGREEMENTS
As is disclosed in the text of the Prospectus following the caption
"General Policies -Repurchase Agreements," there is a risk that in a repurchase
agreement the seller may fail to repurchase the underlying security. In such
event, the Fund would attempt to dispose of the underlying security in the
market or would hold the underlying security until maturity. However, the Fund
may be subject to various delays and risks of loss in attempting to dispose of
the underlying security, including (a) possible declines in the value of the
underlying security during the period while the Fund seeks to enforce its rights
thereto, (b) possible reduced levels of income and lack of access to income
during this period and (c) expenses involved in the enforcement of the Fund's
rights.
FIRM COMMITMENTS
As described in the text of the Prospectus following the caption
"Investment Objective and Policies," the Fund may enter into firm commitment
agreements with banks or broker-dealers for the purchase of securities at an
agreed-upon price on a specified future date. Such agreements might be entered
into, for example, when the Fund anticipates a decline in the yield of
securities of a given issuer and is able to obtain a more advantageous yield by
committing currently to purchase securities to be issued later. Entry into firm
commitment agreements with broker-dealers requires the creation and maintenance
of a segregated account. The underlying securities subject to a firm commitment
agreement are subject to fluctuation in market value and, therefore, to the
extent that the Fund remains fully invested at the same time that it has entered
into firm commitment agreements, there will be a greater possibility that the
net asset value of the Fund's shares will vary from $1.00.
Pending delivery of securities purchased under firm commitment agreements,
the amount of the purchase price will be held in liquid assets such as cash or
high-quality debt obligations. Such obligations will be maintained in a
separate account with the Fund's custodian in an amount equal on a daily basis
to the amount of the Fund's firm commitments. When the time comes to pay for
securities subject to firm commitment agreements, the Fund will meet its
obligations from then-available cash flow or the sale of securities.
NOTE ON SHAREHOLDER APPROVAL
The Prospectus describes the investment objective of the Fund which is
fundamental and may be changed only with the approval of shareholders. The
Prospectus also identifies some of the policies of the Fund which are
fundamental and may be changed only with the approval of the shareholders.
Unless otherwise indicated, the investment policies of the Fund may be changed
without shareholder approval. Approval by the shareholders of the Fund requires
approval by the holders of a majority of the outstanding shares of the Fund. As
used in this Statement of Additional Information, the term "majority of the
outstanding shares" of the Fund means the lesser of (i) 67% of the shares of the
Fund represented at a meeting at
-4-
<PAGE>
which more than 50% of the outstanding shares of the Fund are represented or
(ii) more than 50% of the outstanding shares of the Fund.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental policies of the
Fund and, accordingly, without the approval of the holders of a majority of the
outstanding shares of the Fund, the Fund will not:
(1) Purchase any security if, as a result, more than 5% of its total
assets (based on current value) would then be invested in the securities of a
single issuer, except that the Fund may invest up to 15% of its total net assets
(based on current value) in the obligations of any one bank. This limitation
does not apply to U.S. Government Securities (as defined in the Prospectus).
(2) Purchase voting securities or make investments for the purpose of
exercising control or management.
(3) Invest more than 25% of its total assets in any one industry. This
restriction does not apply to U.S. Government Securities or to bank obligations.
For purposes of this restriction, telephone, gas and electric public utilities
are each regarded as separate industries and finance companies whose financing
activities are related primarily to the activities of their parent companies are
classified in the industry of their parents.
(4) Participate on a joint or joint and several basis in any trading
account in securities. (The "bunching" of orders for the purchase or sale of
portfolio securities with other accounts managed by the Manager or the Sub-
adviser to reduce acquisition costs, to average prices among them, or to
facilitate such transactions, is not considered participating in a trading
account in securities.)
(5) Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Fund may obtain short-term credits as
necessary for the clearance of security transactions.
(6) Borrow money except for temporary or emergency purposes and then only
in an amount not exceeding 10% of its total assets taken at cost; provided,
however, that the Fund may loan its securities as described in the Prospectus
under the caption "General Policies -Loans of Portfolio Securities." However,
the Fund will not borrow if the value of the Fund's assets would be less than
300% of its borrowing obligations. In addition, when borrowings (other than
permissible securities loans) exceed 5% of its total assets, the Fund will not
purchase additional portfolio securities. Permissible borrowings will be
entered into solely for the purpose of facilitating the orderly sale of
portfolio securities to accommodate redemption requests.
-5-
<PAGE>
(7) Make loans, except that the Fund may purchase or hold debt instruments
in accordance with its investment objective and policies. This restriction does
not apply to repurchase agreements or loans of portfolio securities.
(8) Pledge, mortgage or hypothecate more than 10% of its net assets taken
at cost at the time of the incurrence of such borrowings.
(9) Act as an underwriter of securities of other issuers except that, in
the disposition of portfolio securities, it may be deemed to be an underwriter
under the federal securities laws.
(10) Invest in securities of other investment companies, except by
purchases in the open market involving only customary brokers' commissions, or
in connection with a merger, consolidation, reorganization or similar
transactions. For the purposes of this restriction, foreign banks or their
agents or subsidiaries are not considered investment companies. (Under the
Investment Company Act of 1940 (the "Investment Company Act") no registered
investment company may (a) invest more than 10% of its total assets (taken at
current value) in securities of other investment companies, (b) own securities
of any one investment company having a value in excess of 5% of its total assets
(taken at current value), or (c) own more than 3% of the outstanding voting
stock of any one investment company.)
(11) Purchase or retain securities of an issuer if, to the knowledge of the
Trust, any officers, trustees and directors of the Trust or any investment
adviser of the Trust, who individually own beneficially more than 1/2 of 1% of
the shares or securities of that issuer, own in the aggregate more than 5% of
such shares or securities.
(12) Purchase securities of any company which has (with predecessor
businesses and entities) a record of less than three years' continuous operation
or purchase securities whose source of repayment is based, directly or
indirectly, on the credit of such a company if as a result more than 5% of the
total assets of the Fund (taken at current value) would be invested in such
securities; provided, however, that the Fund may purchase U.S. Government
Securities without regard to this limitation.
(13) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts or real estate. This restriction
does not prevent the Fund from purchasing securities of companies investing in
real estate or of companies which are not principally engaged in the business of
buying or selling such leases, rights or contracts nor does it prevent the Fund
from purchasing securities secured by real estate or interests therein.
(14) Purchase any illiquid security, including any securities whose
disposition is restricted under federal securities laws and securities that are
not readily marketable, if, as a result, more than 10% of the Fund's total
assets (based on current value) would then be invested in such securities. The
staff of the Securities and Exchange Commission is presently
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of the view that repurchase agreements maturing in more than seven days are
subject to this restriction. Until that position is revised, modified or
rescinded, the Fund will conduct its operations in a manner consistent with this
view.
(15) Write or purchase puts, calls, warrants, straddles, spreads or
combinations thereof except that, as described above under "Firm Commitment
Agreements," the Fund may enter into firm commitment agreements with respect to
securities otherwise eligible for purchase by the Fund.
Restriction (1) applies to securities subject to repurchase agreements but
not to the repurchase agreements themselves provided that the obligation of the
seller to repurchase the securities from the Fund is "collateralized fully" as
defined in Rule 2a-7 under the Investment Company Act. Although Restriction (1)
permits the Fund to invest up to 15% of its total assets in the obligations of
any one bank, federal regulations applicable to the Fund currently prohibit the
Fund (with limited exceptions) from making any investment that would result in
more than 5% of the Fund's assets being invested in obligations of a single
issuer.
The limitation on investment in illiquid securities set forth in
Restriction (14) does not apply to certain restricted securities, including
securities issued pursuant to Rule 144A under the Securities Act of 1933 and
certain commercial paper, that the Manager or Sub-adviser has determined to be
liquid under procedures approved by the Board of Trustees.
The percentages and percentage limitations set forth above or in the
Prospectus will apply at the time of the purchase of a security and shall not be
considered violated unless an excess or deficiency occurs or exists immediately
after and as a result of a purchase of such security.
CREDIT AND MARKET RISK
The portfolio securities of the Fund are subject to credit risk and market
risk. Credit risk relates to the ability of the issuer of an obligation to make
timely payments of principal and interest. In a repurchase agreement
transaction, credit risk relates to the performance by the other party of its
obligation to repurchase the underlying security from the Fund. Obligations of
issuers are subject to the provisions of bankruptcy, insolvency and other laws,
such as the Federal Bankruptcy Reform Act of 1978, affecting the rights and
remedies of creditors. As noted in the Prospectus, the Fund invests only in
instruments which are rated in the top two rating categories by at least two
major rating agencies (or by one such agency, if only one agency has issued a
rating), or in the case of unrated instruments, which are of comparable quality
as determined by the Fund's manager.
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<PAGE>
Market risk relates to changes in the market value of a security as a
result of variations in the level of prevailing interest rates and yield
relationships among particular segments of the high-grade money market or the
U.S. Government Securities market. Generally, prices tend to fluctuate less for
higher quality issues than for lower quality issues, and, for any given change
in the level of interest rates, prices for shorter maturity issues tend to
fluctuate less than for longer maturity issues. By restricting the maturity of
its investments and purchasing only high-quality instruments, the Fund seeks to
limit changes in the value of its portfolio securities resulting from market
factors and thereby to maintain a constant net asset value of $1 per share.
The value of the securities in the Fund's portfolio can be expected to vary
inversely to the changes in prevailing interest rates. Thus, if interest rates
increase after a security is purchased, that security, if sold, might be sold at
less than cost. Conversely, if interest rates decline after purchase, the
security, if sold, might be sold at a profit. In either instance, if the
security were held to maturity, no gain or loss would normally be realized as a
result of these fluctuations. Substantial redemptions of shares of the Fund
could require the sale of portfolio investments in the Fund at a time when a
sale might not be desirable.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In general, the Fund will purchase securities with the expectation of
holding them to maturity. However, the Fund may engage in short-term trading to
attempt to take advantage of short-term market variations. The Fund may also
sell securities prior to maturity to meet redemptions or as a result of a
revised management evaluation of the issuer. The Fund will have a high
portfolio turnover due to the short maturities of the securities held in its
portfolio.
In placing orders for the purchase and sale of portfolio securities for the
Fund, the Sub-adviser will always seek the best price and execution. It is
expected that portfolio transactions will generally be with issuers or dealers
in money market instruments acting as principal. Purchases from underwriters
will include a commission or concession paid by the issuer to the underwriter,
and purchases from dealers will include the spread between the bid and asked
price. Accordingly, the Fund is not expected to pay significant brokerage
commissions.
Some of the Fund's portfolio transactions are placed with dealers who
provide the Manager or the Sub-adviser with supplementary investment and
statistical information or furnish market quotations to the Fund or other
advisory accounts or investment companies advised by the Manager or the Sub-
adviser. The business would not be so placed if the Fund would not thereby
obtain the best price and execution. Although it is not possible to assign an
exact dollar value to these services, they may, to the extent used, tend to
reduce the expenses of the Manager or the Sub-adviser. The services may also be
used by the Manager or the Sub-adviser in connection with its other advisory
accounts and in some cases may not be used with respect to the Fund.
-8-
<PAGE>
Certain officers of the Manager or the Sub-adviser have responsibility for
portfolio management of certain other investment companies and investment
accounts which may invest in securities in which the Fund also invests. When
one or more of these other investment companies or accounts and the Fund desire
to purchase or sell the same security at or about the same time, purchase and
sale orders will ordinarily be placed and confirmed separately but may be
combined to the extent practicable on a pro rata basis in proportion to the
amounts desired to be purchased or sold for each. It is believed that the
ability of the Fund to participate in larger volume transactions will in some
cases produce better executions for the Fund. However, in some cases, these
procedures could have a detrimental effect on the price and amount of a security
available to the Fund or the price at which a security may be sold.
MANAGEMENT OF THE FUND
TRUSTEES
The Trustees of the Trust, their ages, and a description of their principal
occupations during the past five years are listed below. Except as shown, each
Trustee's principal occupation and business experience for the last five years
have been with the employer(s) indicated, although in some cases the Trustee may
have held different positions with such employer(s).
Name, Address and Age Principal Occupation(s) During the Past Five Years
- --------------------- --------------------------------------------------
E. Philip Cannon Trustee of the Trust and PIMCO Funds: Multi-
2401 Claremont Lane Manager series ("PFMMS"); Headmaster, St. John's
Houston, TX 77019 School, Houston, Texas. Formerly, Trustee, PIMCO
Age 56 Advisors Funds ("PAF"), General Partner, J.B.
Poindexter & Co., Houston, Texas (private
partnership), and Partner, Iberia Petroleum
Company (oil and gas production). Mr. Cannon was
a director of WNS Inc., a retailing company which
filed a petition in bankruptcy within the last
five years.
Donald P. Carter Trustee of the Trust and PFMMS. Formerly,
434 Stable Lane Trustee, PAF, Chairman, Executive Vice President
Lake Forest, IL 60045 and Director, Cunningham & Walsh, Inc., Chicago
Age 69 (advertising agency).
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Gary A. Childress Trustee of the Trust and PFMMS; Chairman and
11 Longview Terrace Director, Bellefonte Lime Company, Inc.; Chief
Madison, CT 06443 Executive Officer, Woodings & Verona Toolworks
Age 62 Inc. Mr. Childress is a partner in Genlime, L.P.,
a private limited partnership, which has filed a
petition in bankruptcy within the last five years.
Formerly, Trustee, PAF.
(*) William D. Cvengros Trustee of the Trust and PFMMS; Chairman of the
800 Newport Center Drive Board of PFMMS; Chief Executive Officer,
Newport Beach, CA 92660 President, and member of the Operating Board,
Age 48 Operating Committee, and Equity Board, PIMCO
Advisors L.P.; Director, PIMCO Funds Distribution
Company ("PFDCO"). Formerly, Trustee, PAF,
President, PFMMS, and Director, Vice Chairman, and
Chief Investment Officer, Pacific Mutual Life
Insurance Company ("Pacific Mutual").
Gary L. Light Trustee of the Trust and PFMMS; Partner, E.V.A.
12220 N. Meridian Street, Investors Inc. (Private Investments); Consultant
#145 to and, prior to March, 1987, Executive Vice
Carmel, IN 46032 President, Mayflower Corporation (trucking and
Age 59 transportation); Vice Chairman and Chief Executive
Officer, Sofamor Danek (medical devices).
Formerly, Trustee, PAF.
(*) Robert A. Prindiville Trustee of the Trust and PFMMS; Vice President,
2187 Atlantic Street PIMCO Advisors L.P. Formerly, Trustee, PAF,
Stamford, CT 06903 President and Director, Thomson Advisory Group,
Age 61 Inc., Director and Chairman, PFDCO, Executive Vice
President, PIMCO Advisors L.P.
Joel Segall Trustee of the Trust and PFMMS. Formerly,
11 Linden Shores Trustee, PAF, President and University Professor,
Branford, CT 06405 Bernard M. Baruch College, The City University of
Age 73 New York, Deputy Under Secretary for International
Affairs, United States Department of Labor,
Professor of Finance, University of Chicago,
Board of Managers, Coffee, Sugar and Cocoa
Exchange.
W. Bryant Stooks Trustee of the Trust and PFMMS; President, Bryant
1530 E. Montebello Investments, LTD. Formerly, Trustee, PAF,
Phoenix, AZ 85014 President, Senior Vice President, Director and
Age 56 Chief Executive Officer, Archirodon Group Inc.,
Partner, Arthur Andersen & Co.
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Gerald M. Thorne Trustee of the Trust and PFMMS. Formerly, Trustee,
5 Leatherwood Lane PAF, President and Director, Firstar National Bank
Savannah, GA 31414 of Milwaukee, Chairman, President and Director,
Age 58 Firstar National Bank of Sheboygan, Director,
Bando-McGlocklin.
* Trustee is an "interested person" of the Trust (as defined in Section
2(a)(19) of the Investment Company Act).
OFFICERS
The chart below sets forth the name, address, age, position(s) with the
Trust, and principal occupation(s) during the past five years of each officer of
the Trust. Except as shown, each officer's principal occupation and business
experience for the last five years have been with the employer(s) indicated,
although in some cases the officer may have held different positions with such
employer(s). Unless otherwise indicated, the business address of all persons
listed below is 840 Newport Center Drive, Suite 360, Newport Beach, California
92660:
Name, Address and Age Position(s) with Principal Occupation(s) During
the Trust the Past Five Years
- --------------------- ---------------- ------------------------------
Stephen J. Treadway President President, PFMMS; Executive Vice
2187 Atlantic Street President, PIMCO Advisors L.P.;
Stamford, CT 06902 Director, Chairman and
Age 49 President, PFDCO. Formerly,
Executive Vice President, Smith
Barney Inc.
R. Wesley Burns Vice President Executive Vice President, PFMMS;
Age 37 President, PIMCO Funds: Pacific
Investment Management Series
("PIMS"); Executive Vice
President, Pacific Investment
Management Company ("Pacific
Investment Management").
Formerly, Vice President, PAF.
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<PAGE>
Newton B. Schott, Jr. Vice President Vice President and Secretary,
2187 Atlantic Street and Clerk PFMMS; Senior Vice President-
Stamford, CT 06902 Legal and Secretary, PIMCO
Age 54 Advisors L.P.; Director,
Executive Vice President, Chief
Administrative Officer and
Secretary, PFDCO, Formerly, Vice
President and Clerk, PAF,
Executive Vice President,
Secretary and General Counsel,
Thomson Advisory Group and PIMCO
Advisors L.P., Executive Vice
President, Secretary, General
Counsel and Director, Thomson
McKinnon Inc.
Teresa A. Wagner Vice President Vice President of PFMMS; Vice
Age 34 President, PIMS; Vice President
and Manager of Fund
Administration, Pacific
Investment Management.
Formerly, Vice President and
Assistant Clerk, PAF, Vice
President, PIMCO Advisors
Institutional Services, Finance
Director, Pacific Financial
Asset Management Company.
John P. Hardaway Treasurer Treasurer of PFMMS and PIMS;
Age 39 Vice President and Manager of
Fund Operations, Pacific
Investment Management. Formerly,
Treasurer, PAF.
The Manager also serves as investment adviser to PFMMS. PFDCO also serves
as principal underwriter for PFMMS and PIMS.
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<PAGE>
TRUSTEES' COMPENSATION
The Trust's Agreement and Declaration of Trust provides that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Trust, except if it is determined in the manner specified in
the Agreement and Declaration of Trust that they have not acted in good faith in
the reasonable belief that their actions were in the best interests of the Trust
or that such indemnification would relieve any officer or Trustee of any
liability to the Trust or its shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of his or her duties. The Trust,
at its expense, will provide liability insurance for the benefit of its Trustees
and officers.
The Trust does not pay any remuneration to Trustees who are interested
persons of the Trust or the Manager. Each of the Trust's Trustees previously
served on the Board of PAF, a mutual fund family advised by the Manager and its
affiliates. PAF ceased operations in connection with the reorganization of its
series with series of PFMMS or PIMCO Funds: Pacific Investment Management Series
in transactions which took place on January 17, 1997.
Fees paid to the disinterested Trustees for their services on behalf of the
Trust during the fiscal year ended September 30, 1996 aggregated $124,833. The
following table sets forth information concerning fees paid during the fiscal
year ended September 30, 1996 to persons who served as disinterested Trustees of
the Trust during such fiscal year.
(1) (2) (3)
TOTAL COMPENSATION FROM
AGGREGATE COMPENSATION TRUST AND FUND
NAME OF TRUSTEE FROM TRUST COMPLEX(1)
--------------- ---------------------- -----------------------
E. Philip Cannon $16,667 $50,000
Donald P. Carter $17,833 $53,500
Gary A. Childress $17,667 $53,000
Gary L. Light $18,333 $55,000
Joel Segall $19,833 $59,500
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W. Bryant Stooks $17,833 $53,500
Gerald M. Thorne $16,667 $50,000
(1) The amounts listed in column (3) for Messrs. Cannon, Carter,
Childress, Light, Segall, Stooks and Thorne include total compensation paid for
their services as Trustees of PAF for PAF's fiscal year ended September 30,
1996. The amounts listed in column (3) do not include pension/retirement
benefits earned by these Trustees for their services on behalf of PAF through
its fiscal year ended September 30, 1995 pursuant to a Trustees' Pension Plan
for PAF (the "Pension Plan"). THE Trustees of PAF voted to terminate the
Pension Plan as of September 28, 1995 and received lump-sum payments in January
of 1996 in respect of services rendered during periods prior to the fiscal year
ended September 30, 1996. Of the amounts listed in column (3), E. Philip
Cannon, Donald P. Carter, Joel Segall and Gerald M. Thorne elected to have the
payment of $50,000, $38,500, $43,000, and $50,000, respectively, deferred under
a deferred compensation plan for PAF and CAT. The compensation listed in column
(3) for Messrs. Light and Segall does not include amounts which accrued pursuant
to 1987 Deferred Fee Agreements with the Trust and PAF which terminated
effective December 14, 1995. These benefits were distributed to Messrs. Light
and Segall during 1996 in respect of services rendered during periods prior to
the fiscal year ended September 30, 1996.
As of December 31, 1996, the Trust believes that the officers and Trustees
as a group owned less than 1% of the outstanding shares of the Fund. Other than
Prudential Securities, Inc., which owned of record 98.98% of the Fund's shares,
the Trust believes that no person as of December 31, 1996, owned of record or
beneficially 5% or more of the shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
MANAGEMENT CONTRACT
As is disclosed in the text of the Prospectus under the caption "Manager of
the Fund," the Manager has agreed, pursuant to a Management Contract, to furnish
continuously an investment program for the Fund and to make investment decisions
and place all orders for the purchase and sale of portfolio securities on behalf
of the Fund; provided, however, that so long as a sub-adviser serves as the
sub-adviser of the Fund, the Manager's obligation under the Management Contract
is, subject always to the control of the Trustees, to determine and review with
the sub-adviser the investment policies of the Fund. Subject to the control of
the Trustees, the Manager or the sub-adviser also manages, supervises and
conducts the other affairs and business of the Trust and of the Fund, furnishes
office space and equipment,
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<PAGE>
provides certain clerical services (excluding determination of the net asset
value of the Fund, trust accounting services supplied by Oppenheimer Management
Corporation and shareholder accounting services) and pays all salaries, fees and
expenses of officers and Trustees of the Trust who are affiliated with the
Manager. As indicated under "Portfolio Transactions and Brokerage," the Fund's
portfolio transactions may be placed with broker-dealers which furnish to the
Manager at no cost certain research, statistical and quotation services of value
to it or its affiliates in advising the Fund or other clients.
The Manager's compensation with respect to the Fund under the Management
Contract described in the Prospectus under the heading "Manager of the Fund" is
subject to reduction to the extent that in any year the expenses of the Fund
exceed the limits on investment company expenses imposed by any statute or
regulatory authority of any jurisdiction in which shares of the Fund are
qualified for offer and sale.
The Fund pays the Manager a monthly fee based on the level of the Fund's
average daily net asset value as follows:
Annual Average Net Asset
Percentage Rate Value Level
--------------- -----------
.425% the first $500 million
.400% the next $500 million
.375% the next $500 million
.350% the next $500 million
.325% amounts in excess of $2 billion
For the fiscal years ended September 30, 1994, 1995 and 1996, the Fund paid
the Manager $3,155,585, $2,915,606 and $2,560,734, respectively, for its
services under the Management Contract.
The Management Contract provides that it will continue in force for one
year from its date of execution, and from year to year thereafter, but only so
long as its continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for that purpose, of a majority of those Trustees who
are not "interested persons" of the Manager or the Fund, and by (ii) the
majority vote of either the full Board of Trustees or the vote of a majority of
the outstanding shares of the Fund. The Management Contract automatically
terminates on assignment, and is terminable by either the Fund or the Manager on
not more than 60 days' written notice to the other party. If, at any time that
the Management Contract is submitted for approval by the shareholders of the
Fund, the shareholders of the Fund should fail to approve the Management
Contract, the Manager would continue to serve as manager and
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<PAGE>
adviser with respect to the Fund pending consideration by the Trustees of such
further action as they may deem to be in the best interests of the shareholders
of the Fund.
The Management Contract provides that the Manager shall not be subject to
any liability in connection with the performance of its services thereunder in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
As of the date of this Statement of Additional Information, the Fund also
has a sub-adviser, Columbus Circle Investors ("CCI"), responsible for portfolio
investment decisions for the Fund. CCI is an affiliate of the Manager and
provides services TO the Fund pursuant to a Sub-Adviser Agreement between the
Manager and CCI. Under the Sub-Adviser Agreement, the Manager pays CCI a
monthly fee at the annual rate of 0.05% of the Fund's average daily net assets
for its services as the Fund's sub-adviser.
Under the Sub-Adviser Agreement, subject always to the control of the
Trustees of the Trust, CCI'S obligation is to furnish continuously an investment
program for the Fund, to make investment decisions on behalf of the Fund and to
place all orders for the purchase and sale of portfolio securities and all other
investments for the Fund. In performing its duties under the Sub-Adviser
Agreement, CCI is subject to the control of the Trustees, the policies
determined by the Trustees and the Manager, the provisions of the Trust's
Declaration of Trust and by-laws and the relevant investment objectives,
policies and restrictions stated in the Prospectus.
The Sub-Adviser Agreement continues in force with respect to the Fund for
two years from the date thereof, and from year to year thereafter, but only so
long as its continuance is approved at least annually by (i) the vote, cast in
person at a meeting called for that purpose, of a majority of those Trustees who
are not "interested persons" of the Manager, CCI or the Trust, and by (ii) the
majority vote of either the full Board of Trustees or the vote of the majority
of the outstanding shares of the Fund. The Sub-Adviser Agreement automatically
terminates on assignment. The Sub-Adviser Agreement is terminable upon notice
by the Trust at any time, may be terminated by the Manager on not less than 60
days' written notice to CCI and may be terminated by CCI on not less than 180
days' written notice to the Manager.
The Fund will pay its management fee, taxes, brokerage commissions,
distribution fees pursuant to the Distribution Plan, and fees and expenses of
the registration or qualification of its shares under federal and state
securities laws, and of the Fund's custodian and transfer agent, as well as the
Trust's general expenses, which include the charges of independent auditors and
legal counsel, all expenses of shareholders' and Trustees' meetings, of
preparing and typesetting prospectuses, of printing and mailing prospectuses to
existing shareholders and the compensation of Trustees who are not directors,
officers or employees of the Manager or its affiliates, other than a registered
investment company.
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<PAGE>
The Fund is responsible for such nonrecurring expenses as may arise,
including litigation in which the Fund may be a party, and other expenses as
determined by the Trustees. The Fund may have an obligation to indemnify its
officers and Trustees with respect to such litigation.
The Manager is a Delaware limited partnership. The sole general partner of
the Manager, PIMCO Partners, G.P., has two partners: (i) an indirect wholly-
owned subsidiary of Pacific Mutual Life Insurance Company; and (ii) PIMCO
Partners, L.L.C. ("LLC"), a limited liability company, all of the interests of
which are held directly by the Managing Directors of Pacific Investment
Management Company who are: William H. Gross, Dean S. Meiling, James F. Muzzy,
William F. Podlich III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague,
William S. Thompson, Jr., William C. Powers, David H. Edington and Benjamin L.
Trosky (collectively, the "Managing Directors"). PIMCO Partners, G.P. has
substantially delegated its management and control of the Manager to an Equity
Board and an Operating Board of the Manager. The activities of the Manager are
controlled by its Operating Board except that certain non-routine or
extraordinary actions may not be effected by the Operating Board without the
approval of the Manager's Equity Board. The Operating Board has in turn
delegated the authority to manage day-to-day operations and policies to an
Operating Committee. Because of the ability to designate a majority of the
members of the Operating Board, Pacific Investment Management Company and the
Managing Directors could be said to control the Manager, although Pacific
Investment Management Company and the Managing Directors disclaim such
authority.
CCI is a general partnership with the Manager and Columbus Circle Investors
Management Inc., a wholly-owned subsidiary of the Manager, as its only partners.
DISTRIBUTION PLAN AND DISTRIBUTION AGREEMENT. Terms of the Distribution
Plan of the Fund and the Distribution Agreement between the Trust and PIMCO
Funds Distribution Company (the "Distributor") are summarized in the text of the
Prospectus following the caption "Distributor and Distribution Plan."
Pursuant to its Distribution Agreement with the Trust, the Distributor
bears the expense of commissions with respect to sales of Fund shares to brokers
having sales agreements with the Distributor, as well as certain associated
expenses, including allocated overhead expenses, and also bears the cost of
making information about the Fund available through advertising and other means
and the cost of printing and mailing prospectuses to persons other than
shareholders. The Distributor's and such brokers' overhead expenses may include
rental payments, salaries, telephone and communications, data processing and
professional services. The Fund pays up to a 0.175% distribution fee, as
described in the Prospectus, which is designed to reimburse the Distributor and
such brokers, in whole or in part, for these expenses and services.
-17-
<PAGE>
The formula for determining the Distributor's reimbursement as distributor
is set forth in the Prospectus. Subject to the 0.175% limitation described in
the Prospectus, the distribution fee may be paid in respect of services rendered
and expenses borne in the past as to which no distribution fee was paid on
account of such limitation. The Distributor does not now include in its
calculation of distribution-related expenses interest, carrying or other finance
charges in respect of other expenses for which it is not compensated under the
Fund's Distribution Plan, but reserves the right to do so in the future.
For the fiscal year ended September 30, 1996, the Trust paid the
Distributor distribution fees of $609,136.
During the fiscal year ended September 30, 1996, expenditures by the
Distributor from funds collected pursuant to the Distribution Plan totaled
approximately $562,000, and were used as follows: sales commissions and other
compensation to sales personnel, $4,000; preparing, printing and distributing
sales material and advertising and preparing, printing and distributing
prospectuses to non-shareholders and other expenses (including data processing,
legal and operations), $558,000.
The Trustees believe that the Distribution Plan has provided benefits to
the Fund. The Trustees believe that the Plan has resulted in greater sales
and/or fewer redemptions of Fund shares, although it is impossible to know for
certain the level of sales and redemptions of Fund shares in the absence of the
Plan or under an alternative distribution scheme. The effect of the Plan on
sales and/or redemptions may benefit the Fund by reducing Fund expense ratios
and/or by affording greater flexibility to Fund managers.
The Distribution Plan may be terminated as to the Fund by vote of a
majority of the Trustees ("Plan Trustees") who are not "interested persons" (as
defined in the Investment Company Act) of the Trust and who have no interest in
the Plan or any agreement related thereto, or by vote of a majority of the
outstanding voting securities of the Fund. The Trustees review quarterly a
written report of distribution costs and the purposes for which such costs have
been incurred. The Plan may be amended by vote of the Trustees, including a
majority of the Plan Trustees, cast in person at a meeting called for the
purpose, provided, however, that any change in the Plan that would materially
increase the distribution cost to the Fund also requires shareholder approval.
The Distribution Agreement may be terminated as to the Fund at any time on
60 days' written notice without payment of any penalty by the Distributor or by
vote of a majority of the outstanding voting securities of the Fund or by vote
of a majority of the Plan Trustees.
The Distribution Agreement and the Distribution Plan will continue in
effect for successive one-year periods, provided that each such continuance is
specifically approved
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<PAGE>
(i) by the vote of a majority of the Plan Trustees and (ii) by the vote of a
majority of the entire Board of Trustees cast in person at a meeting called for
the purpose.
Although the Fund has no present intention to do so, it reserves the right
at any time to suspend the offering of the shares of the Fund.
Under arrangements with participating or introducing brokers, the
Distributor may pay commissions to such brokers accrued daily and paid monthly
at an annual rate of up to 0.125% of the average daily net asset value of Fund
shares held by shareholders purchasing through such brokers.
CUSTODIAL ARRANGEMENTS. The Bank of New York, 110 Washington Street, New
York, New York 10286 is the Fund's custodian. As such, The Bank of New York
holds in safekeeping certificated securities and cash belonging to the Fund and,
in such capacity, is the registered owner of securities in book-entry form
belonging to the Fund. Upon instruction, the Bank of New York receives and
delivers cash and securities of the Fund in connection with the transactions of
the Fund and collects all dividends and other distributions made with respect to
the portfolio securities of the Fund. The Bank of New York also maintains
certain accounts and records of the Fund.
ACCOUNTING SERVICES. Pursuant to an agreement among Oppenheimer Management
Corporation, the Manager and the Fund, Oppenheimer Management Corporation
calculates the total net asset value, total net income and net asset value per
share of the Fund on a daily basis (and as otherwise may be required by the
Investment Company Act, that is, when there is a sufficient degree of trading in
the Fund's portfolio securities to affect its net asset value) and performs
certain accounting services for the Fund.
INDEPENDENT AUDITORS. Price Waterhouse LLP, 1055 Broadway, Kansas City,
Missouri 64105, was selected to serve as the independent public accountants for
the Fund for the fiscal year ending September 30, 1997. Price Waterhouse LLP
provides audit services, accounting assistance, and consultation in connection
with Securities and Exchange Commission filings. Coopers & Lybrand L.L.P., 1301
Avenue of the Americas, New York, New York 10019, served as independent public
accountants for the Fund through the fiscal year ended September 30, 1996. The
financial information for the Fund provided under "Financial Statements" below
was taken from the Trust's Annual Report dated September 30, 1996 and has been
audited by Coopers & Lybrand L.L.P., whose report on such Annual Report is also
included under "Financial Statements."
ORGANIZATION AND CAPITALIZATION OF THE TRUST
The organization of the Trust and the voting rights of shareholders are
summarized in the text of the Prospectus following the caption "Description of
the Trust."
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<PAGE>
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest, which may be divided into
an unlimited number of series of such shares, and which presently consist of the
one series of shares constituting the Fund. Each share of a series represents
an equal proportionate interest in that series with each other share of that
series and is entitled to a proportionate interest in the dividends and
distributions from that series. Upon termination of a series, whether pursuant
to liquidation of the series or otherwise, shareholders of that series are
entitled to share pro rata in the net assets of the series then available for
distribution to such shareholders. Shareholders have no preemptive rights.
A copy of the Agreement and Declaration of Trust (the "Declaration of
Trust") establishing the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts. The Declaration of Trust provides for the
perpetual existence of the Trust. The Trust or a series, however, may be
terminated at any time by vote of at least two-thirds of the outstanding shares
of an affected series or by the Trustees upon written notice to the
shareholders. Upon termination of the Trust or of a series, after paying or
otherwise providing for all charges, taxes, expenses and liabilities, whether
due or accrued or anticipated, of the Trust or of the series as may be
determined by the Trustees, the series shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the shareholders of the series involved,
ratably according to the number of shares of such series held by the several
shareholders of the series on the date of termination.
The assets received by the Trust for the issue or sale of shares of a
series and all income, earnings, profits, losses and proceeds therefrom, subject
only to the rights of creditors, are allocated to that series, and constitute
the underlying assets of that series. The underlying assets of a series are
segregated and are charged with the expenses, including the organizational
expenses, in respect of that series and with a share of the general expenses of
the Trust as described above under "Investment Advisory and Other
Services." While the expenses of the Trust are allocated to the separate books
of account of the series, if more than one series has shares outstanding,
certain expenses may be legally chargeable against the assets of all series.
Under Massachusetts law, shareholders could, under certain circumstances,
be held liable for the obligations of the Trust. However, the Declaration of
Trust disclaims shareholder liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Trust or the Trustees. The
Declaration of Trust provides for indemnification out of the property of a
series for all loss and expense of any shareholder of that series held liable on
account of being or having been a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the series of which he was a shareholder would be unable
to meet its obligations.
-20-
<PAGE>
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The Declaration of Trust provides for indemnification by the Trust
of the Trustees and the officers of the Trust except with respect to any matter
as to which any such person did not act in good faith in the reasonable belief
that his action was in or not opposed to the best interests of the Trust. Such
person may not be indemnified against any liability to the Trust or the Trust
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
As described in the Prospectus, the Trust will not normally hold annual
shareholders' meetings. At such time as less than a majority of the Trustees
have been elected by the shareholders, the Trustees then in office will call a
shareholders' meeting for the election of Trustees. In addition, Trustees may
be removed from office by a written consent signed by the holders of two-thirds
of the outstanding shares and filed with the Trust's custodian or by a vote of
the holders of two-thirds of the outstanding shares at a meeting duly called for
the purpose, which meeting shall be held upon written request of the holders of
not less than 10% of the outstanding shares. Upon written request by ten or
more shareholders, who have been such for at least six months and who hold
shares constituting 1% of the outstanding shares, stating that such shareholders
wish to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as otherwise disclosed in the Prospectus and in this Statement of
Additional Information, the Trustees shall continue to hold office and may
appoint their successors.
NET INCOME, YIELDS AND VALUATION
DETERMINATION OF NET INCOME
The net income of the Fund is determined as of the close of regular trading
(ordinarily 4:00 p.m. (Eastern Time)) on the New York Stock Exchange (the
"Exchange") on each day that the Exchange is open for trading. Net income
includes (i) all interest accrued and discount earned on the portfolio
investments of the Fund, minus (ii) amortized premium on such investments, plus
or minus (iii) all realized gains and losses on such investments, and minus (iv)
all expenses of the Fund.
-21-
<PAGE>
YIELD
As summarized in the Prospectus under the heading "Yield," the "Yield" of
the Fund for a seven-day period (the "base period") will be computed by
determining the "net change in value" (calculated as set forth below) of a
hypothetical account having a balance of one share at the beginning of the
period, dividing the net change in account value by the value of the account at
the beginning of the base period to obtain the base period return, and
multiplying the base period return by 365/7 with the resulting yield figure
carried to the nearest hundredth of one percent. Net changes in value of a
hypothetical account will include the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares, but will not include realized gains or
losses or unrealized appreciation or depreciation on portfolio investments.
Yield may also be calculated on a compound basis ("Effective Yield") which
assumes that net income is reinvested in Fund shares at the same rate as net
income is earned for the base period.
The Fund's Yield and Effective Yield will vary in response to fluctuations
in interest rates and in the expenses of the Fund. For comparative purposes the
current and effective yields should be compared to current and effective yields
offered by competing financial institutions for that base period only and
calculated by the methods described above.
For the seven day period ending September 30, 1996, the Fund's Yield was
4.72% and the Fund's Effective Yield was 4.83%, calculated as described above.
VALUING THE FUND'S PORTFOLIO INVESTMENTS
The total net asset value of the Fund (the excess of its assets over its
liabilities) is determined by Oppenheimer Management Corporation as of the close
of regular trading on the Exchange on each day the Exchange is open for trading.
The Trust expects that the days, other than weekend days, that the Exchange will
not be open will be New Year's Day, Washington's Birthday, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
As described in the text of the Prospectus following the caption "Net Asset
Value," under normal market conditions, the securities will be valued at
amortized cost in order to maintain a constant net asset value of $1 per share.
The amortized cost method of valuation may be used by the Fund so long as
it complies with Rule 2a-7 under the Investment Company Act. Under this Rule,
the Fund is required to maintain a dollar-weighted average portfolio maturity of
90 days or less, to purchase only instruments having remaining maturities of 397
days or less and to invest only in securities determined under the supervision
of the Trustees to present minimal credit risks. The Fund is
-22-
<PAGE>
further required to establish procedures designed to stabilize, to the extent
reasonably possible, its price per share as computed for the purpose of
distribution, redemption and repurchase at $1 per share. Such procedures will
include review of the Fund's portfolio holdings by the Trustees, at such
intervals as they may deem appropriate, to determine whether the Fund's net
asset value calculated by using readily available market quotations deviates
from $1 per share, and, if so, whether such deviation may result in material
dilution or is otherwise unfair to existing shareholders. In the event the
Trustees determine that such a deviation exists, or in any event if the
deviation exceeds 1/2%, they have agreed to take such corrective action as they
regard as necessary and appropriate. Such action may include redemption of
shares in kind, the sale of portfolio securities prior to maturity to realize
capital gains or losses or to shorten the Fund's average portfolio maturity,
withholding dividends, or utilizing a net asset value per share as determined by
using available market quotations. In addition, the Trustees have the authority
to reduce or increase the number of shares outstanding on a pro rata basis and
to offset each shareholder's pro rata portion of the deviation from the
shareholder's accrued dividend account or from future dividends.
As a result of the Fund valuing its securities at amortized cost, the yield
on a shareholder's investment may be more or less than that which would be
recognized if the net asset value per share of the Fund were not constant and
were permitted to fluctuate with the market value of the portfolio securities of
the Fund. However, as a result of the foregoing procedures, the Fund believes
any difference will normally be minimal.
TAXES
The tax status of the Fund and the distributions which it may make are
summarized in the text of the Prospectus immediately following the caption
"Taxes."
The Fund intends to qualify each year as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). In order so
to qualify and to qualify for the special tax treatment accorded regulated
investment companies and their shareholders, the Fund must, among other things,
(a) derive at least 90% of its gross income from dividends, interest, payments
with respect to certain securities loans, and gains from the sale of stock,
securities and foreign currencies, or other income (including but not limited to
gains from options, futures or forward contracts) derived with respect to its
business of investing in such stock, securities or currencies, (b) derive less
than 30% of its gross income from the sale or other disposition of certain
assets held for less than three months; (c) each year distribute at least 90% of
its net investment income (including tax-exempt interest) and certain other
income and the excess, if any, of its net short-term capital gains over its net
long-term capital losses; and (d) diversify its holdings so that, at the end of
each fiscal quarter (i) at least 50% of the market value of the Fund's assets is
represented by cash items, U.S. Government securities, securities of other
regulated investment companies, and other
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<PAGE>
securities, limited in respect of any one issuer to a value not greater than 5%
of the value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities (other than those of the U.S. Government or other
regulated investment companies) of any one issuer or of two or more issuers
which the Fund controls and which are engaged in the same, similar or related
trades or businesses. Under the 30% of gross income test described above, the
Fund may be restricted in selling certain assets held (or considered under Code
rules to have been held) for less than three months, and in engaging in certain
hedging transactions (including hedging transactions in options and futures)
that in some circumstances could cause certain Fund assets to be treated as held
for less than three months.
If the Fund qualifies for taxation as a regulated investment company, the
Fund will not be subject to federal income tax on income paid to its
shareholders in the form of dividends or capital gain distributions. Except
where specifically noted, the remainder of this section assumes that the Fund
will so qualify.
If the Fund distributes amounts in excess of its current earnings and
profits, such distributions to shareholders would be treated as a return of
capital to the extent of a shareholder's basis in his or her shares, and
thereafter as capital gain. A return of capital is not taxable to a shareholder
and has the effect of reducing the shareholder's basis in the relevant shares.
Current federal tax law requires the holder of a Treasury or other fixed-
income zero-coupon security to accrue as income each year a portion of the
discount at which the security was purchased, even though the holder receives no
interest payment in cash on the security during the year. Accordingly, if the
Fund holds such securities, it may be required to pay out as an income
distribution each year an amount which is greater than the total amount of cash
interest actually received. Such distributions may be made from the cash assets
of the Fund or by liquidation of portfolio securities, if necessary. The Fund
may realize gains or losses from such liquidations. In the event the Fund
realized net capital gains from such transactions, its shareholders may receive
a larger capital gain distribution, if any, than they would in the absence of
such transactions.
The Trust under which the Fund is created is organized as a Massachusetts
business trust. Under current law, so long as the Fund qualifies for federal
income tax treatment as described above, it is believed that neither the Trust
nor the Fund should be liable for any income or franchise tax in The
Commonwealth of Massachusetts.
The Fund is generally required to withhold and remit to the U.S. Treasury
31% of redemption proceeds and dividends from net investment income and capital
gains distributions credited to any shareholder account for which an incorrect
or no taxpayer identification number has been provided or where the Fund is
notified that the shareholder has under-
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<PAGE>
reported income in the past (or the shareholder fails to certify that he is not
subject to such withholding).
Shareholders are advised to consult their own tax advisers for more
detailed information concerning the federal taxation of the Fund and the income
tax consequences of an investment in the Fund to its shareholders.
REDEMPTIONS
The procedures for redemptions and withdrawals are summarized in the
Prospectus following the caption "How to Redeem."
The Fund may suspend the right of redemption for the Fund and may postpone
payment when the Exchange is closed for other than weekends or holidays, or if
permitted by the rules of the Securities and Exchange Commission during periods
when trading on the Exchange is restricted or during an emergency which makes it
impracticable for the Fund to dispose of its securities or fairly to determine
the value of the net assets of the Fund, or during any other period permitted by
the Securities and Exchange Commission for the protection of investors.
The Fund will normally redeem a shareholder's shares for cash. However, if
in any 90-day period a shareholder seeks to redeem shares totaling the lesser of
$250,000 or 1% of the Fund's total assets, the Fund may, in unusual
circumstances, redeem any additional shares by payment in kind of securities
held in the portfolio of the Fund.
DESCRIPTION OF INVESTMENTS
1. U.S. GOVERNMENT SECURITIES.
OBLIGATIONS BACKED BY FULL FAITH AND CREDIT OF THE U.S. GOVERNMENT -- are
bills, certificates of indebtedness, notes and bonds issued by (i) the U.S.
Treasury or (ii) agencies, authorities and instrumentalities of the U.S.
Government or other entities and backed by the full faith and credit of the U.S.
Government. Such obligations include, but are not limited to, obligations
issued by the Government National Mortgage Association, Farmers' Home
Administration and the Small Business Administration.
OTHER U.S. GOVERNMENT SECURITIES -- are bills, certificates of
indebtedness, notes, and bonds issued by agencies, authorities and
instrumentalities of the U.S. Government which are supported by the right of the
issuer to borrow from the U.S. Treasury or by the credit of the agency,
authority or instrumentality itself. Such obligations include, but are not
limited to, obligations issued by the Tennessee Valley Authority, the Bank for
Cooperatives, Federal
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<PAGE>
Home Loan Banks, Federal Intermediate Credit Banks, Federal Land Banks, and the
Federal National Mortgage Association.
U.S. Government Securities do not include securities issued or guaranteed
by state governments or instrumentalities.
2. MONEY MARKET INSTRUMENTS.
CERTIFICATES OF DEPOSIT - certificates issued against funds deposited in a
bank, are for a definite period of time, earn a specified rate of return, and
are normally negotiable.
BANKERS' ACCEPTANCES - short-term credit instruments used to finance the
import, export, transfer or storage of goods. They are termed "accepted" when a
bank guarantees their payment at maturity.
EURODOLLAR OBLIGATIONS - obligations of foreign branches of U.S. banks.
YANKEEDOLLAR OBLIGATIONS - obligations of domestic branches or subsidiaries
of foreign banks.
COMMERCIAL PAPER - promissory notes issued by corporations (including banks
and bank holding companies), in order to finance their short-term credit needs.
MASTER DEMAND NOTES - notes issued by corporations that are payable on
demand by either the holder or the issuer.
CORPORATE OBLIGATIONS - bonds and notes issued by corporations in order to
finance longer term credit needs.
REPURCHASE AGREEMENTS - are agreements by which the Fund acquires a
security (usually a U.S. Government Security) and a simultaneous commitment from
the seller (a member bank of the Federal Reserve System or, to the extent
permitted by the Investment Company Act, a recognized securities dealer) to
repurchase the security at an agreed upon price and date. The resale price is
in excess of the purchase price and reflects an agreed upon market rate
unrelated to the coupon rate on the purchased security. Such transactions
afford an opportunity for the Fund to earn a return on temporarily available
cash at no market risk, although the Fund may be subject to various delays and
risks of loss if the seller is unable to meet its obligation to repurchase.
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<PAGE>
APPENDIX A
The nationally recognized statistical rating organizations (individually, an
"NRSRO") that may be utilized with regard to portfolio investments for the Fund
include Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Corporation ("S&P"), Duff & Phelps, Inc. ("Duff"), Fitch Investors Service, Inc.
("Fitch"), IBCA Limited and its affiliate, IBCA Inc. (collectively, "IBCA"), and
Thomson BankWatch, Inc. ("Thomson"). Set forth below is a description of the
relevant ratings of each such NRSRO. The NRSROs that may be utilized by MERUS
and the description of each NRSRO's ratings is as of the date of this Statement
of Additional Information, and may subsequently change.
LONG-TERM DEBT RATINGS (may be assigned, for example, to corporate and municipal
bonds)
Description of the two highest long-term debt ratings by Moody's (Moody's
applies numerical modifiers (1, 2 and 3) in each rating category to indicate the
security's ranking within the category):
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risk appear somewhat larger than in Aaa securities.
Description of the two highest long-term debt ratings by S&P (S&P may apply a
plus (+) or minus (-) to a particular rating classification to show relative
standing within that classification):
AAA Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small
degree.
A-1
<PAGE>
Description of the two highest long-term debt ratings by Duff:
AAA Highest credit quality. The risk factors are negligible being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality Protection factors are strong.
AA Risk is modest but may vary slightly from time to time
AA- because of economic conditions.
Description of the two highest long-term debt ratings by Fitch (plus or minus
signs are used with a rating symbol to indicate the relative position of the
credit within the rating category):
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA."
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments, short-
term debt of these issues is generally rated "[-]+."
IBCA's description of its two highest long-term debt ratings:
AAA Obligations for which there is the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
significantly.
AA Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic, or financial
conditions may increase investment risk albeit not very significantly.
Thomson's description of its two highest long-term debt ratings:
A Company possesses an exceptionally strong balance sheet and earnings
record, translating into an excellent reputation and unquestioned
access to its natural money markets. If weakness or vulnerability
exists in any aspect of the company's business, it is entirely
mitigated by the strengths of the organization.
A-2
<PAGE>
A/B Company is financially very solid with a favorable track record and no
readily apparent weakness. Its overall risk profile, while low, is
not quite as favorable as for companies in the highest rating
category.
SHORT-TERM DEBT RATINGS (may be assigned, for example, to commercial paper,
master demand notes, bank instruments, and letters of credit)
Moody's description of its two highest short-term debt ratings:
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a
superior capacity for repayment of senior short-term promissory
obligations. Prime-1 repayment capacity will normally be
evidenced by many of the following characteristics:
-Leading market positions in well-established industries.
-High rates of return on funds employed.
-Conservative capitalization structures with moderate
reliance on debt and ample asset protection.
-Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
-Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong
capacity for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
S&P's description of its two highest short-term debt ratings:
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to have extremely strong
safety characteristics are denoted with a plus sign (+).
A-3
<PAGE>
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high
as for issues designated "A-1."
Duff's description of its two highest short-term debt ratings (Duff incorporates
gradations of "1+" (one plus) and "1-" (one minus) to assist investors in
recognizing quality differences within the highest rating category):
Duff 1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
Duff 1- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk
factors are very small.
Duff 2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets
is good. Risk factors are small.
Fitch's description of its two highest short-term debt ratings:
F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for
timely payment.
F-1 Very Strong Credit Quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than
issues rated F-1+.
F-2 Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as for issues assigned F-1+ or
F-1 ratings.
IBCA's description of its two highest short-term debt ratings:
A+ Obligations supported by the highest capacity for timely
repayment.
A1 Obligations supported by a very strong capacity for timely
repayment.
A-4
<PAGE>
SHORT-TERM LOAN/MUNICIPAL NOTE RATINGS
Moody's description of its two highest short-term loan/municipal note ratings:
MIG-1/VMIG-1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
S&P's description of its two highest municipal note ratings:
SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
Thomson's description of its two highest short-term ratings:
TBW-1 The highest category; indicates the degree of safety regarding
timely repayment of principal and interest is very strong.
TBW-2 The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated
"TBW-1".
A-5
<PAGE>
NATIONAL MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
<TABLE>
<S> <C>
ASSETS
Investments, at amortized cost (cost $659,021,567) (Note
1)..................................................... $659,021,567
Cash.................................................... 76,516
Receivable for Fund shares sold......................... 16,229,201
Other................................................... 120,589
----------------
Total assets.................................... 675,447,873
----------------
LIABILITIES
Payables and other liabilities:
Fund shares redeemed.................................. 21,529,021
Dividends............................................. 922,830
Management fees (Note 3).............................. 225,004
Shareholder communications............................ 110,561
Trustees' fees........................................ 77,521
Transfer and dividend disbursing agent fees........... 54,054
Distribution fees (Note 4)............................ 53,689
Other................................................. 147,762
----------------
Total liabilities............................... 23,120,442
----------------
NET ASSETS.................................................. $652,327,431
----------------
----------------
NET ASSET VALUE, REDEMPTION VALUE AND OFFERING PRICE PER
SHARE
($652,327,431 DIVIDED BY 652,327,431 shares)............. $1.00
----------------
----------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest and discount earned........................ $ 33,807,078
----------------
EXPENSES
Management fees (Note 3)............................ 2,560,734
Distribution fees (Note 4).......................... 609,136
Transfer and dividend disbursing agent fees......... 360,560
Legal and auditing fees............................. 230,923
Trustees' fees and expenses (Note 3)................ 127,614
Registration and filing fees........................ 122,547
Shareholder communications.......................... 95,299
Insurance expenses.................................. 61,776
Custodian fees and expenses......................... 35,058
----------------
Total expenses.................................. 4,203,647
----------------
NET INVESTMENT INCOME AND NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................................. $ 29,603,431
----------------
----------------
</TABLE>
See accompanying notes to financial statements.
F-1
<PAGE>
NATIONAL MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------
1996 1995
-------------- ---------------
<S> <C> <C>
OPERATIONS
Net investment income and net increase in net assets resulting from
operations................................................................ $ 29,603,431 $ 35,922,653
-------------- ---------------
DIVIDENDS TO SHAREHOLDERS....................................................... (29,603,431) (35,922,653)
-------------- ---------------
BENEFICIAL INTEREST TRANSACTIONS
Net decrease in net assets resulting from beneficial interest transactions
(Note 2).................................................................. (32,900,860) (138,114,232)
-------------- ---------------
Net decrease in net assets.................................................. (32,900,860) (138,114,232)
NET ASSETS
Beginning of period......................................................... 685,228,291 823,342,523
-------------- ---------------
End of period............................................................... $ 652,327,431 $ 685,228,291
-------------- ---------------
-------------- ---------------
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
NATIONAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- ----------- ------------
<C> <S> <C>
SHORT-TERM NOTES -- 101.0%
BANKS -- 11.7%
Government Development Bank for Puerto Rico:
$11,500,000 5.29%, 10/8/96...................................... $ 11,488,171
5,000,000 5.35%, 10/2/96...................................... 4,999,257
7,600,000 5.35%, 10/7/96...................................... 7,593,223
5,000,000 5.40%, 10/9/96...................................... 4,994,000
12,526,000 Matterhorn Capital Corp., 5.34%, 10/21/96........... 12,488,840
3,000,000 Oesterreichische Kontrollbank AG, 5.40%, 11/22/96... 2,976,600
12,100,000 UBS Finance (DE) Inc., 5.33%, 10/3/96............... 12,096,417
U.S. Financial, Inc., guaranteed by Commerzbank AG:
10,000,000 5.34%, 10/21/96..................................... 9,970,333
9,865,000 5.40%, 11/12/96..................................... 9,802,850
------------
76,409,691
------------
BEVERAGES -- 4.3%
Bass Finance (C.I.) Ltd., guaranteed by Bass PLC:
10,000,000 5.32%, 11/26/96..................................... 9,917,244
18,600,000 5.33%, 12/10/96..................................... 18,407,232
------------
28,324,476
------------
BROKER/DEALERS -- 14.2%
Bear Stearns & Co., Inc.:
7,000,000 5.35%, 10/18/96..................................... 6,982,315
15,000,000 5.37%, 10/23/96..................................... 14,950,775
10,000,000 5.40%, 11/4/96...................................... 9,949,000
Goldman Sachs Group, L.P.:
10,000,000 5.37%, 10/4/96...................................... 9,995,525
10,000,000 5.37%, 10/8/96...................................... 9,989,558
10,000,000 5.40%, 11/7/96...................................... 9,944,500
Merrill Lynch & Co., Inc.:
10,000,000 5.28%, 10/9/96...................................... 9,988,267
3,700,000 5.31%, 10/7/96...................................... 3,696,726
17,000,000 5.41%, 10/31/96..................................... 16,923,358
------------
92,420,024
------------
</TABLE>
F-3
<PAGE>
NATIONAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- ----------- ------------
SHORT-TERM NOTES -- (CONTINUED)
<C> <S> <C>
BUILDING MATERIALS -- 3.2%
Redland Finance, Inc.:
$10,000,000 5.28%, 10/4/96...................................... $ 9,995,600
11,100,000 5.35%, 10/10/96..................................... 11,085,154
------------
21,080,754
------------
CHEMICALS -- 2.3%
15,000,000 Dupont (E.I.) DeNemours & Co., 5.33%, 10/29/96...... 14,937,817
------------
COMMERCIAL FINANCE -- 12.6%
APRECO, Inc.:
10,000,000 5.30%, 10/15/96..................................... 9,979,389
10,000,000 5.33%, 10/21/96..................................... 9,970,389
CIESCO L.P.:
10,000,000 5.33%, 10/25/96..................................... 9,964,467
20,000,000 5.40%, 10/1/96...................................... 20,000,000
Sheffield Receivables Corp.:
10,000,000 5.37%, 10/7/96...................................... 9,991,050
12,000,000 5.37%, 10/15/96..................................... 11,974,940
10,000,000 5.40%, 10/21/96..................................... 9,970,000
------------
81,850,235
------------
CONGLOMERATES -- 1.7%
10,800,000 CSR Finance Ltd., guaranteed by CSR Ltd., 5.32%,
11/13/96.......................................... 10,731,372
------------
CONSUMER FINANCE -- 14.8%
CSW Credit, Inc.:
3,200,000 5.27%, 10/9/96...................................... 3,196,252
8,000,000 5.33%, 10/24/96..................................... 7,972,758
6,000,000 5.33%, 11/7/96...................................... 5,967,132
4,300,000 5.35%, 10/22/96..................................... 4,286,580
4,800,000 5.37%, 10/25/96..................................... 4,782,816
5,000,000 5.43%, 10/22/96..................................... 4,984,163
15,300,000 Dean Witter, Discover & Co., 5.28%, 10/3/96......... 15,295,512
Student Loan Finance Corp.:
10,000,000 5.29%, 10/21/96..................................... 9,970,611
9,700,000 5.31%, 11/1/96...................................... 9,655,647
9,800,000 5.45%, 10/1/96...................................... 9,800,000
</TABLE>
F-4
<PAGE>
NATIONAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- ----------- ------------
SHORT-TERM NOTES -- (CONTINUED)
<C> <S> <C>
US Central Credit Union:
$ 8,600,000 5.32%, 10/17/96..................................... $ 8,579,666
4,400,000 5.33%, 10/17/96..................................... 4,389,577
7,800,000 5.34%, 10/3/96...................................... 7,797,686
------------
96,678,400
------------
DIVERSIFIED FINANCIAL -- 1.3%
8,478,000 General Electric Capital Corp., 5.35%, 10/28/96..... 8,443,982
------------
DRUG WHOLESALERS -- 1.5%
10,000,000 SmithKline Beecham Corp., 5.35%, 10/23/96........... 9,967,306
------------
ELECTRIC UTILITIES -- 3.4%
National Rural Utilities Cooperative Finance Corp.:
7,200,000 5.26%, 10/28/96..................................... 7,171,596
5,000,000 5.36%, 11/1/96...................................... 4,976,922
10,000,000 5.36%, 11/5/96...................................... 9,947,889
------------
22,096,407
------------
LEASING & FACTORING -- 4.7%
PHH Corp.:
8,000,000 5.32%, 10/24/96..................................... 7,972,809
5,000,000 5.35%, 10/9/96...................................... 4,994,056
8,000,000 5.35%, 10/16/96..................................... 7,982,167
10,000,000 5.35%, 10/17/96..................................... 9,976,222
------------
30,925,254
------------
OIL-INTEGRATED -- 6.4%
9,700,000 Petrofina Delaware, Inc., 5.40%, 10/3/96............ 9,697,090
Statoil:
10,000,000 5.32%, 10/16/96..................................... 9,977,833
15,000,000 5.33%, 10/18/96..................................... 14,962,246
7,000,000 5.43%, 10/25/96..................................... 6,974,660
------------
41,611,829
------------
PUBLISHING/PRINTING -- 2.9%
Pearson, Inc.:
6,750,000 5.33%, 10/15/96..................................... 6,732,605
12,200,000 5.34%, 10/18/96..................................... 12,169,236
------------
18,901,841
------------
</TABLE>
F-5
<PAGE>
NATIONAL MONEY MARKET FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
- ----------- ------------
SHORT-TERM NOTES -- (CONTINUED)
<C> <S> <C>
RESTAURANTS -- 6.1%
Golden Managers Acceptance Corp.:
$20,000,000 5.29%, 10/2/96...................................... $ 19,997,061
10,000,000 5.38%, 10/16/96..................................... 9,977,583
10,000,000 Supplier Managers Acceptance Corp., 5.38%,
10/16/96.......................................... 9,977,583
------------
39,952,227
------------
SPECIAL PURPOSE FINANCIAL -- 8.4%
Cooperative Association of Tractor Dealers, Inc.:
12,200,000 5.33%, 10/11/96..................................... 12,181,937
3,000,000 5.35%, 10/23/96..................................... 2,990,192
8,500,000 5.40%, 10/3/96...................................... 8,497,450
Preferred Receivables Funding Corp.:
16,100,000 5.29%, 10/22/96..................................... 16,050,318
10,000,000 5.32%, 10/7/96...................................... 9,991,133
5,000,000 5.35%, 10/1/96...................................... 5,000,000
------------
54,711,030
------------
TELEPHONE UTILITIES -- 1.5%
10,000,000 Bell Atlantic Capital Funding Corp.,
guaranteed by Bell Atlantic Corp., 5.42%,
10/15/96.......................................... 9,978,922
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (Cost $659,021,567)................... 101.0% 659,021,567
Liabilities in Excess of Other Assets................... (1.0) (6,694,136)
------ ------------
NET ASSETS.............................................. 100.0% $652,327,431
------ ------------
------ ------------
</TABLE>
Short-term notes are generally traded on a discount basis; the interest rate is
the discount rate received by the Fund at the time of purchase.
See accompanying notes to financial statements.
F-6
<PAGE>
NATIONAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations -- net
investment income................................ 0.05 0.05 0.03 0.02 0.04
Dividends to shareholders......................... (0.05) (0.05) (0.03) (0.02) (0.04)
--------- --------- --------- ----------- -----------
Net asset value, end of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------
Total Return.................................... 5.0% 5.2% 3.2% 2.3% 3.7%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).......... $652,327 $685,228 $823,343 $ 652,256 $2,286,067
Ratios to average net assets:
Net investment income............................. 4.86% 5.15% 3.20% 2.26% 3.70%
Expenses.......................................... 0.69% 0.69% 0.61% 0.71% 0.74%
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
NATIONAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Accumulation Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end, diversified, management
investment company. The Trust consists of the National Money Market Fund, which
is managed by PIMCO Advisors L.P. ("the Manager").
INVESTMENT VALUATION -- The Trust values its portfolio on the basis of
amortized cost which approximates market value. The Trust maintains a
dollar-weighted average portfolio maturity of 90 days or less and only purchases
instruments having remaining maturities of 397 days or less.
FEDERAL TAXES -- No provision for Federal income taxes has been made since
the Trust has qualified as a regulated investment company under the Internal
Revenue Code. The cost basis of investments approximates amortized cost, which
is used for both tax and book purposes.
OTHER -- Security transactions are accounted for on the date the investments
are purchased or sold (trade date). Dividends (representing net investment
income) are declared daily and paid or reinvested in additional Trust shares
monthly. Investment income consists solely of interest income which includes
amortization of premium or accretion of discount.
ESTIMATES -- The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
2) SHARES AND DOLLARS OF BENEFICIAL INTEREST
The Trust has authorized an unlimited number of $.00001 par value shares of
beneficial interest. Transactions in shares and dollars of beneficial interest
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
Shares and dollars sold............................... 5,037,785,418 5,211,739,188
Shares and dollars issued to shareholders in
reinvestment of dividends............................ 27,657,940 34,655,237
------------------ ------------------
Total......................................... 5,065,443,358 5,246,394,425
Shares and dollars redeemed........................... (5,098,344,218) (5,384,508,657)
------------------ ------------------
Net decrease.......................................... (32,900,860) (138,114,232)
------------------ ------------------
------------------ ------------------
</TABLE>
F-8
<PAGE>
NATIONAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1996
3) MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees are paid to the Manager in accordance with the investment
advisory agreement (the "Agreement") with the Trust. Under the Agreement, the
Manager selects and reviews investments and provides executive and other
personnel for management of the Trust. For such services, the Manager receives a
fee, computed daily and paid monthly, based on the annual percentage rates of
the corresponding levels of the Trust's average daily net assets as follows:
0.425% of the first $500 million,
0.400% of the next $500 million,
0.375% of the next $500 million,
0.350% of the next $500 million,
0.325% on amounts in excess of $2 billion.
The Manager's compensation is subject to reduction to the extent in any year
that the expenses (excluding brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) of the Trust exceed
statutory limits of any jurisdiction in which the Trust's shares are qualified
for offer and sale. The most restrictive of such limitations is presently
believed to be 2.5% of the first $30 million of average annual net assets, 2% of
the next $70 million and 1.5% of any excess over $100 million.
The Trustees have approved a unified fee plan, covering compensation from
both of the Trusts for which they serve as independent Trustees, the Cash
Accumulation Trust and the PIMCO Advisors Funds. The fee is allocated between
the Trusts and among the Funds of the Trusts based on relative net assets. The
total Trustees' fees to be allocated are as follows:
<TABLE>
<S> <C>
Annual Retainer............................. $ 35,000
Meeting Fee (each meeting attended)......... 3,000
Committees:
Contract Chairman....................... 6,000
Audit Chairman.......................... 2,000
Audit Member............................ 1,000
</TABLE>
In addition, the Trustees receive reimbursement for travel and out-of-pocket
costs. Several individuals who are trustees or officers (or both) of the Trust
are also directors or officers of the Manager or its affiliates.
4) DISTRIBUTION ASSISTANCE
Pursuant to a Distribution Plan adopted by the Trust, the Trust compensated
the distributor, PIMCO Advisors Distribution Company, an affiliate of the
Manager, $609,136 for services provided and expenses incurred during the year
ended September 30, 1996 in connection with assistance rendered in the sale of
Trust shares. During the year ended September 30, 1996, the distribution fee,
which is accrued daily and paid monthly, was equal on an annual basis to 0.10%
of the Trust's average daily net assets.
F-9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Cash Accumulation Trust:
We have audited the accompanying statement of assets and liabilities of the
Cash Accumulation Trust (National Money Market Fund), including the statement of
investments, as of September 30, 1996, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
National Money Market Fund of the Cash Accumulation Trust as of September 30,
1996, and the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
October 23, 1996
F-10
<PAGE>
CASH ACCUMULATION TRUST
REGISTRATION STATEMENT ON FORM N-1A
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements (included in Part B).
(b) Exhibits:
1.(a) Agreement and Declaration of Trust of the Trust dated
April 27, 1984 and Amendment No. 1 dated June 19, 1984
incorporated by reference to Exhibit 1 to Registration
Statement on Form N-1A (No. 2-91889) filed on June 26, 1984
(the "Registration Statement").
(b) Amendment No. 2 to Agreement and Declaration of Trust of the
Trust dated August 9, 1984 incorporated by reference to
Exhibit 1 to Pre-Effective Amendment No. 1 to the
Registration Statement filed on September 12, 1984.
(c) Amendment No. 3 to Agreement and Declaration of Trust of the
Trust dated September 11, 1984 incorporated by reference to
Exhibit 2 to Post-Effective Amendment No. 1 to the
Registration Statement filed on February 1, 1985.
2.(a) By-Laws of the Trust incorporated by reference to Exhibit 2
to the Registration Statement.
(b) Amendment to By-Laws of the Trust dated July 25, 1990
incorporated by reference to
<PAGE>
Exhibit 2(b) to Post-Effective Amendment No. 12 to the
Registration Statement filed on November 16, 1992.
(c) Amendment to By-Laws of the Trust dated May 24, 1991
incorporated by reference to Exhibit 2(c) to Post-Effective
Amendment No. 12 to the Registration Statement filed on
November 16, 1992.
3. None
4. Specimen Share Certificates of the National Money Market
Fund incorporated by reference to Exhibit 4 to Pre-Effective
Amendment No. 1 to the Registration Statement filed on
September 12, 1984.
5.(a) Management Contract between the Trust and PIMCO Advisors
L.P. incorporated by reference to Exhibit 5(a) to Post-
Effective Amendment No. 18 to the Registration Statement
filed on January 20, 1995.
(b) Sub-Adviser Agreement between PIMCO Advisors L.P. and
Columbus Circle Investors incorporated by reference to
Exhibit 5(b) to Post-Effective Amendment No. 18 to the
Registration Statement filed on January 20, 1995.
6.(a) Selected Dealer Agreement between Thomson Investor Services
Inc. and Prudential Securities Inc. dated July 31, 1991
incorporated by reference to Exhibit 6(b) to Post-Effective
Amendment No. 12 to the Registration Statement filed on
November 16, 1992.
-2-
<PAGE>
(b) Distributor's Contract dated November 16, 1994 between the
Trust and PIMCO Advisors Distribution Company incorporated
by reference to Exhibit 6(c) to Post-Effective Amendment No.
18 to the Registration Statement filed on January 20, 1995.
7. None.
8. Custody Agreement dated December 10, 1993 between the Trust
and The Bank of New York incorporated by reference to
Exhibit 8 to Post-Effective Amendment No. 18 to the
Registration Statement filed on January 20, 1995.
9.(a) Shareholder Service Agreement dated October 31, 1984 between
the Trust and Shareholder Services, Inc. incorporated by
reference to Exhibit 9(a) to Post-Effective Amendment No. 12
to the Registration Statement filed on November 16, 1992.
(b) Accounting Services Agreement dated October 31, 1984 among
the Trust, Thomson McKinnon Asset Management Inc. and
Oppenheimer Asset Management Corporation incorporated by
reference to Exhibit 9(b) to Post-Effective Amendment No. 12
to the Registration Statement filed on November 16, 1992.
(c) Organizational Expense Reimbursement Agreement dated
October, 1984 between the Trust and Thomson McKinnon Asset
Management Inc. incorporated by reference to Exhibit 9(c) to
Post-Effective Amendment No. 12 to the Registration
Statement filed on November 16, 1992.
-3-
<PAGE>
(d) Blue Sky Service Agreement dated December 11, 1990 between
the Trust and Thomson Advisory Group incorporated by
reference to Exhibit 9(d) to Post-Effective Amendment No. 12
to the Registration Statement filed on November 16, 1992.
10. Opinion of Ropes & Gray incorporated by reference to Exhibit
10 to Pre-Effective Amendment No. 1 to the Registration
Statement filed on September 12, 1984.
11. Consent of Coopers & Lybrand L.L.P. IS filed herewith.
12. None.
13. Investment Letter from Thomson McKinnon Asset Management
Inc. to the Trust incorporated by reference to Exhibit 13 to
Pre-Effective Amendment No. 1 to the Registration Statement
filed on September 12, 1984.
14. None.
15. Amended Distribution Plan of the Trust, as revised through
October 26, 1989, incorporated by reference to Exhibit 15 to
Post-Effective Amendment No. 9 to the Registration Statement
filed on December 4, 1989.
16. Schedule for calculation of performance information
incorporated by reference to Post-Effective Amendment No. 10
to the Registration Statement filed on December 3, 1990.
17. Financial Data Schedule for the fiscal year ended
September 30, 1996 (filed as
-4-
<PAGE>
Exhibit 27 for EDGAR purposes) is filed herewith.
18. None
19.(a) Powers of Attorney for E. Philip Cannon, Donald P. Carter,
Emmet Cashin, Jr., Gary L. Light, Robert A. Prindiville and
Joel Segall incorporated by reference to Post-Effective
Amendment No. 8 to the Registration Statement filed on
November 23, 1988.
(b) Power of Attorney for W. Bryant Stooks incorporated by
reference to Exhibit 17(c) to Post-Effective Amendment No.
14 to the Registration Statement filed on November 18, 1993.
(c) Power of Attorney for Gary A. Childress incorporated by
reference to Exhibit 17(d) to Post-Effective Amendment No.
14 to the Registration Statement filed on November 18, 1993.
(d) Power of Attorney for Gerald M. Thorne incorporated by
reference to Exhibit 17(e) to Post-Effective Amendment No.
14 to the Registration Statement filed on November 18, 1993.
(e) Power of Attorney for William D. Cvengros incorporated by
reference to Exhibit 17 to Post-Effective Amendment No. 16
to the Registration Statement filed on November 18, 1993.
(f) Power of Attorney for John P. Hardaway is filed herewith.
-5-
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES.
As of December 31, 1996, there were 27,865 record holders of the Trust's
securities.
Item 27. INDEMNIFICATION.
Item 27 of the Trust's Registration Statement, filed with the Commission on
June 26, 1984, is incorporated herein by reference.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT
ADVISER.
(a) PIMCO Advisors L.P.(referred to herein as either the "Manager" or PIMCO
Advisors L.P.) was organized as a limited partnership under Delaware law in 1987
and is registered as an investment adviser under the Investment Advisers Act of
1940. The Manager advises one mutual fund complex other than the Trust, PIMCO
Funds: Multi-Manager Series ("PFMMS"). The Manager also has various subsidiary
partnerships which advise and manage mutual funds, individual accounts, profit-
sharing and pension funds and institutional accounts and act as sub-advisers to
certain mutual funds.
PIMCO Partners, G.P. ("PIMCO GP"), the Manager's general partner, is a
general partnership with two partners: (i) an indirect wholly-owned subsidiary
of Pacific Mutual Life Insurance Company; and (ii) PIMCO Partners, L.L.C.
("LLC"), a limited liability company, all of the interests of which are held
directly by the Managing Directors of Pacific Investment Management Company who
are William H. Gross, Dean S. Meiling, James F. Muzzy, William F. Podlich, III,
Frank B. Rabinovitch, Brent R. Harris, John L. Hague, William S. Thompson, Jr.,
William C. Powers, David H. Edington and Benjamin L. Trosky (collectively, the
"Managing Directors").
-6-
<PAGE>
PIMCO Partners, G.P. has substantially delegated its management and control of
the Manager to an Equity Board and an Operating Board of the Manager. The
activities of the Manager are controlled by its Operating Board except that
certain non-routine or extraordinary actions may not be effected by the
Operating Board without the approval of the Manager's Equity Board. The
Operating Board has in turn delegated the authority to manage day-to-day
operations and policies to an Operating Committee. The Operating Board is
composed of twelve members, of which seven (including the chairman) are
designated by Pacific Investment Management Company, a subsidiary general
partnership of the Manager. The Equity Board is composed of twelve members
including the chief executive officer of the Manager, three members designated
by Pacific Financial Asset Management Company, the chairman of the Operating
Board, two members designated by LLC, two members designated by holders of
Series B Preferred Stock of Thomson Advisory Group Inc., the former general
partner of the Manager, and three independent members. Because of the ability
to designate a majority of the Members of the Operating Board, Pacific
Investment Management Company and the Managing Directors could be said to
control the Manager, although Pacific Investment Management Company and the
Managing Directors disclaim such authority.
Set forth below are the substantial business engagements during at least
the two past fiscal years of each director or officer of the Manager and of each
member of the Manager's Operating and Equity Boards:
NAME AND POSITION BUSINESS AND
WITH MANAGER OTHER CONNECTIONS
William D. Cvengros Trustee of the Trust; Trustee and
President, Chief Executive Chairman, PFMMS; Director, PIMCO
Officer, Member of Equity and Funds Distribution Company ("PFDCO");
Operating Boards and Operating Director, Furon Corporation.
Committee Formerly, Trustee, Pimco Advisors
Funds ("PAF"), Vice Chairman, Chief
Investment Officer and Director,
Pacific Mutual Life Insurance
Company, Director and Chairman,
-7-
<PAGE>
Pacific Financial Asset Management
Company, Director, Mutual Service
Corporation, Director, Pacific
Equities Network, Director, PFAMCo UK
Limited, Non-Executive Director,
Blairlogie Capital Management
Limited, Trustee and Vice President,
PFAMCo Funds, Chairman and Director,
Parametric Portfolio Associates,
Inc., President, Chairman, Chief
Executive Officer, Director and
Trustee of various realty group
trusts, and PMRealty Advisors, Inc.,
President, Chief Executive Officer
and Director, NFJ Investment Group,
Inc., Vice President and Trustee,
Pacific Select Fund, Director,
Cadence Capital Management
Corporation
Irwin F. Smith Chairman, Managing Director, Chief
Member of Operating and Equity Executive Officer and Chief
Boards and Operating Committee Investment Officer, Columbus Circle
Investors ("CCI") and Chairman,
Columbus Circle Investors Management
Inc.; Formerly, Chairman of Thomson
Advisory Group L.P. ("TAGLP") and of
the Columbus Circle Investors
Division of TAGLP, Director and
Chairman, Thomson Advisory Group Inc.
("TAG Inc.")
Robert A. Prindiville Trustee and President of the Trust ;
Vice President Trustee of PFMMS. Formerly, Director
and Chairman, PFDCO, Trustee, PAF,
President of TAGLP, President and
Director, TAG Inc., Chairman of TIS
Donald K. Miller Chairman, Greylock Financial Inc.;
Member of Equity Board Director of Huffy Corporation, RPM,
Inc. and Christensen Boyles
Corporation; Director, President and
Chief Executive Officer, TAG Inc.
Formerly, Vice
-8-
<PAGE>
Chairman, TAGLP, Director and Vice
Chairman of TIS
Newton B. Schott, Jr. Secretary, CCI, Columbus Circle
Senior Vice President Investors Management Inc., Cadence
- Legal, and Secretary Capital Management Inc., NFJ
Management Inc. and Parametric
Management Inc.; Executive Vice
President, Director, Secretary and
Chief Administrative Officer, PFDCO;
Vice President and Clerk of the
Trust. Vice President and Secretary
of PFMMS. Formerly, Vice President
and Clerk, PAF, Executive Vice
President, Secretary and General
Counsel, TAGLP, Executive Vice
President, Secretary and General
Counsel, TAG Inc., Executive Vice
President and Secretary, TIS
Robert M. Fitzgerald Chief Financial Officer, Senior Vice
Senior Vice President - Finance, President - Finance and Controller,
Chief Financial Officer and PFDCO; Senior Vice President, Finance
Controller and Controller, CCI and Columbus
Circle Investors Management Inc.;
Assistant Treasurer, Cadence Capital
Management; Treasurer, Cadence
Capital Management Inc., NFJ
Investment Group, NFJ Management
Inc., Parametric Portfolio
Associates, Parametric Management
Inc., Pacific Investment Management
Company, PIMCO Management Inc. and
StocksPLUS Management Inc. Formerly,
Chief Financial Officer, TPM
Financial, Vice President, Mechanics
National Bank, and Partner, Price
Waterhouse
Donald A. Chiboucas Managing Director and President, CCI;
Member of Operating Board Director and President, Columbus
Circle Investors Management Inc.
Formerly, Senior Executive Vice
President, TAGLP, President, Columbus
Circle Investors
-9-
<PAGE>
Division, TAGLP, Senior Executive
Vice President, TAG Inc.
Walter E. Auch, Sr. Management Consultant; Director of
Member of Equity Board Fort Dearborn Fund, Shearson VIP
Fund, Shearson Advisors Fund,
Shearson TRAK Fund, Banyan Land
Trust, Banyan Land Fund II, Banyan
Mortgage Fund, Allied Healthcare
Products, Inc., First Western Inc.,
DHR Group and Geotech Industries.
Formerly, Director, TAG Inc.
Donald R. Kurtz Formerly, Vice President of
Member of Equity Board International Asset Management,
General Motors Investment Management
Corp. and Director, TAG Inc.
Kenneth M. Poovey Partner, Latham & Watkins
General Counsel and Board
Secretary
Sharon A. Cheever Vice President and Investment
Vice President, Legal and Counsel, Pacific Mutual Life
Assistant Secretary Insurance Company. Formerly,
Assistant Vice President and
Associate Counsel, Pacific Mutual
Life Insurance Company
Ernest L. Schmider Vice President, Chief Administrative
Vice President, Legal and and Legal Officer, Pacific Investment
Assistant Secretary Management Company; Senior Vice
President, Secretary, Chief
Administrator and Legal Officer,
PIMCO Management Inc.; Director,
Assistant Secretary and Assistant
Treasurer, StocksPLUS Management Inc.
James F. McIntosh Executive Director, Allen Matkins,
Member of Equity Board Leck, Gamble & Mallory. Formerly,
Director of Pacific Investment
Management Company
-10-
<PAGE>
David B. Breed Director, Managing Director and Chief
Member of Operating Board Executive Officer, Cadence Capital
Management Inc.; Managing Director
and Chief Executive Officer, Cadence
Capital Management
Walter B. Gerken Director, Mullin Consulting Inc.;
Chairperson and Member of Equity Director, Executive Services Corp. of
Board Southern California. Formerly,
Director, Pacific Investment
Management Company, Chairman,
Director, Chairman of Executive
Committee and Chief Executive
Officer, Pacific Mutual Life
Insurance Company
William H. Gross Director and Managing Director, PIMCO
Member of Equity Board and Management Inc.; Managing Director,
Operating Board Pacific Investment Management
Company; Senior Vice President, PIMCO
Funds; Director and Vice President,
StocksPLUS Management, Inc.; Member
of PIMCO Partners LLC
Brent R. Harris Director and Managing Director, PIMCO
Member of Operating Board Management Inc.; Managing Director,
Pacific Investment Management
Company; Director and Vice President,
StocksPLUS Management, Inc.; Chairman
of the Board and Trustee, PIMCO Funds
and PIMCO Commercial Mortgage
Securities Trust, Inc.; Member of
PIMCO Partners LLC
Daniel S. Pickett Managing Director, CCI; Director,
Member of Operating Board Columbus Circle Investors Management,
Inc.
Dean S. Meiling Director and Managing Director, PIMCO
Member of Operating Board Management Inc.; Managing Director,
Pacific Investment Management
Company; Vice President, PIMCO Funds
and PIMCO Commercial Mortgage
Securities Trust, Inc.
-11-
<PAGE>
James F. Muzzy Director and Managing Director, PIMCO
Member of Operating Board Management Inc.; Managing Director,
Pacific Investment Management
Company; Vice President, PIMCO Funds;
Director and Vice President,
StocksPLUS Management, Inc.; Member
of PIMCO Partners LLC
William F. Podlich III Director and Managing Director, PIMCO
Member of Equity Board and Management Inc.; Managing Director,
Operating Board Pacific Investment Management
Company; Vice President, PIMCO
Commercial Mortgage Securities Trust,
Inc.; Member of PIMCO Partners LLC
William C. Powers Director and Managing Director, PIMCO
Member of Operating Board Management Inc.; Managing Director,
Pacific Investment Management
Company; Senior Vice President, PIMCO
Commercial Mortgage Securities Trust,
Inc.; Member of PIMCO Partners LLC
Glenn S. Schafer President and Director, Pacific
Member of Equity Board Mutual Life Insurance Company;
Chairman and Director, Mutual Service
Corporation, United Planners Group,
Inc., Pacific Equities Network and
Pacific Financial Holding Company
Thomas C. Sutton Chairman, Chief Executive Officer and
Member of Equity Board Director, Pacific Mutual Life
Insurance Company; Chairman, Trustee
and President, Pacific Select Fund;
Director, United Planners Group,
Inc., Pacific Equities Network,
Mutual Services Corporation and
Pacific Financial Holding Company
William S. Thompson, Jr. Director, Managing Director and Chief
Member of Equity Board; Chairman Executive Officer, PIMCO Management
and Member of Operating Inc.; Chief Executive Officer and
Managing Director, Pacific Investment
Management Company; Director and
President,
-12-
<PAGE>
Board; Member of Operating Committee StocksPLUS Management, Inc.;
Vice President, PIMCO Funds and
PIMCO Commercial Mortgage Securities
Trust, Inc.
Stephen J. Treadway Director, Chairman and President,
Executive Vice President PFDCO; President of the Trust;
President, PFMMS. Formerly,
Executive Vice President, Smith
Barney Inc.
James Ward None
Vice President
Richard M. Weil Assistant Secretary, CCI, Columbus
Senior Vice President, Legal Circle Investors Inc., Cadence
Counsel Capital Management, Cadence Capital
Management Inc., NFJ Management Inc.,
Parametric Management Inc., Pacific
Investment Management Company, PIMCO
Management Inc. and PFDCO; Secretary,
NFJ Investment Group, Parametric
Portfolio Associates, and StocksPLUS
Management, Inc.
The principal business address of the Manager is 800 Newport Center Drive,
Suite 100, Newport Beach, CA 92660. The address of PFDCO is 2187 Atlantic
Street, Stamford, CT 06902. The address of CCI and Columbus Circle Investors
Management Inc. is One Station Place, Stamford, CT 06902. The address of
Cadence Capital Management and Cadence Capital Management Inc. is Exchange
Place, 53 State Street, Boston, MA 02109. The address of NFJ Investment Group
and NFJ Management Inc. is 2121 San Jacinto, Suite 1840, Dallas, TX 75201. The
address of Parametric Portfolio Associates and Parametric Management Inc. is
7310 Columbia Center, 701 Fifth Avenue, Seattle, WA 98104. The address of
Pacific Financial Holding Company, Pacific Equities Network, Pacific Mutual Life
Insurance Company and Pacific Select Fund is 700 Newport Center Drive, Newport
Beach, CA 92660. The address of PIMCO Funds, PFMMS, Pacific Investment
Management Company, PIMCO Management Inc., PIMCO Commercial Mortgage Securities
Trust, Inc. and StocksPLUS Management, Inc. is 840 Newport Center Drive,
-13-
<PAGE>
Newport Beach, CA 92660. The address of Mutual Service Corporation is 7108
Fairway Drive, Palm Beach Gardens, FL 33418. The address of United Planners
Group, Inc. is 7333 East Double Tree Ranch Road, Scottsdale, AZ 85258.
(b) CCI is a general partnership formed on September 9, 1994 which is
registered as an investment adviser under the Investment Advisers Act of 1940.
The Manager and Columbus Circle Investors Management Inc.("CCI Inc."), a wholly-
owned subsidiary of the Manager, are the general partners of CCI. CCI consists
of the personnel of the former Columbus Circle Investors Division of TAGLP and
the investment personnel of the former Mutual Funds Division of TAGLP. CCI acts
as sub-adviser to other mutual funds and also advises and manages individual
accounts, profit sharing and pension funds and institutional accounts.
Set forth below are the substantial business engagements during at
least the two past fiscal years of each director or officer of CCI:
NAME AND POSITION BUSINESS AND
WITH CCI OTHER CONNECTIONS
Irwin F. Smith Member of Equity and Operating Boards
Chairman AND Managing and Operating Committee, PIMCO
Director Advisors L.P.; Director and
Chairman, CCI Inc.
Richard M. Weil Assistant Secretary, CCI Inc.,
Assistant Secretary Cadence Capital Management Inc., NFJ
Management Inc., Parametric
Management Inc., PIMCO Management
Inc. and PFDCO; Secretary, NFJ
Investment Group, Parametric
Portfolio Associates and StocksPLUS
Management, Inc.; Senior Vice
President, Legal Counsel, PIMCO
Advisors L.P.
Donald A. Chiboucas Member of Operating Board, PIMCO
President and Managing Director Advisors L.P.; Director and
President, CCI Inc.
-14-
<PAGE>
Louis P. Celentano Director and Vice President, CCI Inc.
Managing Director
Robert W. Fehrman Director, CCI Inc.
Managing Director
Marc Felman None
Managing Director
Amy M. Hogan Director, CCI Inc.
Managing Director
Daniel S. Pickett Member of Operating Board, PIMCO
Managing Director Advisors L.P.; Director, CCI Inc.
Anthony Rizza Director, CCI Inc.
Managing Director
Paul C. Tyborowski Director, CCI Inc.
Managing Director
Winthrop S. Headley None
Vice President
Clifford G. Fox Director, CCI Inc.
Managing Director
Harold R. Snedcof None
Vice President
Sharon S. Weslow None
Vice President
Michele Montano None
Senior Vice President
Cecelia Pastore None
Vice President
Paul A. Pantalena None
-15-
<PAGE>
Vice President
Jacob Navon None
Senior Vice President
Mark Fishman None
Senior Vice President
Paul Meeks None
Vice President
Anne Malone None
Vice President
Nathaniel J. Belknap None
Vice President
The address of CCI and CCI Inc. is One Station Place, Stamford, CT 06902.
Item 29. PRINCIPAL UNDERWRITERS.
(a) PFDCO, the Registrant's principal underwriter, also serves as
underwriter for PIMCO Funds and PFMMS. PFDCO is a wholly-owned subsidiary of
PIMCO Advisors L.P.
(b) Information with respect to directors and officers of PFDCO is as
follows:
Positions and Offices Positions and
Names and Principal with Principal Offices with
Business Addresses Underwriter Registrant
- ------------------- --------------------- -------------
Jeffrey L. Booth Vice President None
James D. Bosch Regional Vice None
President
-16-
<PAGE>
William D. Cvengros Director Trustee
Robert M. Fitzgerald Chief Financial None
Officer and
Treasurer
Michael J. Gallagher Vice President None
David S. Goldsmith Vice President None
Ronald H. Gray Vice President None
John B. Hussey Vice President None
Edward W. Janeczek Senior Vice President None
Johnathan C. Jones Vice President None
Jaishree B. Kemraj Assistant Vice None
President and
Assistant
Controller
William E. Lynch Senior Vice None
President
Jacqueline A. Mccarthy Vice President None
Andrew J. Meyers Executive Vice None
President
Fioja Moyer Regional Vice None
President
Philip J. Neugebauer Vice President None
Joffrey H. Pearlman Regional Vice None
President
Glynne Pisapia Regional Vice None
President
-17-
<PAGE>
Matthew M. Russell Vice President None
Newton B. Schott, Jr. Director, Executive Vice President;
Vice President, Chief Clerk
Administrative Officer
and Secretary
Robert M. Smith Vice President None
David P. Stone Regional Vice None
President
William H. Thomas, Jr. Regional Vice None
President
Stephen J. Treadway Director, Chairman President
and President
Paul H. Troyer Senior Vice None
President
Brian F. Trumbore Executive Vice None
President
Timothy G. Uecker Vice President None
Richard M. Weil Assistant None
Secretary
Glenn A. Zimmerman Vice President None
The principal business address of each such individual is 2187 Atlantic
Street, Stamford, CT 06902.
(c) The Registrant has no principal underwriter that is not an affiliated
person of the Registrant or an affiliated person of such an affiliated person.
-18-
<PAGE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include Registrant's Clerk,
Newton B. Schott, Jr.; Registrant's Manager, PIMCO Advisors L.P., and sub-
Adviser, CCI; Registrant's Custodian, The Bank of New York; and Registrant's
Transfer Agent and Shareholder Servicing Agent, Shareholder Services, Inc. The
address of PIMCO Advisors L.P. is 800 Newport Center Drive, Suite 100, Newport
Beach, CA 92660; the address of the Clerk is 2187 Atlantic Street, Stamford, CT
06902; the address of CCI is One Station Place, Stamford, CT 06902; the address
of the Custodian is 110 Washington Street, New York, NY 10286; and the address
of the Transfer Agent and Shareholder Servicing Agent is 3410 South Galena
Street, Denver, CO 80231.
Item 31. MANAGEMENT SERViceS.
None.
Item 32. UNDERTAKINGS.
(a) The Registrant undertakes to comply with Section 16(c) of the
Investment Company Act of 1940 as though such provisions of the Act were
applicable to the Registrant, except that the request referred to in the third
full paragraph thereof may only be made by shareholders who hold in the
aggregate at least 1 per centum of the outstanding shares of the Registrant,
regardless of the net asset value of the shares held by such requesting
shareholders.
-19-
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of Cash Accumulation Trust
is on file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant in his capacity as an officer and not
individually and that the obligations of or arising out of this instrument are
not binding upon any of the Trustees or shareholders of the Trust individually
but are binding only upon the assets and property of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 20 to this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Stamford, and
the State of Connecticut on the 23rd day of January, 1997.
CASH ACCUMULATION TRUST
By: /s/ Stephen J. Treadway
---------------------------
Stephen J. Treadway,
President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 20 has been signed below by the following persons in the
capacities and on the dates indicated.
Name Capacity Date
- ---- -------- ----
/s/ Robert A. Prindiville Trustee January 23, 1997
- --------------------------
Robert A. Prindiville
John P. Hardaway* Treasurer and
- -------------------------- Principal Financial
John P. Hardaway and Accounting
Officer
William D. Cvengros* Trustee
- --------------------------
William D. Cvengros
Gary L. Light* Trustee
- --------------------------
Gary L. Light
Joel Segall* Trustee
- --------------------------
Joel Segall
Donald P. Carter* Trustee
- --------------------------
Donald P. Carter
E. Philip Cannon* Trustee
- --------------------------
E. Philip Cannon
Gary A. Childress* Trustee
- --------------------------
Gary A. Childress
W. Bryant Stooks* Trustee
- --------------------------
W. Bryant Stooks
Gerald M. Thorne* Trustee
- --------------------------
Gerald M. Thorne
* By: /s/ Robert A. Prindiville
--------------------------
Robert A. Prindiville
Attorney-In-Fact
Date: January 23, 1997
-2-
<PAGE>
EXHIBIT LIST
Exhibit
- -------
11. Consent of Coopers & Lybrand L.L.P.
17. Financial Data Schedule
19.(e) Power of Attorney for John P. Hardaway
<PAGE>
Coopers Coopers & Lybrand L.L.P.
& Lybrand a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 20 to the
Registration Statement of Cash Accumulation Trust on Form N-1A (File No.
2-91889) (the "Registration Statement") of our report dated October 23, 1996 on
our audit of the financial statements and financial highlights of the Fund.
We also consent to the reference to our firm under the caption"Independent
Auditors" in the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
New York, New York
January 29, 1997
Coopers & Lybrand L.L.P., a registered limited liability partnership, is a
member firm of Coopers & Lybrand International
<PAGE>
POWER OF ATTORNEY
I, the undersigned Treasurer and Principal Financial and Accounting Officer
of PIMCO Advisors Funds and Cash Accumulation Trust, hereby constitute and
appoint Robert A. Prindiville, Newton B. Schott, Jr. and Joseph B. Kittredge,
Jr., and each of them singly, my true and lawful attorneys, with full power to
them and each of them, to sign for me, and in my name and in the capacities
indicated below, any and all amendments (including post-effective amendments) to
the Registration Statements of PIMCO Advisors Funds and Cash Accumulation Trust
on Form N-1A and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys full power and authority to do and perform each and
every act and thing requisite or necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys or any of them lawfully could do or cause
to be done by virtue hereof.
Name: Capacity: Date:
- ---- -------- ----
/s/ John P. Hardaway Treasurer and Principal 2/8/96
- -------------------- Financial and Accounting
John P. Hardaway Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Cash
Accumulation Trust annual report dated September 30, 1996 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> NATIONAL MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 659021567
<INVESTMENTS-AT-VALUE> 659021567
<RECEIVABLES> 16229201
<ASSETS-OTHER> 120589
<OTHER-ITEMS-ASSETS> 76516
<TOTAL-ASSETS> 675447873
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23120442
<TOTAL-LIABILITIES> 23120442
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 652327431
<SHARES-COMMON-STOCK> 652327431
<SHARES-COMMON-PRIOR> 685228291
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 652327431
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 33807078
<OTHER-INCOME> 0
<EXPENSES-NET> 4203647
<NET-INVESTMENT-INCOME> 29603431
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 29603431
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 29603431
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5037785418
<NUMBER-OF-SHARES-REDEEMED> 5098344218
<SHARES-REINVESTED> 27657940
<NET-CHANGE-IN-ASSETS> (32900860)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2560734
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4203647
<AVERAGE-NET-ASSETS> 608671149
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
